Fannie Mae and Freddie Mac: What Next? »
Posted By bizexpert 9 months, 2 weeks ago in Business & FinanceAmerican Economy is in a bad shape.The structural weakening (to put it mildly) of Fannie Mae and Freddie Mac has happened so suddenly, and so violently, that there simply isn't time to dwell on the past.
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lfergie8129 months, 1 week ago
Yes jovial but the problem is trying to protect the homeowner that bought their home to live in.
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From early 2003 until about 2006, we had a housing boom from speculators that bought houses to flip for a profit. They were paying the asking price or more to buy up many houses in my area to artificially drive up the value so houses rose to nearly double the price they were in 2000 with no end in sight. Then suddenly these speculators left and we know what happened there. That left people with houses they couldn't dump so foreclosures started when payments couldn't be made. I don't believe this is the whole problem but it didn't help.
Who's the blame? I believe the CEOs of the mortgage companies that let these people buy houses they weren't going to live in without 20% down are the most at fault. There's a new house in my area that was bought for $414,000 that has never had anyone living in it and there is no way it will sell for more than $315,000 now. Should he be helped? Certainly not but I believe the ones hurt by rising fuel prices should have some help by refinancing.
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cowboygrandpa9 months, 2 weeks ago
Uncontrolled greed and overvalued properties. One sure way to make sure we are hurting.
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Instead of bailing them out. Housing should be allowed to find the level of valuation that it should be at.
Yes, we are going to be hurt badly. But not as bad as if we continue to over value and artificially inflate the value of housing.
This can't continue, or we will end up in a worse situation.
I say these idiots made their financial grave let them occupy it.-
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jordan119 months, 2 weeks ago
If we don't bail them out, small business will go down with them. Small manufacturers need loans to buy the product to make their goods, and they use their receivables (orders) as collateral to do that. Those loans are drying up in the credit crunch caused by this meltdown. Then there are the stores who rely on loans to buy the product to sell. If they can't get loans to buy the product, the manufacturers go out of business, as do small retailers. And if we don't have manufacturing to boost our economy, & no one has credit to buy and boost the economy, we have no economy.
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hyperbola9 months, 1 week ago
Well cowboygrandpa, the problem is much deeper than just housing. In fact, the housing bubble was created with "cheap money" political policies because America was not earning its way, spending far more than it could afford and the politicians did not want to face up to that.
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We have to be VERY careful how the crash is now handled. Here is a comment from a Republican who was Reagan's Asst. Secy. of Treasury.
Has Deregulation Sired Fascism?
..... This crisis comes at the worst possible time. Gratuitous wars and military spending in pursuit of US world hegemony have inflated the federal budget deficit, which recession is further enlarging. Massive trade deficits, magnified by the offshoring of goods and services, cannot be eliminated by US export capability.
These large deficits are financed by foreigners, and foreign unease has resulted in a decline in the US dollar’s value compared to other tradable currencies, precious metals, and oil.
The US Treasury does not have $700 billion on hand with which to buy the troubled assets from the troubled institutions. The Treasury will have to borrow the $700 billion from abroad.
The dependency of Treasury Secretary Paulson’s bailout scheme on foreign willingness to absorb more Treasury paper in order that the Treasury has the money to bail out the troubled institutions is heavy proof that the US is in a financially dependent position that is inconsistent with that of America’s “superpower” status.
The US is not a superpower. The US is a financially dependent country that foreign lenders can close down at will.
Washington still hasn’t learned this. American hubris can lead the administration and Congress into a bailout solution that the rest of the world, which has to finance it, might not accept.....
.... Currently, the fight between the administration and Congress over the bailout is whether the bailout will include the Democrats’ poor constituencies as well as the Republicans’ rich ones. The Republicans, for the most part, and their media shills are doing their best to exclude the ordinary American from the rescue plan.
A less appreciated feature of Paulson’s bailout plan is his demand for freedom from accountability. Congress balked at Paulson’s demand that the executive branch’s conduct of the bailout be non-reviewable by Congress or the courts: “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion.” However, Congress substituted for its own authority a “board” that possibly will consist of the bailed out parties, by which I mean Republican and Democratic constituencies. The control over the financial system that the bailout would give to the executive branch would mean, in effect, state capitalism or fascism.
(Paul Craig Roberts was Asst. Secy. of Treasury in the Reagan administration)
http://www.propeller.com/story/2008/09/25/has-dere...
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hyperbola9 months, 1 week ago
The problem goes back way further than Fanny and Freddie. In fact it goes all the way back to Reagan, when we started transferring wealth to the super-rich (40% of Americans became net debtors during the Reagan administration) with little control of the financial gambling and the resultant extremely poor allocation of resources. In short, the super-rich were incompetent at investing the wealth of America productively and now we have the predictable need for a taxpayer bailout.
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We need to change the whole ideology of how we handle markets.
The End of Neo-liberalism?
by Joseph E. Stiglitz
http://www.project-syndicate.org/commentary/stigli...
Farewell to the Neo-Classical Revolution
by Robert Skidelsky
http://www.project-syndicate.org/commentary/skidel...
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nostalgia9 months, 1 week ago
They are now going on a spending spree
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With all of the media attention on the $700 billion "small" numbers will be largely ignored
"The House of Representatives on Thursday passed a loan package totaling $25 billion to aid the struggling auto industry"
Pelosi throws stimulus into the mix: House Speaker Nancy Pelosi announced Thursday she intends to bring a second economic stimulus package to the House floor on Friday, further complicating a crowded legislative calendar.
THE BUSH ADMINISTRATION and Democratic congressional leaders agreed yesterday that the $700-billion bailout for financial firms buried by bad mortgage debt should also include help for homeowners facing foreclosure
What happened to the $300 billion from the housing bailout bill passed this summer????
I don't think I even want to know what the total is going to be once they pass all of this! -
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Mutainia9 months, 1 week ago
I always wondered where all these millionaires were coming from to afford all these thousands of mansions on hillsides. I now learn that they never could afford those mansions on the hills, and, that us poor folk would be footing the bill for them. I KNEW there was a problem when I was constantly getting calls to help you with your mortgage. I thought, "MAN! WHERE is all this money coming from to HELP people with all these mortgages!?!" Now I know... now I know.
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nostalgia9 months, 1 week ago
Those houses are the next problem and it is going to occur in 2009-2010. This is when the first 5 yr adjustment will occur in the jumbo loans that were offered
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There are going to be many foreclosures in that market also. Some people suspect that we will be right back in the current situation when that happens
Right now the problem is the dub-prime market
Many of the homes had what are called NINJA loans - No Income, No Job, No Assets. The phrase was coined by HCL Finance as a name for one of their finance products
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Lurch9 months, 1 week ago
There is only one way to know "what`s next".
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See which company/industry owns the next highest ranking lobbyist on McCain`s campaign staff.
Disaster capitalism, crisis, scandal, bailout, emergency entitlement, permanent corporate welfare to come soon. -
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reviewer9 months, 1 week ago
WaMU has now BEEN SEIZED!
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http://www.propeller.com/story/2008/09/26/washingt... -
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socialexpert9 months, 1 week ago
I do not think most of the people who is in trouble with their mortgage will be able to afford this loan. the requires for the people to make a certain amount of money to buy certain house or to refinance their house. Their are too rigid. Most American are loosing their job and have to take a smaller one to survive. it is just a game. they want to show they will help. most Americans will not be able afford Fannie Mae. The same like the incentive they changed the rule from $600 to 300
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beavith19 months, 1 week ago
too rigid? 8 ()
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we're in this jam because they weren't rigid enough.
if you can't make the down payment, or pay the monthly mortgage, YOU CAN'T AFFORD THE HOUSE!
there's nothing wrong with renting.
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lfergie8129 months, 1 week ago
Let's see if there's a pattern here. They say that if you don't learn from history you are doomed to repeat it.
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Republican president Hoover in power----market crashes
Republican president Nixon --- oil prices double
Republican presidents Reagan and Bush---Savings & Loan fail
Republican G.W.Bush----oil rises prices 4 times greater, insurance company collapse, and housing finance institutions collapse
Looks like GW beat them all put together.
And they have the audacity to blame the Democrats-
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beavith19 months, 1 week ago
Republican president Hoover in power----market crashes
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almost no regulation.
Republican president Nixon --- oil prices double
not his fault
Republican presidents Reagan and Bush---Savings & Loan fail
Bush I - he didn't make the real estate bubble
Republican G.W.Bush----oil rises prices 4 times greater, insurance company collapse, and housing finance institutions collapse
supply and demand. gibberish. loan standards were guttd by Clinton
Looks like GW beat them all put together.
And they have the audacity to blame the Democrats
because the dems were part and parcel of all the same dealings.
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nikkibabe9 months, 1 week ago
Any news about Freddie & Fannie should be directed to McCain campaign manager who is on their payroll as a lobbyist to keep the two away from any form of regulation.
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