Does the fact that both McCain and Obama agree with the take over of Freddie Mac and Fannie Mae using our tax dollars fill you with confidence about their financial judgment or cause further concern for our ability to return to healthy financial policies?

Yes. If those two entities failed, it would take down the US economy and much of the global economy. That's how much money is involved, and how remiss the Bush administration and their shareholders have been.

Obama doesn't believe that the free market capitalist system can operate in this complex world without supervision to ensure that the rewards go to the people who take the good risks, and not to the people who are able to profit from bad risks without taking any risk themselves. But now that the McCain-Bush free market capitalistic greed will lead to growth and stability has been proven wrong, the government needs to reassert itself and take over the failed companies and fire the CEOs who created the problem and made it worse by lying about the status of these corporations.

McCain believes that the government shouldn't do anything to prevent people like CEOs from profitting from taking really bad risks with other people's money, and that the victims of the risk takers who have nothing at risk should bear the burden, except when it is going to completely tank the economy.

So, Obama is consistent in holding that the free market doesn't always work, and to protect the many innocent bystanders, the government must intervene.

And McCain is inconsistent in holding the the free market always works, especially when every thing fails and even th innnocent bystander is harmed because it will impress on everyone the risks involved for the next fifty years, but given the need to win an election, McCain is for a government bailout because he doesn't want to lose the election by telling the people the truth:

McCain will protect Americans from the 1% chance that another 911 will occur costing the US 3000 lives and a $100 billion by sending 4000 soldiers to their deaths and spending one trillion dollars, but that he won't lift a finger to help people who are going to die because they can't get health insurance because the free market capitalists won't insure than, and he won't help the small businesses by making sure the credit markets are working to provide them credit to do business, and he won't provide loans to the the people who are trying to buy homes that will be abandoned if no one can get a loan to buy them.

Does the fact that both McCain and Obama agree with the take over of Freddie Mac and Fannie Mae using our tax dollars fill you with confidence about their financial judgment or cause further concern for our ability to return to healthy financial policies?

It is a grim reminder of the dual-edged sword that is lobbying. Fannie and Freddie both contributed to both candidates. Questioning the actions of the Treasury at this point would give the other side a "gotcha" moment, saying the candidate was caving in to special interests and doesn't have the nation's interests at heart.
The truth is, the administration doesn't have a plan. While the mortgage market is bad, Fannie and Freddie are still looking at 1.5-2% failure rates in their portfolios. That is higher than usual, but it is sustainable. The companies are being taken from the shareholders who bought them from the government in the first place in order to give the Treasury another tool. Another giant cache of bonds they can manipulate and sell to try to make the economy look better. Another place where they can spin PR from.
In the end, it was a partisan political move, 57 days before the election, and immediately following the GOP convention. It was designed to defer press coverage from the VP nominee. It has nothing to do with fiscal judgment at all.

This whole situation sucks and it shouldn't be a surprise to anyone. They planned it to fail from the beginning. Bush's initiative to help minorities come up to par with whites ("anglos") in terms of percentage of home ownerships caused the credit rules to be softened. They were softened to the point that people could qualify for loans in which the monthly payment exeeded their monthly income.

When I got my mortgage 3 years ago, they pulled my credit and told me I could borrow any amount I thought I could pay back each month. They also gave me an Excel sheet to make the calculations. They never once asked me how much money I make.

Of course, being conservative, I went for the traditional 30yr fixed rate loan...that I could afford...while everyone else was basking in the glories of easy credit they and the banks knew they couldn't pay back.

So, help me understand the situation...the banks (and their shareholders) extened credit to people that everyone knew wouldn't be paid back. Then, when it all crumbles, it's the taxpayer's problem? Of course, if the bet would have paid off, they'd get all the profits...right?

What a bunch of bullshit. In any case, the bailout is a bandaid at best...only delaying the inevitable. Wages are climbing slower than home values are climbing. There had to be a day of reconing at some point. Instead, we're going to prop up a system that just can work with tax dollars. It's little more than an election year ploy. Great, just great.

"We the People...":rolleyes:

Be on the lookout for $50b to bail out the automakers.

The government should have never been backing Fannie and Freddie in the first place.

"It's the economy, Stupid"

Does the fact that both McCain and Obama agree with the take over of Freddie Mac and Fannie Mae using our tax dollars fill you with confidence about their financial judgment or cause further concern for our ability to return to healthy financial policies?

It was a move that was preplanned by team Bush.

The spend thrift adinistration CAUSED it to be something that HAD to be done.

They primed the pump by allowing mortgage companies to sell what amounts to "junk mortgages" to people who were not really good risks...

In so doing, those companies wer basicly LOANING people houses till they failed to pay and then they reclaimed the houses.

It's a ponzi scheme where the only people who win are the companies fronting the mortgages... When they feel a loss, they simply SELL the bad debt to overseas investers... ( in the M.E., no less)

So... for all those people who are about to lose their homes to default, I wonder how it feels to know that it is THEIR tax dollars paying for the paperwork, manpower and legal fees to process the foreclosure process against themselves.

Scroooed again thanks to Bush-Co

And a gentile reminder to our GOP / Free marketeer friends ..

The Housing price bubble, the subprime meltdown, the investment bank meltdown, the subsequent bailouts .. and if THAT were not enough .. the crude oil spec bubble are ALL a direct result of "free market reform" legislation written and pushed by McCains economy tutor: Phil Gramm

"It's the economy, Stupid"Indeed. We'd all be a lot better of if the feds would quit messing around with it. How much of this a direct result of lefties wanting to see the poor own houses?

So much for letting the market sort things out.

(Isn't THAT suppose to be a mantra of the right?)

This whole situation sucks and it shouldn't be a surprise to anyone. They planned it to fail from the beginning. Bush's initiative to help minorities come up to par with whites ("anglos") in terms of percentage of home ownerships caused the credit rules to be softened. They were softened to the point that people could qualify for loans in which the monthly payment exeeded their monthly income.

When I got my mortgage 3 years ago, they pulled my credit and told me I could borrow any amount I thought I could pay back each month. They also gave me an Excel sheet to make the calculations. They never once asked me how much money I make.

Of course, being conservative, I went for the traditional 30yr fixed rate loan...that I could afford...while everyone else was basking in the glories of easy credit they and the banks knew they couldn't pay back.

So, help me understand the situation...the banks (and their shareholders) extened credit to people that everyone knew wouldn't be paid back. Then, when it all crumbles, it's the taxpayer's problem? Of course, if the bet would have paid off, they'd get all the profits...right?

What a bunch of bullshit. In any case, the bailout is a bandaid at best...only delaying the inevitable. Wages are climbing slower than home values are climbing. There had to be a day of reconing at some point. Instead, we're going to prop up a system that just can work with tax dollars. It's little more than an election year ploy. Great, just great.

"We the People...":rolleyes:

Be on the lookout for $50b to bail out the automakers.

Yes but you are overlooking a small issue, OFHEO more or less told Fannie and Freddie exactly how much they could invest and what they had to invest it in. And there hasn't been a bailout yet. For all the talk of F&F having liquidity issues so bad that they had to be 80% nationalized without compensating the shareholders, the government has yet to have injected a dime.

And a gentile reminder to our GOP / Free marketeer friends ..

The Housing price bubble, the subprime meltdown, the investment bank meltdown, the subsequent bailouts .. and if THAT were not enough .. the crude oil spec bubble are ALL a direct result of "free market reform" legislation written and pushed by McCains economy tutor: Phil Gramm

It's ironic and fitting that the free market religion leads directly to nationalization of those entities were in such dire need of deregulation, i.e., socialism.

The government should have never been backing Fannie and Freddie in the first place.

They weren't. Fannie and Freddie have not once since being spun off and sold to private ownership, despite being fully regulated by the government, ever taken a dime of public money. In addition, both organizations underwrite public works and provide to charity.
And as of today, the government has yet to have provided a dime, it simply took 80% of the company.

The government should have never been backing Fannie and Freddie in the first place.How did the government promise to bailout:
- mortgage companies like Countrywide which was basically wiped out as far as stockholders were concerned
- investment banks like BearSterns that was basically wiped out as far as stockholder were concerned
- the foreign banks that bought securities that were created by the hundreds of Countrywides and the dozens of BearSterns causing them to take tens of billions in losses
- the stockholders of Fannie Mae and Freddie Mac who most likely will see all or most of their stock value wiped out
- the hedge funds that lost all or major parts of the capital invested SIVs and CDS and such that will have or will return a fraction of the money invested with them
- the insurance companies that provided CDS for the securities written by the BearSterns that have seen their capital wiped out, and leaving their stockholders with little to nothing, and has caused the muni bond market to collapse because the insurance they were paid for backing up those bonds is considered worthless, sticking the munis with toxic paper
- the dozens of other aspects of the market affected

None of these things were backed by the government, and none were subject to government regulation because of deregulation, and all were free market capitalist enterprises representing at least 50% of the total credit market and 50% of the mortgage market.

Of the credit system, the government regulated state and federal banks and S&Ls are relatively trustworthy and generally functioning, and Fannie and Freddie are functioning, while the unregulated and non-backed by the government credit market segment is about 90% locked up an unable to function.

One of the problems with Freddie and Fannie is that they were afraid of losing market share, so they started relaxing their credit rules to compete with the unregulated part of the market, and this has put a significant, but the minority of its assets at risk.

Of course, they were transformed into non government agencies because government agencies would require Congressional action or long hearings to adapt to competition, and thus if they were government run as they were in the 50s, then they would not have taken any risk. It was making them more like the unregulated financial institutions that have failed or found themselves in deep doo doo that allowed them to get where they are.

Still, they are in a much better state than BearSterns and the other unregulated banks.

And as it was the BearSterns that were the most "innovative" and the one most profit driven that figured out that it could sell bad paper just like good paper and so the only thing it needed to do was create demand for loans which pumped up the price of housing which makes their bad paper good, it is the private free market unregulated non government backed part of the market that caused the bubble, not Fannie and Freddie.

Explain how it is the government that caused the problem and not the greedy private free market capitalists who had every incentive to create an ever larger bubble to keep their commissions coming in?

Indeed. We'd all be a lot better of if the feds would quit messing around with it. How much of this a direct result of lefties wanting to see the poor own houses?

.001% would be generous

Do you actually believe that mortage companies would put thier own assets at risk because "lefties wanting to see the poor own houses?"

weak dude .. do some research

start with "default credit swap"

One of the problems with Freddie and Fannie is that they were afraid of losing market share, so they started relaxing their credit rules to compete with the unregulated part of the market, and this has put a significant, but the minority of its assets at risk.

You hit the nail on the head here. F&F had the problem of serving two masters. They served the shareholders while at the same time serving their Congressional charter. These are inconsistent. Shareholders want a return of value and, in recent years, a return of stock price and short-term financial return instead of value. The charter was to create an underlying structure that would provide liquidity to the mortgage markets, making sure that in tough times, money would still be available for mortgage loans.
Honestly, the companies shouldn't have been worried about competing in the market place. Market share should not have been their goal. Their goal should have been to provide liquidity where it was needed and where liquidity was available, those firms and private investment in sub-prime mortgages, F&F should have simply stepped aside.

So much for letting the market sort things out.

(Isn't THAT suppose to be a mantra of the right?)Unfortunately, the most prominent feature of Adam Smith's "invisible hand" is its huge middle finger.

And a gentile reminder to our GOP / Free marketeer friends ..

The Housing price bubble, the subprime meltdown, the investment bank meltdown, the subsequent bailouts .. and if THAT were not enough .. the crude oil spec bubble are ALL a direct result of "free market reform" legislation written and pushed by McCains economy tutor: Phil Gramm

Yup, all of which has received exactly zero coverage by the mainstream media...:nonono:

Unfortunately, the most prominent feature of Adam Smith's "invisible hand" is its huge middle finger.

Given the incredible amount of money and innovation in pornography, I have a pretty good idea what that invisible hand is doing.

Unfortunately, the most prominent feature of Adam Smith's "invisible hand" is its huge middle finger.

This is true.

The "other" invisible hand tends to be in everyone else's pocket.

So much for letting the market sort things out.
Unfortunately, we gave that one up a very long time ago. We haven't had a free market in well over a hundred years.

.001% would be generous

Do you actually believe that mortage companies would put thier own assets at risk because "lefties wanting to see the poor own houses?"

I started with subprime lending and learned that I was indeed correct. Some of this mess did come from lending to the poor(minorities, farmers and people with little or no credit). I have no way of knowing how much, but I suspect that it was significantly more than the .001% Java suggests.

While Phil Gramm is partially responsible for this mess, in 1999 Bill Clinton actually repealled the Glass-Steagall Act by signing into law the Gramm-Leach-Bliley Act of 1999.

Clinton vowed to veto (http://query.nytimes.com/gst/fullpage.html?res=9C02EEDF1E3CF934A35756C0A96F9582 60) the Senate version of the bill unless it was re-written to include "requirements that banks make loans to minorities, farmers, and others who have had little access to credit." The new version passed 90-8 in the Senate, passed the House, and Clinton signed it into law. Clinton's required reworking of the bill should be studied closely to see what role, if any, it played in illegal, often racist, subprime loans at higher rates than Caucasian borrowers were offered.
http://www.ickypeople.com/2008/04/bill-clinton-major-part-in-subprime.html

A major trophy is the pen Bill Clinton used to sign the repeal of the Glass-Steagall Act, a move which allowed Weill to create Citigroup. Fittingly, Citigroup is a major contributor to guess which current Democratic Presidential candidate?
http://www.progressivehistorians.com/2007/11/bill-clintons-role-in-mortgage-crisis.htmlCitigroup actually began subprime lending before the Gramm-Leach-Bliley Act of 1999 was even signed into law.


http://i188.photobucket.com/albums/z167/liberalamerican/sumbprimemarketgraph.jpg

This is nothing to worry about. Fortunately we have a Federal Reserve System that keeps everything nice and tidy.

Does the fact that both McCain and Obama agree with the take over of Freddie Mac and Fannie Mae using our tax dollars fill you with confidence about their financial judgment or cause further concern for our ability to return to healthy financial policies?

how about WE the people have our tax money spent on us for a ****ing change?

how many times do we need to bail out everyone else? when is it our god damn turn?

started with subprime lending and learned that I was indeed correct. Some of this mess did come from lending to the poor(minorities, farmers and people with little or no credit). I have no way of knowing how much, but I suspect that it was significantly more than the .001% Java suggests.


I poured through the history of Gramm-Leach-Bliley looking for some democratic or clintion addition that forces banks to make loans to high risk or low income buyers and could not find anything.

Here is a link to the bill's provisions

http://banking.senate.gov/conf/grmleach.htm

So I went back to the post .. and read the NYT article and found a little sleight of hand that makes all the difference ..

Here is the text you posted

Clinton vowed to veto the Senate version of the bill unless it was re-written to include "requirements that banks make loans to minorities, farmers, and others who have had little access to credit."

And here is the text from NYT

President would veto the Senate version because it would dilute requirements that banks make loans to minorities, farmers and others who have had little access to credit.

Key words were switched to make it look like "little access to credit" requirements were added .. they were not .. they were part of the Community Reinvestment Act 1977 ... Clinton simply moved to preserve them.

Since there was no subprime meltdown between 1977 and 1999, that clause was obviously not the source of the problem .. and most subprime loans were made by lenders that were not subject to the CRA

Gramms deregulation .. as well as a couple other of his related bills .. allowed the lenders to bundle high risk loans with typical low risk mortgages and market them as AA and AAA rated securities to unwitting pension funds and other investors. Since the lenders could sell spoiled merchandise for the price of fresh .. they had the financial incentive to push risky loans .. it was not going to be their money at risk .. this is similar to the financial formula that led to the great depression .. risk was not being valued correctly

The whole "Its All Clintons Fault" meme is just more freeperbabble