Have nothing to do with the [evil] things that people do, things that belong to the darkness. Instead, bring them out to the light... [For] when all things are brought out into the light, then their true nature is clearly revealed...

-Ephesians 5:11-13

Tag Archives: Fannie Mae

Legal Fallout From Housing Collapse Continues

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The announcement by the Federal Reserve of an “enforcement action” against Goldman Sachs for engaging in “a pattern of misconduct and negligence” in its handling of home mortgage loans was entirely predictable. Charges of such misconduct go back for months when it was first discovered that mortgages and other mortgage-related documents had been “robo-signed” and foreclosure documents hadn’t been properly reviewed and that Goldman’s Litton Loan Servicing unit took actions “without always confirming that documentation of ownership was in order.”

The ruling requires Goldman to

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Bank of America Blames Stock Price Decline on Analyst

The Emperor's New Clothes, by Hans Christian A...

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When Henry Blodgett explained that the reason for the decline in the price of Bank of America’s stock was because Wall Street thinks that Bank of America is worth less—much less—than what the bank itself thinks, bank spokesman Larry DiRita responded, “Mr. Blodgett is making exaggerated and unwarranted claims…[and that] as of June 30th, our tangible book value per share was $12.65.” At the time, BofA stock was selling for $6.42 a share.

The bank’s sharp retort caught Blodgett by surprise:

I was eating a tuna sandwich when I saw the news clip across Bloomberg TV. I almost choked.

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Standard and Poor’s Extends, Defends and Explains Its Downgrade

Standard and Poor - not the most popular build...

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In a series of expected additional press releases, the Standard & Poor’s credit rating agency is expanding its downgrade of debt securities tied to the now-lower-rated sovereign debt of the United States, including Israeli bondsFannie Mae and Freddie Mac, and “pre-funded” municipal bonds. Other credits tied closely to U.S. sovereign debt are also expected to be downgraded shortly, with only a few exceptions.

Most municipal bond issues are not pre-funded with U.S. Treasury securities, and so they aren’t likely to

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S&P Downgrade: Does It Portend a Death Spiral?

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Standard and Poor’s was blunt in its assessment of America’s deteriorating financial condition when it announced Friday night that it was cutting its credit rating on United States’ Treasury securities from AAA to the second-tier AA+, with a negative outlook. S&P said:

Progress [in] containing the growth of public spending, especially on entitlements, or on reaching an agreement on raising revenues, is less likely than we previously assumed

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U.S. Credit Rating Still at Risk

Crisis

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Moody’s announcement on Tuesday that it would retain its AAA rating of U.S. government sovereign debt as a result of the debt-limit agreement came with a warning: the government must rein in spending or risk a downgrade anyway. The deal “virtually eliminated the risk of [a] default,” but the agency warned that “Should the new mechanism put in place by the Budget Control Act prove ineffective, this could affect the rating negatively.” Moody’s added that it wanted to see the United States lower its debt-to-GDP ratio, now approaching 100 percent, to around

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Paul Ryan’s Plan Unveiled, Reviled, Applauded

Rep. Paul Ryan (R-WI)

Rep. Paul Ryan (R-WI) (Photo credit: Wikipedia)

Now that Rep. Paul Ryan (R-Wis.) has unveiled his “Path to Prosperity” budget, nearly all discussion is focusing on the details and not on the proper role of government. Writing in the Wall Street Journal on Sunday, Ryan said that “our budget … cuts $6.2 trillion in spending from the president’s budget over the next 10 years, reduces the debt as a percentage of the economy, and puts the nation on a path to actually pay off our national debt.” He also said that it

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Cato Puts Budget-Cutting Debate in Perspective

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The Cato Institute’s just-announced ad campaign in major newspapers around the country asks rhetorically, “This is leadership?” and then neatly summarizes numerous areas where major budget cuts could be made. The ad questions the debate currently taking place over almost invisible cuts to the federal budget: “The House Republican leadership has proposed $61 billion in spending cuts—but that’s less than 4% of this year’s massive $1.65 trillion federal deficit.” And the Democrats have managed to squeeze out an even more modest proposal of

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Shutting Down Fannie and Freddie: Locking the Barn Door

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It appears that there is at least one thing the Obama administration and the GOP can agree on, and that is that Fannie Mae and Freddie Mac have got to go.

Given the immense role these two government-sponsored enterprises (GSEs) had in the Great Meltdown, they remain an embarrassment for every politician even remotely related to them. As noted cryptically in his latest book, Rollback, Professor Thomas Woods said,

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Financial Crisis Inquiry Commission Report: Classic Misdirection

Money

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After nearly two years of investigation, reviewing millions of documents and conducting hundreds of interviews, the Financial Crisis Inquiry Commission (FCICreleased its report, pinning the blame for the Great Recession largely on Wall Street and alleged deregulation of the financial markets in the 1990s.

The report of the panel of 10 (six Democrats and four Republicans) was delayed by a month as the final report became more of a partisan attack on Wall Street and a push for more regulation of the financial markets. The Republicans ultimately decided not to endorse the report, but instead issued their own report on the cause of the financial crisis.

According to the official report issued today by the FCIC, blame for the financial meltdown beginning in 2007 can be placed on:

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Military Spending: The New Third Rail

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When the Spending Reduction Act of 2011 was unveiled by House Republicans Scott Garrett (R-N.J.), Jim Jordan (R-Ohio), and Senator Jim DeMint (R-S.C.), U.S. News and World Report called it “eye-popping,” referring to the bill’s attempt to rein in government spending by $2.5 trillion over the next 10 years. Rep. Jordan, who is the Chairman of the Republican Study Committee (RSC), explained the need for such sharp cuts:

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Cutting Government: Where to Start

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Once Obamacare is repealed by the House, the attention of the 112th Congress will turn to the question of where government spending can be cut for the largest immediate impact. Several observers have weighed in with their thoughts, including Dick Armey and Matt Kibbe of FreedomWorks, who have an article in today’s online Wall Street Journal. After reviewing the fiscal hot water the republic is already in, and discussing attempts to re-set government spending back to “base lines” such as 2009, 2008, or 2007, the authors get down to business.

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John Allison: Free Market Banker

BB&T

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When asked during an “Online with Terry Jeffrey” interview about how to solve the debt crisis facing the country, former Branch Banking & Trust (BB&T) CEO John Allison, was direct:

If you run the numbers…the United States goes bankrupt. It’s a mathematical certainty.

Now countries don’t go bankrupt the way companies do. They don’t file [for] bankruptcy. They usually hyper-inflate. They print a bunch of paper money, or they become Third World economies like Argentina—unless [they] change direction. So, we absolutely have to change direction.

When challenged about how to change direction, Allison was refreshingly candid:

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World Bank’s Trial Balloon Pops

Deputy Secretary of State Robert Zoellick

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Before the Internet, Robert Zoellick’s brief outline of suggested topics for the G20 meeting this week in Seoul, Korea, might have been considered just an interoffice memo. It appeared in London’s Financial Times, contained obscure references to arcane subjects that would be of interest only to international bankers determined to push their agenda for a world currency, and was written by a certified member of the internationalist “insider” cabal. But when Zoellick wrote that the “cooperative monetary system…should also consider employing gold as an international reference point…,” Internet bloggers picked up on it immediately, and the cover was blown.

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Mortgage Summit: No New Ideas

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When Kevin Hall, writing for McClatchy Newspapers, said “the Obama administration got what it was looking for at its summit on the future of housing finance,” he was very close to the truth: No matter who spoke at the summit or what “new” ideas might be proposed, nothing would change—the government would remain fully in charge of mortgage financing for the country.

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TARP Criticism Misses the Point

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When TARP Inspector General Neil Barofsky criticized the Home Affordable Modification Program (HAMP) as being ineffective, he blamed the Treasury Department for not setting clearer goals for that part of the Troubled Asset Relief Program (TARP).

Only 390,000 homeowners “have seen their mortgage terms permanently modified since the $50 billion program was announced in March 2009. That is a small fraction of the three to four million borrowers who were supposed to receive assistance under the program.”

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Fannie and Freddie De-​​listed From NYSE: Now What?

Fannie Mae headquarters

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When ABC News announced that Fannie Mae and Freddie Mac would be de-listed by the New York Stock Exchange on July 8, writer Rich Blake said that “these once mighty enterprises will trade alongside stocks on the Over-The-Counter Bulletin Board, a place where many companies go to die.”

As a eulogy Blake expressed the usual statist paean: “It’s difficult to contemplate how the U.S. mortgage market could function without the nearly $6 trillion in funding they provide to this market and the institutions that comprise it…The housing sector would be in even worse shape if not for those twin…enterprises.”

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Financial Reform: Expanding Hubris, Limiting Freedom

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When the House passed the 2,319-page Dodd-Frank financial reform bill by a vote of 237-192, all it did was confirm for many the extraordinary hubris of legislators believing they could in fact “fix” the problems they themselves created which resulted in the Great Recession of 2008.

John B. Taylor,  professor of economics at Stanford University says, “The main problem with the bill is that is based on a misdiagnosis of the causes of the financial crisis…the presumption that the government did not [already] have enough power to avoid the crisis.”

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Can ObamaCare Be Repealed, Nullified?

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U.S. Representative Michele Bachmann (R-Minn.), who has earned a “Freedom Index” rating of 90 percent in the current Congress to date, has introduced a bill in the House to repeal ObamaCare. In her press release, Bachmann reminded her constituents that “the government already owns or controls about one-third of U.S. economic activity through the takeover of General Motors, the bankruptcy reorganizations of Chrysler, the partial ownership of two of the country’s largest banks in Bank of America and Citigroup, and the seizure of mortgage giants Fannie Mae and Freddie Mac as well as AIG. Taken all together, [with ObamaCare] we’re looking at half of the American economy in the grip of the federal government.” Bachmann said that it “will do nothing to spur economic growth … [but] will serve only as an obstacle to actual recovery and smother the spirit of innovation and freedoms that made this country great.”

Her bill is simplicity itself:

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Citigroup Bailout Retrospective

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In the announcement that the U.S.Treasury was likely to make a profit selling its stock in Citigroup, much was made about the great returns that sale would generate, and very little was said about how it all happened in the first place.

The potential profit was estimated to be about $7.5 billion assuming that the price of Citigroup’s stock stays at its current level through the end of the year. The article joyfully announced that “it’s a 14 percent rate of return on the $165 billion invested in the biggest banks. Hundreds of smaller banks also received [TARP] money and have been paying the government a steady stream of dividends and interest.” Banking analyst Bert Ely said, “Overall, TARP may cost taxpayers money. But the banking part of it is going to be a moneymaker.”

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Housing: Washington Only Delaying Inevitable

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Friday’s announcement of more intervention in the housing mortgage market will result in a deeper, longer, and more painful delay in the inevitable decline in housing prices that are necessary to clear the market. According to the Obama administration, the “broad new initiatives” will help troubled homeowners to refinance their existing mortgages with more favorable affordable ones provided directly by the government. Part of the new program is “meant to temporarily reduce the payments of [those] borrowers who are unemployed [but are] seeking a job.” In addition, the enhancements include inducements to “encourage lenders to write down the value of loans [already] held by borrowers in modification programs.”

In simple English, HAMP (the Home Affordable Modification Program), announced with great fanfare and high expectations early on in the Obama administration, isn’t working, and so more of the same is required.

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Many of the articles on Light from the Right first appeared on either The New American or the McAlvany Intelligence Advisor.
Copyright © 2018 Bob Adelmann