placing blame for the financial crisis

[kaydee457 13]

And Barney Frank in July claiming that Fannie and Freddie are ok.........

Edited October 4, 2008 by kaydee457

[one...two...tree 2,762]

Oh geez....the Right Wing bullsh!t machine is in full production...desperately trying to find a Democrat as a scapegoat for this whole mess.

....

This piece was written back in June which explains in a nutshell why they failed.

Steven Bainbridge adds:

Fannie and Freddie should have been fully privatized years ago, so that they were subject to market competition; alternatively, although less ideally, they should have been brought back into the government to be regulated more effectively. Leach was right that leaving them as they were was a disaster waiting to happen. And now it looms larger than ever, with potential disastrous implications . . . Want a worst case scenario? The government takes over Fannie and Freddie. The immense increase in the national debt causes the bond rating agencies to cut their rating of Treasury securities from their traditional AAA. Along with other economic problems (whether its mostly whining or not), this spooks investors, especially foreign investors. Foreigners abandon the dollar for the euro, dumping treasuries. The collapse of foreign investment in Treasuries makes our massive current account deficit unsustainable. At which point, things really go to pot.

All because our leaders in Washington failed on a bipartisan basis to address the problems at Fannie and Freddie. Why didn;t they do something? Because Fannie and Freddie bribed them and because they’re petrified of being painted as anti-consumer,

as even the Times finally noticed . . .

Arnold Kling also has some rather pungent commentary:

1. For some reason, I am reminded of a Vaudeville scene in which firemen are squirting hoses at the set to try to put out an apparent fire, and management comes out on stage to say, "Don't worry, folks. It's all part of the act." My point is that it's very important at this time for people like Treasury Secretary Paulson and Fed Chairman Bernanke to make it seem like they know what they are doing. 2. It seems as though nobody wants to admit that the FM's are done for. Yet the new proposal on the table to have the government back more of the firms' debt and perhaps buy equity is so radical that I have to assume that there is no returning to the status quo.

3. If you could do it over again from a regulatory perspective, you would want to see the FM's market shares a lot lower and the market shares of other institutions, notably banks, a lot higher. I have to assume that this will be the thrust of policy going forward. It's just not something that is going to happen tomorrow.

4.

I used to work at Freddie Mac, in the late 80's and early 90's. Back then, the capital regulations gave the FM's an advantage over banks in holding low-risk mortgages. We understood that, and we stuck to low-risk lending. As times changed, and the market shifted to high-risk loans, it would have been logical for the FM's to say, "This is not our market," and allow their market shares to drop. But top management, at least at Freddie, is pretty green (I'm not sure they could spell "mortgage" when they took over in 2003. When friends of mine described the behavior of the new management team, I decided to sell my Freddie Mac stock. This was at least four years ago.). Between that and government pressure to provide "affordable housing," the FM's decided that they needed to get on the subprime bandwagon rather than stop it.

5. A fundamental debate in economics is between central planning and the spontaneous order of the market. The collapse of the FM's, and of the housing market in general, can be viewed as a failure of central planning. Unfortunately, the dynamics are such that when central planning fails, you typically get more central planning.

http://meganmcardle.theatlantic.com/archiv...die_mac_too.php

[kaydee457 13]

Oh geez....the Right Wing bullsh!t machine is in full production...desperately trying to find a Democrat as a scapegoat for this whole mess.

....

This piece was written back in June which explains in a nutshell why they failed.

Steven Bainbridge adds:

Fannie and Freddie should have been fully privatized years ago, so that they were subject to market competition; alternatively, although less ideally, they should have been brought back into the government to be regulated more effectively. Leach was right that leaving them as they were was a disaster waiting to happen. And now it looms larger than ever, with potential disastrous implications . . . Want a worst case scenario? The government takes over Fannie and Freddie. The immense increase in the national debt causes the bond rating agencies to cut their rating of Treasury securities from their traditional AAA. Along with other economic problems (whether its mostly whining or not), this spooks investors, especially foreign investors. Foreigners abandon the dollar for the euro, dumping treasuries. The collapse of foreign investment in Treasuries makes our massive current account deficit unsustainable. At which point, things really go to pot.

All because our leaders in Washington failed on a bipartisan basis to address the problems at Fannie and Freddie. Why didn;t they do something? Because Fannie and Freddie bribed them and because they’re petrified of being painted as anti-consumer,

as even the Times finally noticed . . .

Arnold Kling also has some rather pungent commentary:

1. For some reason, I am reminded of a Vaudeville scene in which firemen are squirting hoses at the set to try to put out an apparent fire, and management comes out on stage to say, "Don't worry, folks. It's all part of the act." My point is that it's very important at this time for people like Treasury Secretary Paulson and Fed Chairman Bernanke to make it seem like they know what they are doing. 2. It seems as though nobody wants to admit that the FM's are done for. Yet the new proposal on the table to have the government back more of the firms' debt and perhaps buy equity is so radical that I have to assume that there is no returning to the status quo.

3. If you could do it over again from a regulatory perspective, you would want to see the FM's market shares a lot lower and the market shares of other institutions, notably banks, a lot higher. I have to assume that this will be the thrust of policy going forward. It's just not something that is going to happen tomorrow.

4.

I used to work at Freddie Mac, in the late 80's and early 90's. Back then, the capital regulations gave the FM's an advantage over banks in holding low-risk mortgages. We understood that, and we stuck to low-risk lending. As times changed, and the market shifted to high-risk loans, it would have been logical for the FM's to say, "This is not our market," and allow their market shares to drop. But top management, at least at Freddie, is pretty green (I'm not sure they could spell "mortgage" when they took over in 2003. When friends of mine described the behavior of the new management team, I decided to sell my Freddie Mac stock. This was at least four years ago.). Between that and government pressure to provide "affordable housing," the FM's decided that they needed to get on the subprime bandwagon rather than stop it.

5. A fundamental debate in economics is between central planning and the spontaneous order of the market. The collapse of the FM's, and of the housing market in general, can be viewed as a failure of central planning. Unfortunately, the dynamics are such that when central planning fails, you typically get more central planning.

http://meganmcardle.theatlantic.com/archiv...die_mac_too.php

Your ignorance of this subject is profound.....In the next two weeks you'll be seeing stories on exactly who/whom is involved and it's primarily democrats, up to and including "the one".....

More evidence of partisan resistance to regulating Fannie/Freddie by the democrats.....

And this one's very good.....albeit very long...

[one...two...tree 2,762]

Your ignorance of this subject is profound.....In the next two weeks you'll be seeing stories on exactly who/whom is involved and it's primarily democrats, up to and including "the one".....

Riiiight, kaydee. You need to pull yourself away from Faux News long enough to actually read what economists are saying about the whole financial crisis. Scapegoating Democrats in Congress is pure Right Wing bullsh!t and you know it. At the heart of this whole mess has been deregulation. While there have been Dems in Congress who favor laissez-faire economic policies and share responsibility, the real culprit has been deregulation...just as what happened with the S&L bailout back in the 80's which cost taxpayers billions of dollars. It's time we learned our lessons from the past and stop trying to dismantle the Federal Government from doing its job.

[kaydee457 13]

Your ignorance of this subject is profound.....In the next two weeks you'll be seeing stories on exactly who/whom is involved and it's primarily democrats, up to and including "the one".....

Riiiight, kaydee. You need to pull yourself away from Faux News long enough to actually read what economists are saying about the whole financial crisis. Scapegoating Democrats in Congress is pure Right Wing bullsh!t and you know it. At the heart of this whole mess has been deregulation. While there have been Dems in Congress who favor laissez-faire economic policies and share responsibility, the real culprit has been deregulation...just as what happened with the S&L bailout back in the 80's which cost taxpayers billions of dollars. It's time we learned our lessons from the past and stop trying to dismantle the Federal Government from doing its job.

Your ignorance of this subject is profound.....

[Ban Hammer 14,638]

kaydee has a valid point imo.

[IAMX 3,055]

[HAL 9000 96]

Your ignorance of this subject is profound.....In the next two weeks you'll be seeing stories on exactly who/whom is involved and it's primarily democrats, up to and including "the one".....

Riiiight, kaydee. You need to pull yourself away from Faux News long enough to actually read what economists are saying about the whole financial crisis. Scapegoating Democrats in Congress is pure Right Wing bullsh!t and you know it. At the heart of this whole mess has been deregulation. While there have been Dems in Congress who favor laissez-faire economic policies and share responsibility, the real culprit has been deregulation...just as what happened with the S&L bailout back in the 80's which cost taxpayers billions of dollars. It's time we learned our lessons from the past and stop trying to dismantle the Federal Government from doing its job.

Who the fukc needs economists when you have FNC blaming the one and only Democrats?

[kaydee457 13]

kaydee has a valid point imo.

This is not theory or "right wing spin" as some uninformed care to characterized it. It's already part of McCain's political ads.

The simple fact is that the democrats in their zeal to provide low cost/no cost mortgages to those that should not have been allowed to buy a home in the first place set the stage for this debacle.

It's social engineering gone amuk. Note that from its inception that mostly all those involved were, and still are democrats with the exception of those republicans attempting to reign them in; from Frank to Dodd to Obama who's the largest recipient of political contributions of them all.

Pretty good for a freshman senator, eh?

These mortgages were the result of bad, very bad corruption from Frank, Dodd, and bad social engineering by Andrew Cuomo.

The word's spreading that this mortgage debacle is soley the democrats fault. I hope some of them go to jail!

Edited October 4, 2008 by kaydee457

[HAL 9000 96]

And yet ARMs have been around longer than those 'low cost/no cost' mortages without one political party to blame. Interesting lack of scope.