Posts tagged ‘Freddie Mac’

November 25, 2011

Poor Caused Meltdown???

Every flimflam needs a mark. For the subprime mortgage scam there were millions of suckers. You’ve heard of them, the ones that are born every minute.

You know the kind, the ill-informed poor people and the uninitiated who reside closer to the middle.

Right wing extremists – a term that now encompasses the vast majority of people who used to call themselves conservatives – blamed first Fannie Mae and Freddie Mac for the meltdown.

And why shouldn’t they blame Fannie and Freddie.. After all the government forced these institutions to back mortgages to poor people who they knew couldn’t repay them. Yes, the big money boys of Fannie and Freddie were threatened with torture if they didn’t obey. Some CEOs were even sent to Gitmo and waterboarded because they didn’t submit. And since nobody likes having toothpicks stuck under their fingernails, the CEOs finally surrendered and, even though they resisted furiously, they were compelled by government to accept hundreds of millions of dollars in salaries and bonuses.  Can you believe that!  

Actually I just made that stuff up.  But the rest is true.

So when that rubbish didn’t seem to stick, well, there was always the Community Reinvestment Act. Blaming the CRA was sheer balderdash, but hey, any port in a storm, right.

Unfortunately, that excuse didn’t gain traction either so let’s see, there’s gotta be something else we can dump this mess on, right, righties. Think hard now. Oh yeah, that’s right. Poor people. Let’s blame poor people.

So desperate were the righties to blame anyone or anything for the economic meltdown that they even blamed poor people. Anyone would do. Anything to avoid blaming their cocktail party buddies – those who are really at fault, the Wall Street jailbirds (also known as CEOs, bankers and mortgage originators).

So they blame Fannie and Freddie who never issued a mortgage, subprime or otherwise. Both of which, in case you didn’t know, were privately operated, profit making institutions whose CEOs scarfed up untold millions in salaries and bonuses.

Then there was the Community Reinvestment Act. Passed during the Carter administration, it sought to eliminate the racist bank practice of redlining. A common exercise, redlining drew boundaries around poorer neighborhoods, mostly populated by African Americans, and placed a lending stranglehold on there areas. It mattered little that someone who qualified for a loan was denied. They were routinely blackballed simply because they happened to live a a poor neighborhood.

Funny thing. Fannie, Freddie and the CMA worked beautifully for decades.

So the righties continues their search. They had to find some excuse to absolve their Wall Street buddies from committing the crime of the ages. (I refer to these Wall Street hoods who scammed the nation and most of the industrialized world as jailbirds not because they ever served even a nanosecond behind bars where they truly belong. But because they escaped jail time only due to the vast amounts of protection money they lavish upon Congress and the White House. And of course that scratch buys them legislation that not only keeps them out of jail. It gets them bailed out with taxpayer money. That “get out of jail card free” card serves both purposes and they carry it in their wallets for future use).

Here’s what really happened. Mortgage originators issued paper to anyone and everyone. Didn’t matter. All they wanted was to collect the fees and commissions. They then sold off the mortgages, which collectively, amounted to many millions of pieces of paper and trillions of dollars in borrowed money.

Now the mortgages that were sold were low interest, short term agreements known as Adjustable Rate Mortgages. Typically, rates and therefore payments balloon in a few years.

Not to worry though. And this is the beauty of the scam When the ARM matures, the mark returns to the issuer to refinance the mortgage. Same low ARM and payment. But this time the house has appreciated in value, as we know all property does, so the mark is now richer and the refi is a breeze. The issuer collects more fees and commissions and sells the junk once again to an investor.

The statement “here’s your check. Go pick out a house and call me in the morning” wasn’t too far from the reality.

The Wall Street jailbirds then packaged the mortgages into securitized bundles (secured by the houses the money bought), sold the bundles and called them Collateralized Debt Obligations.

American International Group

The huge insurance company must share the blame for the meltdown. Image via Wikipedia

However, the jailbirds, also known as investment bankers, went one step further. They insured all the junk mortgages they did not sell and called the insurance policies Credit Default Swaps. Goldman Sachs insured its CDOs with AIG, a huge CDS policy issuer.

AIG quickly went bankrupt when this bank created housing bubble burst and couldn’t payoff on the insurance policies it issued. Not to worry boys and girls. The government, courtesy of the taxpayer, shoveled some more cash, this time in AIG’s direction and soon the insurance company was able to make good on its debts and paid up what it owed Goldman Sachs (and many other companies). In effect the government rescued Goldman a second time from even greater losses.

The AIG default was partly due to inadequate reserves it was no longer required tokeep on hand because the deregulated market place allowed all rules to lapse.

Here’s some of the trash that the Wall Street jailbirds left behind for the taxpayer to clean up after. Gone are Lehman Brothers, Merrill Lynch, Bear Sterns, Washington Mutual, Countrywide Financial and a whole host of other less notables. And let’s not forget the toxic assets gobbled up by the trillions by the Federal Reserve Bank, the layoffs, the destroyed pensions, the unemployment crisis and the entire world deficit problem.

Oh, just one more thing, the huge executive bonuses the Wall Street jailbirds continue to pay themselves are nicely kept in tact.

Despite all of the evidence to the contrary, the righties still blame the victim for the crime.

http://goanimate.com/player/embed/03IWj3SNhdtg

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November 1, 2011

The Folly Trolley

Mayor Bloomberg Blames Fannie and Freddie.

 

Mayor Bloomberg said today that Freddie Mac and Fannie Mae are to blame for the blizzards that occurred in NYC shortly after he fired several hundred sanitation workers. He said Congress forced Fannie and Freddie to take such actions.

This year, the mayor vowed, the city would be handing out snow shovels at fire and police stations. Check your local newspaper for times and locations.

The mayor is reported to have said: “So global warming came a little late last year. Couldn’t happen two years in a row. So I’ll fire some more sanitation workers.

Read the Article at HuffingtonPost

***

Hello, Mayor Bloomberg. Are you there, Mayor? Come in Mayor Bloomberg.

Houston, we have a problem. Mayor Bloomberg is lost in space.

Again.

***

Donald Trump is planning a new reality TV show called Three Ring Circus. He’s hiring an elephant and training it to be master of ceremonies. Anything to pay the bills, right Donald.

***

A fellow who just let it slip

That he took a cold skinny dip

With a girl who was eager

But laughed at his meager

Sad little leaguer that fit on a microchip.

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No nation can survive half prosperous and half poor: Half in the upper classes who dine on good food and fine wine and the other half who wait the tables and clean up after.

***

Herman Cain, such a pain

Viewed two women with disdain.

Much to his forlorn regret

They’ve come back with spear and net

.

Advice to this big a king of pizza

When a woman you next a meetsa

Best say madam s’cuse mum

I’ll a keepa my hands where you can a sees ’em.

Somebody is running a background check on this guy and finding skeletons in the closet.

Read the Article at HuffingtonPost