HELLO!! O.T.

[Juan]

1999 NY Times Article Revealed True Cause of Current Fannie Mae Crises
By P.J. Gladnick (Bio | Archive)
September 25, 2008 - 16:25 ET

This is probably an article that the New York Times wishes it didn't have in its archives because it reveals the true culprits behind the current Fannie Mae meltdown. You will find "uncomfortable" truths in this September 30, 1999 article by Steven A. Holmes starting with the title, "Fannie Mae Eases Credit To Aid Mortgage Lending," that you won't find in current editions of the New York Times (emphasis mine):

In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.

Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.


Get that? Pressure by the Clinton Administration to expand mortgage loans by lowering its credit requirements.

''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''


That would be the same Franklin Raines whom the Washington Post identified as a mortgage and housing adviser for the Obama campaign until that newspaper told us not to rely on its own reporting. We return you now to the article that the New York Times wishes didn't exist:

In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.


Oops! And that is exactly what has happened nine years later. And who were the "killjoys" at the time warning against Fannie Mae easing the credit requirements? That answer is also provided in the NY Times article:

''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''


Yup. The conservative American Enterprise Institute was accurately warning about this impending financial disaster back in 1999. If you don't believe me, then check out the New York Times archive.

—P.J. Gladnick is a freelance writer and creator of the DUmmie FUnnies blog.

v

 

[backhoeboogie]

I thought everyone already knew this was a Clinton legacy.

You have to ignore the OT ramblings.

He was wanting the libs to take credit for Newt's "Contract with America" attributes just yesterday.

If he can find it in print, it really doesn't matter what or who carried it. Star, the Globe - whoever. He'll cut and paste it here. Sometimes his posts starts with "I found this on another site...." Just imagine if we all did that and never thought for ourselves etc. We never verified data for credibility etc.

We could all go out and find things to paste in this forum and no one would ever have time to communicate or read the real feelings of our fellow human beings.

 

[Anonymous]

Fannie Mae was founded as a government agency in 1938 as part of Franklin Delano Roosevelt's New Deal to provide liquidity to the mortgage market. For the next 30 years, Fannie Mae held a virtual monopoly on the secondary mortgage market in the United States.

In 1968, to remove the activity of Fannie Mae from the annual balance sheet of the federal budget, it was converted into a private corporation.[5] Fannie Mae ceased to be the guarantor of government-issued mortgages, and that responsibility was transferred to the new Government National Mortgage Association (Ginnie Mae).

In the late 1990's, the then CEO Franklin Raines relaxed lending standards at Fannie Mae to allow subprime borrowers to obtain loans. This was done under the direction of the Clinton Administration. Relaxing of Lending Standards
http://en.wikipedia.org/wiki/Fannie_Mae
____________________________________

From 1938 to 1968, the secondary mortgage market in the United States was monopolized by the Federal National Mortgage Association (Fannie Mae), which was a government agency during that period. In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation. To provide competition in the secondary mortgage market, and to end Fannie Mae's monopoly, Congress chartered Freddie Mac as a private corporation.

The Emergency Home Finance Act of 1970 created Freddie Mac. The goal was to create a secondary market for conventional mortgages, as indicated in the Fannie Mae charter. [3]

The Financial Institutions Reform, Recovery, and Enforcement Act ("FIRREA") of 1989 revised and standardized the regulatory mechanisms for both Fannie Mae and Freddie Mac. Prior to that, Freddie Mac was owned by the Federal Home Loan Bank System and its member thrifts and governed by the Federal Home Loan Bank Board which was later reorganized into the Office of Thrift Supervision. FIRREA severed Freddie Mac's ties to the Federal Home Loan Bank System, created an 18-member board of directors to run Freddie Mac, and subjected it to HUD oversight.

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

You need to look at the history of fannie and freddie..Both have operated since the 30's and 70's and did quite well when they were regulated under the banking/finance laws set up in the 30's-which didn't bring the country down from 1938 on ...In 1995 the regs were loosened to make more loans available to lower incomes by Clinton (Repub Congress)- which still didn't bring the country down.....

In 1999-2000 foreclosure Phil Gramm passed all the deregulation laws (put into effect in the 30's to prevent this type of mess again) and essentially removed all the banking/investing regulations and made all the loans/investments one big casino of speculations and international trading....
But in July 2001 (Bush/Repub Congress)allowed the move to make more ( 50 percent) of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers.... Bush then went one step further- which has been shown with a pattern involving CFTC, the PSA and GIPSA and FDA and told regulators to "take an 8 year coffee break" or "just shuffle papers and look busy"...

I'll agree both parties are at fault- and the most fault was the Wall Street folks that were all but greedily paying you to take their money-so they could bet it on the speculation/investment roulette wheel - but the biggest question I have to ask is where were the Bush Boys in the last year or two or three when all this Kingdom of theirs started crashing about them :???: Where was Cox :???: Where was Paulson :???: Up until just a few days ago I heard them telling Congress "the fundamentals of the economy is strong"...

On the same day Lehman Brothers and AIG were announcing they were going bankrupt both Bush and McBusch were echoing " the fundamentals of the economy is strong" :shock: Only a month after McBusch's #1 economic advisor and the neocons annointed Treasury Secretary Phil Gramm was telling the country "You've heard of mental depression; this is a mental recession" :shock: :???:

 

[Anonymous]

The Bailout Is a Band-Aid: Housing Crisis Needs to Be Fixed

Thursday, September 25, 2008 4:18 PM

By: Christopher Ruddy




Yesterday Sen. Orrin Hatch was hitting the airwaves.


The subprime crisis, he said, was the fault of the Clinton administration, who he said created the subprime mortgage crisis.


Other Republicans have been laying blame on the financial crisis on minorities and illegal immigrants who got mortgages they simply couldn't pay. They offer no statistical proof on this point.


Nor does the usually sensible Senator Hatch offer evidence when it comes to pointing the finger at the Clinton administration.


The attempt to deflect blame for the crisis is not simply wrongheaded; I think it will compound Republican political woes and bring us disaster again in November.


Doesn't Hatch and Co. know that Bill and Hillary Clinton voters in the swing states will decide who becomes the next president? They are wary of Obama, but love the Clintons and remember the good economic times of the'90s.


As a conservative Republican of the Reagan type, I find myself in this odd place cheering on some of the sensible things I hear from Democrats.


Barack Obama said any bailout to Wall Street must not be simply a cash payout or a loan, but be treated like an equity investment in these firms. We want our money back and then some. Yes to that, I say.


And demands by House Democrats that the secretary of the treasury alone not be given a blank check for over a trillion dollars in our money, and that we have complete transparency in the transactions, I say yes to that too.


Fiscal responsibility, transparency and accountability — aren't these things stuff Republicans believe in?


The Democratic complaints about the Bush plan shows that our government is working. The executive branch tried to put a gun to the head of Congress and told them, "Sign this check or the whole U.S. banking system will collapse."


Congress didn't blink.


Don't get me wrong. I am for a bailout, but one that is sensible and is a win-win for Wall Street, Main Street investors and taxpayers like you and me.


But remember the government bailout plan proposed by the president and modifications supported by the Democrats won't fix the underlying problem: the housing market collapse. Home prices are continuing to fall, and fewer people are buying homes than ever. Foreclosures will continue.


Unless this underlying problem is fixed, the economic symptoms will continue. There are some remedies. But before I get to them, let's review what has happened.


The Federal Reserve under Alan Greenspan gave the U.S. economy shock treatment back in 2001 and 2002 when it lowered interest rates to 1 percent — the lowest Fed Funds rate in recent history.


By pushing the pedal to the metal and backed quietly by the White House, the Fed injected massive liquidity in the U.S. economy, creating the largest asset bubble in history, according to the Economist magazine.


Incredibly low rates by the Fed were accompanied by an acceptance of the central bank for all sorts of exotic mortgage loans. No down payments. Interest only. No job and income verification. Get the picture?[/b]


Compounding this irresponsibility was then the "greed factor" that kicked in at several levels.


First were the local banks and mortgage companies that pushed mortgages, notably adjustable rate ones that offered extremely low introductory rates, and gave them to buyers who would not be able to pay back once the rates adjusted up.


Well rates have adjusted up and the crisis hit.


Many mortgage providers also encouraged loan applicants to lie about incomes and qualifications to approve these mortgages.


Wall Street as a whole had little role at this stage. But later, Wall Street took these mortgages, which had been rolled up into collateralized debt instruments, better known as mortgage backed securities, and sold them off to investors globally.


Wall Street failed to compute the risks involved in these securities. It was a failure, not a crime.


But many Wall Street firms, hedge funds and other investments took incredible, unwarranted risks using these securities. These firms would borrow money at low rates — say 4 percent — and invest in CDOs paying 6 to 7 percent. This small difference in rates of 2 to 3 percent, the arbitrage, would throw off enormous returns, especially considering little or no money had been placed on the table to buy the securities.


I have been told that Lehman and AIG played this leveraging game, investing only $1 for every $30 they held in such toxic suggestions. Again, what they did was not a crime. They took enormous risk and reaped huge returns — for a while.


Now they want us to pay for the huge losses that ultimately fell upon them.


Washington played a role in the mess too. The White House pushed for easy money and easy lending practices, many weighted in favor of the banks and lenders and against the consumer.


Congress, dominated largely by Republicans from 1994 to 2006, did an awful job in oversight. This is especially true after President Bush took the oath of office.


When Bill Clinton was president, the Republicans acted beautifully, working diligently to keep President Clinton on a center-right economic course. The results were great.


This seems like ancient history, but it's important to have a clear picture of how we got into this mess. It may help us get out of it.


First, we need to know the "crisis" the Bush administration presented to us just last week is not a crisis that just popped up. It was apparent to many two years ago the real estate market was in a bubble and would bust.


And when the Fed moved in 2004 and raised rates from 1 percent to 5.25 percent by 2006 — a more than 400 percent increase in two years, it also led directly to those adjustable mortgages re-adjusting at very high rates. Homeowners got struck hard — with monthly mortgage payments on medium size homes mushrooming literally overnight.


The Fed increase rates started the credit crisis. The first tremors were apparent over a year ago when the Fed took emergency steps to give banks liquidity.


It's important to remember that most adjustable mortgages created in the boom years still have not reset – and will continue doing so through 2011.


This problem will worsen unless Washington tackled the underlying problems.


The first thing the Fed must do to reduce the continuance of the problem is drop rates. It doesn't have much wiggle room, because the dollar needs to be protected, but a small decrease in rates could have an enormous impact on those readjusting mortgages.


The second-most-important thing to do is for Congress to give a significant tax credit for new home buyers. Congress just passed a $7500 tax credit for new home buyers, though it's not actually a credit but a loan at no interest.


The famed economist Edward Leamer of UCLA's Anderson School says a $25,000 tax credit to new home buyers would put an immediate end to the fall in home prices. He suggests it would spur economic activity and government tax revenues would grow, more than covering the cost of the program.


Already home prices have fallen to reasonable prices and it should be a buyer's market. But government can spur home buyers who keep staying on the sidelines think prices will fall more.


If this is done, home prices will stabilize and likely begin rising. All of the sectors that relate to the housing market will find relief.


And, most important, the value of those mortgage backed securities will increase as the underlying mortgages become current. Foreclosures will also abate.


The key to solving the financial crisis is not to simply send a blank check to Wall Street, but to get consumers buying homes again.

---------------------------
Christopher Ruddy is a conservative American journalist. He is currently the CEO of Newsmax Media.

http://www.newsmax.com/ruddy/bailout_housing_crisis/2008/09/25/134442.html

 

[TexasBred]

The Bailout Is a Band-Aid: Housing Crisis Needs to Be Fixed

Thursday, September 25, 2008 4:18 PM

By: Christopher Ruddy




Yesterday Sen. Orrin Hatch was hitting the airwaves.


The subprime crisis, he said, was the fault of the Clinton administration, who he said created the subprime mortgage crisis.


Other Republicans have been laying blame on the financial crisis on minorities and illegal immigrants who got mortgages they simply couldn't pay. They offer no statistical proof on this point.


Nor does the usually sensible Senator Hatch offer evidence when it comes to pointing the finger at the Clinton administration.


The attempt to deflect blame for the crisis is not simply wrongheaded; I think it will compound Republican political woes and bring us disaster again in November.


Doesn't Hatch and Co. know that Bill and Hillary Clinton voters in the swing states will decide who becomes the next president? They are wary of Obama, but love the Clintons and remember the good economic times of the'90s.


As a conservative Republican of the Reagan type, I find myself in this odd place cheering on some of the sensible things I hear from Democrats.


Barack Obama said any bailout to Wall Street must not be simply a cash payout or a loan, but be treated like an equity investment in these firms. We want our money back and then some. Yes to that, I say.


And demands by House Democrats that the secretary of the treasury alone not be given a blank check for over a trillion dollars in our money, and that we have complete transparency in the transactions, I say yes to that too.


Fiscal responsibility, transparency and accountability — aren't these things stuff Republicans believe in?


The Democratic complaints about the Bush plan shows that our government is working. The executive branch tried to put a gun to the head of Congress and told them, "Sign this check or the whole U.S. banking system will collapse."


Congress didn't blink.


Don't get me wrong. I am for a bailout, but one that is sensible and is a win-win for Wall Street, Main Street investors and taxpayers like you and me.


But remember the government bailout plan proposed by the president and modifications supported by the Democrats won't fix the underlying problem: the housing market collapse. Home prices are continuing to fall, and fewer people are buying homes than ever. Foreclosures will continue.


Unless this underlying problem is fixed, the economic symptoms will continue. There are some remedies. But before I get to them, let's review what has happened.


The Federal Reserve under Alan Greenspan gave the U.S. economy shock treatment back in 2001 and 2002 when it lowered interest rates to 1 percent — the lowest Fed Funds rate in recent history.


By pushing the pedal to the metal and backed quietly by the White House, the Fed injected massive liquidity in the U.S. economy, creating the largest asset bubble in history, according to the Economist magazine.


Incredibly low rates by the Fed were accompanied by an acceptance of the central bank for all sorts of exotic mortgage loans. No down payments. Interest only. No job and income verification. Get the picture?[/b]


Compounding this irresponsibility was then the "greed factor" that kicked in at several levels.


First were the local banks and mortgage companies that pushed mortgages, notably adjustable rate ones that offered extremely low introductory rates, and gave them to buyers who would not be able to pay back once the rates adjusted up.


Well rates have adjusted up and the crisis hit.


Many mortgage providers also encouraged loan applicants to lie about incomes and qualifications to approve these mortgages.


Wall Street as a whole had little role at this stage. But later, Wall Street took these mortgages, which had been rolled up into collateralized debt instruments, better known as mortgage backed securities, and sold them off to investors globally.


Wall Street failed to compute the risks involved in these securities. It was a failure, not a crime.


But many Wall Street firms, hedge funds and other investments took incredible, unwarranted risks using these securities. These firms would borrow money at low rates — say 4 percent — and invest in CDOs paying 6 to 7 percent. This small difference in rates of 2 to 3 percent, the arbitrage, would throw off enormous returns, especially considering little or no money had been placed on the table to buy the securities.


I have been told that Lehman and AIG played this leveraging game, investing only $1 for every $30 they held in such toxic suggestions. Again, what they did was not a crime. They took enormous risk and reaped huge returns — for a while.


Now they want us to pay for the huge losses that ultimately fell upon them.


Washington played a role in the mess too. The White House pushed for easy money and easy lending practices, many weighted in favor of the banks and lenders and against the consumer.


Congress, dominated largely by Republicans from 1994 to 2006, did an awful job in oversight. This is especially true after President Bush took the oath of office.


When Bill Clinton was president, the Republicans acted beautifully, working diligently to keep President Clinton on a center-right economic course. The results were great.


This seems like ancient history, but it's important to have a clear picture of how we got into this mess. It may help us get out of it.


First, we need to know the "crisis" the Bush administration presented to us just last week is not a crisis that just popped up. It was apparent to many two years ago the real estate market was in a bubble and would bust.


And when the Fed moved in 2004 and raised rates from 1 percent to 5.25 percent by 2006 — a more than 400 percent increase in two years, it also led directly to those adjustable mortgages re-adjusting at very high rates. Homeowners got struck hard — with monthly mortgage payments on medium size homes mushrooming literally overnight.


The Fed increase rates started the credit crisis. The first tremors were apparent over a year ago when the Fed took emergency steps to give banks liquidity.


It's important to remember that most adjustable mortgages created in the boom years still have not reset – and will continue doing so through 2011.


This problem will worsen unless Washington tackled the underlying problems.


The first thing the Fed must do to reduce the continuance of the problem is drop rates. It doesn't have much wiggle room, because the dollar needs to be protected, but a small decrease in rates could have an enormous impact on those readjusting mortgages.


The second-most-important thing to do is for Congress to give a significant tax credit for new home buyers. Congress just passed a $7500 tax credit for new home buyers, though it's not actually a credit but a loan at no interest.


The famed economist Edward Leamer of UCLA's Anderson School says a $25,000 tax credit to new home buyers would put an immediate end to the fall in home prices. He suggests it would spur economic activity and government tax revenues would grow, more than covering the cost of the program.


Already home prices have fallen to reasonable prices and it should be a buyer's market. But government can spur home buyers who keep staying on the sidelines think prices will fall more.


If this is done, home prices will stabilize and likely begin rising. All of the sectors that relate to the housing market will find relief.


And, most important, the value of those mortgage backed securities will increase as the underlying mortgages become current. Foreclosures will also abate.


The key to solving the financial crisis is not to simply send a blank check to Wall Street, but to get consumers buying homes again.

---------------------------
Christopher Ruddy is a conservative American journalist. He is currently the CEO of Newsmax Media.

http://www.newsmax.com/ruddy/bailout_housing_crisis/2008/09/25/134442.html

No, the key is to ensure that you have QUALIFIED BUYERS/BORROWERS buying homes.

 

[Anonymous]

The Bailout Is a Band-Aid: Housing Crisis Needs to Be Fixed

Thursday, September 25, 2008 4:18 PM

By: Christopher Ruddy




Yesterday Sen. Orrin Hatch was hitting the airwaves.


The subprime crisis, he said, was the fault of the Clinton administration, who he said created the subprime mortgage crisis.


Other Republicans have been laying blame on the financial crisis on minorities and illegal immigrants who got mortgages they simply couldn't pay. They offer no statistical proof on this point.


Nor does the usually sensible Senator Hatch offer evidence when it comes to pointing the finger at the Clinton administration.


The attempt to deflect blame for the crisis is not simply wrongheaded; I think it will compound Republican political woes and bring us disaster again in November.


Doesn't Hatch and Co. know that Bill and Hillary Clinton voters in the swing states will decide who becomes the next president? They are wary of Obama, but love the Clintons and remember the good economic times of the'90s.


As a conservative Republican of the Reagan type, I find myself in this odd place cheering on some of the sensible things I hear from Democrats.


Barack Obama said any bailout to Wall Street must not be simply a cash payout or a loan, but be treated like an equity investment in these firms. We want our money back and then some. Yes to that, I say.


And demands by House Democrats that the secretary of the treasury alone not be given a blank check for over a trillion dollars in our money, and that we have complete transparency in the transactions, I say yes to that too.


Fiscal responsibility, transparency and accountability — aren't these things stuff Republicans believe in?


The Democratic complaints about the Bush plan shows that our government is working. The executive branch tried to put a gun to the head of Congress and told them, "Sign this check or the whole U.S. banking system will collapse."


Congress didn't blink.


Don't get me wrong. I am for a bailout, but one that is sensible and is a win-win for Wall Street, Main Street investors and taxpayers like you and me.


But remember the government bailout plan proposed by the president and modifications supported by the Democrats won't fix the underlying problem: the housing market collapse. Home prices are continuing to fall, and fewer people are buying homes than ever. Foreclosures will continue.


Unless this underlying problem is fixed, the economic symptoms will continue. There are some remedies. But before I get to them, let's review what has happened.


The Federal Reserve under Alan Greenspan gave the U.S. economy shock treatment back in 2001 and 2002 when it lowered interest rates to 1 percent — the lowest Fed Funds rate in recent history.


By pushing the pedal to the metal and backed quietly by the White House, the Fed injected massive liquidity in the U.S. economy, creating the largest asset bubble in history, according to the Economist magazine.


Incredibly low rates by the Fed were accompanied by an acceptance of the central bank for all sorts of exotic mortgage loans. No down payments. Interest only. No job and income verification. Get the picture?[/b]


Compounding this irresponsibility was then the "greed factor" that kicked in at several levels.


First were the local banks and mortgage companies that pushed mortgages, notably adjustable rate ones that offered extremely low introductory rates, and gave them to buyers who would not be able to pay back once the rates adjusted up.


Well rates have adjusted up and the crisis hit.


Many mortgage providers also encouraged loan applicants to lie about incomes and qualifications to approve these mortgages.


Wall Street as a whole had little role at this stage. But later, Wall Street took these mortgages, which had been rolled up into collateralized debt instruments, better known as mortgage backed securities, and sold them off to investors globally.


Wall Street failed to compute the risks involved in these securities. It was a failure, not a crime.


But many Wall Street firms, hedge funds and other investments took incredible, unwarranted risks using these securities. These firms would borrow money at low rates — say 4 percent — and invest in CDOs paying 6 to 7 percent. This small difference in rates of 2 to 3 percent, the arbitrage, would throw off enormous returns, especially considering little or no money had been placed on the table to buy the securities.


I have been told that Lehman and AIG played this leveraging game, investing only $1 for every $30 they held in such toxic suggestions. Again, what they did was not a crime. They took enormous risk and reaped huge returns — for a while.


Now they want us to pay for the huge losses that ultimately fell upon them.


Washington played a role in the mess too. The White House pushed for easy money and easy lending practices, many weighted in favor of the banks and lenders and against the consumer.


Congress, dominated largely by Republicans from 1994 to 2006, did an awful job in oversight. This is especially true after President Bush took the oath of office.


When Bill Clinton was president, the Republicans acted beautifully, working diligently to keep President Clinton on a center-right economic course. The results were great.


This seems like ancient history, but it's important to have a clear picture of how we got into this mess. It may help us get out of it.


First, we need to know the "crisis" the Bush administration presented to us just last week is not a crisis that just popped up. It was apparent to many two years ago the real estate market was in a bubble and would bust.


And when the Fed moved in 2004 and raised rates from 1 percent to 5.25 percent by 2006 — a more than 400 percent increase in two years, it also led directly to those adjustable mortgages re-adjusting at very high rates. Homeowners got struck hard — with monthly mortgage payments on medium size homes mushrooming literally overnight.


The Fed increase rates started the credit crisis. The first tremors were apparent over a year ago when the Fed took emergency steps to give banks liquidity.


It's important to remember that most adjustable mortgages created in the boom years still have not reset – and will continue doing so through 2011.


This problem will worsen unless Washington tackled the underlying problems.


The first thing the Fed must do to reduce the continuance of the problem is drop rates. It doesn't have much wiggle room, because the dollar needs to be protected, but a small decrease in rates could have an enormous impact on those readjusting mortgages.


The second-most-important thing to do is for Congress to give a significant tax credit for new home buyers. Congress just passed a $7500 tax credit for new home buyers, though it's not actually a credit but a loan at no interest.


The famed economist Edward Leamer of UCLA's Anderson School says a $25,000 tax credit to new home buyers would put an immediate end to the fall in home prices. He suggests it would spur economic activity and government tax revenues would grow, more than covering the cost of the program.


Already home prices have fallen to reasonable prices and it should be a buyer's market. But government can spur home buyers who keep staying on the sidelines think prices will fall more.


If this is done, home prices will stabilize and likely begin rising. All of the sectors that relate to the housing market will find relief.


And, most important, the value of those mortgage backed securities will increase as the underlying mortgages become current. Foreclosures will also abate.


The key to solving the financial crisis is not to simply send a blank check to Wall Street, but to get consumers buying homes again.

---------------------------
Christopher Ruddy is a conservative American journalist. He is currently the CEO of Newsmax Media.

http://www.newsmax.com/ruddy/bailout_housing_crisis/2008/09/25/134442.html

No, the key is to ensure that you have QUALIFIED BUYERS/BORROWERS buying homes.

Yep- and thats a major part of the problem...In their "greed" to get this money into the roulette wheel cycle of investing and speculation- they were handing out these subprime loans to anyone that could sign on the dotted line- even advertising on TV that you didn't need a credit rating or could even have a bad credit record....

Interestingly- in the fannie/freddie hearings last night- the major part of these no verification, no doc/low doc loans were not given out/held by fannie and freddie who were way below the percentage rate that Congress had set to allow them to write/buy up-- instead because of the greed - they were written by the Wall Street lending fims like Countrywide/etal and traded into the international market....

One scarey thing brought up is- the credit card bubble hasn't burst yet- with the same type lending practices being done by them- and a bunch of those folks will never be able to pay for them either...Just like that tv ad I kept watching that allowed college students to borrow up to $40,000 per year for college plus $8,000 living expenses-- NO CREDIT RATING NEEDED....

 

[TexasBred]

Yep- and thats a major part of the problem...In their "greed" to get this money into the roulette wheel cycle of investing and speculation- they were handing out these subprime loans to anyone that could sign on the dotted line- even advertising on TV that you didn't need a credit rating or could even have a bad credit record....

Interestingly- in the fannie/freddie hearings last night- the major part of these no verification, no doc/low doc loans were not given out/held by fannie and freddie who were way below the percentage rate that Congress had set to allow them to write/buy up-- instead because of the greed - they were written by the Wall Street lending fims like Countrywide/etal and traded into the international market....

One scarey thing brought up is- the credit card bubble hasn't burst yet- with the same type lending practices being done by them- and a bunch of those folks will never be able to pay for them either...Just like that tv ad I kept watching that allowed college students to borrow up to $40,000 per year for college plus $8,000 living expenses-- NO CREDIT RATING NEEDED....[/quote]


OT..true...but fannie and freddie don't originate loans. They only buy and sell. .....but credit cards have always been "unsecured" noncollateralized transactions. Banks usually try to offset risk or exposure with high interest rates and fees and make money even on the lowest rate credit cards. They do not want anyone to pay them off.....just keep making payments.... Always, at some point in time they reach a "can't lose" point and after that it doesn't matter. If you default, they'll settle for a % of your balance, charge off the remainder and still be way ahead. In effect they're betting that along with the high rates they charge there will always be a higher % that pay and pay and pay than those who do not. Not totally unlike the old "payday loans" or ten dollar loans the loan sharks make....borrow $10, pay a dollar a week interest...never worry about the principal. If you die or disappear they coudl care less once they get a total of $11.