Uh-oh...

[QUOTE=HeavyMetalParkingLot;3149525]

Quote:

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Originally Posted by clocker

No, not saying it is. But it plays a big role. If the banks didn't have to make all these loans to uncreditworthy people they could have put this money to better use. If you had the option of loaning your money to someone who has shown through past performance that they take care of their debts or someone for the sake of "diversity" who would you choose?

---

No, it did NOT "play a big role".
Banks did NOT have to make loans to uncreditworthy people, they wanted to.
The more loans they made the bigger the collected fees...and what's the downside?
None, because they could package all these loans and sell them as instruments which Wall St. would call AAA, because Wall St. made a shitton of cash selling em.
So the banks were happy, Wall St. was happy, everybody was happy until the new loans started to dry up...because all the qualified borrowers already had loans.
What to do?
Offer loans to anyone who asked or anyone you could rope in...no risk since Wall St. was repackaging them and calling them riskless, so why not.

This mess was not the fault of poor people being foisted off onto poor, helpless banks.
Not a single part of the CRA forces a bank to make a loan to an unqualified person.
Banks/Wall St. brought this on themselves, primarily due to unbridled greed, not government intervention.

I am sorry but you are wrong. Before the act was passed, banks used a practice known as "redlining". This is when instead of looking at an individual, they would look at the location where they lived. They would flat out not make a loan for any person living in areas they felt was too high risk.

The problem with that was these areas almost always were places that had a majority of minority residents.

This opened the door for groups such as Acorn to step in and claim racism.

This caused banks to have to give lower credit standards and high risk loans.

How can you say this didn't lead to the mortgage crisis which lead into the current economic problems?

The act did make redlining illegal because that practice eliminated a borrower solely on the basis of their location with no regard to their credit history.
Under redlining, Bill Gates would have been turned down for a loan if his address fell into a "bad" district.

What the act didn't do was force banks to ignore actual credit history/credit worthiness, they just couldn't use location as the primary determining factor.

Blaming the CRA for current problems also completely ignores the role that banks/Wall St. played after a risky loan was made.
Traditionally, loans were packaged for resale as securities (for consumption by investors) based on risk level...all the "good" loans were packaged together and since they had less risk, they returned less profit. "Bad" loans, which carried higher risk, earned more money.
The salient point is that the investor knew beforehand what he was buying and could balance the potential downside against the desire for profit.

Bundling all loans together- multiple times- meant that by the time the final security was offered for sale, no one knew what the package actually contained.
What was the percentage of safe to unsafe loans?
Who cared...there was lots of money to be made, and these "securities" were being rated AAA (most secure) by brokers eager for commissions.
Compounding the problem was the invention of the "credit default swap", in essence, an insurance policy to safeguard the purchase of the security.
In reality, another way for investment brokers to earn even more commissions.

All of this financial hocus-pocus was predicated on one simple- and demonstrably false- premise...housing prices would never fall, only continue to rise.

As long as housing prices rose, who cared if a borrower defaulted?
You just foreclose and then resell the property, making money on both sides of the deal (you've already made money on whatever the initial borrower paid before defaulting and now you get to resell the house at an even higher price).

Furthermore, both banks and investors were having so much fun (fun=making buttloads of cash, obviously) that they decided to expand the party by luring previously "good" borrowers into buying above their capability to repay...you could buy that McMansion that used to be out of reach because hey!, housing prices only go UP, so you can resell in a few years and make a tidy profit.
So everybody, from the homebuyer to the Wall St. investment buyer gets to make some money and the whole thing is risk free!.

Looking at this whole thing objectively it's apparent that it's really a house of cards and destined to fail.
At any given time there are only so many qualified buyers and housing prices only rise when it's a seller's market.
Unfortunately, there is one more component to this fiasco...what were the security buyers doing with all the profit they were making on all these bundled loans?
Reinvesting in real estate of course.

So, you have an ever shrinking pool of qualified buyers AND a growing pool of property to sell to them.
What a shock, real estate prices start to fall...who could have figured?

And another bubble bursts.

Now the banks are fucked...they own all these loans but they've mashed them up so extensively that no one can seperate the good from the bad.
Plus, they've insured all these securities, and now they're starting to fail, so they get billed twice- once for holding a bad loan and again by the buyer of the package they bundled it into.

So, you still think ACORN is the villain here?

Quote:

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Originally Posted by clocker

So, you still think ACORN is the villain here?

---

Yes, ACORN is one of the villains.

You think otherwise, apparently, and prefer not only to deflect some of the blame from ACORN, but ALL of it.

ACORN, Freddie Mac, Fannie Mae...all of them, Democrat-inspired and controlled GSEs which operate hand-in-glove with Democrat leadership to favor and advance Democrat causes and constituencies.

Fact.

Truth.

Indisputably, too.

Oh, boo-hoo.

Democratic leadership is pursuing Democratic causes and constituencies...and the Republicans/conservatives are doing what?
Lobbying for the good of all mankind?

BTW, at some point it will become evident to you that posting "fact", "truth", and "indisputably" along with nonsense only proves you can spell, not that what you say is based in reality.
My favorite example of this is:

Quote:

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Originally Posted by j2k4 (referring to Obama)

Take away his teleprompter and he's pretty fucking stupid, truth

---

This from a man who supported Bush through two disastrous terms and routinely spouts Fox News talking points as if they were gospel.

Fact.
Truth.
Indisputably, too.

Quote:

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Originally Posted by clocker

Oh, boo-hoo.

Democratic leadership is pursuing Democratic causes and constituencies...

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And doing it with taxpayer money suits you fine?

Quote:

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Originally Posted by clocker

and the Republicans/conservatives are doing what?

---

Perhaps they should get some taxpayer cash going into conservative versions of NPR, PBS, the ACLU, ACORN...Hell, why stop there - the "fairness doctrine" should work both ways, right?

So we want half the airtime on CBS, NBC, and ABC, and half the print media across the country.

In return (and, just to be "fair"), you can allot yourselves some time on radio.

Given that the Republicans are a political party- check it out, it's true, fact!- they are also quite adept at spending taxpayer money.
On Republican agenda type things.
In fact, we're just coming out of an eight year period where they did just that.

You know, on such popular and productive things like abstinence only sex education, bridges in Alaska and a war in Iraq.
Google 'em.

Poor conservatives...all the media is lined up against them.
I guess it makes sense to blame something as amorphous as "the media" for your lack of popularity rather than accept that you are spouting policies and ideals that the majority of America finds stale and repugnant.
So go ahead, keep up the good work.
Blame the media- or anyone else you can think of- rather than try to adapt to the times.
You'll lose even more seats in 2010/2012 and maybe wither away finally.

"Tax cuts, forever!"
YAY!

Quote:

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Originally Posted by clocker

you are spouting policies and ideals that the majority of America finds stale and repugnant.

---

Wrong on that count; besides which, I am a conservative...not a Republican.

Therein lies your problem.

Oh, and then there's this, which I'm sure you'd never mention:

http://www.washingtonpost.com/wp-dyn...062300818.html

No, I would posit that being conservative is your problem and has nothing to do with me.

So now you're posting items from the Washington Post.
Aren't they the poster child for the "liberal media" you're so rabid about?
Or are they OK when they print something you like?

And you're right, I'd never mention that article.
Mainly because I see no relevance.
But, if you want to throw around weird and unrelated information, you can respond to this:conservative/religious states love porn.

So the same folks who profess to be religious, pray once a day and uphold conservative values are also the most avid consumers of porn.
Gee, is there a discrepancy there?

Quote:

---

Originally Posted by clocker

So the same folks who profess to be religious, pray once a day and uphold conservative values are also the most avid consumers of porn.
Gee, is there a discrepancy there?

---

Well in all fairness the most radical liberal person in history, the feminist Nancy Pelosi, married her high school sweetheart, stayed married without having an affair or use of a manwhore and has never had an abortion.:whistling

I'm sure that's reasonably accurate.

[QUOTE=HeavyMetalParkingLot;3149406]

Quote:

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Originally Posted by Busyman

Do you know how to google? Do you know what the Community Reinvestment Act is?

Don't worry about it, you will just do what your people are good at and say facts are racist.

---

Huh....what do you mean....you people?

Quote:

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Originally Posted by HeavyMetalParkingLot

Quote:

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Originally Posted by Busyman

He does nothing for the comedy industry.

---

Of course he doesn't. Nonblack comedians with be labeled racist if they made fun of you all's holy one.

---

....and "you all's holy one"?

I knew you were the same racist idiot that posted awhile back.

Quote:

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Originally Posted by HeavyMetalParkingLot

I am sorry but you are wrong. Before the act was passed, banks used a practice known as "redlining". This is when instead of looking at an individual, they would look at the location where they lived. They would flat out not make a loan for any person living in areas they felt was too high risk.

The problem with that was these areas almost always were places that had a majority of minority residents.

This opened the door for groups such as Acorn to step in and claim racism.

This caused banks to have to give lower credit standards and high risk loans.

How can you say this didn't lead to the mortgage crisis which lead into the current economic problems?

---

Looking at an area where someone lives is a dumb way to ascertain risk. That's why.

Quote:

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Originally Posted by Busyman

Looking at an area where someone lives is a dumb way to ascertain risk. That's why.

---

Actually, no it isn't- even ACORN never said this.
Using location as the ONLY determining factor was the problem.

Neither ACORN nor FannieMae/FreddieMac favored wholesale lending to obvious high risk borrowers without proper safeguards...they simply wanted to erase the clearly racist practice of redlining.
In fact, by far the most avid practitioners of subprime lending were brokers/banks that weren't even covered by the CRA and it was their stupidity/greed that has lead us to this point.

Naturally, both j2 and HeavyMetal would prefer to ignore these facts and instead place the blame on the poor, abetted by the apparently god-like powers of Obama who somehow manhandled the entire entire banking industry into submitting to his will.

Not bad for a guy who j2 is convinced is clearly "stupid".

Quote:

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Originally Posted by clocker

No, I would posit that being conservative is your problem and has nothing to do with me.

So now you're posting items from the Washington Post.
Aren't they the poster child for the "liberal media" you're so rabid about?
Or are they OK when they print something you like?

And you're right, I'd never mention that article.
Mainly because I see no relevance.
But, if you want to throw around weird and unrelated information, you can respond to this:conservative/religious states love porn.

So the same folks who profess to be religious, pray once a day and uphold conservative values are also the most avid consumers of porn.
Gee, is there a discrepancy there?

---

It most certainly is relevant; no, I don't mind the Washington Post when it deviates from it's norm; and find me a credible study that says libs consume discernably less porn than conservatives and you will have found something relevant.

Humans have their peccadilloes, whichever side of the ideological fence they're on.

Quote:

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Originally Posted by clocker

Neither ACORN nor FannieMae/FreddieMac favored wholesale lending to obvious high risk borrowers without proper safeguards...they simply wanted to erase the clearly racist practice of redlining.
In fact, by far the most avid practitioners of subprime lending were brokers/banks that weren't even covered by the CRA and it was their stupidity/greed that has lead us to this point.

---

Really.

Read this-

The People Responsible for Fannie Mae and Freddie Mac

By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly
September 10, 2008


It was a wise man who noted that the only corporate structure more insidious than a government-sponsored monopoly is a government-sponsored and investor-owned monopoly. In the end, as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have now so painfully proved, trying to serve the master of public policy while generating returns for investors will lead to disaster.

Fannie and Freddie collapsed because they were part and parcel of the widespread gross financial misconduct that has taken place in the United States over the past decade. It's easy to miss this fact, but the reality is that too many people were making too much money pumping up the housing market. In 2005, the Office of Federal Housing Enterprise Oversight (OFHEO), the erstwhile regulator of the two, attempted to limit their use of off-balance sheet entities to groom earnings. In the end, it didn't, because, as one reform-minded politician admitted, Congress was afraid of undermining the housing boom.

Some are more culpable than others-
As part of the conservatorship, the Department of the Treasury has demanded that Daniel Mudd and Richard Syron, the CEOs of Fannie and Freddie, respectively, step down. Certainly, at the time of a corporate collapse, those in charge have to bear some responsibility. But Mudd and Syron came into their roles when the great pillaging was well in process.

At some point not too long from now, the nation's attention is going to turn from the immediate players to those who benefitted the most, shouted down the skeptics, and/or stood by as Fannie and Freddie deviated from their core business in the name of growth and/or mission. These people are keeping a low profile right now, until the taxpaying public starts paying attention to something else. As taxpayers, we don't particularly enjoy our role in this relationship, and we're hopeful over the longer term that the following folks cease to enjoy theirs.

Franklin Raines
Fannie Mae was always a political beast, but it reached its elbow-swinging heights during the time when former Clinton administration budget director Franklin Raines sat in the CEO chair. Under Raines' leadership, Fannie overstated earnings by a stunning $10.6 billion, all the while paying Raines and his senior management team massive bonuses.

It was under Raines' management that Fannie morphed from being a company in a sleepy business -- issuing debt to buy mortgages from lenders -- into a far more risky and exciting one: buying up mortgages and holding them, thus capturing the spread between its borrowing costs (which were lower than anyone's other than the federal government's) and the interest rate received. It was a great business, except that it had nothing to do with Fannie's charter. According to a May 2006 report from OFHEO, Raines became obsessed with keeping earnings per share as high as possible and motivated management to achieve that goal by setting up a bonus system that rewarded increasing earnings per share (EPS).

The thing is: Any company can hit an EPS number if it doesn't worry about little things like accounting rules, debt levels, and risk factors. All told, Raines pulled in some $90 million between 1998 and 2003, the majority from bonuses. And when OFHEO began to ask uncomfortable questions, Raines actively lobbied Congress to cut its funding. In April, Raines agreed to disburse $24 million for his role in the accounting "errors."

Timothy Howard
Former Fannie Mae CFO Timothy Howard is another major player who is probably cowering in a corner somewhere. For all of the expletives and derogatory names thrown at former Enron CFO Andrew Fastow, he at least stayed around to take his punishment. Inmate No. 14343-179 pleaded guilty to fraud and is serving a six-year prison term. Howard, on the other hand, saw the writing on the wall -- largely because he was the author -- and got out of Dodge.

As Fannie's CFO from 1990 to 2005, Howard signed off on the financials that overstated the company's earnings by $10.6 billion from 1998 to 2004. His reward? A cool $14 million in salary and $16.8 million in bonuses during the period -- bonuses based on the earnings plan that Raines set up.

While Howard was not the only person at Fannie guilty of constructing fraudulent financial statements quarter after quarter, as CFO he is most responsible for the integrity of said statements. Whether he left early enough to avoid culpability remains to be seen. However, we've heard through the low-security-prison grapevine that Fastow is lonely these days and wouldn't mind talking shop with a fellow former CFO.

Barney Frank
The House Financial Services Committee chairman and Democratic congressman from Massachusetts has long been a proponent of both Fannie and Freddie, assuring the public that their mission to encourage home ownership outweighed the distortive risks they brought to the market, and that the federal government was not, in fact, on the hook for their liabilities. In fact, it seems clear now that Frank had no idea of just how poor a grasp Fannie and Freddie had on their lines of business. As recently as Aug. 25 he told Money magazine, "Fannie and Freddie are better off than the market thinks. ... Part of the problem is rumormongering by short-sellers."

What's more, though Frank will blame past political opponents for failing to further regulate the mortgage market by banning products such as subprime loans, the fact of the matter is that the very presence of Fannie and Freddie incentivized brokers to overstate the creditworthiness of borrowers and then pass on that risk to the federal government, all while being cheered for helping more people "realize the American Dream." While we can all agree (I hope) that mortgage markets only function when -- as Frank told Money, banks "do not lend money to people who can't pay it back" -- Frank's ideology in this case blinded him for decades to the realities of the marketplace and the operations at these companies, leading him to stonewall realistic reform efforts that might have helped us avoid the current calamity.

Angelo Mozilo
There's good reason for Angelo Mozilo to hide under a desk these days. Few, if any, extracted more personal profit from the credit bubble than the CEO and founder of Countrywide Financial. Mozilo's talking points always borrowed heavily from the propaganda of our government-sponsored enterprises (GSEs). Countrywide liked to pretend that it was performing some kind of public service -- "breaking down barriers" -- by making homes more "affordable" to the average (or subaverage) wage earner. Unfortunately, as speculation drove home prices to ridiculous levels across the U.S., "affordability" came to be the code word for gimmicky, high-interest subprime loans lavished on the riskiest of borrowers in order to get them into a mortgage that would soon be bundled and shipped off to the suckers on Wall Street.

Unfortunately for borrowers and investors in Countrywide's mortgage paper, the American Dream of home ownership quickly morphed into a nightmare. Default rates surged, followed by the inevitable foreclosures, and mortgage paper backed by Countrywide loans became as valuable as post-bubble, dot-com stock options. Countrywide was only spared the ignominy of bankruptcy when its longtime sugar daddy, Bank of America (NYSE: BAC), stepped in to take it out.

As captain of this sinking ship, CEO and founder Mozilo was, for a time, very vocal in defending his company's legacy. But like so many others in America's great housing bubble, talk was one thing, and actions were another. As the housing bubble began peaking in 2003 and 2004, through the period when Countrywide's risky lending fell apart, Mozilo engaged in one of history's greatest stock dumps, selling more than $480 million worth of shares, according to the tally of insider filings on secform4.com. This graph tells the tale.

Alan Greenspan
If not the boldest of the group, then at least the most public, Greenspan, the man many are now blaming for the housing bubble (there were a brave few that piped up years ago), has refused to go quietly into his well-padded retirement. The man charged with providing the country with a financial voice of reason fell far short, so much so that it might be comical if it weren't so tragic.

Greenspan's denial of the possibility of a housing bubble has been widely derided in the past year, but a single statement could be excused as human error. However, a quick scan shows that this wasn't a single event. He also promoted the adoption and expansion of adjustable-rate mortgage (ARM) products in early 2004, when short-term rates were at or near historic lows. That same year he claimed, "securitization by Fannie and Freddie allows mortgage originators to separate themselves from almost all aspects of risk associated with mortgage lending." And separate themselves they did, ceasing to perform any kind of due diligence as to the ability of borrowers to pay for the homes they were buying.

Now retired from his role as the nation's monetary conscience, Greenspan continues to espouse his, er, theories on the financial crisis through editorials in which he denies any culpability for the events of the past three years. He is also applying his experience and insight as an advisor for Paulson & Company, a hedge fund which cashed in on billions of dollars by calling the collapse of the subprime mortgage market that Greenspan helped create.

An ignominious list
To be sure, there were many more complicit in this mess, including consumers who bought more house than they could afford. And though we have to move forward now, let's hope no one forgets what's happened here.

Quote:

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Originally Posted by Busyman

....and "you all's holy one"?

I knew you were the same racist idiot that posted awhile back.

---

Quite sure it was louis farrakhan who labelled him as "the messiah".

"you racist fuck"

"you racist idiot"

Typical of what I stated before...

Quote:

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Originally Posted by j2k4

Quote:

---

Originally Posted by clocker

Neither ACORN nor FannieMae/FreddieMac favored wholesale lending to obvious high risk borrowers without proper safeguards...they simply wanted to erase the clearly racist practice of redlining.
In fact, by far the most avid practitioners of subprime lending were brokers/banks that weren't even covered by the CRA and it was their stupidity/greed that has lead us to this point.

---

Really.

Read this-

The People Responsible for Fannie Mae and Freddie Mac

By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly
September 10, 2008

An ignominious list
To be sure, there were many more complicit in this mess, including consumers who bought more house than they could afford. And though we have to move forward now, let's hope no one forgets what's happened here.

---

And?

Your previous tack has been that forcing GSEs to loan to poor/unqualified borrowers lead to the problem.
Nowhere in the article does it mention that at all.

Financial hocus-pocus executed on the executive level to inflate bonuses and pay is not the fault of the borrowers, is it?

Furthermore, I see no mention of either ACORN or Obama-both previously cited by yourself- as players in this mess.

Finally, you stated before that the fall of Freddie/Fanny was graphic proof of Democratically controlled government entity pandering to a Democratic constituency in furtherance of a Democratic agenda when this article makes it rather clear that personal greed was the motivating factor, not political agendas.

Unless you'd like to assert that greed is a particularly Democratic- or even political- trait, this article is completely irrelevant.

Quote:

---

Originally Posted by j2k4

find me a credible study that says libs consume discernably less porn than conservatives and you will have found something relevant.

Humans have their peccadilloes, whichever side of the ideological fence they're on.

---

I think the relevance is that conservatives, at least politically, want to ban porn, liberals do not

[QUOTE=clocker;3151450]

Quote:

---

Originally Posted by j2k4

Really.

Read this-

The People Responsible for Fannie Mae and Freddie Mac

By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly
September 10, 2008

An ignominious list
To be sure, there were many more complicit in this mess, including consumers who bought more house than they could afford. And though we have to move forward now, let's hope no one forgets what's happened here.

---

Quote:

---

Originally Posted by clocker

And?

Your previous tack has been that forcing GSEs to loan to poor/unqualified borrowers lead to the problem.
Nowhere in the article does it mention that at all.

---

My "tack" is what's contained in the article.

GSEs, to my mind, are not a solution to anything, but you seem to favor them because you prefer non-prosecutable government incompetence and corruption to the prosecutable private version.

Quote:

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Originally Posted by clocker

Financial hocus-pocus executed on the executive level to inflate bonuses and pay is not the fault of the borrowers, is it?

---

I abhor "financial hocus-pocus" and would prosecute it wherever I find it.

In this case, the hocus-pocus comes courtesy of the democrat functionaries of a quasi-government entity, who were found to be guilty of the hocus-pocus, but were nonetheless excused by democrats and are now revered by those democrats as heroes for their efforts.

Quote:

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Originally Posted by clocker

Furthermore, I see no mention of either ACORN or Obama-both previously cited by yourself- as players in this mess.

---

That is simply because neither of them figured in the article, which was about Fannie and Freddie.

I'm sure I can find lots about B.O. and ACORN, but you'd probably fail to deal with them in any substantive way as well.

Quote:

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Originally Posted by clocker

Finally, you stated before that the fall of Freddie/Fanny was graphic proof of Democratically controlled government entity pandering to a Democratic constituency in furtherance of a Democratic agenda when this article makes it rather clear that personal greed was the motivating factor, not political agendas.

---

Yes, quite correct; the personal greed of democrats in service of their ideology.

I think you've finally got it.

Quote:

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Originally Posted by clocker

Unless you'd like to assert that greed is a particularly Democratic- or even political- trait, this article is completely irrelevant.

---

Greed is practiced by individuals in both political parties, but try to catch a liberal in here taking note of democrat corruption by starting a thread or even condemning same.

I take that back, I think Busyman did it recently, however, I have no recollection of you commenting one way or another.

Call it a failure to acknowledge.

Find me an exception, and you'll have my sincerest apologies, forthwith.

Quote:

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Originally Posted by devilsadvocate

Quote:

---

Originally Posted by j2k4

find me a credible study that says libs consume discernably less porn than conservatives and you will have found something relevant.

Humans have their peccadilloes, whichever side of the ideological fence they're on.

---

I think the relevance is that conservatives, at least politically, want to ban porn, liberals do not

---

What's your point?

Quote:

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Originally Posted by HeavyMetalParkingLot

Quote:

---

Originally Posted by Busyman

....and "you all's holy one"?

I knew you were the same racist idiot that posted awhile back.

---

Quite sure it was louis farrakhan who labelled him as "the messiah".

"you racist fuck"

"you racist idiot"

Typical of what I stated before...

---

If the shoe fits.....

Quote:

---

Originally Posted by j2k4

Quote:

---

Originally Posted by clocker

Neither ACORN nor FannieMae/FreddieMac favored wholesale lending to obvious high risk borrowers without proper safeguards...they simply wanted to erase the clearly racist practice of redlining.
In fact, by far the most avid practitioners of subprime lending were brokers/banks that weren't even covered by the CRA and it was their stupidity/greed that has lead us to this point.

---

Really.

Read this-

The People Responsible for Fannie Mae and Freddie Mac

By Bill Mann, Seth Jayson, Tim Hanson, Nate Weisshaar and Keith Beverly
September 10, 2008


It was a wise man who noted that the only corporate structure more insidious than a government-sponsored monopoly is a government-sponsored and investor-owned monopoly. In the end, as Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) have now so painfully proved, trying to serve the master of public policy while generating returns for investors will lead to disaster.

Fannie and Freddie collapsed because they were part and parcel of the widespread gross financial misconduct that has taken place in the United States over the past decade. It's easy to miss this fact, but the reality is that too many people were making too much money pumping up the housing market. In 2005, the Office of Federal Housing Enterprise Oversight (OFHEO), the erstwhile regulator of the two, attempted to limit their use of off-balance sheet entities to groom earnings. In the end, it didn't, because, as one reform-minded politician admitted, Congress was afraid of undermining the housing boom.

Some are more culpable than others-
As part of the conservatorship, the Department of the Treasury has demanded that Daniel Mudd and Richard Syron, the CEOs of Fannie and Freddie, respectively, step down. Certainly, at the time of a corporate collapse, those in charge have to bear some responsibility. But Mudd and Syron came into their roles when the great pillaging was well in process.

At some point not too long from now, the nation's attention is going to turn from the immediate players to those who benefitted the most, shouted down the skeptics, and/or stood by as Fannie and Freddie deviated from their core business in the name of growth and/or mission. These people are keeping a low profile right now, until the taxpaying public starts paying attention to something else. As taxpayers, we don't particularly enjoy our role in this relationship, and we're hopeful over the longer term that the following folks cease to enjoy theirs.

Franklin Raines
Fannie Mae was always a political beast, but it reached its elbow-swinging heights during the time when former Clinton administration budget director Franklin Raines sat in the CEO chair. Under Raines' leadership, Fannie overstated earnings by a stunning $10.6 billion, all the while paying Raines and his senior management team massive bonuses.

It was under Raines' management that Fannie morphed from being a company in a sleepy business -- issuing debt to buy mortgages from lenders -- into a far more risky and exciting one: buying up mortgages and holding them, thus capturing the spread between its borrowing costs (which were lower than anyone's other than the federal government's) and the interest rate received. It was a great business, except that it had nothing to do with Fannie's charter. According to a May 2006 report from OFHEO, Raines became obsessed with keeping earnings per share as high as possible and motivated management to achieve that goal by setting up a bonus system that rewarded increasing earnings per share (EPS).

The thing is: Any company can hit an EPS number if it doesn't worry about little things like accounting rules, debt levels, and risk factors. All told, Raines pulled in some $90 million between 1998 and 2003, the majority from bonuses. And when OFHEO began to ask uncomfortable questions, Raines actively lobbied Congress to cut its funding. In April, Raines agreed to disburse $24 million for his role in the accounting "errors."

Timothy Howard
Former Fannie Mae CFO Timothy Howard is another major player who is probably cowering in a corner somewhere. For all of the expletives and derogatory names thrown at former Enron CFO Andrew Fastow, he at least stayed around to take his punishment. Inmate No. 14343-179 pleaded guilty to fraud and is serving a six-year prison term. Howard, on the other hand, saw the writing on the wall -- largely because he was the author -- and got out of Dodge.

As Fannie's CFO from 1990 to 2005, Howard signed off on the financials that overstated the company's earnings by $10.6 billion from 1998 to 2004. His reward? A cool $14 million in salary and $16.8 million in bonuses during the period -- bonuses based on the earnings plan that Raines set up.

While Howard was not the only person at Fannie guilty of constructing fraudulent financial statements quarter after quarter, as CFO he is most responsible for the integrity of said statements. Whether he left early enough to avoid culpability remains to be seen. However, we've heard through the low-security-prison grapevine that Fastow is lonely these days and wouldn't mind talking shop with a fellow former CFO.

Barney Frank
The House Financial Services Committee chairman and Democratic congressman from Massachusetts has long been a proponent of both Fannie and Freddie, assuring the public that their mission to encourage home ownership outweighed the distortive risks they brought to the market, and that the federal government was not, in fact, on the hook for their liabilities. In fact, it seems clear now that Frank had no idea of just how poor a grasp Fannie and Freddie had on their lines of business. As recently as Aug. 25 he told Money magazine, "Fannie and Freddie are better off than the market thinks. ... Part of the problem is rumormongering by short-sellers."

What's more, though Frank will blame past political opponents for failing to further regulate the mortgage market by banning products such as subprime loans, the fact of the matter is that the very presence of Fannie and Freddie incentivized brokers to overstate the creditworthiness of borrowers and then pass on that risk to the federal government, all while being cheered for helping more people "realize the American Dream." While we can all agree (I hope) that mortgage markets only function when -- as Frank told Money, banks "do not lend money to people who can't pay it back" -- Frank's ideology in this case blinded him for decades to the realities of the marketplace and the operations at these companies, leading him to stonewall realistic reform efforts that might have helped us avoid the current calamity.

Angelo Mozilo
There's good reason for Angelo Mozilo to hide under a desk these days. Few, if any, extracted more personal profit from the credit bubble than the CEO and founder of Countrywide Financial. Mozilo's talking points always borrowed heavily from the propaganda of our government-sponsored enterprises (GSEs). Countrywide liked to pretend that it was performing some kind of public service -- "breaking down barriers" -- by making homes more "affordable" to the average (or subaverage) wage earner. Unfortunately, as speculation drove home prices to ridiculous levels across the U.S., "affordability" came to be the code word for gimmicky, high-interest subprime loans lavished on the riskiest of borrowers in order to get them into a mortgage that would soon be bundled and shipped off to the suckers on Wall Street.

Unfortunately for borrowers and investors in Countrywide's mortgage paper, the American Dream of home ownership quickly morphed into a nightmare. Default rates surged, followed by the inevitable foreclosures, and mortgage paper backed by Countrywide loans became as valuable as post-bubble, dot-com stock options. Countrywide was only spared the ignominy of bankruptcy when its longtime sugar daddy, Bank of America (NYSE: BAC), stepped in to take it out.

As captain of this sinking ship, CEO and founder Mozilo was, for a time, very vocal in defending his company's legacy. But like so many others in America's great housing bubble, talk was one thing, and actions were another. As the housing bubble began peaking in 2003 and 2004, through the period when Countrywide's risky lending fell apart, Mozilo engaged in one of history's greatest stock dumps, selling more than $480 million worth of shares, according to the tally of insider filings on secform4.com. This graph tells the tale.

Alan Greenspan
If not the boldest of the group, then at least the most public, Greenspan, the man many are now blaming for the housing bubble (there were a brave few that piped up years ago), has refused to go quietly into his well-padded retirement. The man charged with providing the country with a financial voice of reason fell far short, so much so that it might be comical if it weren't so tragic.

Greenspan's denial of the possibility of a housing bubble has been widely derided in the past year, but a single statement could be excused as human error. However, a quick scan shows that this wasn't a single event. He also promoted the adoption and expansion of adjustable-rate mortgage (ARM) products in early 2004, when short-term rates were at or near historic lows. That same year he claimed, "securitization by Fannie and Freddie allows mortgage originators to separate themselves from almost all aspects of risk associated with mortgage lending." And separate themselves they did, ceasing to perform any kind of due diligence as to the ability of borrowers to pay for the homes they were buying.

Now retired from his role as the nation's monetary conscience, Greenspan continues to espouse his, er, theories on the financial crisis through editorials in which he denies any culpability for the events of the past three years. He is also applying his experience and insight as an advisor for Paulson & Company, a hedge fund which cashed in on billions of dollars by calling the collapse of the subprime mortgage market that Greenspan helped create.

An ignominious list
To be sure, there were many more complicit in this mess, including consumers who bought more house than they could afford. And though we have to move forward now, let's hope no one forgets what's happened here.

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Damnit I wanted to read this but it's in hyper cerulean blue.

Good job.

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Originally Posted by clocker

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Originally Posted by Busyman

Looking at an area where someone lives is a dumb way to ascertain risk. That's why.

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Actually, no it isn't- even ACORN never said this.
Using location as the ONLY determining factor was the problem.

Neither ACORN nor FannieMae/FreddieMac favored wholesale lending to obvious high risk borrowers without proper safeguards...they simply wanted to erase the clearly racist practice of redlining.
In fact, by far the most avid practitioners of subprime lending were brokers/banks that weren't even covered by the CRA and it was their stupidity/greed that has lead us to this point.

Naturally, both j2 and HeavyMetal would prefer to ignore these facts and instead place the blame on the poor, abetted by the apparently god-like powers of Obama who somehow manhandled the entire entire banking industry into submitting to his will.

Not bad for a guy who j2 is convinced is clearly "stupid".

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I can attest to this since these same style brokers came to my house twice and contacted me through cold calls at least 30 times....and I'm NOT poor.

They were adamant that I move to these shoddy loan products when I wanted to simply refinance. I remember the visits very well. They were even trying to get me take out way more money than I needed (or wanted) and said that since I had a lower monthly payment, I could invest the excess that I would've paid in a normal mortgage.

Oh and after 4 or 5 years, I'd have to refi again since I'd only be paying principal (with no tax write-off).

Oh and....I'm sorry was this ACORN coming to my house and calling me all those times?

I'm pissed that Obama had ACORN come after me even for a refi. ACORN must have had me on that poor, black people list and Obama said, "go get him".

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Originally Posted by j2k4

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Originally Posted by clocker

you are spouting policies and ideals that the majority of America finds stale and repugnant.

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Wrong on that count; besides which, I am a conservative...not a Republican.

Therein lies your problem.

Oh, and then there's this, which I'm sure you'd never mention:

http://www.washingtonpost.com/wp-dyn...062300818.html

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So?

Over half of Americans also believe that Aliens kidnap people, and a sizeable number think Elivis is still alive.

Belief in fairytails is universal around the world, but hows it relevant to all all this?