Freddie & Fannie Really to Blame?....

[Stringer]

Interesting piece done on 60 Minutes last night regarding Wall Street's "Credit Swap" mechanisms.

Link...

http://www.cbsnews.com/stories/2008/10/05/60minutes/main4502454.shtml

Some interesting tidbits...

"A credit default swap was available to them, marketed to them as a risk-saving device for buying a risky financial instrument," Greenberger says.

But he says there was a big problem. "The problem was that if it were insurance, or called what it really is, the person who sold the policy would have to have capital reserves to be able to pay in the case the insurance was called upon or triggered. But because it was a swap, and not insurance, there was no requirement that adequate capital reserves be put to the side."

Asked what role the credit default swaps play in this financial disaster, Frank Partnoy tells Kroft, "They were the centerpiece, really. That's why the banks lost all the money. They lost all the money based on those side bets, based on the mortgages."

To me, this next bit is the most worrisome about this mess, the not knowing how big is big...

The result is a huge shadow market that may control our financial destiny, and yet the details of these private insurance contracts are hidden from the public, from stockholders and federal regulators. No one knows what they cover, who owns them, and whether or not they have the money to pay them off.

In describing Bear Sterns, AIG, et al, I think this guy nailed it...

"They did it all on their own," Partnoy agrees. "That's the most incredible thing about this crisis is that they pushed the button themselves. They blew themselves up."

And I agree with Grant's assesment here..

"There is no defending," Grant replies. "A trainee making 45,000 a year would have had the common sense not to bet the firm on mortgage contraptions that no one in the firm actually understood. That is not a deep point to comprehend. Somehow, through, I will call it a criminal neglect and incompetence, the people at the top of these firms chose to look away, to take more risk, to enrich themselves and to put the shareholders and, indeed, the country, itself, ultimately, the country's economy at risk. And it is truly not only a shame, it's a crime."

You can blame the Freddie & Fannie talking point all day long, but in and of itself they did not have the critical mass to bring down the financial sectors....these smart guys did it to us...

I'm not a big Fed Regulation supporter, but.......

Greed does need to have a check and balance against it...Even if it is by our greedy elected leaders....wow, I just threw-up in my mouth a little when I typed that.

[sluggish]

No financial wizard here but I had an idea of sorts yesterday.

If government were to force lending institutions to loan to higher risk clients, wouldn't the increased number of potential people in the market drive prices up to compensate?  Wouldn't the the artificially inflated real estate prices quickly devalue as soon as the high risk loans started to default?  Isn't this exactly what's happening right now?

[Sixpence]

If government were to force lending institutions to loan to higher risk clients

How would they do that?

[sluggish]

How would they do that?

You've never heard of the "Fairness in Lending" act?

[kamilyun]

You've never heard of the "Fairness in Lending" act?

Community Reinvestment Act?

I tried looking for a Fairness in Lending Act and didn't find a federal act...one from Illinois, maybe.  There's a federal Truth In Lending Act.

[wrag]

No financial wizard here but I had an idea of sorts yesterday.

If government were to force lending institutions to loan to higher risk clients, wouldn't the increased number of potential people in the market drive prices up to compensate?  Wouldn't the the artificially inflated real estate prices quickly devalue as soon as the high risk loans started to default?  Isn't this exactly what's happening right now?

Sure seems that way!

[Sixpence]

You've never heard of the "Fairness in Lending" act?

Does it force them to make bad loans?

[sluggish]

Community Reinvestment Act?

I tried looking for a Fairness in Lending Act and didn't find a federal act...one from Illinois, maybe.  There's a federal Truth In Lending Act.

Ah, yes "Community Reinvestment Act."

My bad oops.

[sluggish]

Does it force them to make bad loans?

Community Reinvestment Act....

Encourages, by force of hand, to lend to minorities and women, whom would not qualify if they were white males.

[Sixpence]

Community Reinvestment Act....

Encourages, by force of hand, to lend to minorities and women, whom would not qualify if they were white males.

So how? Is there a gun to their head? Are they threatened to be sued? Threatened to be put out of business? What is 'force of hand'?

[RipChord929]

Fact, republicans on the finance commitee, (including McCain) were
warning about this problem w Freddy and Fannie, 2 YEARS AGO...
They also brought forward legislation in that same finance committee
that would have regulated those bad loan practices...

But the democrats on the same commitee voted the legislation down...
Dems making statements like F&F were financially sound... LOL!!!
All the while stuffing their pockets with money from F&F lobbyists..
One of those was Princess Barack himself.... And on top of that,
Obama BinLaden, places those same executives from F&F in high
positions in his election campaign...

Most often these highfalutin money guys end up with cabinet
positions in the new admin... OMG, they RIPOFF the whole country,
then are appointed to leadership positions... UNBELIEVABLE!!!

These are FACTS, with video to back them up....

The VAST majority of media outlets refuse to mention these facts..
So by omission, they give the complete opposite appearance...
They are doing so intentionally, which makes them accomplices
to possibly one of the largest LIES in american history..
Certainly one of the most expensive LIES in american history...

Now those same Dummycrats are out there blatherin like they
are the white knights of salvation for the economy....
When, THEY CAUSED THE STINKIN PROBLEM IN THE FIRST PLACE!!!

OMG, the poo is gettin plenty DEEP...

Oh man, are the American ppl suckers or what????
This is just sickening to watch...

RC

[Sixpence]

Fact, republicans on the finance commitee, (including McCain) were
warning about this problem w Freddy and Fannie, 2 YEARS AGO...
They also brought forward legislation in that same finance committee
that would have regulated those bad loan practices...

But the democrats on the same commitee voted the legislation down...
Dems making statements like F&F were financially sound... LOL!!!
All the while stuffing their pockets with money from F&F lobbyists..
One of those was Princess Barack himself.... And on top of that,
Obama BinLaden, places those same executives from F&F in high
positions in his election campaign...

Most often these highfalutin money guys end up with cabinet
positions in the new admin... OMG, they RIPOFF the whole country,
then are appointed to leadership positions... UNBELIEVABLE!!!

These are FACTS, with video to back them up....

The VAST majority of media outlets refuse to mention these facts..
So by omission, they give the complete opposite appearance...
They are doing so intentionally, which makes them accomplices
to possibly one of the largest LIES in american history..
Certainly one of the most expensive LIES in american history...

Now those same Dummycrats are out there blatherin like they
are the white knights of salvation for the economy....
When, THEY CAUSED THE STINKIN PROBLEM IN THE FIRST PLACE!!!

OMG, the poo is gettin plenty DEEP...

Oh man, are the American ppl suckers or what????
This is just sickening to watch...

RC

About as factual as the seahawks being 5-0

[Nwbie]

Fact, republicans on the finance commitee, (including McCain) were
warning about this problem w Freddy and Fannie, 2 YEARS AGO...
They also brought forward legislation in that same finance committee
that would have regulated those bad loan practices...

But the democrats on the same commitee voted the legislation down...
Dems making statements like F&F were financially sound... LOL!!!
All the while stuffing their pockets with money from F&F lobbyists..
One of those was Princess Barack himself.... And on top of that,
Obama BinLaden, places those same executives from F&F in high
positions in his election campaign...

Most often these highfalutin money guys end up with cabinet
positions in the new admin... OMG, they RIPOFF the whole country,
then are appointed to leadership positions... UNBELIEVABLE!!!

These are FACTS, with video to back them up....

The VAST majority of media outlets refuse to mention these facts..
So by omission, they give the complete opposite appearance...
They are doing so intentionally, which makes them accomplices
to possibly one of the largest LIES in american history..
Certainly one of the most expensive LIES in american history...

Now those same Dummycrats are out there blatherin like they
are the white knights of salvation for the economy....
When, THEY CAUSED THE STINKIN PROBLEM IN THE FIRST PLACE!!!

OMG, the poo is gettin plenty DEEP...

Oh man, are the American ppl suckers or what????
This is just sickening to watch...

RC

"But saying that Democrats killed the 2005 bill "while Mr. Obama was notably silent"  oversimplifies things considerably. The bill made it out of committee in the Senate but was never brought up for consideration. At that time, Republicans had a majority in the Senate and controlled the agenda. Democrats never got the chance to vote against it or to mount a filibuster to block it."http://www.factcheck.org/elections-2008/who_caused_the_economic_crisis.html