Democrat Senators Still Carrying Water For FNM

Discussion in 'Politics' started by AAAintheBeltway, May 13, 2010.

  1. 13 Sellout Senators Who LOVE Fannie Mae And Freddie Mac

    Fannie Mae (FNM) and Freddie Mac (FRE) are among the least popular banking institutions in the country, and it would make sense that as part of financial reform, we took on firms that had a major role in financing the housing bubble.

    But that's not going to happen.

    The Senate voted down an attempt by Republicans to wind them down, and instead opted to support a study.

    That's right. The Treasury department will be tasked with looking at what can be done with Fannie and Freddie.

    Lots of Democrats voted to preserve the institutions, but some Senators REALLY love the GSEs.

    How do we know?

    Because they're up for re-election this year, and they still like the firms.

    Read more:
  2. You really need to click on the link to see them. Hard to imagine a more disgusting group that doesn't have Obama and Bill Clinton in it.

    The group:

    Michael Bennet, D-Col

    Barbara Boxer, D-Ca

    Roland Burris, D-Il

    Byron Dorgan, D-ND

    Daniel Inouye, D-HI

    Patrick Leahy, D-VT

    Blanche Lincoln, D-AR

    Barbara Mikulski, D-MD

    Patty Murray, D-WA

    Harry Reid, D-NV

    Chuck Schumer, D-NY

    Arlen Specter, D-PA

    Ron Wyden, D-OR


    Chris Dodd, D-CT who is thankfully retiring

    Specter will not make it past the democrat primary. Reid, Lincoiln and Burris are all very vulnerable. They'll need that FNM/FRE campaign money.

    These are among the biggest culprits for the financial meltdown and the trillions it has cost us.
  3. By Barry Ritholtz - May 13th, 2010, 7:20AM My approach to everything I have written, studied and analyzed in this space is pretty straight forward: Start with the data and evidence and go forward from there. Figure out what the “Truth” is; try to get as close to the objective reality beneath the noise in order to make intelligent investing decisions for myself and my clients.

    There are others who do not share this objective. Their goals are either political (winning the next election) or ideological (having their belief system become dominant). Truth is irrelevant to these people.

    Not surprisingly, these folks — many of whom contributed to the crisis in a might way — are desperately trying to duck responsibility for what happened. Those who helped cause the crisis are engaged in an ongoing effort to rewrite its history.

    Their goal? Exonerate their own bad behavior, throw off any responsibility to the collapse, blame anything but their own ideology and horrific decision making. They want to keep pushing their tired political agendas, despite the damage they may have caused.

    When writing Bailout Nation, I tried to steer clear of partisan finger pointing. I kept the focus on what actually occurred, what could be proven mathematically. I blamed Democrats and Republicans — not equally, but in proportion to their what they did. Unsupported theories, tenuous connection, loose affiliations were not part of the analysis. Every legislative change, each regulatory failure, all corporate actions, to be blameworthy, had to manifest themselves in actual mathematical proof.

    This led me to ascertain the following 30 year sequence:

    -Free market absolutism becomes the dominant intellectual thought.
    -Deregulation of markets, investment houses, and banks becomes a broad goal: This led to Glass Steagall repeal, Derivative exemptions, Investing house leverage exemptions, and a new breed of unregulated non bank lenders.
    -Legislative actions reduce or eliminate much of the regulatory oversight; SEC funding is weakened.
    -Rates come down to absurd levels.
    -Bond managers madly scramble for yield.
    -Derivatives, non-bank lending, leverage, bank size, compensation levels all run away from prior levels.
    -Wall Street securitizes whatever it can to satisfy the demand for higher yields.
    -”Lend to securitize” nonbank mortgage writers sell enormous amounts of subprime loans to Wall Street for this purpose.
    -To meet this demand, non bank lenders collapse lending standards, leading to a credit bubble.
    -The Fed approves of this innovation.
    -Housing booms, then busts
    -Credit freeze, market collapse recession.

    You will note that the CRA is not part of this sequence. I could find no evidence that they were a cause or even a minor factor. If they were, the housing bubbles would not have been in California or S. Florida or Ls Vegas or Arizona — Harlem and South Philly and parts of Chicago and Washington DC would have been the focus.

    Nor do I blame Fannie and Freddie. Now understand, there is no love lost between myself and the GSEs. For years, I have called them “Phoney and Fraudy.” Since George Bush and Hank Paulson nationalized them, I have accused the government of using these two as a backdoor bailout for banks — a hidden PPIP/TARP used to buy all the garbage mortgages that banks are desperate to get off their balance sheets. Longtime readers will recall we very publicly shorted Fannie based upon their fraudulent practices and horrific balance sheet.

    But even I cannot reconcile the movement to place all of the world’s troubles at the feet of the GSEs. Not, at least, according to the data.

    That lack of evidence, however, doesn’t stop ideologues from making the attempt. Consider this attempt at rewriting the causes of the credit crisis by Kevin Hassett:

    “The worst financial crisis in generations was set off by a massive government effort, led by the two mortgage giants, to make loans to homebuyers no matter whether they could make the payments. Lenders were willing to lend money to just about all comers, no matter how low their income. Why? Because the lenders knew Fannie and Freddie would purchase the loans from them for a high price before bundling them into securities to sell to investors.”

    Now, this makes for a fascinating narrative that plays into a number of different ideological beliefs. It exonerates the radical free market deregulators, it ignores what the private sector did, and it somehow ignores the fact that Congress was controlled by a very conservative GOP from 1994 to 2006 — the prime period of time covered leading up to and including the beginning of the crisis.

    But worse than all of that, the data supporting Hassett’s position simply isn’t there.

    Over the past 2 years, I have repeatedly asked the people who push this narrative to provide some evidence for their positions. I have offered a $100,000 if they could prove their case.

    Specifically, I have requested some data or evidence that DISPROVED the following facts:

    -The origination of subprime loans came primarily from non bank lenders not covered by the CRA;

    -The majority of the underwriting, at leats fro the first few years of the boom, were by these same non-bank lenders

    -When the big banks began chasing subprime, it was due to the profit motive, not any mandate from the President (a Republican) or the the Congress (Republican controlled) or the GSEs they oversaw.

    -Prior to 2005, nearly all of these sub-prime loans were bought by Wall Street — NOT Fannie & Freddie

    -In fact, prior to 2005, the GSEs were not permitted to purchase non-conforming mortgages.

    -After 2005, Fannie & Freddie changed their own rules to start buying these non-conforming mortgages — in order to maintain market share and compete with Wall Street for profits.

    -The change in FNM/FRE conforming mortgage purchases in 2005 was not due to any legislation or marching orders from the President (a Republican) or the the Congress (Republican controlled). It was the profit motive that led them to this action.

    These are data supported facts I pounded on in BN.

    Of course, folks like Hassett hate this factual history, as it conflicts with their goals and politics. Rather than produce evidence, they create story lines unsupported by facts. But Monkeys love a good narrative, and so they give that to them.

    However, as an investor, I demand evidence, data and facts. The blame Fannie & Freddie crowd have managed to remain blissfully data free. They have steadfastly ignored all calls for proof.

    Its way past the time to call out their intellectual dishonesty. If you cannot show any data, if you cannot prove what you are alleging with actual facts, you need to be called out for what it is you actually are: Proponents of a failed philosophy.
  4. >>-After 2005, Fannie & Freddie changed their own rules to start buying these non-conforming mortgages — in order to maintain market share and compete with Wall Street for profits.

    -The change in FNM/FRE conforming mortgage purchases in 2005 was not due to any legislation or marching orders from the President (a Republican) or the the Congress (Republican controlled). It was the profit motive that led them to this action.<<

    This guy is a moron. He totally ignores the fact that FNM was running up its balance sheet and cooking its books to justify huge bonuses to its execs, who were largely democrat political hacks like Franklin Raines and Jamie Gorelick. They pocketed scores of million sin bonuses and options and have never been forced to return them, even though honest accounting would have shown no profits to justify any bonuses.

    Next, he ignores the whole point of my post, namely that the taxpayers had to write huge checks to bail out these corrupt cesspools, but the democrats refuse to do anything to prevent it happening again. It is just too enticing to have these slush funds available for fundraisers, jobs for out of work pols, etc. The fact is that Bush and his regulators tried to get a handle on FNM and rein it in, but were blocked by the democrats in congress. That is just a fact and no amount of spinning will change it. In hindsight they should have fought harder, but they didn't see the enormity of the risk and they had bigger fish to fry.

    If FNM and FRE had stuck to their original, boring, low profit mission of securitizing mortgages, they would have been fine. They wanted to be bigger players however and started growing their balance sheets. It would have been dangerous for competent managers to do this, but these GSEs were run by political hacks who knew how to lobby congress but knew next to nothing about the risks of running a big mortgage portfolio. So the taxpayers get a trillion dollar bill when they smash up the family car.
  5. jem


    great insight.

  6. fhl


    The democrats in congress pushed banks to make lousy subprime loans ever since Jimmy Carter was in office. It's been called the CRA.

    The regulators pushing hard on banks by not letting them merge, etc if they wouldn't increase these types of loans. It resulted in the gse's ballooning their balance sheets with crap loans. This was during the CLINTON administration. <b>Even Bill Clinton publicly admits that the democrats in congress stopped him and the republicans from clamping down on the gse's</b>.

    Non bank mortgage originators aren't stupid. They see millions of dollars lying around waiting to be picked up by making lousy loans. The same type of loans that the democrats in congress are demanding that banks make. <b>Should a non bank loan originator be scared to make them? He can sell them off by securitizing them and he knows that barney frank and chris dodd can hardly complain about it. Not while they're demanding banks make the same loans.</b>

    The gse's got the go ahead to make sub prime because they were losing market share, yes, but what does that prove? Is it supposed to prove that nobody would dare make that kind of loan before they did? <b>Even thought Frank and Dodd were demanding that banks make these very same type of loans</b>?

    Barry Ritholz analysis is so ridiculous that only someone w/o and ounce of common sense believes it.
    He wants you to believe that even though <b>the gov't demanded that banks make lousy loans, and normalized it, that didn't induce, and give the go ahead to the private sector to also begin making lousy loans, too</b>. The private sector would just leave those millions of dollars in commissions lying on the ground and wouldn't pick them up. Ritholz wants you to believe that to prove the non bank loan originators were not at blame, you have to show that they made loans AFTER the gse's. He wants you to <b>ignore the fact that the democrats in congress were already demanding and using regulatory force to require banks to make these lousy crap loans</b>.

    His 100,000 dollar challenge is a farce and anybody with brains should be able to see it. The gov't demanded these loans be made by the banks they were regulating, and then the non bank originators made them. Since it was by decisions of free will that they made them, and not a law, how can you prove why they did it? <b>You simply have to use common sense</b>.j

    Someone should tell ritholz they'll give him a hundred grand to prove that the gov't demanding that banks make crap loans didn't induce and give the go-ahead for non banks to do the same thing.
  7. Hello


    It is unbelievable that dems would even argue over reforming the 2 companies who will end up with more government money than any 2 companies which got bailed out during the entire crisis. Instead they try to make GS the villain, when goldman has paid back its loans in full, and is back to being profitable. Can any logical human being actually argue that fnm/fre didnt have a large part of the responsibility for the collapse? So we are to believe that Goldman Sachs, and other banks which positioned them selves well during times of uncertainty were the cause of the meltdown of the banking sector?

    We now live in a society of survival of the unfittest, the totally useless individuals/companies get a free pass while successfull people/companies become pariahs. The bigger the fuckup you are the more government money you are entitled to. Is there any question as to whether or not we are doomed? Our only saving grace will be if Republicans take back both houses and revert to actual conservatism, otherwise this nation is screwed.

    The only thing i can be thankful for is that the list of Dems AAA has listed who support fnm/fre will probably be cut down by atleast 50%.
  8. except it was not cra loans that blew up. you guys have a bad case of ""Don't Bother me with the Facts - My Mind is already made up!"
  9. Hello


    Fact: FNM/FRE will recieve more government money than any 2 companies in the U.S.

    Fact: GS paid back its government loans with greater than 15% interest, and is profitable again.

    Fact: Dems want to regulate GS, and not FNM/FRE

    Fact: if the large majority of banks had positioned themselves in the same way GS did, meaning they didnt keep a bunch of "shitty" mortgages on their books, there would have been no meltdown in the first place.

    What was that about facts?
  10. fhl


    Frank and Dodd hassled banks for twenty years to make sub prime loans. But, number one, they didn't want to because it was bad business. They'd have to keep them on their books. And two, they were salaried employees who sat around and drank coffee. Non banks loan originators work on commission. They've seen all these loans they couldn't make because they didn't qualify and then they see Frank and Dodd tell the world that it's not only all right to make them, you're a racist if you don't. (that was their redlining argument).

    So the non banks see millions of dollars of commissions lying on the ground and need to find a way to get at them. Thats where wall st securitization came in. They started racking up the loans and commissions and then the gse's see market share eroding and they get it fixed so they can accept sub prime, too. Ritholtz says the gov't had nothing to do with the gse's accepting of sub prime in 2005. <b>Who in their right mind believes that</b>?

    Rithholz entire argument boils down to the fact that gse's didn't take subprime until 2005. He wants you to believe that non banks wouldn't make subprime loans until the gse's did. He wants you to believe that non banks saw the gov't hassling banks to make these loans and that, in and of itself, wouldn't convince non banks to make them, if only they could find a way to get rid of them, which they did, through securitization.

    I would have to assume that ritholtz is also one of those people that doesn't think the minimum wage reduces employment. He just can't be convinced that incentives cause people to do things. If someone can do a study and show higher costs don't impede hiring, he's just the type of guy that would believe it. But, he tells his readers that he's being non partisan and then he gets a hundred comments from liberals on his posts saying "attaway to tell em, barry"! He belongs in the nightly msm news, where the rest of his kind work. Not on the blogosphere.
    #10     May 13, 2010