Financial Regulation

Why No One Is Trying to Kill Fannie and Freddie

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ready freddie?

A great piece in today's Wall Street Journal from Brian Carney on the mysterious immunity to reform enjoyed by the utterly dysfunctional Freddie Mac and Fannie Mae:

Fannie and Freddie have liabilities in excess of $5 trillion. They have already directly cost taxpayers nearly $150 billion, with no end in sight. Most of the banks bailed out in the fall of 2008 have gotten back on their feet and many have paid back, or started to pay back, the money provided to recapitalize them at the height of the panic. Not so Fan and Fred. They continue to bleed money, and each quarter brings new losses and new demands on their unlimited line of credit with the federal government, which is to say the American taxpayer. And yet these facts are ignored—not just by Congress or the administration, but by the press and much of the public.

kill fannie!

Meanwhile, Fannie and Freddie, failures that they are, have become more central than ever to America's mortgage industry. They underwrite the vast majority of all new home loans, and they own or guarantee about half of all the mortgages outstanding. Our banking system never was nationalized in the crisis, as some urged at the time. But mortgage finance has been, or nearly so, with nary a whisper of debate or protest.

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  1. At least as early as 2003 and I think 2002, Ron Paul proposed a bill annually to kill them.

    “No one” is a stretch.

  2. First comment on the WSJ thread, rare to see a newspaper comment that I can agree with:

    Dismantling all the GSEs should be a requirement of those seeking seats in the next Congress.

  3. Follow the money.

  4. Why, I just can’t imagine why no one’s very, very, very few Congresstards (for robc) have taken on F and F.

    It’s a mystery.

    *palms up, shaking head*

  5. money provided to recapitalize them at the height of the panic.

    It warmed my heart to see it called a panic, not a crisis.

    1. Panic is what politicians once called what we now call recessions.

  6. I’m from the Government, and I’m here to help you.

  7. Well – some noteworthy items.

    1- the GSE Reform Act of 2005 (HR 1461/S190) was squashed by the Bushpigs.

    2- FNM/FRE were put into receivership in Sep 08 instead of ch 11.

    3- FNM/FRE originate no loans or take no deposits. They exist as a mortgage finance agent only.

    4- Bondholders in the trillion $$$ range are “implicitly” backed by Washington.

    5- the $150 billion backstop by Washington saves trillions unless the US were to default.

    6- the situation was a total clusterfuck from the inception of FNM/FRE in 1948 and 1969.

    1. It was mostly Democrats who opposed the GSE reforms. Remember Barney Frank saying that it might make housing “less afordable”?

      1. Total bullshit. Barney Frank “saying” something meant nothing in the DeLay/Frist iron grasp of Congress.

        Quit listening to Rush (King of the Rednecks) and his insipid lies.

        1. I’m not sure how well this breaks down on partisan lines, but it is certainly true than neither party has clean hands in regards to this insane obsession with “home ownership.” The GSEs are just one part of the problem, though a big part.

          I’d say a little more responsibility lies in the lap of the Democrats for this nonsense, but the GOP didn’t stab the GSEs with its steely knives when it was in control, either.

          1. True.

            Private banks like WaMu or public GSE’s FNM/FRE skimped on capital to the point where a 20% fall in home values decimated their balance sheet.

            Merrill sold MBS at .22c on the face dollar to survive.

            FNM/FRE were only a symptom of a coming deflation.

        2. http://goliath.ecnext.com/coms…..enate.html

          All the democrats on the senate banking committee voted against it.

          1. You are correct. Per your link – “the committee voted 11 to nine to move the bill to the Senate floor. ”

            So the GOP Majority won 11-9 in committee.

            Then Bush killed it. Mike Oxley – House sponsor said that Bush gave the “one finger salute” to that reform.

            You highlight the impotence of the minority Dems with your link – nothing more.

            1. The Democratic minority was “impotent” to vote in favor of it?

              My impression is that you’re saying that Bush didn’t fight hard enough to overcome Democratic opposition.

              That doesn’t mean that the Democrats weren’t against it.

              1. Dems lost 11-9. Yes, that is “impotence”.

                1. so basically it was bush and the dems that blocked it

                  1. +100

            2. Good information in this thread, including a partial reprint of the FT article with Oxley’s comments and the statement from the Bush Administration indicating that HR 1461 wasn’t sufficiently strong enough to reign in the GSEs.

              Note though that there’s no indication that it was WH pressure that led to the demise of the whole process. HR 1461 passed the House. It was in the Senate that things got bogged down.

              But the theory that the Dems were fully in support of reigning in the GSEs simply has no basis in reality.

              1. I NEVER claimed that Dems were in full support of S/190!

                I only claimed that the Bush White House killed it!

                The fact is HR1461/S190 would have raised CAPITAL requirements to the point they could loan no more in 2005!

                Would it have averted the 2008 crisis? Not likely.

                Nevertheless a pattern emerged – the Bush regime wanted no part of serious regulations.

                1. The article actually says the Bush administration thought the bill wasn’t strong enough.

                  1. And privatization is the ultimate regulation as it forces investors to bear the full risk of their actions. Privatization in which the government bears the downside risk is of course not privatisation at all, but corporatism.

                  2. Because the Bushpigs weren’t satisfied with neutering the GSE’s — they wanted to fully privatize – like they wanted to do with Social Security eventually.

                    That is why I call them “pigs”.

                    1. Because the Bushpigs weren’t satisfied with neutering the GSE’s — they wanted to fully privatize – like they wanted to do with Social Security eventually.

                      You say this like it’s a bad thing.
                      If you still consider yourself a libertarian, why are you against fully privatizing F&F?

                2. Too bad you’ve provided zero evidence of that. The Bush Administration was openly in support of GSE reform. It did not like the House effort (HR 1461) and stated that openly. There’s no evidence that they weren’t supportive of the Senate effort. The Senate effort did not make it to the floor for a vote, and the reasons for that aren’t entirely clear.

                  But you, with a straight face, are trying to state that the Bush Administration was the bulwark of resistance to GSE reform. Utter bullocks. They resisted particular “reform” attempts, as all bills that come out of Congress are labeled as “reform” but may not truly be such when one actually bothers to read and understand them. Some (most) are crap. They thought HR 1461 was crap. If you want to argue why they were wrong, then go ahead. But stop with this “Bush Coddled the GSEs and Prevented Reform!” crap.

                  1. No! The House passed 1461 under Finance Chair Mike Oxley (R) in order to curtail the lending activity of FNM/FRE.

                    The “evidence” is the language in the Bill!

                    You tell ME what Bush really wanted in the place of 1461/190!

                    He bucked the GOP Congress!

                    1. Since apparently you didn’t feel the need to read through the commentary I provided earlier, here is the link in that commentary from the Bush WH explaining why they weren’t in favor of HR 1461.

                      Note that this is not an objection to S-190. HR-1461 and S-190 were two very different bills. There was no WH statement about S-190 that I can find. According to the linked AEI article, S-190 was much closer to what the WH was seeking. It died in committee, and Mike Oxley’s comments don’t tell you dick about why, since he was only commenting on HR-1461.

                      So stop lumping the House and Senate efforts together and stop oversimplfing the pathways to reform and try providing a shred of evidence that the WH wasn’t interested in solid GSE reform such as S-190.

                    2. Herr Busho Flightsuit —

                      This regime is of particular concern given that Fannie Mae and Freddie Mac currently hold only about half of the capital of comparable financial institutions.

                      So he killed it! LMAO!

                    3. Good to know that when backed into a corner due to lack of evidence for your stated position, you resort to simply restating your pre-conceived truth.

                      Classic.

                    4. Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush Bush

                    5. He bucked the GOP Congress!

                      That left-wing fucker! I knew he wasn’t a real republican!

        3. The GSE Reform Act of 2005 originated from the Bush Administration. It overwhelmingly passed the House. It squeaked by the Senate committee on a party line vote, with the GOP passing it.

          I couldn’t find, in 5 minutes of Googling, exactly how it ended up dying, but your claim of Bushpigs is simply preposterous.

            1. “The House bill, the 2005 Federal Housing Finance Reform Act, would have created a stronger regulator with new powers to increase capital at Fannie and Freddie, to limit their portfolios and to deal with the possibility of receivership”

              Anybody hear an echo of Wesley Mouch in there?

            2. Brad DeLong doesn’t answer shit. Brad DeLong simply reprints the FT article that you already referenced with the Oxley quote.

              1. Well, yes. This is arcane nuance most pass over for a few good ol’ Fox News talking points…

        4. Quit listening to Rush (King of the Rednecks) and his insipid lies.

          God fucking damnit, Shrike, and you were doing so well up until this moment. Back to the dustbin of retard spammers with you.

    2. Some people do not understand the origin of money. They think it can be created out of thin air. These people tend to vote for socialists like Obama & Company. These are some fine examples of such people.

      ROGULSKI: Why are you here?

      WOMAN #1: To get some money.

      ROGULSKI: What kind of money?

      WOMAN #1: Obama money.

      ROGULSKI: Where’s it coming from?

      WOMAN #1: Obama.

      ROGULSKI: And where did Obama get it?

      WOMAN #1: I don’t know, his stash. I don’t know. (laughter) I don’t know where he got it from, but he givin’ it to us, to help us.

      WOMAN #2: And we love him.

      WOMAN #1: We love him. That’s why we voted for him!

      WOMEN: (chanting) Obama! Obama! Obama! (laughing)

      -=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-=-

      ROGULSKI: Did you get an application to fill out yet?

      WOMAN: I sure did. And I filled it out, and I am waiting to see what the results are going to be.

      ROGULSKI: Will you know today how much money you’re getting?

      WOMAN: No, I won’t, but I’m waiting for a phone call.

      ROGULSKI: Where’s the money coming from?

      WOMAN: I believe it’s coming from the City of Detroit or the state.

      ROGULSKI: Where did they get it from?

      WOMAN: Some funds that was forgiven (sic) by Obama.

      ROGULSKI: And where did Obama get the funds?

      WOMAN: Obama getting the funds from… Ummm, I have no idea, to tell you the truth. He’s the president.

      ROGULSKI: In downtown Detroit, Ken Rogulski, WJR News.

        1. Reality is racist

          1. Nope, just you, Hitler, etc.

            1. Hitler only hated Jews not blacks….

              According to Faracon you can do that and not be a racist.

              1. You ought to be afraid, as fucking ignorant as your statement was.

    3. Would that be the S190 that was co-sponsored by noted Bushpigs McCain, Sununu, and Dole? The one that Obama didn’t vote for? That couldn’t get a filibuster-proof majority because of Democratic opposition?

      Bushpigs, my third nipple. It was killed by Democrats.

    4. Shrike, baby, they aren’t THAT noteworthy,

    5. There’s enough blame to go around, but I’m sure you want to bring those overcompensated execs to task like we did with Enron, right? People like Franklin Raines, James Johnson, and Jamie “Mistress of Disaster” Gorelick. (Gorelick was also the Clinton administration official who prevented the FBI and CIA from sharing intelligence about terror threats and thus contributed to 9/11. Amazingly, she then served on the 9/11 commission!)

      1. Jamie “Mistress of Disaster” Gorelick. (Gorelick was also the Clinton administration official who prevented the FBI and CIA from sharing intelligence about terror threats and thus contributed to 9/11. Amazingly, she then served on the 9/11 commission!)

        Well, who would better know how to stop another 9/11 than the person who contributed to it? If it were me, I’d have Osama Bin Laden as chair of the 9/11 commission!

  8. They are being ORDERED to buy up mortgages by the government, which is still trying to prop up the housing market and get people to buy homes.

    Not that Fannie and Freddie aren’t collossal failures, but the Obama has pursued an explicit policy of using them as conduits to soak up troubled assets and keep housing prices from falling.

    In fact, the main reason the banks have been ABLE to pay back TARP is because the government is soaking up through trouble assets through F&F and the federal reserve.

    All they are doing, really, is shifting the bailout balance from one account (TARP) to another one (the Fed printing money, F&F absorbing bad loans.)

    1. FNM/FRE only bought “conforming” loans of a certain credit standard and under $330,000 in 2005.

      Private banks originated 84% of all mortgages 2004-06. http://www.mcclatchydc.com/200…..z0kRjNd6Xl

      Lehman, Bear, and Merrill died of their own gunshot wounds.

      The private sector failed.

      1. The private sector Easy money policies by the fed failed.

        Sigh. Dumbfuck liberal.

      2. Non sequitor. i’m pointing out that RIGHT NOW, F&F’s debts are ballooning because F&F are being forced to buy up shitty loans to prop up the market.

        1. Yes, in real time 2010, FNM/FRE are soaking up debt no one else wants – and also holding rates down for borrowers.

          Without FNM/FRE 30 yr rates would be 8-10% even in these low Fed Funds rate days..

          This is a Depression since assets are all cratering (x gold) the only thing holding the sky up is Fed liquidity of “fiat” money that is appreciating…

          1. Maybe 30 year rates SHOULD be 8-10%.
            given American’s horrible credit histories recently.

            Also, if the banks were collecting 8-10% interest they might actually replace their lost capital reserves that much more quickly.

            1. I wish loan rates were 8-10%, maybe then I could make some interest on the cash I have been saving. Knowing that the best I can get on savings is 1.4% or so makes it hard to resist the urge to go out and spend it all on hookers and blow.

              1. The retirement plan my broker has NOT advised me of: die youngish and penniless with a shit-eating smile on your face.

                Still sounds better than the TV programs with geriatrics living on golf course developments in Arizona.

                Makes a feller think…

            2. They probably SHOULD be. But that is not politically expedient.

              The Fed has a mandate to manage their lowest rate in accordance with UE and interest rates (inflation).

              Bernanke has his foot on the pedal and 10-yrs are still selling and 2-3%.

              Dump gold and buy 5% corporate yields.

              1. This is another aspect of what is sick and wrong with “Democratic” control of the economy. If the majority can fuck with the economy in whatever way they want, then the home-owning majority will vote for ever-rising housing prices, and the stock-owning majority will vote for higher stock prices. And so forth. All precipitating periodic bubbles and crashes.

                Anyone who thinks that economic regulation will work out because
                democracy will magically make things fair and rational is completely insane.

                1. Yes, young grasshopper. It is good for assets to increase in value.

                  1. For the holders of the assets, yes.

                    And value is defined by … ?
                    If my house doubles in market value, but so does the price of everything else, how am I better off?

                    I’m only better off if I can actually get more out of selling the house. I.e. if my asset increases in value relative to someone else’s asset.

                    And if I can just use “democracy” to vote up the value of my stuff relative to others, how is that fair?

                    Bottom line, the only way to fairly improve values for everyone assets, is to produce more with the same investment. Voting for the government to drive up the market value of your personal investments is fundamentally fucking wrong from both a moral and economic standpoint.

                  2. Yes, young grasshopper. It is good for assets to increase in value.

                    Not it is not. It’s is good for the asset holder for assets to increase in value, but it’s not necessarily proper for them to increase in value in aggregate.

                    Falling prices for an asset is what is known as a market signal. If the government mandated that all assets vill increase in zer falue, no mattah vat!!!11!1one1!! then this situation could hardly be described as ‘good’, it would better be described as North Korea.

              2. They probably SHOULD be. But that is not politically expedient.

                Stop right there, you’re done.

          2. It is absurd that 30 year mortgages with less than 20% down are less than 15-20% interest.

            1. Yes! It would be in normal times.

              Except we are in a deflationary spiral!!!!!!

              1. No we’re not. But it might be better if we were. At least we could start recovering, then.

              2. Yes! It would be in normal times.

                Except we are in a deflationary spiral!!!!!!

                Impossible, Fed policy is designed in such a way that this will never happen.

      3. Originated isn’t the same thing as “held”.

        Most mortgage loans were sold to F&F within 60 days of closing. From 200-2003 F&F were actually being prudent and they saw their market share dwindle because mortgages were becoming riskier which F&F avoided. Post-2003 as the number of private entities buying the shit dwindled, F&F were being begged by public pension funds and Congress to “get in the game” to boost their market share. Yeah, get in the game right when the smarter money is getting out.

        1. Close.

          Post 2003 the private banks were elbowing F&F out of the way to package MBS to sell at AAA Moody’s status to unsuspecting investors.

          1. Oh. My. Word.

            Elbowing? Come again? Did the GSE’s market for their debt suddenly dry up (as “elbowing” would imply)? I think not.

            “Unsuspecting investors” – Yeah, that’s it. Joe and Jane investor just started gobbling these up. It wasn’t the other financial institutions (you know, like Bear Stearns). Totally “unsuspecting”.

            “AAA” – Yeah, the packagers of MBS’s forced the ratings agencies to give fraudulent ratings. Uh huh. The ratings agencies were duped by evil private banks.

            1. No, the packets of MBS were rated AAA by the syndicates who pooled them (at a price premium of course). Moody’s/S&P were merely pimps along for the ride flagging their buttocks for street value.

              This will all be grad school fodder for MBA students the next decade.

              But market liars/fundies won’t fare so well since they used the system to fool ordinary mutual funds.

              1. WTF are you talking about? Only the ratings agencies issues ratings. They are solely responsible for all the crap that got AAA attached to it.

              2. The MBSes were rated AAA because of misapplication of statistical risk models that only some nerds living in closets understood.

                1. But until Obama FinReg they weren’t liable!

                  Civil suits on sham ratings now have effect!

                  1. They have no effect. The ratings were a mathematical modelling error. They were not intentional. You can’t charge someone with fraud for giving you a buy rating because they were stupid.

                    What you should do is use a different ratings agency. But … oops … we’re not allowed to do that.

          2. Post 2003 the private banks were elbowing F&F out of the way to package MBS to sell at AAA Moody’s status to unsuspecting investors.

            And government regulations demand that all assets rated at less than AAA be sold, creating a deflationary spiral. Those MBS’s weren’t worth $0, they were worth something, but because of twisted market regulations, they essentially became worthless overnight. Because of this fucked up rating system, an asset goes from “Good as cash” to “?!!?!?!!?!?”.

            We should be pushing for rating system reform if anything. This system of forcing financial institutions to hold AAA rated stuff, and then sell AA rated stuff is a recipe for disaster.

            Oh wait…

      4. Private banks originated 84% of all mortgages 2004-06

        So wait i can make any crazy loan i want and FNM/FRE will buy them sight unseen and no responsibility after the sale of the loan will come back to haunt me?

        You are correct, the private sector failed to note the fundamental catastrophic economic errors the government was installing into the the financial sector.

        If the government started paying top dollar for sewage it should be no surprise that the private sector would supply it to them no questions asked.

  9. Fannie and Freddie have liabilities in excess of $5 trillion. They have already directly cost taxpayers nearly $150 billion, with no end in sight. … They underwrite the vast majority of all new home loans, and they own or guarantee about half of all the mortgages outstanding.

    “Underwrite”?! “Guarantee”?!

    1. Misleading article – there is $5 trillion in liability but what is the asset valuation?

      In 09 it was low – in 2013 it could be $8 trillion.

      1. Misleading article – there is $5 trillion in liability but what is the asset valuation?

        What the market says it is, nothing more, nothing less.

  10. Kill them,
    KILL THEM.
    KIILLLL THEM!

    Let the chips fall where they may.

  11. Private banks originated 84% of all mortgages 2004-06.

    A meaningless statistic, since private banks don’t keep the mortgages, but sell them off to Fannie and Freddie. The banks are essentially originators, and make their money from origination fees.

    The existence of Fannie and Freddie, implementing a federal policy of hoovering up every mortgage in sight, is the fundamental market distortion, since it changes the incentive for banks from making quality loans (where they bear the risk of bad loans) to originating loans in volume (where money is made by making bad loans).

    1. A meaningless statistic, since private banks don’t keep the mortgages, but sell them off to Fannie and Freddie.

      No questions asked. Zero risk and guaranteed profit for loan originators.

      All we need now is a congressional investigation of why loan originators did this and the circle of idiocy will be complete.

      1. F&F do have buy-back provisions in their contracts and are trying to get originators to take lots of loans back. Only problem is, taking the loans back will make more banks insolvent thus requiring the FDIC to take over the bank. F&F are essentially the shadow FDIC or RTC at this point.

        1. I know this is happening, but what are the conditions of the buy-back provisions. Do they need to show some sort of fraud or is it a “hey, we misvalued by over 40%, buy it back”.

          Speaking of which, you would think that F&F would get an appraisal done before buying the mortgages.

          1. Ap-prai-sal? How do you spell that? Is it an English word?

    2. …the fundamental market distortion,…

      Wrong, the FED is the fundamental market distortion.

      1. The Fed is the rocker arm of the market.

        STFU.

        1. The Fed is the rocker arm of the market.

          And it’s workin’ like clockwork.

  12. It’s amazing what businesses will do when they know the government has got their back.

  13. FNM/FRE originate no loans or take no deposits. They exist as a mortgage finance agent only.

    And without Fanny and Freddy standing by to snap them up, a lot of (now-underwater) loans would never have been made.

  14. I’m starting to wonder whether shriek is real. Because he can’t be.

    1. The TechnoCore sent him from 1,000 years in the future to prevent humanity from discovering their plot to turn all humankind into sexless idiots and use our excess brain cells for their computing power needs.

      1. Oh, is he that Shrike?

        1. What could be so resistant to the powers of logic besides a 3 meter, 500 kilo steel and razorwire killing machine?

          1. Paul Krugman?

      2. No, he was sent back in time to destroy humanity by convincing us all that printing little pieces of paper and handing it out to people in exchange for not working will make us all fabulously rich.

        1. Because you know, all those little piece of paper will stimulate demand for the products made by magic gnomes who live underground. Whom we can tax.

          1. saith Ron Paul – goldbug tool of the ancients!

            1. Who says I’m a goldbug? I believe in competing currencies.

  15. C’mon, shrike, we’re running out of falsehoods and non sequiturs to eviscerate, here. Don’t let the thread die, man!

    1. And while Shrike insists that Bush killed it, it appears that he’s abandoned the “Bush killed it with a pocket veto” fable. It’s sad to see the classics die.

  16. Rush is fat.

    QED

    1. yeah, but Moving Pictures still rocks! đŸ™‚

      1. La Villa Strangiato, Dude!

    2. …and I’m not sure, but I think shrike dislikes him.

  17. Speaking of which, you would think that F&F would get an appraisal done before buying the mortgages.

    What? And eat into those razor-thin margins?

  18. Read how Fannie and Freddie pushed us over the cliff in 2004/5 to cover up their accounting scandals.

  19. If anybody saw the Masters of Horror’s episode “Jenifer”, then you could understand why Freddie and Fanny have not received the ax yet…

  20. I think the larger question in regards to FNM and FRE is what is the ultimate point of a GSE? If it is always a liability, what useful purpose does it serve trying to clean up the $#!% it creates every couple of election cycles?

  21. On the bright side, at least mortgage contracts signed in June are at all time lows!

    From Bloomberg: “The rate was the second-lowest in data going back to 1963 after May’s downwardly revised 267,000 pace.”

    http://www.bloomberg.com/news/…..casts.html

  22. So they cost taxpayers about a fifth of our “defense” budget during a historic financial crisis in which private firms took it on the chin too and helped many people into home ownership (a major milepost of dignity for most Americans).

    How awful!

    1. They were also major contributors to the current recession. Seems a bit steep to put people in houses.

      1. Not to mention that many of those people they helped are now losing their house and are in worse financial shape than they would have been if they continued renting. Mission accomplished!

    2. I am galactically uninterested in seeing other people helped to “a major milepost of dignity” on my dime. Their dignity, or lack thereof, is not my goddamn problem.

      1. Dagnabbit!

      2. ‘Milepost of Dignity’ reminds me of ‘War on Terror’ and other abstract non-achievable yet ludicrously expensive propositions.

      3. RIGHT ON!!

    3. a major milepost of dignity score-keeping in the game of competitive materialism for most Americans

      FTFY

      I’d rather be a renter for life than be murdered or enslaved by a foreign aggressor, thanks. Though I suppose I’m currently more concerned about our domestic aggressors.

  23. I wish loan rates were 8-10%, maybe then I could make some interest on the cash I have been saving. Knowing that the best I can get on savings is 1.4% or so makes it hard to resist the urge to go out and spend it all on hookers and blow.

    No, no, no- how are we going to get the Dow back to 14k that way?

    The more I think about it, the more I become convinced the PowersThatBe are actively trying to discourage saving, and force any and all liquidity into the stock market.

    1. Ummm…money invested in the stock market is savings.

  24. And good old ultra-independent Ben Bernanke is not exactly immune to the knowledge that the Treasury really needs ZIRP, if they want to continue borrowing.

  25. money invested in the stock market is savings.

  26. Fucking squirrels…

    Yes.

    But it is illiquid, and subject to erratic and significant fluctuations in value.

    1. True. Well, its pretty liquid, it takes about 30 seconds to cash it out. Not go-to-an-ATM liquid, sure.

      But anyway, neither the illiquidity nor erraticity makes it any less savings, from a calculate the savings rate perspective.

      1. That’s utterly and completely wrong. Stocks are not savings, they are stocks. A stock is an investment – an interest on the revenue stream and control of a company. It is subject to wild swings in valuation.

        1. From an abstract perspective it doesn’t make any difference. Money put in a bank account is ultimately invested by the bank on your behalf.

          In one case it is lent out with a promise of a fixed return. In the other you get a share in the profits.

          The only different is the risk/reward ratio.

          And anyway, you can reduce risk by investing in mutual funds or index funds or hedge funds. You could probably come up with some sort of stock-based investment that acts like a bond. I think someone probably has already.

  27. Mrs ward you are part of the ugly big problem .you know very well that with out fnm,and fre thid would be worst they the ones that taking all the bad shit from you banks that you love. they are the problem .don’t shift the attention that you repblicans created

  28. Could the reason for Fannie/Freddie’s continuation be that it’s a congressional slush fund? Congress gets big bucks, kids.

    How many in congress, or their handlers, money-monkeys, spouses, kids have Fan/Fred bonds and/or stocks? Those “investments” are a sure thing since congress manadated, after Frederick Raines cooked the books at Fannie and paid himself hundreds of millions of dollars in bonus, that taxpayers would be on the hook for any and all losses. That wasn’t true under Bush 1.

    So in other words, fraudster friends of congress collapsed the economy (and the world’s economy too), losing the value of their investments, or their friends did, and we pay!

    And the liar loan recipients who lost their homes because they signed papers saying they’d pay knowing full well they wouldn’t…will be paid by taxpayers too. And the liar banks… same thing.

    In addition aren’t most big “public service” unions’ pension funds invested in CDOs and real estate whose value was fraudulant ? Was the fact that those union members would be expecting payouts an excuse for the swindle? can’t you picture the congressional realization “we’re screwed because all those folks are expecting payouts and there’s no way there’s enough tax money coming in or likely to fall out of the sky, so what’re we doing to do?!?!”… or were those folks’ retirement benefits just collateral damage?

    Think about what those union expectations mean. Everyone throughout the US who works in any kind of government or quasi government job (an awful lot of people) made their contributions (or they didn’t contribute but someone did it for them — taxpayers again), all of them expecting to receive pension benefits… which they won’t, if everything goes to hell. Even if things hadn’t gone to hell, I doubt if the money would have been there, and that’s interesting to think about. Maybe that’s the real reason for the whole swindle — getting taxpayers on the hook so that congress could look like the good guys. After all, for the last 50 years they’ve been making promises to the tune of hundreds for every tax dollar coming in. So without knowing it, taxpayers have been indentured to congress for their promises to pay every thing to every one. The chickens are now in the hen house, or soon will be. But anyway, everything HAS gone to hell, courtesy of congress, and taxpayers will be forced to pay, at the least for a number of generations or perhaps forever or as long as the country lasts, whichever is longer.

    I read the phrase “100% tax” recently, along with a very slick justification. I’m not kidding.

    But unfortunately, at the same time the bozos in congress are desperate to have trillions of tax dollars flowing in so that people won’t start doing very bad things to them for their unimaginable and unquantifiable malfeasance, jobs are disappearing, and this debacle is going to be hanging around for many decades if not a hundred years or more.

    All of us are on the hook to the banks that got a de facto invitation to take everything that the Savings and Loan debacle didn’t get, thanks to congressional tinkering with and finally killing the Glass-Steagall Act that protected us from the very thing that has now come to pass.

    And that’s the way it’s gonna be. And don’t think that elections are going to fix anything. They haven’t ever, and they never will…not the way things are handled in this country. Everyone gets a finger-wagging, never a bash in the side of the head with a 2×4.

    This link might be the 2×4 for some folks.
    http://www.usdebtclock.org/

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