Showing posts with label Gretchen Morgenson. Show all posts
Showing posts with label Gretchen Morgenson. Show all posts

Sunday, February 15, 2015

Gretchen Morgenson smells a rat: Fannie/Freddie bailout cost us nearly $188 billion, but Treasury rakes in the profits

Gretchen Morgenson for The New York Times, here:

For decades, the companies had maintained that their mortgage operations posed no risk to taxpayers; their pals in Congress echoed this refrain. But then came the mortgage debacle, and taxpayers had to shore up the companies with $187.5 billion. Initially, Fannie and Freddie had to pay interest on the loan. But in August 2012, the Treasury and F.H.F.A. abruptly changed the agreement; under the so-called third amendment, the government began sweeping all the companies’ profits into the Treasury. Since then, Fannie and Freddie have been immensely profitable. As of last December, the Treasury had received a total of $225.4 billion from the companies. ... 

The initial $187.5 billion loan remains outstanding, however, because of the deal’s structure. ...

But recall what was going on in mid-2012. The presidential election was in full swing, and Democrats and Republicans were clashing over the debt ceiling. That May, in a shock to many, Fannie and Freddie reported profits from their operations for the first time since the mortgage crisis. The amount: $4.5 billion. And plenty more was to come. Certainly, giving the Treasury access to billions of dollars in the companies’ profits during this time provided financial flexibility to the executive branch that Congress might not otherwise have approved.




Sunday, July 22, 2012

Neil Barofsky, TARP "Watchdog", Blasts Financial Fascism In New Book

And Gretchen Morgenson of The New York Times provides a favorable review, here:


He is Neil Barofsky. Remember him — the man whose job it was to police the $700 billion Troubled Asset Relief Program? And his new account, a book titled “Bailout” (Free Press), to be published on Tuesday, is a must-read. ...

He soon discovered that the [Treasury] department’s natural stance of marching in lock step with the banks meant that he had to question its policies and programs repeatedly to ensure that taxpayers weren’t at risk for fraud and abuse.


“The suspicions that the system is rigged in favor of the largest banks and their elites, so they play by their own set of rules to the disfavor of the taxpayers who funded their bailout, are true,” Mr. Barofsky said in an interview last week. “It really happened. These suspicions are valid.” ...

Meaningful changes to our broken system may finally come about, he writes, if enough people get angry. His conclusion is this: “Only with this appropriate and justified rage can we sow the seeds for the types of reform that will one day break our system free from the corrupting grasp of the megabanks.”

At the center of that whole sordid affair of regulatory capture at the time was Tim Geithner at Treasury, former head of The New York Federal Reserve Bank, who obviously isn't simply morally challenged with respect to paying his taxes, but also with respect to reporting LIBOR irregularities.

Unfortunately for us, we not only had two candidates for president in 2008 who voted FOR TARP (Sen. John McCain and Sen. Barack Obama), in 2012 the Republican candidate still defends it, as recently as March here in USA Today Away:

"There was a fear that the whole economic system of America would collapse, that all our banks or virtually all (banks) would go out of business," Romney told a town-hall-style forum in Arbutus, Md. "In that circumstance, President Bush and Hank Paulson said, 'We've got to do something to show we are not going to let the whole system go out of business.' I think they were right. I know some people disagree with me, I thought they were right to do that.".

And not only that, Romney is as unlikely as anyone to get angry about bailouts in future. We can't even get Romney to be angry about ObamaCare.

It's not even clear Obama's recent $100 million in attacks against Romney's personal character have made him mad, especially when it's the subject of speculation on conservative talk radio. Here Rush Limbaugh notes Romney "finally" gets ticked off about Obama's (plagiarizing) use of (Elizabeth Warren's) "you didn't build that", but even Rush isn't 100 percent convinced:

RUSH: You know, folks, I think this actually made Romney mad! I actually think that what Obama said finally ticked Romney off. I think Romney now has realized Obama is not a nice guy who's just befuddled and wrong. That was Romney's prior description of Obama: "He's a nice guy, just doesn't know what he's doing." I think this really got to Romney. Let's squeeze one more in here...


RUSH: Yes, siree bob! Something lit a fire. I am convinced that what Obama said actually has made Romney mad. Not in an insulting way. It has made him mad over what we're up against now. And, of course, as I say: The Obamaites are saying that their guy was "taken out of context." Right. Okay. ...


RUSH: Have you seen anything on Romney's speech in Irwin, Pennsylvania? "A little bit." Well, before we go to the break, let's play sound bite nine again and then follow it up with the last one. This is Romney on fire yesterday in Irwin, Pennsylvania, a suburb of Pittsburgh. He's really ticked off now, I think. This is about Obama saying (impression), "You started a business? You didn't do that! You didn't make that happen! You didn't build that. Uhhhh, you didn't -- you -- you -- you had help! You had a road, a bridge. You didn't do that."

And I think Romney is really ticked. I think there's now a fire burning under the posterior. So here are the two bites. Just bang 'em back-to-back, Mike.



If conservatives aren't sure if Romney's really angry, who is? The man is cool, I tell you, as in passionless, just like Obama. And that is the prerequisite for deception.

On the outstanding problems of our time, from massive bailouts of the banking system to government coercion in healthcare, Gov. Romney is on the same side as Obama and the Democrats.

Some choice!

Meanwhile, the American people just shrug.

A country that can't get angry about anything is a country that deserves what's coming to it (see France).

Sunday, July 15, 2012

HELOC Required Payments Are Set To Explode Between 2012-2018

Today, just $11 billion in home equity lines of credit require both principal and interest payments. By 2018 the number will be ten times that, $111 billion.

The four biggest banks alone hold HELOCs with credit lines approaching $300 billion.

Gretchen Morgenson has many of the details at The New York Times, here.

It is unclear from the story just how many first mortgages already underwater also have HELOCs. It is widely estimated that 25 percent of firsts are underwater. Add HELOCs on top of any of those and both lenders and borrowers are back in a world of hurt, as if they had actually gone anywhere but the purgatory we now inhabit.

Sunday, February 12, 2012

Banks Make Out Like Bandits Again, Mortgage Settlement a Drop in the Bucket

As detailed by Gretchen Morgenson for The New York Times here:

There's no doubt that the banks are happy with this deal. You would be, too, if your bill for lying to courts and end-running the law came to less than $2,000 per loan file.

As for the supposed benefits to the economy, skeptics abound. One of them is Paul Diggle, property economist at Capital Economics in London. In a report last week, he rejected the notion -- espoused by both banks and government authorities -- that this deal would help turn around the American housing market.

For most homeowners, it will barely move the needle. Forgiving $17 billion in principal "is a drop in the ocean," Mr. Diggle said, "given that close to 11 million borrowers are underwater on their loans to the tune of $700 billion in total." Doing the math, $17 billion in write-downs would be about 2.4 percent of the total negative equity weighing down borrowers across the nation now.

Sunday, October 9, 2011

Taxpayer-Insured Commercial Banks Continue To Write CDS in $Trillions

Protest that you numbskulls.

These banks' political contributions are going to your man in The White House.

Gretchen Morgenson has the story here for The New York Times.

Wednesday, June 29, 2011

Liberals Blame Bill Clinton for Housing Bubble

The Financial Crisis Inquiry Commission, under Phil Angelides who had a testy, partisan, op-ed in The Washington Post yesterday, in its report sought to blame Wall Street for leading the way to the housing bubble, not government policy as mediated through the likes of Fannie Mae.

Gretchen Morgenson of The New York Times has begged to differ, and Steven Malanga provides a timely and sympathetic review of a new book she co-authored which uncovers a major impetus to the housing bubble in the administration of none other than Bill Clinton, who took a weaker form of liberalism under George Herbert Walker Bush and ran with it:

Reckless Endangerment locates the origins of the crisis in the ironically named Federal Housing Enterprises Financial Safety and Soundness Act of 1992, which was supposed to protect taxpayers from big losses by Fannie and Freddie. That law pushed the institutions into affordable housing lending and prompted Fannie in particular to adopt a strategy to disarm critics by continually arguing that efforts to rein in the company's operations, such as requiring it to back its mortgage purchases with more capital, would only hurt the goal of expanding home ownership. "You should rejoice in Fannie Mae and Freddie Mac rather than fight them," Fannie's chief executive, James Johnson, told the New York Times.

In the wake of the 1992 legislation, Fannie Mae created the Housing Impact Advisory Council, an assembly consisting of low-income housing advocacy groups and mortgage lenders. Fannie Mae also began supplying grants to the housing groups, like ACORN, which a few years earlier had criticized the GSEs in the press as "strictly by-the-book" interpreters of underwriting standards whose young underwriters, "are not sensitized to the existence of redlining, be it racial or geographic." Now Fannie was singing a different, more cooperative tune, and its new council, Morgenson and Rosner write, evolved into "the centerpiece" of President Clinton's 1994 National Partners in Homeownership program, a "disastrous homeownership policy" that played a crucial role in inflating the housing bubble.

With The Nation pinning financial deregulation on Bill Clinton in recent days, liberalism's not having a good start to the summer.

If Bill Clinton were smart, he'd respond to all this by blaming Bush, or hope people still have enough money left to go to the beach and read trashy novels instead.