The banks and mortgage companies wrote what they KNEW were loans unsupported by the borrowers ability to re-pay and they shifted the liability to YOU, Mr. and Mrs. Taxpayer, via Fannie and Freddie, their bought and paid for ace in the hole.

Now...it's time to pay the piper for our blindness and stupidity.

WE have allowed this to happen by believing the rhetoric, by being beguiled with pleasant words, and re-electing a plethora of Congresscritters who care more about their corporate masters than they do us.

Even after taking another butt-reaming (remember the savings and loan "crisis?"), will we do it again? Will we re-elect those who are selling us down the river to protect their corporate buddies and who are doing it all with Chinese money, thereby subverting our national security?

You have a VOICE....USE IT!



Paulson Seeks Authority to Shore Up Fannie, Freddie (Update1)

By Brendan Murray and Dawn Kopecki

July 13 (Bloomberg) -- Treasury Secretary Henry Paulson sought authority from Congress to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, aiming to stem the collapse of confidence in the largest sources of U.S. mortgage financing.

Paulson proposed that Congress enact legislation giving the Treasury temporary authority to buy equity ``if needed'' in the firms, and to increase their lines of credit with the department from $2.25 billion each. The Federal Reserve authorized the companies to borrow directly from the New York Fed, in a step that could provide funding before the bill is passed.

Today's announcement followed crisis talks between the firms, government officials, lawmakers and regulators, after Fannie Mae and Freddie Mac lost about half their value last week. Paulson and Fed Chairman Ben S. Bernanke are trying to prevent a collapse in the firms that would exacerbate the worst housing recession in 25 years and deepen the economic slowdown.

Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac own or guarantee almost half the $12 trillion in outstanding U.S. mortgages. As lenders retreated from the housing market, they have grown to account for more than 80 percent of the home loans packaged into securities.

Freddie Mac is scheduled to sell $3 billion in short-term notes tomorrow, and Paulson's comments indicate a growing concern that a crisis of confidence may take hold if investors balk. The companies issue debt to raise money for their purchases of mortgage securities.

Action This Week

Paulson spoke with congressional leaders and is confident that lawmakers will be able to add the measures in an existing housing bill and enact the package this week, a Treasury official told reporters on a conference call. The temporary authority granted to the Treasury may be for 18 months, the official said on condition of anonymity.

The plan would give Paulson power to buy an unspecified amount of stock in Fannie Mae and Freddie Mac, the official said. He also said he didn't recall any time in the past when the government has taken an equity stake in either company.

Paulson also proposed that the Fed get a ``consultative role'' overseeing the companies' capital requirements. The Fed said in a separate statement that the New York Fed was approved to make direct loans to Fannie Mae and Freddie Mac at the discount rate, currently 2.25 percent, charged to commercial banks.

Facing White House

The Treasury chief read his statement before cameras on the Bell Entrance of the department's building in Washington, facing the White House. The unusual step illustrated the significance of today's proposals.

Debt sold by Fannie Mae and Freddie Mac ``is held by financial institutions around the world,'' Paulson said in the statement. ``Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets.''

Freddie Mac shares tumbled 47 percent in New York Stock Exchange composite trading last week and Washington-based Fannie Mae lost 45 percent of its value, forcing Paulson two days ago to issue a statement of support for the companies in their ``current form.''

``Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer,'' Paulson said.

The government-chartered, publicly traded companies have already raised $20 billion to cover losses amid the highest delinquency rates in at least 29 years. Freddie Mac said earlier this month it planned to sell $5.5 billion of equity after it reports earnings next month.

To contact the reporter on this story: Brendan Murray at brmurray@bloomberg.netDawn Kopecki in Washington at dkopecki@bloomberg.net

http://www.bloomberg.com/apps/news?pid=20601068&sid=aGFaSjTJmUZ0&refer=home

Thank god for FDR and all safe guards built in after the disastrous Republican Herbert Hoover administration

quote:

Originally posted by scottrj50:
Thank god for FDR and all safe guards built in after the disastrous Republican Herbert Hoover administration

Those so-called safe-guards are only as effective as their implementation.

This administration has basically pursued a policy of "hands off" the mortgage markets and that's why we're seeing what we see today.

Could we say "protecting their corporate and banking buddies?"

Naw...it couldn't be that....could it?

Like I've been saying all along. Voting now a days is just picking which candidate is the lesser fool. I kept telling my wife and friends two years ago that Bush should step in and do something. How in the heck can a $125,000 house be worth $200,000 in one year and then worth $250,000 a year later and the only thing new in the neighborhood is that more drug addicts are coming in????? Now that same house sits with a for sale sign on it for the past year and the grass in the front yard is 3 feet high. What are we fighting for?

Thats fine, I encourage those in need of bankruptcy to do so...Why be a slave to these clowns? Their going to give you credit anyways so who cares??

quote:

Originally posted by scottrj50:
Thank god for FDR and all safe guards built in after the disastrous Republican Herbert Hoover administration

You'd better hope they work, because they are the only instruments between this country and financial disaster. Virtually 100s of banks could close in the next year, with "FDIC" being the only thing that might head off total collapse. The over-speculation in the housing market (running up house prices from $10,000 to $500,000 in just 40 years) is a direct parallel to plague of "buying on the margin" in 1900-1928. In both cases, banks borrowed out all their customers' money to those gambling on such ventures, assuming they would make great profits on the interest "bubble" which will never burst. Well, all bubbles eventually explode and sink back into the mire - and that's where we are!

But can an insolvent Government back up and make good insolvent banks???

I guess will soon find out - -

This is what happens when our regulatory and oversight mechanisms fall into neglect and disrepair because of the people who run them.

Just another one of scores of unintended consequences.

quote:

Originally posted by Duster6:
Like I've been saying all along. Voting now a days is just picking which candidate is the lesser fool. I kept telling my wife and friends two years ago that Bush should step in and do something. How in the heck can a $125,000 house be worth $200,000 in one year and then worth $250,000 a year later and the only thing new in the neighborhood is that more drug addicts are coming in????? Now that same house sits with a for sale sign on it for the past year and the grass in the front yard is 3 feet high. What are we fighting for?

Excellent point! It is the grass-root greed of the common home buyer that is just at fault as any banker or wallstreet-type. People buy homes at $100,000 gambling that the value will go to $250,000, so they can sell, pay the loan with the equity, an buy even bigger. But at the same time, they are maxing out all kinds of credit cards for every kind of luxury and toy they can dream of, doubling their debt to live in paradise - way above the Joneses down the street...

Criminal-types see this as the golden goose and actually start manipulating loans and property values so that they can drive home prices way up to gain loans, then pocket the money and run - - That has been happening all over Utah. Once the scams were recognized and stopped, the bottom fell out of the housing market and inflated home prices plummeted. Honest home owners suddenly found themselves owing twice or three times what their homes had fallen to. Then they go to work and find their being laid off because the company is moving to India or China - -

America is in MAJOR trouble - as bad as 1929 - -

quote:

Originally posted by 18476586:
Thats fine, I encourage those in need of bankruptcy to do so...Why be a slave to these clowns? Their going to give you credit anyways so who cares??

That is the attitude which will destroy this nation - Bankruptcy is theft made legal by thieves for thieves - and credit buying is no better - buy with someone else's hard-earned money, then take the goods and run - -

Whatever happened to an honest days work for an honest days pay, and pay with what you earn for what you buy??

Cultural dishonesty will be the death of this nation, as Washington predicted, and you have proclaimed the truth of his prophecy - -

But it's almost all self-fulfilling prophecy.

This nation went along pretty well from the end of the great depression till the late 70's. There were ups and downs but nothing that took the tresury to bailout. Regs and anti monopoly law keeping rapant greed in check.

Do only a few realize that the ones that scream for free enterprise and unrestricted captialism always want to socialize any losses?

I know a lot of people in the mortgage industry who aren't doing too well right now. During the Great Refi Boom of 2001-2006, they were making well into the six figures. But almost all the people I know thought that gravy train would last forever and bought expensive houses, etc, and drove up their monthly expenses staggeringly high, to match the income that was coming in.

Now, I know very few who aren't losing a house or a car...It'll get worse when rates are driven up significantly. Blind leading the blind?

Corporation, n.: An ingenious device for obtaining individual profit without individual responsibility.

- Ambrose Bierce

quote:

Originally posted by greywolfghost:

quote:

Originally posted by 18476586:
Thats fine, I encourage those in need of bankruptcy to do so...Why be a slave to these clowns? Their going to give you credit anyways so who cares??

That is the attitude which will destroy this nation - Bankruptcy is theft made legal by thieves for thieves - and credit buying is no better - buy with someone else's hard-earned money, then take the goods and run - -

Whatever happened to an honest days work for an honest days pay, and pay with what you earn for what you buy??

Cultural dishonesty will be the death of this nation, as Washington predicted, and you have proclaimed the truth of his prophecy - -

I understand but again who cares? If bearstearns gets bailed out, if Fannie and Freddie get bailed then i'm going to make my own damn plan B

Roses are red,
Violets are blue,
As long as we have a 2 party system,
They are going to to screw me and you.

Isn't that what the democrat's and more recently the republican's want? More new taxes? Sounds like more of the same ol' same ol' to me.

quote:

Originally posted by 18476586:
Thats fine, I encourage those in need of bankruptcy to do so...Why be a slave to these clowns? Their going to give you credit anyways so who cares??

The tragedy is that you are correct, no one cares. There was a time when declaring bankruptcy was tantamount to suicide. In most cases it caused shame and feelings of failure. These days it is little more than a brief legal exercise resulting in the debtor being relieved of responsibility while those owed get little or nothing. No shame is attached to the action and almost immediately the reborn consumer can start building debt all over again with no one seeming to care...and we wonder why the economy is in such a mess.

quote:

Originally posted by greywolfghost:

quote:

Originally posted by Duster6:
Like I've been saying all along. Voting now a days is just picking which candidate is the lesser fool. I kept telling my wife and friends two years ago that Bush should step in and do something. How in the heck can a $125,000 house be worth $200,000 in one year and then worth $250,000 a year later and the only thing new in the neighborhood is that more drug addicts are coming in????? Now that same house sits with a for sale sign on it for the past year and the grass in the front yard is 3 feet high. What are we fighting for?

Excellent point! It is the grass-root greed of the common home buyer that is just at fault as any banker or wallstreet-type. People buy homes at $100,000 gambling that the value will go to $250,000, so they can sell, pay the loan with the equity, an buy even bigger. But at the same time, they are maxing out all kinds of credit cards for every kind of luxury and toy they can dream of, doubling their debt to live in paradise - way above the Joneses down the street...

Criminal-types see this as the golden goose and actually start manipulating loans and property values so that they can drive home prices way up to gain loans, then pocket the money and run - - That has been happening all over Utah. Once the scams were recognized and stopped, the bottom fell out of the housing market and inflated home prices plummeted. Honest home owners suddenly found themselves owing twice or three times what their homes had fallen to. Then they go to work and find their being laid off because the company is moving to India or China - -

America is in MAJOR trouble - as bad as 1929 - -

Yup. That about sums it up in a nut shell.

Kind of makes one sick when they see or hear our elected officials raise their right hand and swear on the bible to be fair and help America and then go behind close doors and start making deals to screw us. Our justice system should hold them accountable but it too sometimes hands out justice behind those same closed doors.

My economy is just fine. Planning ahead pays off.

Oh honey...look what's on the tube!
A program outlining how to "flip" a mortgage on a rundown old home...fix it up for a few pennies and then rip off an unsuspecting sucker. Line up a fly by night lender and *PRESTO*--there you are--hey we can even sell advertising to corporations like Countrywide and DiTech refinaciers to subsidize the show.
Where am I going and why am I in this handbasket?
Genius!

I just can't put all the blame on the companies. Seems to me that any fool would know not to buy way above their means. Just because the payments are low, doesn't mean that one can afford it. You have to pay the capital at some point in time.

What happened to all the regulations and oversight?

How come we have had a savings&loan crisis and bailout, an airline bailout and now a mortgage lender massive bailout just to hit the hit points?

I rent my home, so one one level all of this is beyond me. But I'm also a working taxpayer, so at some point my dollars will go into this mess.

I dodged the bullet, but frankly it wasn't because I was particularly smart--I was either lucky or unlucky depending on your perspective.

I don't really like renting--I'd much rather own my home but at the moment and in my current location I can't afford it. About three years ago I was seriously looking at real estate, but even then I was only looking at sheriff's sales and VA forclosures--forget new housing, I'm not made of money, y'know. Ennyhoo, in short order TOH lost her job due to health issues and I ran up a debt load due to an unfortunate series of cat rescue cases. Thank God I wasn't carrying an unsustainable mortgage at that time or I'd really be screwed.

Well, I'm still working and scraping. TOH is awaiting a determination on Social Security disability. I'm holding it together, but that's increasing requiring a high degree of creativity and adaptability that's testing everything I ever learned in The Green Suit. And on top of that I'll now be bailing out those not so lucky or prudent with my tax dollars. And the taxes I'll pay next year may well increase since I'm not one of "The Protected".

Sigh. Guess I'll keep my powder dry until November, fire off my pitiful few shots and then hunker down when the counter-battery fires hit....