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Post by redwolf on Dec 13, 2008 8:41:04 GMT -6
Lawmakers blast former Fannie, Freddie execsLawmakers blast former Fannie, Freddie execs for fueling market turmoil that led to recession by Alan Zibel, AP Real Estate Writer finance.yahoo.com/news/Fannie-Freddie-execs-turned-apf-13783389.htmlBuried in this article are the following paragraphs: Likewise, lawmakers pressed Mudd about an internal Fannie Mae presentation from June 2005. It showed the company at a key juncture. Its competitors on Wall Street were starting to reap lucrative fees on investments backed by risky loans. Fannie Mae had to decide whether to compete in that market or take the less risky, but also less profitable, path.
Fannie Mae executives worried at the time about "becoming a niche player" and "becoming less of a market leader" at the time, according to the confidential internal presentation, which noted that mortgage securities sold by Wall Street investors exceeded those sold by Fannie Mae for the first time in 2004.
With competitors entering the market, Mudd said, "we couldn't afford to make the bet that the changes were not going to be permanent."To me, this says that the deregulation that occurred on Wall St. also led to the collapse of Fannie Mae and Freddie Mac. They had to offer risky loans in order to compete or lose market share. In other words, the Republican line that Fannie Mae and Freddie Mac started the financial crisis is bogus. It is the other way around.
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Post by unlawflcombatnt on Dec 13, 2008 12:05:09 GMT -6
To me, this says that the deregulation that occurred on Wall St. also led to the collapse of Fannie Mae and Freddie Mac. They had to offer risky loans in order to compete or lose market share. In other words, the Republican line that Fannie Mae and Freddie Mac started the financial crisis is bogus. It is the other way around. Absolutely. Fannie Mae and Freddie Mac were behind the curve, not ahead of it. As Mudd regurgitated on several occasions in his Congressional testimony, he said something to the effect of ''I needed to do what was in the best interests of the shareholders." NO. That's not the mission of a Government-sponsored enterprise, regardless of its private ownership. The mission of a Federally-sponsored entity is to serve the Federally-determined needs of the People. That's why they were set up in the first place by the Federal government. They don't need to be "competitive" with anyone. Their "implicit" backing (in reality "explicit" backing) guarantees their survival off the backs of American taxpayers, even if they aren't "competitive." Their primary mission is to serve the public, not their shareholders. Mudd seems to have forgotten that.
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Post by kramer on Dec 13, 2008 22:55:10 GMT -6
To me, this says that the deregulation that occurred on Wall St. also led to the collapse of Fannie Mae and Freddie Mac. They had to offer risky loans in order to compete or lose market share. In other words, the Republican line that Fannie Mae and Freddie Mac started the financial crisis is bogus. It is the other way around. I disagree, I believe F&F set the stage for this mess. Ask yourself this: If F&F never had 'encouraged' banks to give 100% loans to people with no verifiable income and who had bad credit and where the down payment was sometimes as little as $500 dollars, do you think would bank lending rules have evolved on their own to the point where banks would be making these types of loans? No frigging way. And if you were a banker and were being 'encouraged' to make these loans to people with bad credit, why wouldn't think that it's ok to make them to people with good credit? Add in the implicit backing of these loans by the government and you have the recipe for getting this mess started. On other point to consider. Both Bill Clinton and Robert Reich have said that part of the blame goes to democrats. There are other democrats who have also said this. Everybody is to blame from what I've read. And based on what I've read, I think democrats deserve more blame than republicans. Kramer
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Post by redwolf on Dec 13, 2008 23:15:24 GMT -6
Where's your proof? When did F&F ever 'encourage' banks to give shoddy loans?
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Post by agito on Dec 14, 2008 1:45:07 GMT -6
i'm with redwolf on this one- i thought the same thing when i read your comment kramer.
i had friends who were artists who were sucked into the mortgage business and it just made me think- "wtf is going on there?" there were a lot of fast paced coke snorting smooth workers there passing mortgage apps to banks that had no business being there- but it was a culture of look the other way profiting(and perhaps a false sense of security from the derivative process) that got the loans passed on through to F&F.
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Post by kramer on Dec 14, 2008 13:00:10 GMT -6
Where's your proof? When did F&F ever 'encourage' banks to give shoddy loans? Ok, I'm pressed for time (watching football) but here are some quick points with links. If you read the scathing of HUD villagevoice link, you'll see that the Bush admin implemented every single suggestion that the previous HUD wanted when Clinton was in office. That doesn't absolve Bush of his role in this mess... But it also means that democrats get some of the blame for the fallout during Bush's time since he implemented the previous admins and HUD's plans. Kramer
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