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Freddie Bets Against Homeowners

Freddie Mac bets billions against American homeowners. It’s shocking. What should we learn here?

Freddie Mac headquarters in McLean, Va., and the Fannie Mae headquarters in Washington. (AP)

Freddie Mac headquarters in McLean, Va., and the Fannie Mae headquarters in Washington. (AP)

The story was almost too bad to believe.  At the very time millions of Americans were desperately struggling to hang on to their homes, to keep their families’ heads above water, Freddie Mac – the taxpayer-owned mortgage giant – was betting against American homeowners refinancing.

Betting billions against lower monthly mortgage payments for families absolutely on the edge.  Freddie Mac would make a killing.  American dreams would get killed.  Now Washington’s talking relief.  But what happened here?

This hour, On Point:  the outrage over Freddie Mac.

-Tom Ashbrook

Guests

Chris Arnold, National Public Radio correspondent. He is the co-author of “Freddie Mac Bets Against American Homeowners,” a collaboration between NPR and the non-profit investigative journalism organization Pro Publica.

Jesse Eisinger, Pulitzer-prize winning senior reporter for Pro Publica, where he covers Wall Street and finance. He’s the co-author of the NPR and Pro Publica piece this week: “Freddie Mac Bets Against American Homeowners.”

Christopher Mayer, professor of real estate at Columbia Business School.

William Black, professor at the University of Missouri – Kansas City School of Law.

From Tom’s Reading List

ProPublica “Freddie Mac, the taxpayer-owned mortgage giant, has placed multibillion-dollar bets that pay off if homeowners stay trapped in expensive mortgages with interest rates well above current rates.”

Forbes “Except, upon actually reading the story, I don’t get it. Freddie Mac did something potentially risky, but it was based on the reasonable assumption that interest rates can’t go much lower, but neither will they rise dramatically. ”

Washington Post “President Barack Obama called on Congress Wednesday to make it easier for millions of additional homeowners to refinance their mortgages at lower interest rates even if they owe more than their homes are worth. He conceded that his administration’s housing plans so far have not lived up to their promise.”

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  • Ellen Dibble

    HUD Secretary Shaun Donovan held forth for 45 minutes yesterday on the new mortgage restructuring the administration is proposing, not that  Boehner et al. will allow it, but “it seems unfair,” and they lay it on thick.  The link is the press conference from 2/1, and the first 45 minutes:  
    http://www.whitehouse.gov/photos-and-video/video/2012/02/01/press-briefing
    It seems to me the idea is the fine the big banks to support reducing mortgages of people who have been paying on time but locked in at rates banks can no longer command.  No, they didn’t say Fannie and Freddie would be fined to support this $3,000 a year boost to middle class Americans; they said “the banks.”  And Donovan explained the way the fine print made for tough slogging and caused the time lag for them to even arrange this deal to push at Boehner et al and the various lobbies.  (Insurance, inspections, semi-integrated layers of banking…)  It does seem that housing should not be a government project.  Fannie and Freddie can’t be regulating themselves, and if they, being part of government, are unregulated, “there they go again” betting against the home-buyers and getting into a conflict of interest. How did the GI bill get that 1950s generation into homes without that self-conflictable bureaucracy?  Hmm?

    • Worried for the country(MA)

      Ellen, I’m with you.  There is something unseemly with the taxpayer underwriting refinancing underwater McMansion mortgages .  Of course they claim they will fund this with new mysterious bank fees of $5B to $10B.  Even if we were to believe there is no taxpayer exposure,  the banks will simply pass on the costs to their customers so it is in effect a tax on everyone.

      • Gregg

        That’s exactly what happened. Dodd/Frank imposed a limit on what banks can charge consumers who use debit cards. BofA created a new fee. Now consumers instead of merchants pay the money the banks were going to get one way or another.

        • Ray in VT

           I think that you’re right about banks shifting costs.  They did back down on the debit card fee, though, right?  I don’t do any business with them, but I imagine that failing that move they’ve built other costs into the system for their customers.  I mean bonuses gotta get paid, right?  ;) (I still don’t like using that, but maybe I’ll have to start)

          Perhaps we, and I don’t mean you and I or anyone else here specifically, are part of this problem.  How many of us have come to expect free checking, free online banking and no annual fee credit cards?  Those services still cost companies money to provide, so in order to do that they’ve just shifted those costs to other places, like with merchant fees.  It wasn’t too many years ago that my local bank charged $1 per month for checking.  They dropped that to compete with the other area banks, but I’m sure that they’ve made moves to make that up elsewhere.

          • Gregg

            I’m not sure if they backed off the fee or not but I’ll take your word for it. I agree it’s shifted somewhere.

            IMO the key word in your comment was “compete”. That’s what lowered cost and gave you alternatives. It’s organic, government intervention is not.

          • Ray in VT

            It did lower costs in one area, but I’m sure that those costs just popped up elsewhere, and I think that part of our problem is that financial services companies, in this case, will go to great lengths to hide those costs from consumers and push them into less obvious places.  The services still have a cost.  You and I both know that there is no such thing as a free lunch.

          • Observer

            No such thing as a free lunch?

            That’s our whole economic approach, it’s just nobody wants to admit it, because we love our materialistic life and illusion of easy security too much.

            http://video.google.com/videoplay?docid=5352106773770802849#

          • Gregg

            True enough but IMO you are not describing (correct me) competition. The implication is banks can shuffle the numbers around and fool consumers into thinking there is competition. But consumers are empowered, they don’t have to fall for it.

            In the case of Dodd/Frank, that’s a new and artificial limit imposed on the bank. It has nothing to do with the market. That’s different than a bank crunching numbers, improving efficiency, knowing their local market and going after them all in an effort to get a leg up on the competition. The consumer reaps the rewards. 

          • Anonymous

            In one sense this comes down to the fact that “wages are sticky.” It is found everywhere as people resist lowered wages (in current job, new job, etc.) and the bankers got used to exorbitant bonuses as they “grew” their share of the profits of American companies (the financial sector profits grew from 10% or so to over 33% of all American companies). But the freshwater schools (Chicago, etc.) don’t admit this because they can’t write solvable mathematical equations that model it. But saltwater schools (Keynesians) do recognize it and have developed good heuristics to explain its effects and have a modeling system, IS/LM, which allows dealing with the complexities more informally, but in ways that predict what will actually occur to reasonable accuracy.

            The banks will not stop trying to soak the middle class until banking is returned to “boring,” instead of the exciting seller of new “innovations” which mainly enrich them instead of enabling a more productive economy. That is the thrust of the remarks of the last 5 minutes or so of the program.

        • Anonymous

          @327b60c55221432e499267aebfb70c09:disqus 
          “consumers pay the money the banks were going to get one way or another.”

          You just agreed that the banks have NO, NO, NO remorse for what they did. They just want to continue collecting “their” big bonuses as I pointed out in another (earlier) post in this thread. The need is to change the actions of the banking sector from being a balloon, where it bulges out somewhere else when pushed in a one point, to a system that actually contracts when pushed in.

          The implementation might be problematical, but if the bankers faced taxes of 90% on all income above say $10 million, it might slow their aggrandizing ways.

  • Worried for the country(MA)

    Did Newt ‘consult’ FreddieMAC on this idea?

    • Terry Tree Tree

      Yes, we want to know the ‘HISTORY’ of this question!

  • Anonymous

    One reason existing refinancing efforts have fallen far short of their goals is that Fannie and Freddie continue to charge homeowners high, risk-based fees up front to refinance their loans you can avoid this if you check your rates and fees at 123 Refinance before you sign

  • margbi

    It’s an old dodge: privatize earnings and socialize losses. Why aren’t some of these people in jail?

  • Yar

    Holding the interest rates low is also holding housing on the bottom.  What is thought to support housing prices may actually be hurting it.
    Inflation will lift housing above water faster than manipulating currency to make loans cheap for rich people (qualified borrowers).
    The financial industry can’t refinance, or even foreclose on all the homes underwater because the write-down will book their insolvency.  They are betting against mortgage owers (home owners: Are you still a home owner if you owe more than your home is worth?) to extract more fees.  

    The money isn’t there, the value isn’t there to back the mortgage, Bankers would rather see a house torn down than let a family live in it and lose money. The loan shark equivalent of breaking your knee caps. They may hinder your ability to repay but make a powerful example out of your pain.  The US taxpayer backs these mortgages, we must require these homes are protected from damage caused by theft, mold, and crooked bankers.  Somebody needs to go to jail, and in most cases it is not the mortgage ower.The idea that homes are underwater indicates our currency is over valued.  10 percent inflation will make a lot of money parked in financial products move into real estate.  

  • Anonymous

    What ever happened to “by the people, for the people”?
    How has America not become a cleptocracy?

    • still just cory

      Or a plutocratic corporatcracy.

      • Observer

        We have 2-party Corporatism. State Capitalism.

        The answer is not more Government Power infused into the corrupt/inept mess, its more unbiased accountability to the Rule of Law, and more power distributed to the people, to allow their choices to drive economic activity, not central planners and the bankers who are paid to do their bidding.

        We need to back away from the China model, not walk into it.  Efficiency, if it even occurs, at the expense of liberty, is a faustian bargain.

        https://www.montpelerin.org/montpelerin/documents/Toby%20Evans.pdf

  • Anonymous

    This has to stop. Enough is enough.
    The culture of wall street is infecting the fabric of our society and it’s out of control. 

    • Still Here

      You know nothing about the culture of anything.

      • still just cory

        Nothing about anything?  Pretty harsh.

      • Anonymous

        Whatever, as if I’m should care what the people of your ilk think.

  • Apride1

    There are many people like me with excellent credit and underwater mortgages not owned by Freddie Mac or Fannie Mae. We are people that pay our bills on time, are committed to keeping our homes and would PUT THE MONTHLY SAVINGS BY REFINANCING BACK INTO THE AILING ECONOMY IMMEDIATELY. Our home’s value has declined but to make matters worse, bank appraisals now use the lowest comparable sales or sales from distant neighborhoods because there are no sales nearby (our appraised value is less than our assessed value). 

    This is a press release I dream about:

    FOR
    IMMEDIATE RELEASE:

     

    BANK
    OF AMERICA TO OFFER REFINANCE PROGRAM

    FOR
    UNDERWATER MORTGAGES

     

    CHARLOTTE,
    NC – FEBRUARY 1, 2012

     

    In
    a smart and socially responsible move, Bank of America today announced that it
    will offer a new mortgage program to refinance underwater mortgages. The
    program, called the BANK OF AMERICA COMMON SENSE REFINANCE®, will be offered to
    the bank’s existing mortgage customers with high credit ratings, who do not
    qualify for other mortgage refinance programs such as HARP because their
    mortgages are not owned by FNMA or FHLMC.

     

    Brian
    Moynihan, the President of Bank of America, made the announcement, saying “Our
    nation’s economy is weak, in large part because consumer confidence and
    spending are weak. We have thousands of hard working, credit worthy customers,
    who, if they were able to refinance, would spend their monthly savings on
    things like cars and appliances. At Bank of America, we know we can help with
    the COMMON SENSE REFINANCE®. And our bank will benefit by holding these mortgages
    which will be low risk, near zero default loans based upon the excellent credit
    history of the borrowers. These loans will look terrific on our books. It’s a
    win-win-win situation for the bank, the customer and the nation.”

     

    The
    reaction by Bank of America customers is universally joyous. Jane Jones, a 10
    plus year customer said, “Bank of America knows that I have made the payments
    on my 6% mortgage for years without a problems and that I will certainly make
    the payments on a 4% mortgage. Our payment will be reduced by $400 a month. I’ve
    already picked out the new stove we need at our house.”

    • Yar

      Before you buy that new stove, make sure you don’t owe taxes on the forgiven interest.  It may be considered taxable income.  I can’t remember if it was excluded by legislation.

      • Apride1

        what forgiven interest? there is none. This is a refinance, an entirely new mortgage at a lower rate replacing the existing mortgage.

  • Terry Tree Tree

    Freddie Mac was created to assist qualified people to become home-owners.
       Executives that violated that mission, should be prosecuted for fraud, and any other crimes that they committed!
       ANY personal gains they have made from these crimes should be IMMEDIATELY confiscated!
      Legislators, corporate and private company executives that had ANY part in this change, should be exposed, and prosecuted!

  • Terry Tree Tree

    The G.I. Bill helped veterans to become home owners, for decades, and probably has a better profit-loss ratio than many commercial mortgage lenders!
      What is the record of Fannie Mae and Freedie Mac?

  • Still Here

    Number of bond traders on the panel = 0
    Seriously you couldn’t run down to Fidelity and get somebody who lives every day in the mortgage-backed market.  They speak English and I’m sure they could dumb it down for you.  Pathetic.

    Could somebody please discuss why Freddie might want to hedge prepayment risk?  How inverse floaters allow agencies to hedge, therefore, you have to look at net exposure?

    The Silverstein’s defaulted, they cannot refinance their mortgage.  They would need to modify their principal on a new mortgage.

    Refinance rates have fallen because credit eligibility has deteriorated and collateral values have shrunk. 

    I can’t tell you how low my expectations are for this discussion and the dis-service you are about to do.

     

    • Still Here

      How about a discussion of which risks are easier to hedge than others; interest rate, credit, prepayment; and the tools available for each as well as their respective liquidity?

    • Anonymous

      I agree with Still Here.  Did Freddy operate outside of ethical/legal boundaries?  Could be – looks like it.  There are, however, legitimate reasons to hedge (think crop insurance).  You really need someone to represent this point of view.  Otherwise it will simply turn into a pilling-on fest.

      • Observer

        They distort the market plain and simple.  Can you make a down payment? Can you make the mortgage payments? Yes? Here is a loan. No? Sorry, come back when you are more stable if you want home ownership.

        We don’t need a master plan and manipulated market for that.

        The Road to Hell is Paved with Good Intentions, as are the pockets of Bankers.

    • Still Here

      Tom, you did not disappoint!  This show was quite the soap-box for ProPublica propaganda!  The discussion, like the article, failed to provide any context to the allegations and failed to consider the views of those who have so eloquently pointed out the misinformation in PP’s reporting.  Sitting there in Boston you couldn’t find anyone who understands issues associated with managing an incredibly large portfolio of mortgage-backed securities?  Amazing!  Instead we get to hear from three journalists and two academics, outsiders commenting on a world they don’t understand. 

  • twenty-niner

    Let Fannie and Freddie, otherwise known as the world’s largest welfare recipients, get off the public dole once and for all.

    The conflicts of interest in DC are off the charts under Obama. Both Eric Holder and DOJ’s Lanny Breuer were partners at the law firm Covington & Burling. If you look at this firm’s client list, you’ll find the 10 largest mortgage services, the four banks of the apocalypse, as well as the government-sponsored crime syndicates Fannie and Freddie.

    This along with Obama’s robust campaign finance machine powered by Wall Street crimes bosses has led to this:

    “Obama Prosecuting Fewer Financial Crimes Than Under Reagan or Either Bush”http://www.washingtonsblog.com/2011/11/obama-prosecuting-fewer-financial-crimes-than-under-either-bush-presidency.html

    • Brettearle

      Twenty-niner:

      Regardless of your own knowledge; lack of knowledge; prudence; or bias:

      The fact is that anyone who looks at agencies, such as Fannie or Freddie, and uses words such as, “welfare recipients” and “public dole”, to describe their activity, will tune out prudent readers and observers.

      Other biased terms, such as, “four banks of the apocalypse” and “government-sponsored crime syndicates” are catchy phrases–but that is ALL that they are.

      These terms do nothing but to obfuscate, demonize, and convolute complex problems.

      The phrases and the words suggest an inability to examine the full dimension of issues that govern the housing market and the banking industry–especially as it relates to the complexity of the economic stagnation of the country and of the world.

      The comments only serve to depict your outrage.  They are hardly edifying. 

      • Observer

        Hiding behind the excuse of “complex problems” is the real apologist cop-out.

        Un-sound monetary policy coupled with revolving door, favor trading politicians and Wall St. Bankers, living above the rule of law, in a rigged market of Discretion instead of cold, unbiased competition, is not very complex.

        The complexity is what the Fed, Bankers, Wall Streeters, and DISCRETIONARY “lawmakers” (loophole creators) purposefully create to dupe the masses.  Very simple.

      • twenty-niner

        “convolute complex problems?”

        As long as we’re alliterating, not to be pejorative, but you seem amongst the placable, passively prostrate in the penumbra, easy prey to pedantic pedagogy perpetrated by pompous pricks.

        This doesn’t seem that complex to me:

        Fannie and Freddie have cost taxpayers $150 billion since 2008, (yea the one with a ‘b’), effectively making them government organizations, and yet the executives of these giant failures make an order of magnitude more than the president, around 13 million each.

        Resuming alliteration:

        CRONY F. CAPITALISM

        http://www.bloomberg.com/news/2012-02-01/u-s-senators-introduce-bill-to-cap-fannie-mae-freddie-mac-pay.html

    • Observer

      If you wanna join em’, don’t beat em.

    • Observer

      The DNC hypocrisy on this issue of the stunning unaccountability under this administration is simply incredible.

      Bill Black should be on the show monthly at least, and all the status quo apologists around here should be ashamed.

      http://therealnews.com/t2/index.php?option=com_content&task=view&id=31&Itemid=74&jumival=7502

      http://www.nakedcapitalism.com/2011/04/william-black-why-arent-the-honest-bankers-demanding-prosecutions-of-their-dishonest-rivals.html

      • still just cory

        No hypocrisy from the GOP of course.  Observer has no clothes.  Begone!

        • Observer

          Cory, we all know that goes without saying. It’s just that people need to stop treating the DNC as the savior and pretending they are not just the other half of the establishment, status-quo problem.

          Our country will implode before any of the pigs at the trough in Washington and their Crony Corporate partners leave voluntarily.

          Step 1. Admit you have a problem.

    • Anonymous

      ” . .  Fannie and Freddie, otherwise known as the world’s largest welfare recipients . . .”

      Just who received the monetary value of these welfare payments?

  • Still Here

    Please discuss the administration’s current relationship with FHFA head Edward J. DeMarco in the context of this “story.” 

    • Still Here

      Upsetting the status quo, especially entrenched interests like Boxer, sounds like a guy we should get behind.

  • http://www.facebook.com/profile.php?id=1816544 Dan Trindade

    Freddie Mac obvioulsy needs to be regulated. What powers, aside from the bully pulpit, does the President have at his disposal to so? Or is this a matter that must, by law, be left to Congress? By extension, how much influance can the President have on the housing crisis at large? Is it something that requires Congressional action to actually so results?

    • Anonymous

      Apparently it does take Congressional action and for the duration of this administration as indicated in this area by:

      1) Obama did take steps to gain some control over this by appointing a new head for the FHA, but Republicans in the Senate filibustered the appointment, leaving DeMarco in charge.

      2) Obama’s conflicts with DeMarco on efforts to improve the housing problem have been in the news for some months.

      3) So many approaches to helping the housing mortgage problem have drawn the “moral hazard” warning. But when the banks faced this problem, it was pushed aside without even requiring the banks to give back, such as allowing mortgagees to use bankruptcy to force renegotiating the value of the loan, as would happen in commercial real estate.

      4) The incredible level of pushback against Dodd/Frank which does eliminate the moral hazard for banks taking wild risks and getting taxpayer relief. Why? The banks still feel they did not do anything wrong in slicing and dicing mortgages into these tranches of derivatives and seem to want to continue the process with taxpayer backing.

      • http://www.facebook.com/profile.php?id=1816544 Dan Trindade

        Well stated. Thank you for the detailed response.

      • Observer

        All you need to do to remove moral hazard, is not bail them out. We don’t need a 2000 page bill for that.

        Most people appreciate that, and are skeptical about what elite loopholes are in their, to make sure the right people can continue to play the same old Washington/Wall St. games and remain in power.

        • Anonymous

          If they were the only people being hurt by not bailing them out, you would be right. But there was no way to let them fail under the law at the time that would not have created immense collateral damage on the rest of us. Even with the bailout, the collateral damage has been bad, but it would have been much worse. There is such a thing as cutting off the nose to spite the face.

  • Still Here

    Please discuss the relationship between Propublica and Golden West Financial Corporation founders, Herbert Sandler and his wife.  Please characterize Golden West’s mortgage underwriting practices including but not limited to ARMs and interest-onlys.  Please discuss Golden West’s relationship with the GSEs (government-sponsored entities.)  Please discuss the fate of Wachovia following its purchase of Golden West.

  • Still Here

    Please discuss the separation between underwriting and treasury operations at Freddie and identify specific evidence showing any collusion between the two. 

    • Still Here

      Sounds like, despite your equivocating, the answer is no but that’s not going to stop you from making grandiose assumptions apparently for which you have no evidence.  Is this how journalism works?

  • Observer

    How many have read Reckless Endangerment, by the NY Times writer Gretchen Morgenson, on the political and Wall St. shenanigans creating the great Housing Scam?

    Tweele-Dee, Tweedle-Dum apologists need not read, as the cold, non-partisan motivated facts will make you feel dirty.

  • Observer

    Public-Private Partnership.

    What a crock peddled by the likes of Clinton and Blair, for short term political gain.

    Privatize gains, Socialize losses.

    Crony Capitalism/State capitalism at its best.

    The state should be an unbiased watchdog, and companies who make poor decisions or can’t compete should fail.

    • Anonymous

      I believe the idea was first pushed by Republicans in their effort to “reduce the size of government.” Of course meshing private interests to achieve public goals has always been a feature of the growth of America, from the transcontinental railroads enabled by the Lincoln administration to the Eisenhower Interstate Highway System and hundreds of other examples along the way (and some before).

      But the most recent round has selected projects that are not in the public interest but are driven for the pure profit of a tiny segment, a rich and thus powerful segment, of the population.

      Bill and Tony too easily were “convinced” that the world had progressed to the point where “excessive exuberance” would be “self-correcting.” The world has seen how well that went, but is currently letting the people (VSPs or Very Serious People) lead us toward “doubling down” and recreating the conditions that led to the fall.

      If a repeat of that disaster is to be avoided the country must avoid over-reacting to the fully understandable and justifiable rage that has sprung up since 2008. This is a time when “simple solutions” to a complex problem are almost certain to make things worse than better. There was a lot of pushback to Rahm Emanuel’s comment “to never waste a crisis.” But the success of Tea Party Republicans is evidence of how going in the wrong direction can be more successful than taking the right direction. Obama took the right approaches, though too weakly with the inadequate stimulus for which he may pay dearly, but they were more complex and counter to the “common wisdom” so they were more easily opposed with false analogies to “household finances.” And then he compounded his problem by not getting out in front with a strong argument for why his approach was right.

      But the Tea Party members of the Republican Party had a simple solution, no matter that it will only make things worse as VSP approach in Europe (see the U.K. in particular as its problem is not as complicated by currency issues as on the Continent) has led to INCREASING deficits, not reduced ones and the “confidence fairy” is being true to its name and is not making an appearance as you would expect with imaginary things.

      • Observer

        Why didn’t Greece take on more debt to solve its fiscal problems?

        The Tea Party sentiment, not the long-since neo-con hijacking of it, of being mad as hell at our exploding debt and a financial crisis aided by an inept and corrupt government that was not acting to police markets and ensure Rule of Law, and instead helped cook up and legitimize the schemes in the name of social justice, and the partnerships you mention, is quite simple and justified.

        Your argument that if we just stimulated more we would be ok, is debatable, but not fact, given the levels of debt we now have.

        At some point, No Free Lunch will mean something, even in the USA.

        Continuing to defend the Democratic angle of the status quo, and Obama’s role in it, and demonizing the Tea Party concept, is really a waste of time for our country while “Rome burns”.

        The problems and corruptions and stranglehold by the power elite are bigger than the 2 parties, and neither will deliver us.

        • Observer

          Recall the real tea party started during Bush’s term in response to the crisis/bailouts.

          If we missed the boat on using that moment of critical outrage at the status quo against both corrupt Wall St and corrupt politicians in both parties, we deserve what we get.

          progressives, fiscal conservatives, and libertarians could have mobilized for a huge demand for accountability and real Rule of Law and true Free Markets as opposed to crony State Capitalism

          But it appears the old 2-party knee-jerking was just too fun to let go of for the good of the country.

        • Anonymous

          I don’t know of any Democrat in office or liberal economist arguing that the country does not have a future debt problem. But the biggest problem now is unemployment, both for the drop in GDP and lost tax revenue and the increased safety-net costs. Currently those with uncommitted money see no place to profitably invest it because of the lack of aggregate demand, (Remember the $2+ trillion that corporations are holding) as shown by the fact that people and businesses are buying federal debt at negative interest rates when inflation is accounted for. So government should borrow even more to put people to work on already identified productive projects (unsafe bridges and roads, more efficient transportation like rail and subways, etc.). Once the fear of job loss is minimized, spending would return to create the needed demand to unleash business investment, with the concomitant return to a strong economy.

          But here is where the corruption lies: in the refusal of the wealth elite to accept that they are going to have to sacrifice a little to restore the country’s growth.

          And freeing the market and cutting taxes on the wealthy will do little to revive the economy, while cutting the safety net will simply make life for the 98% worse while further depressing the economy.

  • Anonymous

    Freddie and Fannie are both political arms of our government and they should be stopped.  

    We haven’t had a free market in the home loan business for over 10 years now and we see how that all worked out!

  • Observer

    “The Secret of Oz won best documentary of 2010 at the Beloit International Film Festival. It won the Silver Sierra Award for Excellence in Filmmaking at the Yosemite Film Festival. It won the Award of Merit at The Accolade Competition in La Jolla, California. It won the Silver Screen Award at the Nevada Film Festival. It’s received an excellent review on Nathan’s Economic Edge, one of the world’s top economics blogs. It’s British premier was at the prestigious Bromsgrove conference on Oct. 1. What’s going on with the world’s economy? Foreclosures are everywhere, unemployment is skyrocketing – and this may only be the beginning. Could it be that solutions to the world’s economic problems could have been embedded in the most beloved children’s story of all time, “The Wonderful Wizard of Oz”? The yellow brick, the emerald city of Oz, even Dorothy’s silver slippers (changed to ruby slippers for the movie version) were powerful symbols of author L. Frank Baum’s belief that the people – not the big banks — should control the quantity of a nation’s money. The bottom line: No More National Debt. All our money is created out of debt. But nations don’t have to borrow money from banks. Sovereign nations can create their own money — debt free — just as Abraham Lincoln did.”
    http://www.youtube.com/watch?v=swkq2E8mswI&feature=player_embedded

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    This is what happens when you create quasi-governmental private corporations. Any private corporation that is supposed to be responsible for anything other than the bottom line is going to have a direct conflict of interest. Period.

    • ebw343

      Exactly. FRMC (and FNMA) should’ve been maintained in their original New Deal structure, NOT quasi-privatized.

  • Greyman

    Can Mr. Arnold explain how FM’s practices size up against the President’s call for a new $10 billion in banking fees to subsidize lower-rate mortgages. Is this hand-in-glove or hand-against-glove government at work?

  • Anonymous

    Tom, “incent” is not a word.  I almost turned the radio off.

  • Observer

    Just stop the Central Management of our economy and enforce the damn law!

    Tom, we need to have Bill Black on every Political/Economic/Finance show until we start seeing the enforcement of the Rule of Law, the lack of which underlies all our biggest problems.

    • Steve

      I wish I had as much faith in the rule of law as you do

      • Observer

        What the heck else are we supposed to do?

        Benevolent Dictatorship and Communism have been failed ideas.

        We have to work at Rule of Law as vigilant, self-governing citizens.

        Its that or the China Model of State Capitalism and vastly reduced liberty all in the name of efficiency.

        Not going to go over well here.

    • nj

      Hey, it’s Leather Dave of a Thousand and One Handles back with more Libertarian dreamland pablum.

      Dave, who do you think you foolin’?

  • http://www.facebook.com/people/Tim-Brown/1227104716 Tim Brown

    Nothing surprising here: American style crony capitalism is a machine rigged to benefit the 1%. The idea that a semi-public institution would somehow not succumb to the general trends within our financial industry is hopelessly naive.

    • Observer

      The bigger the government the bigger the cronyism.

      Ensure fierce competition between private parties. Enforce the law fiercely, without loopholes and discretion.

      We need transparent Rule of Law enforcement, not government Central Management. That is the modern liberal mistake.

      Get back to classical liberalism.

      http://www.capitalismwithoutfailure.com/2011/12/capitalism-without-failures-realistic.html

      http://www.independent.org/students/essay/essay.asp?id=1612

      http://www.cato.org/pubs/journal/cj30n3/cj30n3-3.pdf

      • http://www.facebook.com/people/Tim-Brown/1227104716 Tim Brown

        That’s one solution, but unwinding these banks, not to mention all government intervention in financial markets, is going to be a very long process. Decade long gradual reforms don’t mesh well with elections being held every 2 years and the financial sector being by far the largest contributor to both parties’ coffers.

        However, I’m all for unwinding these two lenders. The lesson to take, going forward, is that when we make public institutions that will play in the private market (and I think it is inevitable that there will be a public demand for these sorts of interventions one way or another), we need to carefully engineer the checks and balances in those programs and the incentives. Right now basically anything getting passed in regards to the financial sector is written, primarly, by lobbyist. Look at Dodd-Frank: once an honest attempt at regulating Wall St. (at least in its conceptual form), now a tool by which Wall St. giants try to bend the law to benefit themselves over their competition. The bill is so rife with holes that I fear it might do more harm than good in the long run.

        Bring back common sense simple legal frame works. Glass-Stegall is a start. Investment banks who’s business is inherently high-risk should be separate entities from FDIC insured commercial banks. No securities and commercial banks as the same entity, period, it’s that simple. This is HR 1481 I think. It is currently dead in committee.

        • Observer

          Careful engineering by pandering politicians OR unaccountable academic appointees will always fail. Pricing and Risk Management based on accountability and no bailout possibility is the only way, whether we wish so or not.

          • Anonymous

            The problem here is that the big investment banks so shuffled the derivatives that no bank would trust that another bank would not default on a transaction. And while there are too many interbank transactions, there is a need for a lot of such transactions to maintain the economy. But the banks had determined that transparency limited the amount they could charge for derivatives and hedges so there was little of it.

            Now it is unfortunate when a couple of people decide to play chicken to see who can drive faster toward a cliff on the edge of a deep unpopulated valley, so they kill only themselves. But when they decide to hold their “contest” in a place where they will fall on an oil refinery that is surrounded by dense population and where there is no easy route to escape the conflagration. Thus they endanger the whole population and turn something unfortunate into something that inflicts catastrophe on other innocent people.

            That is why there needs to be prohibitions on people behaving in certain ways, such as designing derivative instruments to enable/seek the generation of “liar loans” by companies like Countrywide.

            If you want to make pricing and risk management the only restraint, then make failure mean that your earnings for the last x years be subject to loss along with your total wealth, with no loopholes like putting the money in a spouses name, etc. When the CEO knows that he will be financially broke instead of just walking away with a golden parachute, it just might concentrate his mind. And make any future employer of the individual responsible for some part of the debt, unless the wages paid are equivalent to the poverty level.

          • Observer

            “If you want to make pricing and risk management the only restraint, then make failure mean that your earnings for the last x years be subject to loss along with your total wealth, with no loopholes like putting the money in a spouses name, etc. When the CEO knows that he will be financially broke instead of just walking away with a golden parachute, it just might concentrate his mind. And make any future employer of the individual responsible for some part of the debt, unless the wages paid are equivalent to the poverty level.”

            Here, here!

            As long as its equally and blindly applied, as Rule of Law should be, great! That’s the point.

            Not to mention, to blame this on a few individuals playing chicken is a bit much. Its more systemic and was being warned of for a while.  The status quo types just didn’t want to hear it.

            http://www.informationliberation.com/?id=32412

          • Anonymous

            It was an ANALOGY, not a item-by-item equivalence. There were thousands playing their respective parts to make this horror show happen. But together they put aside scruples and decided to follow the “path” until it no longer existed.

  • Four Elements

    The housing and financial crises “caused” the current recession only in the sense that water vapor in the atmosphere causes rain. But that water vapor in turn was caused by evaporation, and so on. The direct architects of these crises, through political manipulation, made themselves too big to fail and too connected to jail. So they were bailed out, but the United States as a whole is too big to bail, though not too big to ail. The housing and financial collapses themselves were in actuality effects of devious attempts to create wealth out of thin air when it became evident to some clever people that wealth could no longer be created in the traditional manner. And that situation was in its turn the effect of the depletion of the great treasure house of earth and its lands as well as of the mindless explosion of human population. Is it any wonder that such evanescent wealth is finally evaporating, along with all the jobs, assets, institutions and confidence that were built upon it?

    • Observer

      ‘The direct architects of these crises, through political manipulation, made themselves too big to fail and too connected to jail.”

      It’s called the Federal Reserve and Unsound Monetary Policy, and the pandering politicians who use the funny money to promise us everything from military domination to an entitlement to a home.

      • Anonymous

        Absolutely NOT! It was the investment bankers who wanted some high income products (like the “junk bonds” of a previous era) to sell to people with a lot of money and eager for bigger returns. The fact that the Federal Reserve held interest rates low in a (deluded) attempt to make up for the lack of growth response to the Bush tax cuts, a form of “stimulus” that is notoriously inefficient (about $0.45 of GDP growth per $1 of tax cuts) is more a feedback than the original sin. But the tax cuts put a lot of money in the hands of wealthy investors looking for the latest gimmick, fueling the market for those CDOs and then the even less justifiable CDSs.

        It is the rich who can most easily get the politicians to enact tax loopholes, more properly called tax expenditures, which cost much more than any pandering to the poor or middle class.

        • Observer

          The Fed makes the drugs. Wall St. are the cutters and dealers.

  • Ellen Dibble

    What has Mitt Romney had to say about this?  It sounds like DeMarco at the Federal Home Loan agency, in prioritizing profits for the taxpaying public, is acting like the kind of capitalist manager that Romney wants to bring to our government.  Maybe it’s no surprise that Obama has been trying to replace him — if I’m understanding.
        If all the agencies of government were into creating profits on behalf of the taxpayers, then the actual public interest would not be watched out for by anyone.  The profiteering of the private sector would have taken over the supervisory function of the government.

  • Still Here

    Ok, maybe you don’t like no-load fund families. 

    How about calling Mr. Andrew Dudley, Investment Director, Global Asset Allocation at Putnam Investments?  It’s a local call!

    Do I need to look up Putnam’s number for you?

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    How can they say it’s not conflict of interest? For-profit corporations are legally required to make their bottom line their one and only priority.

  • Terry Tree Tree

    BONE-USes for bad business,  against its mission!
       This doesn’t look very good for Republicans, with a Republican-appointed administrator, that Republicans wouldn’t allow to be replaced, that VIOLATED the reason the organization was created!  Further makes it look like Republicans are trying to destroy the U.S.?

  • Observer

    Tom you should have Gretchen Morgenson on the panel or on again soon.  Fannie/Freddie will continue to be big news throughout the election. She laid out the bipartisan corruption in Reckless Endangerment.

  • Scott B, Jamestown NY

    If the government (ALL sides are responsible for Fannie and Freddie) wants to make up for what they did, then make them one entity that will refi mortgage holders that are having problems.  Be they ones that got sucked into a bad mortgage, are underwater or upside down, that HARP and HAMP failed, or people like my wife and me – That did everything right (never missed a payment, legit mortgage, was a decent rate at the time) and our lender (BOA), and others, will not help us because (and these are direct quotes from BoA (our holder) and others, “You don’t owe enough for us to make a profit”, and “There’s no incentive [government brownie points and cash] for us.”

    Turn them into “MacFanny”, let me pay a couple hundred bucks in fees and I’ll happily pay them.

    ****

    BoA told us they want thousands of dollars in fees  to save us a grand total of $18@month:disqus
    Not. Why is it that they can send us a slip if paper that effects our sky-high stack of mortgage related paperwork that covers everything in it, tack on fine instantly for violating some grace period ploicy changes that were weren’t informed of when BoA took over Countrywide, etc., etc., and do so much at the  literal press of a button; but when we just want the current lower rate it costs us $4000 plus other assorted fees and processes, and takes weeks upon weeks into months and months.   Did our property lines suddenly change overnight that we have to spend hundreds on a new survey?  We have to do a new Title Search for what reason? 

    Not everyone has a mortgage is going to save hundreds of dollars with a new rate, or need to save hundreds. For people like my wife and I even a hundred dollars a month would be a HUGE savings.

    • Observer

      Give us all a 3.5% mortgage, backstopped by the financial industry as a whole, and then dismantle Fannie/
      Freddie.

      • Observer

        Wall St Banks need to be punished, and the Government needs to get out of the economic management business.

        Very simple, and bipartisan.

        • Scott B, Jamestown NY

           The gov’t is stuck with Fanny and Freddie, but if they’re going to be stuck at least fix them and help the 20 million people like me that just needs a few points off my mortgage without breaking my bank account and doing backflips.

          • Observer

            How do you “fix” the bailout moral hazard of taxpayer-backed loans?

          • Scott B, Jamestown NY

             I have little sympathy for the idiot that was allowed to  McMansion with his part time job at McDonalds and lost it.  

            That taxpayers were backing it doesn’t bother me.

             That people that could afford a house and were turned away by banks that don’t want to deal with anyone without a sky-high FICO score, or a minority, or some other legal or moral injustice, could get a house is great.

            But we the people were conned, the rules were rigged, bent, and broken.

            You fix it by oversight. You know, the thing no one wants to pay for, and what you can’t do when you deregulate everything. 

             

          • Anonymous

            What is being proposed is not that different from what happens with commercial real estate, where renegotiation of loan terms is fairly common when economic dips come along (e.g., bankruptcies).

            But a proposal that a bank lowering the principal would participate in any appreciation at the sale time should go a long way to alleviate that.

        • Squanto

          Wall Street, if not synonmous with the Federal Government, is certainly sleeping in the same bed.

          If the game is rigged by the people who make the rules there will be few prosecutable offenses other than occasional underlings thrown into the fire to appease the masses.

          • Observer

            Thats right. Satisfied by Madoff prosecution?

            But so what do we do, give up?

            Ron Paul is at least trying. To bad people don’t want to listen to his message and logic.

            People are ready to throw away the Constitution and the vision of the Founders, for some blurry, emotional hope that we can micromanage our way to justice and prosperity.

            Understand and discuss with others, Classical Rule of Law and Central Banking/Fiat money issues.

            http://www.independent.org/students/essay/essay.asp?id=1612

            http://www.cato.org/pubs/journal/cj30n3/cj30n3-3.pdf

      • Scott B, Jamestown NY

         That’s all we want. When we got our mortgage 7% was a good rate for us and we purposely steered clear of sub-prime and hinkey loans.

        They’re got FREE MONEY!  ZERO INTEREST! And they were supposed to help with HAMP and HARP, which they did not do. So how is it that these banks get bailed out by us, the hard working American people, but they wont help us?  

  • Still Here

    Why tighten credit?  Did you see what the Federal Reserve just said about the economy? 

    • Anonymous

      Because the banks are sitting on portfolios of derivatives that are overvalued and they would have to sell them at fire-sale prices to have the money to loan out, plus they can make more at the Fed’s discount window.

      • Still Here

        That’s a fair, partial explanation of why credit is already tight.  The reason credit might get even tighter is that the Fed is suggesting the economy is still susceptible to steep declines, not the kind of environment to take a lot of risk no matter who you are.

  • John in Amherst

    Outrageous doesn’t come close to describing this situation.  Where are the prosecutions to determine responsibility, assign blame and exact just penalties??    

    • Observer

      Obama is the Wall St Finance president. He took the Bush/Paulson era a notch higher with Summers/Geithner.

      People should be barfing.

      • John in Amherst

        Like I said, where are the prosecutions?  The revolving door between academia, finance and government started spinning faster and faster starting w/ Clinton.  The deregulation during Bush II spurred a worsening that Obama has done too little to correct.  And now the GOP wants to strip away most of the remaining regulations on Wall Street and the financial industry.  All the while, the Supreme Court has declared personhood for corporations, which allows these uber-rich, uber-greedy entities to buy influence unimpeded through campaign financing regulation.  American Democracy: only the rich need apply….

        • Observer

          The problem is that despite the original intent of the bills, things like Dodd-Frank are not virtuous savior we hope them to be. It is more of the same loophole ridden crap that ensures the elite finance folks who populate the ruling class of both parties can continue to evade REAL reform or accountability.

          Real “conservatives” or libertarian types, want a level playing field, real competition, and adherence to the Rule of law. I can’t help it if most Republicans are just as corrupt and duplicitous that the status quo Dems.

          The status quo Dems give us sham “Regulations” that promise to protect us, the status quo Republicans just want to make it easy for folks to scam for profit. 

          Real fiscal conservatives or libertarians want a Rule of Law free market system, not the crony capitalism, State Capitalism, rigged market, revolving door special favor, above the law crap we have now.

          IMO, communism will not be the answer, and a return, or finally an embrace, or classically liberal respect for rule of law and transparent competitive markets will be our best chance at accountability, broad opportunity, and individual liberty.

        • Anonymous

          When you look at the difficulties the states’ attorneys-general are having trying to prosecute the banks, what is seen gives credence to the claim that the banks had managed to ensure that what they were doing was “legal” if not moral. And it is why they are pushing back on Dodd/Frank.

  • Observer

    All star show idea.

    Bill Black
    Glenn Greenwald
    Gretchen Morgenson
    Bill Still

    Just moderate the time to speak and let them deconstruct for an hour.

    Pretty please?

  • Ellen Dibble

    I would also like to know where Barney Frank comes down on this matter.  Here he is retiring, and as I understand it this housing issue has been near and dear to him forever.  I’ve always thought there were more than a few flies in the ointment.  Maybe he retires and gets in position to be able to point that out.

    • Anonymous

      He has never been particularly bashful, and I expect to hear from him soon.

      But being in the minority, he will not be able to do as much as he would like.

  • Still Here

    Betting huge?  Tom, come on, put this in context.  What is Freddie’s total book?

    • Still Here

      Hundreds of billions!

      • Anonymous

        Out of a total market over $10 trillion.

        • Still Here

          So categorizing a 0.05% of total market purchase of inverse floaters as a huge bet against American mortgage holders is beyond hyperbole.

  • Lichtenf

    They are private company and they did the same thing all the other provate companies did. It’s good to see them get caught. Prosecute!

  • http://neilblanchard.blogspot.com/ Neil Blanchard

    We don’t need a new mortgage program — we need to change the rules, and make them hang on to their mortgages, just like a good local bank does.

    Neil

  • Still Here

    Selling mortgage-backed, retaining less, incentivizes Freddie to lessen credit underwriting standards for the profit.  Were you guys around here 5 years ago?  Because you’ve already forgotten the lesson. 

  • John Bauers

    The inherent conflict embodied in Freddie Mac illustrates in stark relief the distinction between the points of view of “market based” capitalism vs. “big government” which are bombarding us in this current election cycle. Unless and until we as a nation and world society can rise above these artificial dichotomies to find a new view of the world, we will be stuck in this conversation for ever!

    • Observer

      Baloney. Truly free, competitive markets, bound by a Rule of Law that punishes for collusion and corruption, are the best we can do for pricing and allocation of resources unless you want start experimenting with communist fantasies again.

      People vote with dollars, companies compete or die (composting), and lawbreakers go to jail.

      Not that radical or complicated, lets just do it and get back to living!

      • http://www.facebook.com/people/Tim-Brown/1227104716 Tim Brown

        I agree with the general sentiment but I feel it would work better in an environment where the word “boycott” doesn’t invoke seizures across the media and pundits foaming at the mouth about “killing the entire economy.”

  • margaret/ Omaha, NE

    So this looks bad for Republicans as DeMarco is a Bush appointee and Congress would not approve a Obama appointment. Remember the story in WSJ  Eric Cantor, the Republican Whip in the House of Representatives,
    bought up to $15,000 in shares of ProShares Trust Ultrashort 20+ Year
    …in

    • Still Here

      Wrong, Obama appointee, please pay attention.

      • Anonymous

        I believe DeMarco was placed at FNFA by Bush and held the next lowest position when the Bush-appointed executor resigned, so Obama’s “appointment” was more pro-forma than not.

        • Still Here

          Looks like he’s been a bureaucrat through multiple administrations. 

          On
          August 25, 2009 President Obama designated Edward J. DeMarco the Acting Director
          of the Federal Housing Finance Agency (FHFA), the regulator of Fannie Mae,
          Freddie Mac and the 12 Federal Home Loan Banks effective September 1, 2009. Mr.
          DeMarco was appointed Chief Operating Officer and Senior Deputy Director for
          Housing Mission and Goals for FHFA in 2008 after enactment of the Housing and
          Economic Recovery Act of 2008, the legislation that established FHFA. Mr.
          DeMarco joined the Office of Federal Housing Enterprise Oversight (OFHEO), a
          predecessor agency to FHFA, in October 2006 as its Chief Operating Officer and
          Deputy Director. He came to OFHEO from the Social Security Administration (SSA)
          where, as Assistant Deputy Commissioner for Policy, he led SSA’s policy,
          research, and statistics functions. Before joining SSA in 2003, Mr. DeMarco was
          Director of the Office of Financial Institutions Policy at the U.S. Department
          of the Treasury where he oversaw analyses of public policy issues involving
          government sponsored enterprises and other financial institutions. Prior to his
          ten-year tenure at the Treasury Department, he worked at the U.S. General
          Accounting Office for seven years. Mr. DeMarco received a Ph.D. in Economics
          from the University of Maryland and a B.A. in Economics from the University of
          Notre Dame.

  • jim

    Look, there is a fine line between two roles of Freddie Mac. But the priority for Freddie Mac is to make MONEY to shareholders, which is the tax payers. Consumers must understand that there is no conflict of interest. Whether it is a private enterprise or a governmental entity, Freddie Mac’s ultimate goal is to make money, not to be a charity. Consumers do not understand that there is absolute no conflict of interest. the role of Freddie Mac to consumers as shareholders and to consumers as borrowers are TWO different things.

    • Observer

      Anything backstopped by taxpayers is a scam. YOU CAN’T MAKE APPROPRIATE RISK DECISIONS WHEN YOU KNOW YOU WILL BE BAILED OUT BY THE FED OR THE TAXPAYERS (SAME IN THE END).

      We have to get off this free lunch mentality that we can cook up schemes that do a better job than a transparent honest market based on work, saving, buying, selling, thriving and failing.

      Guess what we CAN”T have it all, no matter how much you want politicians to deliver it and financial charlatans to convince you it’s possible!

  • Ellen Dibble

    It sounds like the Entire Congress is in the Conflict of Interest business.  One wee bill is moving along now, ushered along I believe in part by Mass. Republican Senator Scott Brown, that stops certain profit taking from the inside knowledge their positions of power and decision put them in.
       One Small Step for Congress.

  • JustSayin

    There is no long risk! There is no risk at all!

    They would be bailed out once again by taxpayers.

  • Gisscottheron

    Look At the ISDA who is in charge now of the defaults of the derivatives get Robert Pickle on the show and grill him about how and when defaults will occur. It seems that the real problem is the amount of derivatives offset by securities like MF global and the rehypothocation of shares held in street name by clearing houses.  if Corzine re imagines that ll of the capital that customers are using in his clearing house are his to use as he sees fit and he bets that Greece goes tits up and Pickle says that 50% hair cut is not default or 890 % is not default it seems that the CFTC and the system is allowing clearing houses to transfer billions of stocks held in the DTCC or MF global to transfer that cash to banks llike Jp Morgan or Goldman . so the bottom line is don’t hold any money in street name or they can steal it from you  like Corzine I don’t know where the money went oopsies.

  • Charles A. Bowsher

    If the powers that be in finance can’t rein in Mortgage default swaps or Collateralized Debt Obligations maybe they need to be regulated by the State Insurance Commissioners. I keep hearing that these instruments are essentially “Insurance” so it seems the various insurance commissioners should be the ones to regulate this mess.

    • Observer

      Maybe we should have let all the private interests who held the rotten debt all FAIL instead of having US, the taxpayer/government, buy it all up to protect the 2-party banker class!

  • Mark Wollaeger

    As
    many as 3 yrs ago, Yale economist John Geneakopolis argued in a NYTimes
    Op-Ed that the only effective way to address the mortgage crisis would
    be to reduce mortgage debts, not to change terms of the loan: fewer
    defaults, so the owner of the mortgage would overall get more money,
    since houses sold on default market fetch very little, and more people
    could stay in their homes.

  • Scott B, Jamestown NY

    Hearing some of this about how what was done is like hearing a doctor say, “The fall from the bridge wasn’t what killed him, it was that his heart stopped at the bottom.”  Our system is broken, we know what broke it, we know many hands helped break it.  Fix it. Glass-Steagall kept us out of this mess for seven decades, and that can be put back for free!

    • JustSayin

      Exactly. If these guys could only risk capital that was invested for the purpose the risk would be contained to the high risk gamblers. The taxpayer and ordinary savings and capital would be protected once again.

      Today Fascism is the rule that makes the laws. 

  • Observer

    Woo Hoo! Mr. Black.

  • Anonymous

    This makes steam come out of my ears.  As a nation we should be outraged, but it shouldn’t stop there.  Anyone with common sense should not have any hesitation about calling this practice morally reprehensible.  This practice should be illegal and there should be a major investigation – independent (as much as possible), NOT by Congress – and anyone who made money on this should have to give it back.

    As a nation we are slowly crawling out of a historic, worldwide financial crisis, and yet the more we learn the more we see that the crisis was caused, exacerbated and prolonged by bottomless corporate greed and countless examples of repugnant, borderline-evil behavior (“borderline” only to those who will continue to hail the joys of capitalism).

    Citizens of the U.S. and the world should not, and cannot, continue to stand by and allow this type of rapacious behavior by those in power.  Of course we would need Congress to actually do something worthwhile in order to stop it.  We all have better odds of winning the lottery.

  • John in Amherst

    Where are the prosecutions?  The revolving door between academia,
    finance and government started spinning faster and faster starting w/
    Clinton.  The deregulation during Bush II spurred a worsening that Obama
    has done too little to correct.  And now the GOP wants to strip away
    most of the remaining regulations on Wall Street and the financial
    industry to permit the “free market” to work its wonders.  All the while, the Supreme Court has declared personhood for
    corporations, which allows these uber-rich, uber-greedy entities to buy
    influence unimpeded through campaign financing regulation.  American
    Democracy: only the rich need apply….

  • Observer

    Private with Pubic backing.

    What a scammers dream.

    • http://www.facebook.com/people/Tim-Brown/1227104716 Tim Brown

      Too be fair, after 2008 the entire financial sector has a pretty much explicit public backing as well as ready access to 0% loans from the Federal Reserve and the ability to store liquidity with the Fed at interest. Socialized losses, privatized gains.

    • JustSayin

      The same can be said of BOA, and the other “Investment banks”, and GM too. If congress socializes the losses by guaranteeing the downside as they have in the past, and they will do again and again.

      • Observer

        Of course. 

  • RobynT

    We own a condo and are “underwater”. We have never missed a payment, yet we are held captive by our
    mortgage.  Surely
    this is a boon for our lender.  There is
    no incentive for them to refinance or renegotiate our loan, because we cannot
    take our business elsewhere.  For the
    foreseeable future, they enjoy an income from us that far exceeds current
    rates. 

     

    We
    don’t want to sell our condo – we just want to lower our payments in accordance
    with current market rates. Our lender only loses out if we
    default.  Renegotiating or refinancing
    to lower our costs puts us in a stronger financial position, and a stronger
    position for us decreases the likelihood of a default.  In a common sense world,
    this ought to be a win-win situation. 
    Instead, we are seen as over-leveraged even though we have done
    everything right and prudently.

  • David

    I thought FreddieMac was a public entity…. who exactly is profiting from these shenanigans?

    • http://www.facebook.com/people/Tim-Brown/1227104716 Tim Brown

      I am fairly certain that the US Treasury receives a share of the profits, although these are publicly traded entities and so profits also go to private investors.

      I may be wrong on this though. I’m assuming this because the Fed’s profits on investments are paid to the treasury.

  • Screamingpalms

    If the Education system was rigged against students in hopes that they would fail there would be riots in the streets.

    All I ever hear are excuses….nothing changes.

    It is as if I Society has learned to accept it and rationalize it.

    Pathetic.

  • Ellen Dibble

    With $300 or $400 less in mortgage payments per month, will these Americans have less of a deduction on their 1040s to the IRS?  And thereby there is more revenue?  I guess the Tea Party should be for this.

    • Scott B, Jamestown NY

       Yeah, save on the mortgage, get booted into a higher tax bracket. 

  • DaveyD

    This is what happens when you “run government like a business”  Businesses seek profit.  Governments serve the people when the profit seekers turn their backs.  This could have been anticipated thirty-odd years ago when Fannie Mae and Freddie Mac were created.

  • http://pulse.yahoo.com/_Y6CO5C2HE4WM2OYGCDVWGPRXXM oldman

    Refinancing sounds great for homeowners – but every dollar they save is a dollar their mortgage holder is going to lose. There will be a huge push to prevent this from happening.

    • Still Here

      And who holds the mortgages; pension funds, mutual funds, money market funds …

  • DaveyD

    Take Heart! After the Great Depression it took til the mid-30′s before the government paid attention and started fixing things.  It will happen this time when Barack Obama gets a second term.

    • Observer

      That’s sarcasm right?

      Government started fixing things?  Where have you been through this housing crisis?

    • mary

      lol…

    • Scott B, Jamestown NY

       I think the banks should be glad Elizabeth Warren didn’t get the appointment, I think things might have actually started getting fixed and heads rolling. Hopefully the new guy takes up the fight.

  • AC

    wow. not one single law was broken here? why is no one in jail? anyone here a lawyer? please explain….

  • Ellen Dibble

    Scott — the caller who would REALLY benefit by say an extra $100 a month, which the banks deem too little to be worth the refinancing.  They hold stacks of paperwork out and say dare you, sort of.  This is what HUD Secretary Shaun Donovan was addressing yesterday, and he was addressing that stack of paperwork.  His office has been trying to get it so the house doesn’t have to be reappraised, for instance, but use “auto-inspections” or something.  I don’t know if that’s the Freddie Mac loans or the private bank loans, and I don’t know if it’ll pass, but the reason for the press conference was to drum up support.  It’s a no-brainer, it seems.

    • Scott B, Jamestown NY

       I was told flatly by BoA that it would be at least $4K to refi, plus I’d be paying for an inspection (several hundred), title search (several hundred more), survey ($400 was the lowest we could find).

      Our loan is backed by the FHA, which wasn’t in line  to be helped like Fanny & Freddie, but is looking more like it is now. 

      I’d love to see what a mortgage written by Elizabeth Warren, Bill Black and/or Simon Johnson would look like.

      Seems to me that a mortgage could read, “You owe $X. You’re interest rate is X%. You’re monthly bill is $X. A late payment is $X…” and so on.

      But BoA, Quicken, et al all want $XXXX so they can kill a copse of trees to make the paperwork that will all be done on a computer (which is where all  the work is being done anyways these days) with the press of a few buttons  and spit out a slip of paper  to cover the old mortgage that reads, “Wherever it says ’7%’ is now 3.5%”.  They say they can work the cost of the paperwork into the refi and that’s where I get the whopping savings of not even $20@month:disqus . Oh, and that because we owe so little they can’t give us the low rate, we’d have to be happy with shaving only a point or two off our rate. You don’t think that the 3.5 points between 7% and 3.5% is huge until you see what the numbers for 5% or 6% and not 3.5% or 4% are. 

       My credit card company, insurance companies, and every other business I require an ID number for, do it all the time, but without the fees and hoops.   In fact this just happened with a credit card company regarding a lower rate I managed to get. I sent in a piece of paper with my name on it and they sent back a piece of paper  saying that I now had a lower rate, and  that the new numbers trumped all the old numbers. No huge fee, a call,and two pieces of mail back and forth. 

  • David

    more on this, please!

  • Still Here

    Sell the portfolio?
    Black, you cannot be serious.  So you basically want them to be New Century Financial.  That worked out great!

  • SaddenedByGreed

    My house went to auction after foreclosure.  I had short sell offers that were never declined, just drawn out until foreclosure.  I put 10% down on a 30 year fixed for 335k.  Paid my mortgage for 3 years until it became obvious that my property value in AZ would never regain value.  Nobody would even talk to me regarding refinancing.  

    So anyway, my house goes to auction; I owed 285k on my principal.  Fannie/Freddie BOUGHT my mortgage for 265k from a private bank.  They then sold it to a private buyer for 185k, 5k more than one of my short sell offers.  They turned it in less than 6 weeks.  Corruption?

    I declare shenanigans.

    • Still Here

      “Paid my mortgage for 3 years until it became obvious that my property value in AZ would never regain value.”

      Thanks for defining greed so well.

      • SaddenedByGreed

        I bought my first home after 7 years of doctoral education at a private university in Boston (250k).  I said regain, not profit.  I was not a speculator.

        • Still Here

          You speculated your house would not regain its value in some artificial time construct of your own making and then backed out of your obligation in order to enrich yourself at society’s expense.  That’s greed!

          • SaddenedByGreed

            Perhaps you miss the point friend.  Fan/Fred bailed out a private bank with my tax dollars to cover a banks loss.  It was assessed at 140, they paid 265k at auction; that’s absurd.  You can attack my motives and character while knowing nothing of me, I have learned to accept the fact that people like you exist.  Best wishes in the future with your obfuscation tactics.

          • Still Here

            I know nothing of your “facts” except how you characterize the basis for your action.  Colored by your greed, I’m sure you were disappointed that your speculation on your home’s value proved to be so inaccurate. 

          • SaddenedByGreed

            “how you characterize the basis for your action”? What does that mean?

          • Still Here

            You assessed the future appreciation potential of your home and walked. 

          • SaddenedByGreed

            More accurately, I assessed the depreciation potential of my home that was overvalued by the same people providing the value estimates and the money lent.  So what about all of the airlines, auto companies, and even Donald Trump and their bankruptcies?  They all seem to be doing quite well, far better than I.  Your anger is misplaced friend.

          • Modavations

            You ripped usalloff

        • Anonymous

          You see, under Stilly’s law, only businesses or wealthy people are allowed to make decisions in their own financial interest, regardless of the impact on others.  “Little people” are just supposed to shut up and take it.

          • Still Here

            As usual, you prove your ignorance and hypocrisy.  I have no problem with his actions, only that he, like yourself, sees only greed in others. 

      • Modavations

        As TerryTT would say(he’s probably sleeping, still nursing the Hangover)….Greedy,Greeeeeedy Rich

        • Terry Tree Tree

          NOT knowing me personally, you have repeatedly insinuated that I am a Drunk, Drug Addict, Fire Bug, Child, Hysterical Woman, and other things that I am NOT.  You have done the same to others, for months!
             YOU whine that I am stalking you, and unfair, when I repeat the things that YOU have commented about YOURSELF?

          • Modavations

            Stand down lad.I’ve made the offer a million times.I turned the cheek 50 times.The 51st was what broke the camel’s back.I even offered to take you to Mexico to see a real archeological dig.You wanted war,you got war,.Stand down and I’ll gladly stand down

    • TFRX

      I will not point the finger at you.

      You are acting like a rich person would. Good for you.

      If we’ve learned anything from the people who’ve learned the phrase “moral hazard” since about 2006, it is that when Joe Lunchbucket’s mortgage fails, it’s a sign of Bad Moral Character, but when Donald Trump’s venture someplace goes belly-up, well thass’ jes’ capitalism.

  • James

    I called Bank Of America this past Monday to inquirer on refinancing a home.  The account is actually ahead of schedule for repayment but the interest rate is 6.125 percent.   BOA, after 5 phone calls, finally said they would put me on a list and call me back in 60-90 days.   Child Please!  

    • Still Here

      You don’t need to go to only the issuer/servicer to refinance, go anywhere.

      • Gregg

        6 or 8 months ago, on a lark, I asked our loan officer if it made sense to refinance the mortgage on our new indoor arena. I knew rates were low but the goal was not to remove equity or to lower the payment. The goal was to exercise our free market opportunities and couple that with a sound business plan to reduce the cost. 

        The result was our minimum payment went up a little under $100. But we always paid at least $100 over the minimum anyway. 5 years and $20,000 were lopped off. As I recall, the fees for the transaction were $113. Fat city.

        It’s amazing how different the equation can be.

        • Terry Tree Tree

          Yes, it seems VERY different for re-financing an Indoor Arena, and people’s HOMES.   The mortgage companies put MORE emphasis, and MONEY, on a horse arena, that a family’s residence?
             People wonder why I keep bringing up the GREEDY rich?
             I explained to Gregg, that I don’t consider him to be, because of what he says he  does for children.

          • Gregg

            You got it backwards TTT. I’m not rich but I am greedy. I want as much as I can get. It helps me in my quest to make a better world.

      • Scott B, Jamestown NY

         They all read from the same playbook. We tried literally dozens of financing businesses – banks, credit unions (including ours), all the ones you see on TV, in state, out of state, you name it.  They wanted more money for fees, or couldn’t get more than a point or so shaved off (plus fees), and always more waiting…

    • Matts

      about to do the same.. bac home loan…6k underwater, 6% interest,  3 month wait to refinance? what a joke

    • Morticia

      Is this your owner occupied home or a rental?    You are free to go anywhere to refinance but rates will be higher if you are not going to be living in the house.

    • Scott B, Jamestown NY

      James, you have my sympathy. For those of us that did the right thing, no good deed goes unpunished.  Now my friend and his wife that bought a pricey house, that didn’t pay for months, had a pretty decent rate to begin with (even with so-so credit scores) that didn’t even ask for help has BoA calling them, telling them that they’re reworking their mortgage and for no charge, and forgiving a BIG piece of it, too, effective immediately. 

      I’m not mad at my friend and his wife, but how’s that even remotely fair to the millions of us that did everything right and can’t get a crumb thrown our way?

        Seriously, I need to start a bank…  Where do I apply for papers and a bailout?

  • DaveyD

    Hey Tom-   How about a show on the concept of “running Government like a business”?  During the upcoming election I’ll bet we hear the phrase more than once.

    • Terry Tree Tree

      We’ll hear enough about that, to fulfill even your wishes?

    • Scott B, Jamestown NY

       Yeah, but what business?  One that has ethics and values it’s employees and customers as much as it’s execs and shareholders? Or something like a bailed out bank? Or GE or a Big Oil company that makes record profits yet gets to claim a tax loss for a huge rebate from the IRS? Or maybe one that used it’s small investors thatr used their money to prop up retirement packages for their execs?  Seems like we already have the government running like a business…

  • Joan Buser

    We are a retired couple trying to refinance at a lower rate.  We needed three comparable sales to determine the value of the house.  Only two were found.  Govt. rules state that you can not use a bank sale as a comp and cant use a sale that is over 6 months old.  THEY DID JUST THAT.  The comp bank sale was a very low price and was sold over 6 months ago, but it made it impossible to refinance, because it lowered the estimate of our home.  How can they do this?

    CHEATED BY THE RULES

  • Scott B, Jamestown NY

    I apologize to Tom and  the listeners if I seemed to stammer when i was online, but I was pretty angry (as the screener noted lol), and at the end I was trying to keep my thought radio friendly.

    • Terry Tree Tree

      Understood!  You did well!   The screener, and trying to keep up with the conversation so that you can seem pertinent to the present line, and keeping your original comment, are distractions.

      • Scott B, Jamestown NY

        Those and a deathly fear of speaking in public, home on the phone or not! lol  I didn’t help myself that I drained a large iced coffee out of a dry mouth from anxiety while on hold, either. lol 

        I knew I’d be the last caller, AND trying to obey the screener, AND keep it short n’ sweet, AND get my points in and in some kind of logical order…   Just trying to keep it G-rated while talking about BoA was hard enough! 

        Oh well, maybe I’ll do better if there’s a next time.  Just glad that something I said came out intelligibly.  

        • Pauline

          I thought your comments were just what the program needed…some regular guy who is the victim of this financial mess. As for your voice – I thought you were about to cry at the end of your remarks…sounded “choked up”….and understandably so. 
            A NPR listener from near-by Buffalo

          • Scott B, Jamestown NY

             Choked up came later in the day when my wife and I were talking about the frustration I was feeling when I was on the radio.

  • JustSayin

    The bottom line here is that any investment corporation will get another congressional bailout if any of them ask for it. Subsidies are just preemptive reoccurring bailouts that never go away.

    Is there anyone in America, that believes that Congress wouldn’t protect their campaign backers? The fact is that socializing the losses for private corporations is now standard Congressional policy.

    What are “the people” going to do about it, Vote? …

    Big money knows who owns the the government, and its not “the people”.

  • Modavations

    When does it sink in.Govt.is not the solution,it is the problem.Privatize everything(including the military),let the market run it’s course.Manioulating and proping up markets delays the recovery.Let prices reach bottom and buyers will appear.While all you guys are screwed ,the reduced prices let many more middle class buy homes.I’d say Boston prices can still drop 30%

    • Mrlongleg1962

      “Privatizing the army” is really a great idea. The share holders will then be able to enforce their interest with military force. What about some Chinese and Russian investors for the U.S. army? That way the trade deficit could be used efficiently !!!
      Come on – you can’t be serious about that. We need a government to enforce the law, provide justice, education and fairness and a level economical playing field. Otherwise we will go back to the wild west where the gangster with the biggest gun calls the shots.

      • Modavations

        If we privatize everything we should have five zillion hacks available as overseers.The only thing govt should do is act as referee

        • Scott B, Jamestown NY

           Would the US reached space, or the moon landing, if it weren’t for government?  Like those nice free highways that let you visit grandma several states away, and gets your toilet paper to your local store?  Or that you have the internet and computer chips your computer,smartphone, calculator, car, and big screen TV all use? Government financed those. The government bought virtually every computer chip made for decades to get that business established.  Eisenhower remembered traveling the Autobahn and thought that it would be a great boon to America for people and business.

          Government can help. I just resent it when I see it spending dollars propping up businesses and practices that don’t help the people.  Big Oil, Big Agriculture, Big Pharma, Big Anything does not need our money anymore. 

        • Anonymous

          Why do you hate the founding principles of our country?

          • Anonymous

            Because this guys is trying to be funny or he’s a misanthrope.

      • Observer

        “We need a government to enforce the law, provide justice, education and fairness and a level economical playing field. Otherwise we will go back to the wild west where the gangster with the biggest gun calls the shots.”

        Lets try,

        “We need a government to enforce the law, providing justice and a level economical playing field.” 

        That’s enough to prevent a Wild West, and it was the meddling and corrupting influence of government interference in the name of good intentions, as opposed to tenaciously doing the rest, that got us where we are.

    • Scott B, Jamestown NY

       A privatized military is called “mercenaries”, and besides – We already have whatever it is Blackwater is calling itself, and other government contractors out the wazoo.

      Privatizing everything doesn’t help, especially those that need it most.  Privatized insurance and  health care has done nothing but driven up costs and kept it out the reach of the people that can’t afford double digit yearly inflation in those areas. 

  • Modavations

    Pres.Obama’s solution.Let’s raise taxes,form another commitee and start another program

  • Charlie Mc

    I cannot believe that seekers of answers to the reasons the economy has tanked so desperately  continue to  listen to advice from the “so called” experts which allow the state of things to be repeated and worsen. It seems to me that the majority of those experts are simply trying to extricate themselves from the guilt of decisions made in greed, or to protect their ill gotten gains at the expense of us poor saps who bought their advice.
            One person stands out to me as a crucified prophet of this era, Brooksley Born. She has received the JFK Profiles in Courage Award for her counsel but vilification from the economic experts and relegation to the obscurity of chosen Maine retirement.
            Please bring her back. To help the Administration, or at least to On Point (for the first time).

  • Modavations

    All this started with the ill conceived do-gooderism of J.Carter.It escalated with Janet Reno threatening the banks(it started with the banks in Boston).Loan to the poor or feel the Jackboot of Big Govt.

    • jimrob

      Hey Modavations. You’re a right-wing hack (and an unpaid one, at that!). Everyone’s heard every variation of every one of your right-wing comments ten. thousand. times. Repeating things ad nauseum will not make them true.

      • Ray in VT

        Don’t try to talk sense to Herr Modavations.  Maybe he thinks that a lie repeated often enough does become the truth.

      • Modavations

        sure got you out of your seat comrad

      • Anonymous

        Having read his comments on this site for some time, I’m not so sure he’s not on someone’s payroll, assigned to disseminate his anti-American clap trap.  I often wonder just whose side he’s on.

    • Ray in VT

      Yeah, remember when Jimmy Carter created CDOs and the securitization of mortgages?  Private actors in the field created things like that, as well as Ninja loans, because they found a way to take some fees as pass the bad investments off to others.  Fannie and Freddie just followed.  Care to cite the law or regulation that compels a bank to provide a home loan to someone without a job?

      • Observer

        Ray in all seriousness have you read Reckless Endangerment?

        • Ray in VT

          No.  My local library has it, and I think that she was on On Point a while back (although I might be getting her confused with Bethany McLean).  I’m not saying that they weren’t a part of the problem.  I just reject the notion that they alone created the problem and the financial instruments used in it.

          • Observer

            I encourage a read. We need more bipartisan rage and skepticism if we are ever going to get out from under this mess and its institutional underpinnings.

          • Ray in VT

            It certainly looked good, but between two jobs, two little kids and another on the way, my free time is pretty limited these days.  Although I would have more free time if I didn’t find myself staying later at work in order to make up for the time that I’m on this site.

            I agree with the bipartisan rage and skepticism, although it certainly looks like we have very different angles on things.

          • Observer

            Understand the constraints and appreciate your commentary.  Hope you get time and that common ground keeps getting closer.

          • Ray in VT

            I hope so too.  One of these day’s it’ll happen.  I think, or at least hope, that people can find a lot of common ground when they want to.  Sometimes that won’t happen, and that’s alright too.  It’s the nature of things.

    • Gregg

      Yup, the ol’ CRA. The road to hell is paved with good intentions.

      • Anonymous

        So you believe all those (formerly) million dollar homes in Florida, Nevada, California, etc., were built and financed due to the CRA.  You could read this,

        http://www.federalreserve.gov/pubs/feds/2011/201136/201136pap.pdf

        which shows you how wrong you are.  Or you could just use your own brain power and common sense, which would reveal the same answer.

        • Gregg

          I didn’t really say that now did I?

        • Gregg

          Sorry man, I’m not going to read a 46 page report from the Fed. For one thing, it doesn’t have pictures. I agree with Modavations, the problems were rooted in the do-good intentions of the CRA. It wasn’t so much the bill itself as it was the exploitation of it as Moda suggests. I’d add Andrew Cuomo to the list.

          • Ray in VT

            Don’t shoot the messenger, Gregg.  That’s just a well-intentioned jab, not a swing.  Did you see my response last night to your comment imploring me not to do the same?

          • Gregg

            Yea I read and appreciated it.  I plead not guilty to shooting the messenger. It’s the 46 page assignment to try to discern Jimino’s  allegation that was my problem not the Fed…. although they do suck. 

          • Ray in VT

            Thanks for the chuckle.

          • Anonymous

            The problems were rooted in fraudulent and unregulated financial dealings which greatly profited the wrongdoers.  It wasn’t “do-good” intentions that caused it.  It was   “do-nothing” (as long as we’re making money and getting away with it) intentions that were the problem.

    • SirRaiseAlotsWife

      Reagonomics is the key cause of the  33 year Financial disaster that exist today. Get you facts right!! 

      • Observer

        Fed Policy, Unsound Money, and Congressional/Wall St. Collusion equals predictable, but profitable for elite, bubble fiasco.

        It’s not just for aficionados any more.

    • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

      Oh my oh my, the POOR banks and their social do gooder CEOs.  What crap!

  • Modavations

    Fannie Mae became a playground and Patronage pit for the Dems(a few minor players from the Rep.Hack cadres).It was run by Herr Johnson(worked for Mondale,Kerry,Obama),Jamie Gorelik(Clinton asst.Att.General),and Frank Raines(Clinton’s OMB guy?).They took over 100 million in commissions.Frankie Raines took 91mill and the govt.took back 25mill.What a friggin punishment.Jamie G.got 26 million.

  • Modavations

    The heinous Barney Frank,C.Dodd,Charlie Rangel ran interference.  when pressed for reforms.Barney and Maxine said no problem here.Move along please.When Barney was queried about giving mortgages to folks with no wherewithall he said,we’ll worry about that later if problems arise

  • Modavations

    Maxine was supposed to have an ethics investigation about involvement in one of the phoney-baloney banks in Boston ,that her husband was involved in.It’s been two years.Barney’s involved up to his neck.

    • jimrob

      Modavations is a comment-bot.

      • Modavations

        The sad part,is that this worthless temper tantrum gets a “Like”.Make an argument son.I’m off to the gym.I hope you piranhas don’t cannibalize each other.Play nice

      • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

        Yes indeeed. And programmed for nonsense.

  • Modavations

    President Obama bought his house for 300,000.00 below market, from his mentor,the slum lord Resco(?).When asked,the Pres. said he shouldn’t have done the deal.Mr Resco is in penitentiary for assorted crimes and mayhem.

    • Gregg

      That whole deal stinks bad but no one cared during the campaign and no one cares now. Sad.

    • SirRaiseAlotsWife

      I would have done the same thing Pres. Obama did…by my house below the market. Houses are a human necessaties not a comodity.

  • Scott B, Jamestown NY

    Can I have  one of the billion dollars that they gave the bank for HARP and HAMP, since they didn’t use it?

    I want to start a bank that actually helps people that need help. 

    • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

      You are in the wrong country. That is no longer possible in the wholly owned corporate subsidary called the USA.

  • Macedc

    complete manufactured BSread the posts on the subject at Yeves Smith’s nakedcapitlsm blogyou need to do some reasearch before you dive into sensatioalist headlines

  • Guest

    I was unable to refinance last year because I was a consultant (for the US Army) and because I did my own taxes. The rules required a W2 forms (I get 1099 forms) or a CPAs record of having done my taxes for two years. My credit score was report to be 802. I have over $1M in an IRA.

    • Scott B, Jamestown NY

       Sounds like the other side of the coin to what happens when I go to the bank for a loan: To get a loan, first you have to prove you don’t need one.  You proved you don’t need one.

      Do everything right, show you know your way around a dollar, and get punished.

  • Observer

    2004

    Housing: Too Good to Be True
    http://mises.org/daily/1533

    2004. But who would have guessed…….

    • SirRaiseAlotsWife

      I worked in the housing market. By October 2004 I could see bad things coming when prospects were getting financed with limited or zero down payment and no doc loans. Like my momma always said”if its to good to be true..then it is”. Those words have always rung true!

  • http://www.avellonelaw.com/ Frank Avellone

    Take a look at the one page response Freddie issued yesterday.  It’s incoherent!  Lame, lame, shame, shame.

  • Ralph Fletch

    All 3 have absolutely no idea what they are talking about!!!!  Why don’t you invite Ron Paul on to explain?

  • Ralph Fletch

    Or maybe a real journalist…Matt Taibbi.  

  • ScottB

    Just another reason to distrust the government.
    It’s like the audit of the federal reserve last year that exposed $16 trillion given away to corporations and foreign governments, and yet no consequences.
    And the control of the fda by Monsanto, with the FDA stating that a person doesn’t have the right to consume the food of their choice.
    as Tom said, the fox guarding the henhouse.

  • findyournote.com

    Check out Harper’s Article by Christopher Ketchum – “Stop Payment”  This is the real story. 

  • http://www.facebook.com/profile.php?id=1093281412 Winslow Kelpfroth

    Very one-sided discussion.  your guests completely overlooked  the fact that every dollar borrowed is someone else’s retirement savings, which they expect to grow while they’re in the bank.  Let me give you a concrete example.  I’m part of an historical cemetery association.  We’ve got an endowment of somewhat under $1 mil, gathered over the last 150 years.  We currently hold several FannieMae bonds, yielding us around 4%, which we use for current operations.  For FannieMae and FreddieMac to freely refinance loans at the whim of the borrowers means that they’ll either default on their bonds or call them early.  Not good news for those of us who are trying to live prudently on less than we earn.  
    The fact that a mortgage is underwater should not be a problem as long as the borrower stays employed. And the borrower always has the real value of a home: shelter. If you’ve borrowed for a car, its value is undoubtably less than the current balance, but that doesn’t stop anyone from borrowing to buy one.

    • findyournote.com

      They (fannieMae bonds), are likely empty – no mortgages in the Trusts for the Bonds.  Check out the John Hancock Life Ins vs. JPMorgan filed last week in NY State court.  The “pools are empty.” (pages 131-140 of Complaint).  Securities fraud.  Also see the FHFA lawsuits against the Banks.   

      • http://www.facebook.com/profile.php?id=1093281412 Winslow Kelpfroth

        Thanks; you’re exactly right. I’m aware that FannieMae is technically in default; see their 10Q filings with the SEC.  That’s why I voted not to buy them, but I was overruled by our treasurer who could only see the coupon yield:  12% on a couple of them that only have a year to go.  He bought them at a premium and still doesn’t understand that the actual yield is somewhere around 4.1% after the premium and commission.

  • SirRaiseAlotsWife

    Wow this is ugly..betting that families will not refinace their homes! Wall St made its way to F.M.! Loansharking and gambling on The  American Peoples Homes! How can long We The Poeple let this corrupt banking and government continue to dismantle this great country! What will be left for the future generations. This is the saddest situation yet.

  • http://profiles.google.com/felix.scotfl2 Felix Scott

    This is wrong. Wall Street gambled away my son’s future. Loansharking and betting that families would fail and American people would loose their homes. You are playing with peoples lives. They can’t loose but they want us to fail. The government and the banks are in this together. When more people find out what is really going on there is going to be trouble.

  • findyournote.com

    Great program!  Great guests!  This is critical information for all American taxpayers.  Dive deeper…..

  • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

    Freddy execs are good candidates for a public hanging.

    • Anonymous

      At the very least a trial and some jail time.

      • http://profiles.yahoo.com/u/3ETFGMQ3B7VD4AAMILBBEVMCWE JasonA

        A LOT of jail time, as in life without parole, and fine the SOBs into lifetime poverty. Let their wives and children be reduced to begging on the streets for food.

    • Observer

      Throw in the politicians who created the monster and we can have a clam bake.

  • Pingback: Blue Mass Group | Feds throwing homeowners under the bus

  • http://www.facebook.com/orland.ca Orland Ca

     This whole thing started(yes I am that old) when Bill Clinton and Alan Greenspan changed the rules of Wall Street and the Banks, and I may I quote Alan, (Wall Street and the Banks can Police Themselves) unquote, My now ex-wife was a branch Manager in a bank and we talked this over many times and the conclusion was a train-wreck was on the way , It wrecked 3 times since, Until the banks can not do business as usual, it will happen over and over again. Freddie and Fannie should never been allowed to hedge investments, or invest for that matter, People like George Soros new this and made a killing with Tax free foundations, NOW,  Foundations should pay taxes on investments also!

  • http://www.facebook.com/orland.ca Orland Ca

     Anyone should never bet(hedge) against a company or a nation or against a dollar yen or whatever, It is a recipe for disaster and it has proven so! Las Vegas or Reno is for that , Not 401Ks or Homes or retirement funds NO!

  • Bin

    You people just don’t get it. Our beloved financial executives need money to buy private ranches, islands, and do other such job creating ventures. They also need to pay off members of congress to write the legislation that allows them to bleed you. Luckily, GOP congressmen are easier to buy than ever before!

  • Christine Meissner

    This may be an naive question but in order to balance the investment side of the company and the housing mortgage side, why doesnt Freddie/Fannie just makes bets that people WILL have access to mortgages and then create the environment for people to in fact access them. Then it is a win-win for everyone and the company isnt betting against its constituents, but instead betting for them!

ONPOINT
TODAY
Jul 31, 2014
Russian President Vladimir Putin heads the Cabinet meeting in the Novo-Ogaryovo residence, outside Moscow, Russia, Wednesday, July 30, 2014.  (AP)

The US and Europe face off against Russia. Are we looking at Cold War II? Something hotter?

Jul 31, 2014
A comical sign suggest the modern workplace is anything but collegial . (KW Reinsch / Flickr)

When the boss is a bad apple. How some pretty dark traits can push some to the top.

RECENT
SHOWS
Jul 30, 2014
Janitta Swain, Writer/Exec. Producer/Co-Director Dinesh D'Souza, John Koopman, Caroline Granger and Don Taylor seen at the World Premiere of 'America: Imagine The World Without Her' at Regal Cinemas LA Live on Monday, June 30, 2014, in Los Angeles, CA. (AP)

Conservative firebrand Dinesh D’Souza says he wants an America without apologies. He’s also facing jail time. We’ll hear him out.

 
Jul 30, 2014
Smoke and fire from the explosion of an Israeli strike rises over Gaza City, Tuesday, July 29, 2014. Israel escalated its military campaign against Hamas on Tuesday, striking symbols of the group's control in Gaza and firing tank shells that shut down the strip's only power plant in the heaviest bombardment in the fighting so far. (AP)

Social media is changing how the world sees and talks about Israel and Gaza, Israelis and Palestinians. We’ll look at the impact.

On Point Blog
On Point Blog
Criticism, Conservatism And Dinesh D’Souza
Thursday, Jul 31, 2014

Best-selling conservative author and filmmaker Dinesh D’Souza and On Point host Tom Ashbrook disagree about what makes America great…or do they?

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1 Comment
 
This 15-Year-Old Caller Is Really Disappointed With Congress
Tuesday, Jul 29, 2014

In which a 15-year-old caller from Nashville expertly and elegantly analyzes our bickering, mostly ineffective 113th Congress.

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6 Comments
 
Our Week In The Web: July 25, 2014
Friday, Jul 25, 2014

Why the key to web victory is often taking a break and looking around, and more pie for your viewing (not eating) pleasure.

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