Does Anyone feel like Bailing

[classicman]

Link for the above post. I didn't realize that the charts were not identified. Take a look at the link to see which is which.

It seems as though subprime is less the issue than credit score. Additionally the ARM's became more attractive as people were becoming more transient and housing values were increasing so rapidly. I think those factors combined created somewhat of a "perfect storm" in the industry.

To say that none of these banks were forced/coerced/encouraged to lend to more people seems unbelievable to me. This reeks of a wink-wink nudge-nudge deal. As long as the property values increased everyone on the lending side was getting rich, including the lobbyists and the politicians. However, once the shit hit the fan they all scattered like ants and they were all point their fingers at each other. I believe they were in it together. No proof, just an opinion.

Originally Posted by classicman

...It seems as though subprime is less the issue than credit score

....To say that none of these banks were forced/coerced/encouraged to lend to more people seems unbelievable to me.....

You cant separate the sub prime from credit scores since most with bad credit became the market for the un (under) regulated sub prime lenders during the post-2000 housing boom...and most were with an adjusted rate.

I would agree with encouraged...but certainly not forced or coerced.

And again, it still ignores the question of the necessity (or not) of better regulation of both the lender and borrower.

[TheMercenary]

[quote=Redux;623762]QUOTE]But America generally does not agree with what your party is doing. How are you going to survive the next election cycle?

[classicman]

IIRC we, had the discussion previously about the the lenders being more than just encouraged. Thats splitting hairs. . .

If the lenders profits were tied into their default rates perhaps that would deter some questionable lending. I know that if I don't get paid on a sale there is no commission earned, perhaps they should be compensated in some similar fashion. Bailing them out and leaving them go without severe penalties certainly isn't the answer. I understand what the philosophy was on the bailouts, but still. It let a lot of guilty mofo's get off scott free.

[classicman]

I also found this which I think is an interesting read. I meant to post it earlier and forgot.

FROM 2007

While doing some research on delinquencies, I just happened to stumble across a recent release from Freddie Mac on delinquencies.
Following is a chart and it shows that delinquencies at Freddie Mac are falling dramatically:



That is pretty stunning. Freddie Mac says delinquencies are dropping, but everything else I can find shows delinquencies are rising dramatically. OK, Mish, what gives?

US mortgage defaults: it pays(sic) to read the footnotes

Essentially, Footnote No. 12 says that if Freddie Mac renegotiates the terms of the loan with someone who is delinquent, then, voila, that person is no longer delinquent. It seems to me that since about June of 2006, Freddie Mac is struggling to keep this Ponzi scheme afloat.

Fannie Mae has its own guidance on delinquencies:

“First and foremost, Fannie Mae tries to avoid foreclosure. There are no winners when a home mortgage is foreclosed. It is the least desirable way to resolve a problem loan, and a terrible ordeal for the homeowner. It also is costly for Fannie Mae, as the investor, and for the loan servicer.

“Homeowners who are having difficulties making their mortgage payments should immediately contact their mortgage loan servicer (the company to which they send their monthly payments) to discuss options.

“Fannie Mae has instructed its lenders and servicers to avoid foreclosure whenever possible by offering borrowers who get behind in their mortgage payments various alternatives, including temporary forbearance, loan modification, and preforeclosure sales.”

Mish Translation: Keep this stuff off the books as long as you can. Cross your fingers and toes with David Lereah and hope the bottom is in.

Link

[TheMercenary]

No plan to date supports continuing to throw money at Fannie and Freddie. None. More regulation is not the solution. That is stupid.

Originally Posted by TheMercenary

...More regulation is not the solution. That is stupid.

But here you call for more regulation (or legislation):

Originally Posted by TheMercenary

....additionally: Eliminate non-commercial banks abilities to provide low cost loans to people who never could have afforded them in the first place....

Unless you know of another way to eliminate those non-commercial banks.

[TheMercenary]

Originally Posted by Redux

Why do you hate it when Americans stand up and dissent?

Originally Posted by TheMercenary

Why do you hate it when Americans stand up and dissent?

I'm not sure why you drifted from the fact that you said you were against regulations after implying we need regulations....to I hate it when Americans dissent....other than to post silly pics.

Focus, dude.

[TheMercenary]

Originally Posted by Redux

Thank you very much for your comments. The majority of Americans who now are against the Demoncratic reforms of Healthcare and other supposed reforms by the Demoncrats welcome the minority view.

[TheMercenary]

Originally Posted by Redux

Thanks again for your minority views about reform in Americka. I will be sure to pass them on to the minority who support you.

Hey, I'm just trying to understand how on one hand you say "More regulation is not the solution. That is stupid" but on the other hand, you want to "eliminate non-commercial banks abilities to provide low cost loans to people who never could have afforded them in the first place"

Seems like a contradiction to me. I simply asked how you could accomplish that.

I fail to see how that means I "hate it when Americans stand up and dissent."

added:
BTW, my personal opinions on policy issues are not based on popularity, although I think most Americans favor a greater federal regulatory role over banks and financial services, but that is irrelevant to the discussion.

[classicman]

Originally Posted by Redux

I think most Americans favor a greater federal regulatory role over banks and financial services, but that is irrelevant to the discussion.

I think that IS the discussion. (see thread title) :p

Originally Posted by classicman

I think that IS the discussion. (see thread title) :p

That is why I have been asking others how they would reform the banking/financial services sector. :p

If not with greater federal regulation, then how?

I have never suggested that regulations will eliminate all the crooks and greedy manipulators in the industry. I do think new regulations will minimize these practices and punish those who abuse the system more than they can be punished now.

But if you disagree, I am open to other suggestions. How would you prevent future questionable housing loans? or prevent future Madoff type rip-offs? or shaky financial instruments like derivatives?

[classicman]

CHARLIE ROSE
What will economic growth look like in 2010?

PAUL VOLCKER
Economists are terrible at forecasting, but it's going to be a slog. The most recent figures are a little bit better than we would have expected, but that doesn't mean they're very strong.

And jobs?
Jobs are going to be slow to recover.

A permanent loss of jobs?
No, we shouldn't have a permanent loss of jobs, but we have a considerable adjustment process to go through here. We've got to restore investment, we've got to restore our manufacturing industry, not the old-fashioned manufacturing industry, but we have to do a better job at the new industries that are coming along—the so-called green economy. Other countries are ahead of us in production that's related to change.

How did that happen?
What happened is our best and brightest got attracted to Wall Street. You've read about those big bonuses. These are generalizations, but I do think that the pull of Wall Street on bright young people, ambitious young people, has been tremendous.

Will it change?
I think we're in the process of change now. Wall Street hasn't got quite the glamor that it had a few years ago.

Yes, but I hear bonuses are coming back.
Well, I hope you'll get more competition on Wall Street and get some reforms, and profitability won't seem quite so great. At one point, Wall Street had almost 40% of all the profits in the country. And, you know, its contribution to the welfare of the country does not approach 40%. Something's out of line here.

Let's talk about the financial system. You have said it failed the test of the marketplace.
Yes. It collapsed on us. And I think that's the test of a financial system—is it facilitating reasonable stability and growth? No, it's had a breakdown at great risk to the economy. It became dysfunctional, and it is still largely dependent upon government assistance.

How should we create a well-oiled financial system?
The kind of reform I've been advocating is acceptance of the fact that the core of the system remains commercial banking. If that breaks down then you have an enormous crisis. And commercial banks have expanded into areas I don't think are so central. I would cut back their so-called capital market activities—hedge funds, equity funds, commodities trading, trading in derivatives. They're all legitimate functions, but they're not so central. And I don't want to protect all those functions. I don't want to protect everybody because when people act like they're protected, you get in trouble. So let's leave the capital markets to their own devices without any expectation of government protection and keep the existing safety net for the commercial banking system.

In my judgment we don't need to regulate the capital markets so heavily. You have some extreme cases where individual institutions are so big and so vulnerable, yes, you might want some regulation of capital and leverage, but that would be the exception. But if they fail, let 'em fail. We will have some kind of a new resolution process. Some agency will go in there and say, "You're going to fail, but we're going to provide a more orderly exit."

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