Today’s Tosser: Illinois Review
Hysterical:
Get this out to everyone on your personal email list. Here’s what happened, including questions from Illinois Congressman Don Manzullo (R-16) of Barack Obama’s close advisor and Fannie Mae former CEO Franklin Raines per C-SPAN’s objective eye and ear.
Even if you take the case at the worst, calling Raines a close advisor is a lie. The entire statement he made was that:
The commercial’s main charge is based on an April story in The Washington Post that said Raines has “taken calls from Barack Obama’s presidential campaign seeking his advice on mortgage and housing policy matters.” Reporter Anita Huslin says Raines told her that during an in-person interview.
Now, compare that to having a campaign manager on the Freddie Mac dole through August, it appears that Illinois Review is descending into self-parody. Again.
But let’s, again, clarify where the Fannie and Freddie problems come from:
As of April, Sanders said, the rate of serious delinquencies on loans held by Freddie Mac was 0.81 percent. Fannie Mae’s rate of serious delinquencies was 1.15 percent. Those rates compare to market-wide rates of serious delinquency of 1.47 percent for prime mortgages, 8.35 percent for Alt-A mortgages, and 20.74 percent for subprime mortgages.
Fannie Mae and the smaller Freddie Mac either own or guarantee nearly half the entire market of U.S. home loans. The companies purchase mortgages from lenders, keep some for their own investment portfolio, and resell some to Wall Street investors as collateralized debt obligations or asset-/mortgage-backed securities.
“It is clear that Fannie and Freddie are the remaining source of stability and prudent underwriting practices among financial intermediaries,” Sanders said. “It is their willingness to continue to purchase conforming loans that is keeping the U.S. housing market afloat.”
Finance Professor Herbert Kaufman holds the same view. “Fannie and Freddie haven’t been involved in subprime mortgages — those with all the defaults, the real source of the market crisis. Fannie and Freddie, instead, have mainly bought prime mortgages, with strong credit standards and fairly strict lending requirements. Even in this bad mortgage market, the default rate on those prime mortgages is reasonable based on historical precedent.
Fannie and Freddie made good loans. However, they bought bad MBSs to make more money and that’s where the instability comes from. It’s fair to say they should be regulated more-in fact, requiring all mortgage lenders to meet the same or similar levels of regulation as banks would have greatly limited this entire fiasco–but, you know, regulation is bad….
The way to solve the problem is to return Fannie and Freddie to their initial state and take away the perverse incentives created by being privately held.
October 1st, 2008 at
But Barney Frank, Chuck Schumer, and Maxine Waters have been telling us for years there is nothing wrong with Fannie & Freddie. Why, when Bush & McCain suggested more oversight back in 2003 & 2005, the democrats bitched and moaned about the return of “red lining” and saving “affordable housing”.
By the way, Obama represented ACORN in the Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994 suit against redlining. Most significant of all, ACORN was the driving force behind a 1995 regulatory revision pushed through by the Clinton Administration that greatly expanded the CRA and laid the groundwork for the Fannie Mae, Freddie Mac borne financial crisis we now confront. Barack Obama was the attorney representing ACORN in this effort. With this new authority, ACORN used its subsidiary, ACORN Housing, to promote subprime loans more aggressively.
October 1st, 2008 at
—But Barney Frank, Chuck Schumer, and Maxine Waters have been telling us for years there is nothing wrong with Fannie & Freddie. Why, when Bush & McCain suggested more oversight back in 2003 & 2005, the democrats bitched and moaned about the return of “red lining” and saving “affordable housing”.
The were wrong. In fact, as I suggested, moving Fannie and Freddie out of buying up MBSs from other sources would have solved the problem more than any changes and Bush moved them towards buying up more of those. You do understand this don’t you?
—By the way, Obama represented ACORN in the Buycks-Roberson v. Citibank Fed. Sav. Bank, 1994 suit against redlining
Are you for redlining? Generally decent human beings aren’t, but perhaps you have a novel take. Redlining is illegal so I have no idea what you are attempting to say here.
===ACORN was the driving force behind a 1995 regulatory revision pushed through by the Clinton Administration that greatly expanded the CRA and laid the groundwork for the Fannie Mae, Freddie Mac borne financial crisis we now confront.
Wow, this must be very embarrassing for you. If you bothered to know a fucking thing about the subject you are trying to talk about, you’d know how incredibly dumb you sound right now–or even if you had read down one post.
CRA has nothing to do with our current problems. CRA covered institutions are the ones that are most stable currently and it is secondary institutions, not banks that are the primary source of bad loans. CRA isn’t even strictly about subprime lending, it’s about lending in underserved areas–a very different issue. Not understanding this suggests to me you are another conservative who espouses markets, but doesn’t know the first thing about them. CRA loans also have failed at far lower rates than the loans that have created the problems so empirically you are just wrong. What’s funny is that you had no clue about the CRA before a week or two ago.
Furthermore, you don’t even understand what got Freddie and Fannie into trouble. The loans originated under Fannie and Freddie products have much lower rates of default than those by other institutions. The problem of Fannie and Freddie is they bought MBSs from the private market that included the bad loans and that severely hurt them–the loans originated under their products continue to perform well and generally still valuable on the market.
Do you have a cite that actually mentions the default rate for homes bought through ACORN Housing programs? Because one thing you don’t seem to get is that the loans they arrange are often far better screened than the loans that are causing the problems and credit counseling and budgeting classes are the best prevention for defaults in general so your conspiracy theory kind of falls apart when it meets reality.