Re: In Bush, Loyalists See A Good & Steadfast Man Who Has Gotten

John Briggs wrote:
> Vince wrote:
>> John Briggs wrote:
>>> Vince wrote:
>>>> John Briggs wrote:
>>>>> Vince wrote:
>>>>>> Paul J Gans wrote:
>>>>>>
>>>>>>>> Look,  the reason for this mess is the relaxation of US banking
>>>>>>>> regulations over many years and the effect this has had on the
>>>>>>>> world banking system.
>>>>>>>
>>>>>>> He's right about "banking" taken literally.  The problem is that
>>>>>>> in the US mortgages can be issued by entities that are not banks
>>>>>>> and are not subject to the same kind of regulation.
>>>>>>>
>>>>>>> While we often use the term "bank" to cover both, technically
>>>>>>> it isn't correct.
>>>>>>
>>>>>> The "issuing" of mortgages as such was not the problem.
>>>>>
>>>>> Well, it was - in the sense that in their greed for commission, the
>>>>> agents responsible for arranging those mortgages misstated the
>>>>> income and ability to pay of those applying for mortgages (those
>>>>> sub-prime applicants would still have got their mortgages, albeit
>>>>> on very different terms, if their cir***stnces had been correctly
>>>>> stated.)
>>>> See below
>>>>
>>>>>>  It was the securiitization of repurchased re sliced mortgages
>>>>>> though fannie may and Freddie Mac without the slightest quality
>>>>>> control
>>>>>
>>>>> That was a consequence of the above. The securitisation and
>>>>> re-slicing of sub-prime mortgages was a perfectly sound idea, but
>>>>> was heavily dependent on the original mortgages being correctly
>>>>> characterised. (So that real risk could be more accurately
>>>>> *****sed.)
>>>>
>>>> Which was the precise skill FNMA was being paid for.  They bought
>>>> crap knew it was crap and lied big time for the fees from
>>>> securitization. paid themselves fat salaries and transferred the
>>>> risk to the taxpayer They were the root cause since so one would
>>>> write a mortgage if fannie and Freddie and Ginnie would not buy it
>>>
>>> The blame lies with those writing the mortgages. Not for writing the
>>> mortgages, but for not accurately characterising them.
>>
>> Plausible deniability at work
>>
>> they wrote crap because FNMA wanted crap
> 
> No, they wanted quantity - but *not* crap that was misdescribed. They 
> failed to pass this message on clearly enough.
> 

nonsense

Dimini****ng marginal quality is an inevitable result of demanding more 
quantity

"So Mr. Mudd made a fateful choice. Disregarding warnings from his 
managers that lenders were making too many loans that would never be 
repaid, he steered Fannie into more treacherous corners of the mortgage 
market, according to executives. For a time, that decision proved 
profitable. In the end, it nearly destroyed the company and threatened 
to drag down the housing market and the economy.  Dozens of interviews, 
most from people who requested anonymity to avoid legal repercussions, 
offer an inside account of the critical juncture when Fannie Mae’s new 
chief executive, under pressure from Wall Street firms, Congress and 
company shareholders, took additional risks that pushed his company, 
and, in turn, a large part of the nation’s financial health, to the 
brink. Between 2005 and 2008, Fannie purchased or guaranteed at least 
$270 billion in loans to risky borrowers — more than three times as much 
as in all its earlier years combined, according to company filings and 
industry data.  “We didn’t really know what we were buying,” said Marc 
Gott, a former director in Fannie’s loan servicing department.
......


All this helped supercharge Fannie’s stock price and rewarded top 
executives with tens of millions of dollars. Mr. Raines received about 
$90 million between 1998 and 2004, while Mr. Howard was paid about $30.8 
million, according to regulators. Mr. Mudd collected more than $10 
million in his first four years at Fannie.

Whenever competitors asked Congress to rein in the company, lawmakers 
were besieged with letters and phone calls from angry constituents, some 
orchestrated by Fannie itself. One automated phone call warned voters: 
“Your congressman is trying to make mortgages more expensive. Ask him 
why he opposes the American dream of home owner****p.”

http://www.nytimes.com/2008/10/05/business/05fannie.html?pagewanted=print


"The depressed housing market and high rate of foreclosures make it 
tough for anyone investing in home loans, but Fannie and Freddie took 
steps in 2006 and 2007 that came back to bite them. The companies 
lowered their standards for loans they would buy, and they backed 
riskier mortgages, including loans that didn’t require borrowers to 
provide proof of their stated income. Such loans accounted for half the 
companies’ credit losses in the second quarter this year."

http://articles.latimes.com/2008/sep/08/business/fi-qanda8


Everyone , everyone knew what was going on

>> FNMA crap buyers were paid bonuses for volume, not quality
>> "for whatsoever a man soweth, that shall he also reap" (Gal. 6:7,
>> kjv).
> 
> Yes, but crap that was correctly described as crap would have done just 
> as well. They knew that, but their suppliers didn't. The whole thing was

> unnecessary. (Although inevitable, because it catered to human greed.)

I disagree


Vince