More Money For Freddie
Ouch.
The U.S. Treasury took control of Freddie Mac and its sister entity, Fannie Mae (FNMA.OB), at the height of the financial crisis in 2008 as loan losses mounted.
Since the government takeover, the two firms together have requested close to $150 billion from the government’s unlimited credit line, scheduled to expire at the end of 2012.
The plan to put Freddie Mac and Fannie Mae into conservatorship was meant to be temporary.
But nearly two years later, Treasury Secretary Timothy Geithner has only just begun the process of figuring out how to overhaul the U.S. housing finance system.
There’s a reason for that… Obama doesn’t want to give up control of Freddie and Fannie.
To make things worse, it seems the Administration is floating the idea of forgiving all the toxic Freddie/Fannie mortgages.
http://blogs.reuters.com/james-pethokoukis/2010/08/05/an-august-surprise-from-obama/
Posted by Deekaman on August 09, 2010 at 1743 hrs
What’s your solution, Owen?
Just curious…
Posted by Swamp Gas on August 09, 2010 at 2237 hrs
great news,
Posted by coach outlet online on August 10, 2010 at 0015 hrs
The solution is to let those mortgages fail and return the housing market to its normal level. This whole FREAKING mess got started from the lax Fannie/Freddie regulation - trying to put people in homes that they have no business being in, because they can’t afford it.
Home homeship is a good thing. But it is a very bad thing when you destroy the marketplace for it.
http://www.youtube.com/watch?v=_MGT_cSi7Rs
Posted by .(JavaScript must be enabled to view this email address) on August 10, 2010 at 0510 hrs
What’s your solution, Owen?
Just curious…
About what? Freddie or the spamming…?
Posted by .(JavaScript must be enabled to view this email address) on August 10, 2010 at 0629 hrs
This is a terrible idea. The previous round of bailouts already served to suspend housing prices, which NEED to fall. We cannot expect to reduce housing stocks, and re-assemble neighborhoods that are in shambles without making housing reasonably affordable. Wages are falling, and will continue, and the idea of taking action to make housing prices static is terrible.
Forclosure is devastating for the family involved, but it provides an opportunity for another family, who is more responsible, or more capable of paying for that property…. At a reasonable price.
Don’t forget that we got where we are because of massive debt levels. We are quickly putting our nation into the position of the family with a 100k income living in a $450k house, with 2 50k cars, two mortgages totaling 500k, and 20k in credit card debt…. It is unsustainable. Another few hundred billion to selectively help only certain mortgagees is ridiculous.
Posted by .(JavaScript must be enabled to view this email address) on August 10, 2010 at 0800 hrs
What’s your solution, Owen?
Just curious…
To what quandary do you seek a solution. This is the post you make, in every thread. It’s almost as if the question is rhetorical…. oh, wait.
This spending is unnecessary. People got themselves in a bad spot, and now they need to face the consequences. Bailouts serve to reinforce the bad behavior, which we are already seeing… Look at Barrett’s initiative with ACORN to get people who cannot afford them into homes in Milwaukee…
So, here is what the fiscal management of the progressives have gotten us:
1.) A bailout bill which put lenders right back up to the practices that brought them down to begin with.
2.) A stimulus that produced NO jobs, and no boost to the economy, in fact, there is a pretty loud murmur arising in the economic community that we are, right NOW, going back into recession.
3.) A financial reform bill (CARD) which served to allow credit card companies to impose even more ridiculous penalties and fees on credit card customers.
4.) Now we are proposing to pass another stimulus (jobs bill) to do, what the first stimulus apparently wasn’t designed to do… you know, create jobs?
5.) We are looking at throwing a couple hundred billion more dollars into a pit, soaking it in gasoline, and torching it, to forgive the debt of Americans whose eyes were bigger than their wallet.
I genuinely feel terrible for the few people out there who got suckered by a smooth talking mortgage salesman, because they thought that guy was there to help them, rather than make a commission. But, if you are stupid enough to sign a contract as HUMONGOUS as a mortgage without having it looked over by a lawyer, you know someone paid to protect your interests, you are an idiot and you deserve to suffer the consequences. I feel bad, but there needs to be consequences for this perverse fiscal behavior.
Posted by .(JavaScript must be enabled to view this email address) on August 10, 2010 at 0856 hrs
A couple of things.
First, experience to date is that “modifying” the terms of loans (to borrowers’ advantage) does not work. That is, most “modified” mortgages have again wound up in default within 6-12 months.
A reasonable conclusion is that these “modifications” do not solve anything, they just postpone the day of reckoning. The macroeconomic result is that these massive expenditures make the housing/banking crisis worse by prolonging it.
Second, there are lasting consequences to government pressure for lenders to “modify” the terms of loans. One consequence is that lenders, knowing modifications may be forced on them in the future, demand a large risk premium for all but the most credity-worthy borrowers—and if they can’t get this premium, they will withdraw their funds from the mortgage markets and use them elsewhere.
The consequence here is, again, a prolonging of the housing crisis into the indefinate future, due to lack of credit from private sources.
The real solution is to let the bad loans go bad, let housing find its own price level, and move on—as soon as possible.
If this causes distress to those now living in McMansions on Bungalow incomes, then perhaps some temporary government help would be warranted. But, attempting to prop up unsupportable loans and unsupportable housing prices—while this might provide some short-term political benefits, creates long-term costs and ultimately solves nothing.
Posted by .(JavaScript must be enabled to view this email address) on August 10, 2010 at 0931 hrs
Your solution, Albigensian, although correct, would require the government abandon Keynesianism and also that politicians incur some short term political fallout. They aren’t going to do that and they’re quite prepared to sacrifice you in order to maintain the status quo.
Posted by .(JavaScript must be enabled to view this email address) on August 10, 2010 at 1027 hrs
To what quandary do you seek a solution. This is the post you make, in every thread. It’s almost as if the question is rhetorical…. oh, wait.
It’s one thing to bitch about a problem and it is an altogether different thing to stitch-together a solution to the problem.Owens seems to be doing more of the former lately.
Posted by Swamp Gas on August 10, 2010 at 1118 hrs
The money is for bonuses. They’ve done such a grand job it’s only right they be rewarded. Don’t you know?
The level of American stupidity is simply astounding, and yet…......................................we haven’t seen it’s apex.
WHAT? HUH??? What Happened?!?!?!?
Posted by .(JavaScript must be enabled to view this email address) on August 10, 2010 at 1125 hrs
Yeah, this whole housing thing needs some tough love. Everyone knows someone who is scamming unemployment and everyone knows someone who is currently living rent free in a home that is at some point in the foreclosure process. Rewarding these people over and over and over makes my blood boil….. it’s very divisive…
Posted by Smeety on August 10, 2010 at 1145 hrs
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