Friday, October 3, 2008

Wall Street didn't do this ... part 1

We are getting sold out.   Who said that the Constitution will never fail you, but your leaders will and be wary of anyone who tries to convince you that it's the other way around.  When did we as a country start heading down the prim rose path to socialism?  It seems that the Emergency Economic Stabilization Act of 2008 is going to help us move down that path.  The act simply believes, from each, according to his ability; to each, according to his need.

The Department of Housing and Urban Development said in 2005 that Fannie and Freddie should increase financing for low-income areas or moderate-income regions with high minority populations to 37 percent of new business from 34 percent in 2001 through 2004. That rose to 39 percent last year.  Since many people wanted their own home subprime mortgages were given to people with poor credit scores.  In 2006 Dan Mudd, a former CEO who left in late 2008, said in a 2006 interview that he planned to expand the companies' holdings to include more higher-risk loans.  A short time later it was said that Freddie wouldn’t lose anything on about 95 percent of its uninsured subprime bonds unless more than 90 percent of borrowers already two months late are foreclosed upon and more than half of the rest default, according to slides from a company presentation in August.  It seems that he was right because that was pretty much what happened. 

As of August 2008 57.3% of their entire subprime loans were past due and 10.7% were in foreclosure.   The former CEO of Freddie Mac had his salary last year was $900,000, although in a radio interview last month, he didn't deny reports that he raked in a total of $43 million in stock options, bonuses and overall compensation from 2005 to 2008.  When Fannie Mae and Freddie Mac went into conservatorship the Government Sponsored Enterprises became the owner of 79.9% of the company.  This means that the government now holds the mortgages of 55 million families at Fannie Mae and Freddie Mac holds 30 million.  The U.S. government controls at least 85 million homes with more on the way as Freddie and Fannie are to manage the subprime mortgage securities. 


Jolly Roger said...

This is a talking point, and it is false. Fannie and Freddie did NOT come up with the SIV.

Why do some insist that gree-driven policies were not at the root of this?

Avatar said...

avatar said...
Talking point? Fannie needed the government to save it in the 80's.

As to the green policies what do they have to do with the economic disaster that we are in?

Democurmudgeon said...

Eliot Spitzer nailed the cause early on, just what jolly roger had mentioned with greed driven policies.

Democurmudgeon said...

Oh, one more thing that just occurred to me. This was all deregulation slight of hand, plus tax cuts. Greenspan provided Bush with amazingly low interest rates for Bush's "ownership society," and to prop up the economy with housing. All the while Bush gave tax cuts to the wealthy, giving the appearance that the cuts were the reason why the economy had been doing so well. In reality, it was the housing market and predatory lending.

Having been in real estate myself, I read about all the possible problems approaching us in our rear view mirror.

It was pure ideology that prevented government from stopping the abuses and providing the needed regulation and oversight.

But then, the market will take care of itself. Right?

Socialism isn't a bad word, it can be a solution, like in health care. But no one wanted to be forced into this socialized bailout of Wall Street debt, or come to the rescue of those "small government" zealots who's theory blew up in their faces.

One Vote said...

Bush leaves us with the No Banker Left Behind Act of 2008. I hope we punish all incumbents at the polls.