August 05, 2007

The Fed's William Poole correctly says the mortgage lenders and homebuilders going out of business were "bad actors" whose punishment was deserved

Damn, this is getting interesting... So interesting that if you work for an Alt-A "Liar's Loan" lender, or a homebuilder targeting people with low incomes and bad credit, and you haven't been laid off yet, you might want to start packing up Monday, and take the plants home now... Doesn't sound like the Fed is gonna be bailing you out...

"This year’s markets punished mostly bad actors and/or poor lending practices. The market’s punishment of unsound financial arrangements has been swift, harsh and without prejudice”

-William Poole, President Federal Reserve Bank of St. Louis, July 2007


Anonymous said...

Hey people.... can you all go log on to Ziprealty and look at the INTERACTIVE MAP in the PHOENIX metro.

There are more houses for sale than i can cleverly articulate with words.


look at Westwing Mountain.

look at all the Toll Bro houses in Sonoran Mtn Ranch.

This turkey is toast.

we have never seen this before.

this is Armageadean.. (phuck the spl)

These Wall Street banks better be ready to own TENS OF THOUSANDS OF houses in Phoenix Alone...

not to mention Florida, and Cali and Vegas.

Literally... there are streets with 6 of the 11 houses for sale on that street.

Anonymous said...

REALTORS, mortgage bankers and appraisers were bad actors too

SPECTRE of Deflation said...

It's called an efficient market, and Mr. Poole is exactly right. Was the small investor helped when he/she got their asses handed to them in 2000? Now the rich elites are taking one in the shorts, and they want the FED to bail them out even though a rate cut will be meaningless in this environment.

Welcome to the cess pool boys and girls. You can now swim with the common sheeple. BOO-YAH!!!!!

Anonymous said...

Poole's right

Thomas said...

And Cramer's wrong.

zoiks said...

Well according to some guy named Cramer, "Bill Poole is a shame! He's shameful!".

And who is this Cramer guy anyway, and why haven't they fired him yet?

Paul E. Math said...

Both Poole and Cramer are right.

Cramer is complaining because he thinks that by 'bad actors' Poole is referring to a small, limited number of participants. Cramer is trying to argue that all of Wall St. is being punished, not just a limited few. And that's true.

But all of Wall St. was a 'bad actor' and they all are getting the punishment that they deserve.

See? Can't we all just get along?

Anonymous said...

This link is on Patrick right now and it is just so good I had to repost it here:


arch said...

Anyone who benefitted from the housing ponzi scheme will have to pay the piper. Even those of us who did not participate directly benefitted a little through increased economic activity the past few years. Those who were most deeply involved, will be hit the hardest. The rest of us will also suffer, but not as badly.

mortgage brokers
hedge funds
pension funds
chinese govt

Vandal said... the Fed stating to "tell it like it is". That statement would seem to indicate that the fed is likely leaning in the direction of sacrifing credit/house to save the greater economic good.

This probably means that there will be no rate decrease on the horizon.

burn baby burn said...

Rates are going up inflation is at 2.0% even when they strip out housing, gas, food, etc...

Anonymous said...

POole is going to stick it to Cramer and his buds

Russ said...

Everything goes in cycles and this isn't much different. Used to be we dreamed of owning our own home before we were 30. Now I'm doing loans for 22 year olds.

I like Cramer but he's being a big baby on this one. Capitalists love an open market system and no government intervention. Now that those who cater to Qualified Investors (hedge funds) make bad business decisions, they want the Fed to step in. Why do banks get special treatment? They're a business like any other business and should pay the consequences for bad business decisions.

Anyone remember the "liquidity crisis" of October, 1997? History does repeat itself. Pay attention folks.

Hang in there everyone and stay positive. This too shall pass.

As for Poole's "bad actors" comment. Life IS a stage. You just need to know what role you want to play and how to play it. Everyone should read "The Infinite Banking Concept" by Nelson Nash. Great lessons on economics and human behavior. "Pirates Of Manhattan" is another good one based on current circumstances.

Anonymous said...

Welcome to the price of greed...and EVERYONE is complicit..from the homeowner with a 600 credit score that lied on their stated income, no doc loan, - the mortgage broker that took it, the appraiser that worked the numbers so the LTV would work, the bank that lent the money, to the mortage bond buyer that provided liquidty to that bank, to the homebuilder that built supply knowing that the demand was increasingly speculative. Even the local govt that benifited from increased tax revenues based on inflated realestate values.

Everyone got greedy and made a lot of return the guy/gal that couldnt buy cheese on a cheeseburger 5 years before, could by a 500,000 house, and brag to their friends and feel like they were living the dream , especially when their house ran up 20% in value in a year so they went out and took out that teaser HELOC loan and purchased an overvaued depreciating asset..A Car.

Well, the time has come to pay the piper.

A lot of people are going to lose their homes..yes..but most of them should never have been able to buy them. And those that cashed out equity to buy THINGS...well that was shortsighted and materialistic. Hopefully that 50k vehicle will last you 4 ten years as you recover from your desire to leave beyond your means.

Did you really need that 4 bedroom 2 car garage , 2500 sq ft + for 2 people..maybe 3? Do you think you DESERVE it?

Good news is it will be cheaper to rent .

Wait till when the IRS cracks down on all the people renting rooms to pay their mortgage but arent reporting the income.

Yes, that will be next.

But Hey , at least for 5 years people got to live like they were rich. Now they get to live like they can afford. Maybe that taste of the 'good life' will inspire them to create something of value that will increase their bottom line and maintain true growth in our economy.

Who knows nothing? The people know nothing, the mob, the plebes..who are they..look around you at the mall, in starbucks, at a redlight....the mirror.

Id say the FED, which is NOT an entity of the US Govt , knows plenty. Econmic turmoil is how massive asset reallocation occurs. Its been done for thousands of years. Its how the property of the many becomes the poperty of the few, at a deep discount.

Banks wont own the houses..private investor "vulture funds" will. Portfolios of bad loans are on the market everyday for 20,30,40 cents on the dollar. The rich (top 2% in the country
as well as cash rich foriegn investors that have devalued curency ie china) money will own your $500,000 for $100,000 - $200,000 .

So in pursuit of your Deserved dream of oppulence for nothing, you have sold your soul (and your country) to the devil (the rich and china) .

What will happen...hopefully we open the gates of this county and let people pour in to create demand and spur growth..only growth can gobble up massive mistakes such as this.


tyler said...

Remember Remember the 15th of November.

Cramer was right then and will be right later. Say thank you to FAS 157 & 159. Wait till thursday :P