Occupy Wall Street: Not on major media but worth watching!

[dagnabit]

one of us does....

here is wikki....fwiw

http://en.wikipedia.org/wiki/Freddie_Mac
http://en.wikipedia.org/wiki/Fannie_Mae

The Federal Home Loan Mortgage Corporation (FHLMC), known as Freddie Mac (OTCBB: FMCC), is a public government sponsored enterprise (GSE), headquartered in the Tyson's Corner CDP in unincorporated Fairfax County, Virginia.[3][4]

The FHLMC was created in 1970 to expand the secondary market for mortgages in the US. Along with other GSEs, Freddie Mac buys mortgages on the secondary market, pools them, and sells them as a mortgage-backed security to investors on the open market. This secondary mortgage market increases the supply of money available for mortgage lending and increases the money available for new home purchases. The name, "Freddie Mac", is an acronym of the company's full name that had been adopted officially for ease of identification (see "GSEs" below for other examples).

 

[DiscoBiscuit]

Fannie Mae goes back to the 30s. I think you're getting back to the narrative.

Why are people trying to rewrite the history of the crisis? Some are simply trying to save face. Interest groups who advocate for deregulation of the finance sector would prefer that deregulation not receive any blame for the crisis...

...Bloomberg was partially correct: Congress did radically deregulate the financial sector, doing away with many of the protections that had worked for decades. Congress allowed Wall Street to self-regulate, and the Fed the turned a blind eye to bank abuses.

"Banks abuses" includes Freddie, Fannie and others who are backed by the taxpayer. Anybody selling FHA loans gets FHA backing. The feds oversee these corporations, their books and their risk but government doesn't profit from the corporate side of these entities.

 

[HUGE]

here you 2 stop fighting and listen to this old man http://www.break.com/index/too-big-to-fail-1999-warning-in-congress-2193451

he will set you straight dagnabit

 

[DiscoBiscuit]

yeah, that pretty much reinforces the idea to watch out when deregulation occurs.

 

[dagnabit]

im not arguing for deregulation.

im saying the fed backing mortgage bundles that included subprimes through fannie/freddie helped compound the problem exponentially.

1980–1989
1980: The Depository Institutions Deregulation and Monetary Control Act (DIDMCA) of 1980 grants all thrifts, including savings and loan associations, the power to make consumer and commercial loans and to issue transaction accounts. The law also exempts federally chartered savings banks, installment plan sellers and chartered loan companies from state usury (unlimited high interest rates) limits.[16] The law also allowed home equity loans to be treated just like mortgages.[17]
1981: Each of the 12 Federal Reserve banks establishes a Community Affairs Office to offer public and private guidance in accordance with the Community Reinvestment Act.[18][19]
1981: Salomon Brothers transitions from a private partnership to a public corporation, the first of the Wall St. investment banks to do so. This shifts the risk of financial loss from the partners to shareholders, arguably increasing the appetite for risk.[20]
1981: David Maxwell becomes CEO of Fannie; he greatly increases the use of mortgage securities, forming an uneasy alliance with Ranieri and Fink[5]
1982: Reagan's Commission on Housing recommends the GSEs be separated from the government
1982: Alternative Mortgage Transaction Parity Act of 1982 (AMTPA) preempts state laws allows lenders to originate mortgages with features such as adjustable-rate mortgages, balloon payments, and negative amortization and "allows lenders to make loans with terms that may obscure the total cost of a loan".[21]
1983: The first collateralized mortgage obligation (CMO) is created by Larry Fink's team at First Boston. It is made from Freddie Mac mortgages.[22]
1984: The Secondary Market Enhancement Act (SMMEA), partly formed by Ranieri's closeness with Reagan's staff, attempts to level the playing field on the mortgage securities market so that private mortgage-securities companies (like Salomon Brothers) will be able to be able to compete with the GSEs. The act also is the foundation of the credit ratings agencies importance in the market; the law limits pension funds & others so that they are only allowed to buy mortgage bonds that are rated highly by a NRSRO[23]
1986: Tax Reform Act of 1986 (TRA) ended prohibited taxpayers from deducting interest on consumer loans, such as credit cards and auto loans, while allowing them to deduct interest paid on mortgage loans, providing an incentive for homeowners to take out home equity loans to pay off consumer debt.[21] Household debt would grow from $705 billion at year end 1974, 60% of disposable personal income, to $7.4 trillion at year end 2000, and finally to $14.5 trillion in midyear 2008, 134% of disposable personal income.[24]
1986: The Real Estate Mortgage Investment Conduit (REMIC) law is passed, as part of an uneasy alliance between Ranieri (of Salomon) and Maxwell (of Fannie). It prevents double-taxation of mortgage securities; the 'secondary market' for mortgages booms.[25]
1987 The mezzanine CDO was invented at Drexel Burnham Lambert[20]
1987: Maxwell of Fannie, fights bitterly with Wall Street and Congress about allowing GSEs to do REMICs. Lobbying and threats fly back and forth.[26]
1985–1989: The effects of Tax Reform Act of 1986, the elimination of Regulation Q which had capped interest rates banks were allowed to pay, imprudent lending during the late 1970s inflationary period, as well as other causes,[27] led to asset-liability mismatch for many Savings and Loans.[28] This de facto insolvency led to the Savings and Loan Crisis and the failure and/or closure of half of all federally insured savings and loans. The number declined from 3,234 to 1,645.[29][30]
Late 1980s: Several groups lose big money on tranched mortgage securities, including Merrill Lynch. Market shrinks.[31]
1988: Guardian Savings and Loan issues the first 'subprime'-backed mortgage security. Long Beach Mortgage begins to move towards the subprime securitization market. Its employees will later go on to lead many other subprime companies.[32]
1989–1995: Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) established the Resolution Trust Corporation (RTC), which closed hundreds of insolvent savings and loans holding $519 billion in assets. The law also moved regulatory authority to the Office of Thrift Supervision (OTS). The U.S. government ultimately appropriated $105 billion to resolve the S&L crisis. After banks repaid loans through various procedures, there was a net loss to taxpayers of $40 billion by the end of 1999.[33]
The RTC decides to sell the massive amount of bad real estate debt it holds to investors. In order to do this, it decides to use the tools of securitization and structured finance, such as overcollateralization, bond insurance, and subordination. This results in transforming the bad debt into various new products that had high enough ratings to attract investors.[32]
[edit]
1990–1995
1990s: The first subprime bubble. Founding of subprime lenders New Century, Option One, FirstPlus Financial, and the buyout of The Money Store. Famco and several other subprime lenders go bankrupt. Angelo Mozilo of Countrywide privately calls subprime lenders 'crooks', but is forced to compete or lose market share.[34]
1990s: J.P. Morgan invents Value-at-Risk and credit default swaps; later misused tragically by other companies.[35][36]
1990: Fannie gets Paul Volcker to argue it doesn't need the same regulatory capital as banks.[37]
1992: Federal Housing Enterprises Financial Safety and Soundness Act of 1992 required Fannie Mae and Freddie Mac to devote a percentage of their lending to support affordable housing, increasing their pooling and selling of such loans as securities; Office of Federal Housing Enterprise Oversight (OFHEO) created to oversee them[38][39]
1992: Jim Johnson is new CEO at Fannie. Ramps up the 'cut them off at the knees' strategy against political enemies. Tactics include a massive lobbying effort, neutering the OFHEO, creating a "partnership office" network to court the politically powerful with pork, giving high level employment to the well connected, giving out campaign contributions, creating a charity foundation, and threatning critics like FM Watch with retaliation. One of McClean & Nocera's sources compared Fannie's activities to Tammany Hall.[40]
1993: The Federal Reserve Bank of Boston published "Closing the Gap: A Guide to Equal Opportunity Lending", which recommended a series of measures to better serve low-income and minority households, including loosening income thresholds for receiving a mortgage, influencing government policy and housing activist demands on banks thereafter.[41][42]
1994: Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (IBBEA) repeals the interstate provisions of the Bank Holding Company Act of 1956 that regulated the actions of bank holding companies.
1994: J.P. Morgan & Blythe Masters sell the first credit default swap to the European Bank for Reconstruction and Development, to insure Exxon's JPM credit line, & free up JPM's capital[43][44]
1995: New Community Reinvestment Act regulations break down home-loan data by neighborhood, income, and race, enabling community groups to complain to banks and regulators about CRA compliance. Regulations also allow community groups that market loans to collect a broker's fee.[45] Fannie Mae allowed to receive affordable housing credit for buying subprime securities.[39]
[edit]
1995–2000
1995–2001: Dot-com bubble and collapse
circa 1996: President Clinton's "National Homeownership Strategy"[46]
1997: Mortgage denial rate of 29 percent for conventional home purchase loans.[47] Investors purchased more than $60 billion of private-label (non-GSE) subprime mortgage-backed securities, six times more than 1991's volume of $10 billion.[21]
J.P. Morgan bundles credit default swaps into BISTRO, the precusor of the Synthetic CDO. AIG sells credit protection against BISTRO's super-senior tranche.[48][49]
July: The Taxpayer Relief Act of 1997 expanded the capital-gains exclusion to $500,000 (per couple) from $125,000, encouraging people to invest in second homes and investment properties.[50]
November: Freddie Mac helped First Union Capital Markets and Bear Stearns & Co launch the first publicly available securitization of CRA loans, issuing $384.6 million of such securities. All carried a Freddie Mac guarantee as to timely interest and principal.[51][52] First Union was not a subprime lender.[53]
1998: Incipient housing bubble as inflation-adjusted home price appreciation exceeds 10% per year in most West Coast metropolitan areas.[54]
The New York Fed persuades Wall Street to bail out Long-Term Capital Management (a hedge fund). Bear Stearns declines, but every other major bank agrees. Some worry the Fed intervention creates moral hazard.[55]
May: Brooksley Born at the Commodity Futures Trading Commission wants to investigate over the Counter derivatives like credit default swaps; their lack of transparency, lack of regulation, and possible systemic risk. Alan Greenspan, Robert Rubin, and Arthur Levitt of Clinton's Working Group on Financial Markets, and Larry Summers shut her down. She resigns soon after.[56][57][58][59]
October: "Financial Services Modernization Act" killed in Senate because of no restrictions on Community Reinvestment Act-related community groups written into law[60]
1998–2008: Credit default swaps boom along with the products they insure; mortgage securities and CDO tranches. By November 2008, there are between $33 to $47 trillion CDS contracts; nobody can know for sure because the market is unregulated and non-transparent.[61]
1999:
September: Fannie Mae eases the credit requirements to encourage banks to extend home mortgages to individuals whose credit is not good enough to qualify for conventional loans.[62]
November: The Gramm-Leach-Bliley Act (Financial Services Modernization Act) passes. It repeals the Glass-Steagall Act of 1933. It deregulates banking, insurance, securities, and the financial services industry, allowing financial institutions to grow very large. It also limits Community Reinvestment Coverage of smaller banks and makes community groups report certain financial relationships with banks. Congressmen key to the effort include Phil Gramm, Jim Leach, Thomas J. Bliley, Jr., Chuck Schumer, and Chris Dodd.[60]
2000: Lenders originating $160 billion worth of subprime, up from $40 billion in 1994. Fannie Mae buys $600 million of subprime mortgages, primarily on a flow basis. Freddie Mac, in that same year, purchases $18.6 billion worth of subprime loans, mostly Alt A and A- mortgages. Freddie Mac guarantees another $7.7 billion worth of subprime mortgages in structured transactions.[21]
Credit Suisse develops the first mortgage-backed CDO[20]
Lehman Brothers convicted of 'aiding and abetting' the fraud of bankrupt subprime lender Famco, pays a tiny fine.[63]
October: Fannie Mae commits to purchase and securitize $2 billion of Community Reinvestment Act eligible loans,[64][65]
November: Fannie Mae announces that the Department of Housing and Urban Development (“HUD”) will soon require it to dedicate 50% of its business to low- and moderate-income families" and its goal is to finance over $500 billion in Community Reinvestment Act related business by 2010.[66]
December:Commodity Futures Modernization Act of 2000 (based on a report by Summers, Greenspan, Levitt, & Rainer) declares credit default swaps (and other derivatives) to be unregulated, banning the SEC, Fed, CTFC, state insurance companies, and others from meaningful oversight.[67] CDS eventually destroy AIG & others.[68][69][70]

 

[juicepuddle]

quote back n forth cool

 

[DiscoBiscuit]

im not arguing for deregulation.

im saying the fed backing mortgage bundles that included subprimes through fannie/freddie helped compound the problem exponentially.

GSEs have been bundling since the 30s. GSEs knew the difference between low risk and high risk mortgages. GSEs sold these securities accordingly.

It's also important to note that Fannie and Freddie aren't mortgage initiators as much as buyers of mortgages sold by other lenders.


http://www.prmia.org/pdf/Case_Studies/Fannie_Mae_and_Freddie_Mac_090911_v2.pdf

In 2004, the 2000 rules were dropped and high‐risk loans were again counted toward affordable housing goals. This was in the assumption that Fannie Mae's enforcement of their underwriting standards for standard conforming mortgages would also provide safe and stable means of lending to buyers who lacked a prime credit rating. The market continued to perceive that Fannie Mae and Freddie Mac had an implicit government guarantee which gave them the ability to issue debt at lower rates than would otherwise have been possible.

But Fannie Mae’s computer systems could not fully analyze many of the risky loans that customers, investors and lawmakers wanted them to buy. Many of these products were so new that unsafe bets could not be identified by the mathematical models and computer programmes correctly. “We didn’t really know what we were buying,” said Marc Gott, a former director in Fannie’s loan servicing department in the New York Times on October 5, 2008.

In other words, never before in the history of housing had lenders sold to deadbeats.

“This system was designed for plain vanilla loans, and we were trying to push chocolate sundaes through the gears”.

"We also set conservative underwriting standards for loans we finance to ensure the homebuyers can afford their loans over the long term..."

The above is example of GSEs planning for the long term.

We sought to bring the standards we apply to the prime
space to the subprime market with our industry partners primarily to expand our services to underserved families. Unfortunately, Fannie Mae‐quality, safe loans in the subprime market did not become the standard, and the lending market moved away from us.

The above is explanation of other lenders loaning to deadbeats and then selling junk to GSEs who couldn't assess risks because the loans were so exotic and some were even designed to fail.

Borrowers were offered a range of loans that layered teaser rates, interest‐only, negative amortization and payment options and low‐documentation requirements on top of floating‐rate loans.

In early 2005 we began sounding our concerns about this "layered‐risk" lending. For example, Tom Lund, the head of our single‐family mortgage business, publicly stated, "One of the things we don't feel good about right now as we look into this marketplace is more homebuyers being put into programs that have more risk. Those products are for more sophisticated buyers.

Does it make sense for borrowers to take on risk they may not be aware of? Are we setting them up for failure?” As a result, we gave up significant market share to our competitors." ‐ Daniel Mudd, then President and CEO of Fannie Mae, states in the
"Opening Statement as Submitted to the U.S. House Committee on Financial Services", April 17,

The above examples that GSEs actually lost market share by not selling the same crap their competitors sold.

Government made one more mistake besides deregulating banking, lending, insurance, investments, etc. The government had observed lenders applying the necessary due diligence to their loans for decades. Government only assumed the industry would continue weed the chaff.

But when the rug got pulled out from under the circus, private lenders said, "Fuck it, GSEs can't tell we're selling em junk. If they don't buy our crap, Wall Street will and we'll still get rich."

Total ethical collapse from the folks that promised us the market sets conditions that mitigate fraud. They just proved that when no one's looking, they'll rip us off.

 

[Dudesome]

ugh same old story: "what can we change to make it better?"

 

[whodare]

ugh same old story: "what can we change to make it better?"

ive been wondering the same thing and i wonder if a blend of direct democracy and representative government would work...

for example

all big ticket items like foreign aide, war, currency, social services, are controlled by a direct vote of the population....

local governments up to the size of counties would still operate on a representative basis but we would increase the number of reps...



it certainly creates logistical problems but i believe the basis is sound, and it gives the power back to people who i actually do have faith in regardless of how the media and governments try to portray the average "dumb" american, not that they don't exist i just don't believe it to be even close to a majority...

and it would inspire people like me who don't vote to go out and do so because i actually have a say...

imagine getting a prospectus like packet of all the major issues quarterly and voting 4 times a year on multiple issues...

 

[grozzef]

ugh same old story: "what can we change to make it better?"

"can't fix the machine if you don't have the components"

the game is rigged from the start, so much is held back from us like free energy. just imagine the immense changes that alone would bring about. TRUTH is the change we need.

 

[whodare]

nothing free in this world bud, wether its sweat equity or home equity your paying for it somehow...

 

[grozzef]

how is that even a response?

 

[Hank Hemp]

Y"ll talk I'm going to get up off my lazy ares and go vote for my boy Gatewood Galbraith for govener. How about that anybody going to do more for the Cause today?

 

[whodare]

"can't fix the machine if you don't have the components"

the game is rigged from the start, so much is held back from us like free energy. just imagine the immense changes that alone would bring about. TRUTH is the change we need.

nothing free in this world bud, wether its sweat equity or home equity your paying for it somehow...

how is that even a response?

hmmm you spoke of free energy as though it exists and i simply stated that nothing is free, you expend either energy or "money" to get anything or anywhere...

thats how it was a response...

 

[KSP]

Y"ll talk I'm going to get up off my lazy ares and vote for my boy Gatewood Galbraith for govener. How about that anybody going to do more for the Cause today?

Right there with you bro. How great would it be if GG won?

 

[mrcreosote]

Ever notice that every Govt. insurance scheme always ends up badly with the taxpayer footing the bill?

Want to build a 2 million buck house in the Florida Keys smack in the middle of Hurricane Heaven and the private insurance co.s tell you "No effin way" ?
Uncle Sam says "No sweat, here's your flood insurance". "Yes there's no pricing risk involved because when you get blown away the taxpayers are there to pay".

Share the wealth. Joe the Plumber gets to pay for Harry Stockbrokers NEW and improved summer home.
What could be more 'fair' than that?

"The Govt.- Insuring stupid for over 75 years".

 

[Hank Hemp]

Joe the plumber is a bend over and take it sort of guy ain't he?

 

[Haps]

I am making southwestern veggie bean and rice stew to take to my local occupy site this afternoon. The young rebels need warm food to keep the movement going forward. We movin here babay.
H


* They ate the stew in a half hour while I was talking about the movement with the security guard who is trying to understand the deal. Feels right to feed young folks.

 

[krunchbubble]

http://www.youtube.com/watch?v=-xtaZI7grys&feature=player_embedded#!

roger waters....

 

[Grass Lands]

http://www.youtube.com/watch?v=Q7U8iT3O_nk&feature=related

Just Watch and Listen.