January 25, 2008

FLASH: Fannie Mae & Freddie Mac regulator calls legislation to raise loan size a MISTAKE, doesn't feel they have sufficient risk management or capital

Gotta love the incompetent corrupt monkeys in Congress intent on screwing the America people because the NAR's lobbyists promised them a bunch of money for their re-election campaigns.

Fannie and Freddie should not be allowed to take on loans (that nobody else in their right minds would buy) up to the new $729,750 limit because they DO NOT HAVE SUFFICIENT CAPITAL, NOR DO THEY HAVE SUFFICIENT RISK MANAGEMENT IN PLACE, and even Bush and Paulson know this.

The eventual writedowns and taxpayer bailout will be in the trillions HP'ers. It'll make Citibank and Merrill's messes look like a day in the park.

This should be illegal. And when there is a Federal bailout of Fannie and Freddie, the congressmen and women who voted for this insanity, AGAINST the wishes of Fannie and Freddie's oversight agency and the Treasury secretary, should be arrested for treason. And the NAR lobbyists who bribed them should be tracked down and dealt with in the public square.


STATEMENT OF OFHEO DIRECTOR JAMES B. LOCKHART ON CONFORMING LOAN LIMIT INCREASE

We are very disappointed in the proposal to increase the conforming loan limit as we believe it is a mistake to do so in the absence of comprehensive GSE regulatory reform. To restore confidence in the markets we must ensure that the GSEs’ regulator has all the necessary safety and soundness tools.

Yesterday Chairman Dodd talked about moving a GSE reform bill early this year. We are ready to work with him and the Senate Banking Committee. We will also be working with Fannie Mae and Freddie Mac to ensure that any increase in the conforming loan limit moves through their rigorous new product approval process quickly and has appropriate risk management policies and capital in place.

_____________

Lockhart, Treasury Secretary Henry Paulson Jr. and the White House have repeatedly insisted that any such increase should be tied to broader legislation tightening regulation of the two companies. The decision to include the increase in the economic rescue package flies in the face of those calls, a fact Paulson addressed Thursday.

"I got run down by a bipartisan steamroller," Paulson said at a White House briefing. "Republicans and Democrats were united on this."

9 comments:

Anonymous said...

This will just prolong the housing slump. Things may get a little better later this year. But we are sacrificing a little short term relief for an extended slump. This will also increase the risk of a major GSE failure.

Idiots in Government said...

I agree that the GSE's need to make sure they are able to control these new higher loan limits. However, the current loan limits are woefully behind the times. They never were tracked to normal inflation, so unfortunately some of this housing mess can probably be tied to that fact. If buyers were able to get mortgages through freddie and fannie, and gone through their normal underwriting process, it would not have given wall street and the slime brokers the opprotunity to put people in these junk loans with just a pulse as a qualifier. It also would not have caused this huge runup in housing prices. Now prices are starting to reach normal inflation adjusted levels (some areas), if they keep this in place for 12 months, as mentioned, it may still keep prices lower but not cause the run on the banks we have seen. In the long run, increasing the loan limits is the right thing to do, lets just hope they put the proper backstops in to insure that the GSE's are not just glorified subprime lenders all over again....

Paul E. Math said...

Legislators just miss the point entirely, don't they? I mean, they really don't have a sniff.

Underwriting standards were poor across the board. Subprime just adjusted first and most so they are defaulting first and most right now. Rest assured, alt-a and prime will follow suit.

Fannie Mae and Freddie Mac are in no position to take on more and bigger loans - they are a Countrywide waiting to happen.

Luckily, the plan will have very little impact since the potential buyers of $417k+ homes will still be unable to sell their < $417k homes and that's where the whole thing ends.

Anonymous said...

Is this plan intended to keep housing prices from falling? That is a ton of money to borrow.

Anonymous said...

i think they did this under the mis-guided idea that it would stop some of californias current bleeding- it wont- what it will do is allow new buyers to buy the homes at a lower interest rate AFTER the homes have dropped 50% in value but are still above the $417k limit- and if the banks dont adjust their underwriting proceedures after what has happened then fuck them! as of right now its extremely difficult to qualify for anything but conforming.

Abrey said...

Dear Keith: Check this out. Things are about to get very interesting in California: http://news.aol.com/business/story/_a/pepsi-super-bowl-ad-features-silence/20080124173309990001?ncid=NWS00010000000001

Anonymous said...

I agree that the GSE's need to make sure they are able to control these new higher loan limits. However, the current loan limits are woefully behind the times.

In the long run, increasing the loan limits is the right thing to do, lets just hope they put the proper backstops in to insure that the GSE's are not just glorified subprime lenders all over again....

You sir are either the dumbest human on earth or a realator (corrupt whore). Burn in hell for promoting a scheme that will only sell our children in to debt slavery. You are not a moral man. Every person reading this blog knows this bailout would only serve the pigmen of wallstreet, realestate whores and Washington politicos. In the end you will be destroyed, I will be laughing.
Sighned Amerika Ps Those loans will default wether or not the pigmen get their cash along with you mortgage brokers. Burn baby burn.

Anonymous said...

for people whose purpose was to make housing affordable, how does giving sheeple more money to use to bid housing prices higher accomplish any thing but enslave more people longer and harder

Anonymous said...

"I got run down by a bipartisan steamroller," Paulson said
This is another MSM misrepresentation. According to eyewitnesses what really happened was that Paulson threw Joe taxpayer under a steamroller being driven by one Wally S. Treat. After the crowd had dispersed Hank and Wally headed off to the 19th hole for martinis and cigars.