freddie mac

Privatizer in Chief Obama Blames Reckless Homeowners

President Obama gave a speech on winding down Freddie Mac and Fannie Mae, the GSEs often blamed for the housing crisis and a darling of conservative ire.  Government sponsored enterprises, or GSEs buy up mortgages from private lenders and the theory is to loosen up funds to stir additional lending.

La-La Libor Lawsuit Land

Another bank ripoff and another lawsuit dismissed.  The Libor manipulation scandal spurred private investors and others to sue the banks over their losses.  A judge just threw out major portions of their case.  There were at least 22 Plaintiffs.  Now groups like the City of Baltimore are out of luck in recovering all of their losses due to banks manipulating a key interest rate.

What's Up in Bankster Land?

bankstersIt might just be election time. We have Bank of America being sued for Countrywide's hustle, a program which pawned off bad mortgages onto Fannie Mae and Freddie Mac from 2007 to 2009. The U.S. District Attorney, Office’s Civil Frauds Unit in New York filed a civil complaint against BoA, who acquired Countrywide, for $1 billion.

The Complaint seeks civil penalties under FIRREA, as well as treble damages and penalties under the False Claims Act, for over $1 billion in losses suffered by Fannie Mae and Freddie Mac for defaulted loans fraudulently sold by COUNTRYWIDE and BANK OF AMERICA.

Manhattan U.S. Attorney Preet Bharara said: “For the sixth time in less than 18 months, this Office has been compelled to sue a major U.S. bank for reckless mortgage practices in the lead-up to the financial crisis. The fraudulent conduct alleged in today’s complaint was spectacularly brazen in scope. As alleged, through a program aptly named ‘the Hustle,’ Countrywide and Bank of America made disastrously bad loans and stuck taxpayers with the bill. As described, Countrywide and Bank of America systematically removed every check in favor of its own balance – they cast aside underwriters, eliminated quality controls, incentivized unqualified personnel to cut corners, and concealed the resulting defects. These toxic products were then sold to the government sponsored enterprises as good loans. This lawsuit should send another clear message that reckless lending practices will not be tolerated.”

$2.6 Trillion for 2 Million Jobs

bernake say whatAnyone find these economic stimulus packages put out by the government and the Federal Reserve ridiculous at this point?  The reality is a direct jobs program would be much cheaper and much more effective to get the economy moving.   Yet, magically that idea has been dismissed and worse since 2008.

Fire in the Jackson Hole - Bombastic Stimulus Claims

Federal Reserve Chair Ben Bernanke will do more quantitative easing. That's the consensus from his Jackson Hole speech.   As usual, the utterances on labor are ignored by Wall Street or in this case, used to justify Wall Street's crack addict quantitative easing fix.

The stagnation of the labor market in particular is a grave concern not only because of the enormous suffering and waste of human talent it entails, but also because persistently high levels of unemployment will wreak structural damage on our economy that could last for many years.

Taking due account of the uncertainties and limits of its policy tools, the Federal Reserve will provide additional policy accommodation as needed to promote a stronger economic recovery and sustained improvement in labor market conditions in a context of price stability.

Bernanke is justifying this action through various studies claiming quantitative easing generated jobs.

FHFA Firestorm!

firestormThe FHFA just pooped on half a million Americans and denied those underwater on their mortgage to obtain partial debt forgiveness. Millions of American homeowners holding out hope are outraged. Acting FHFA director Ed DeMarco:

Today, I provided a response to numerous congressional inquiries as to whether the Federal Housing Finance Agency (FHFA) would direct Fannie Mae and Freddie Mac to implement the Home Affordable Modification Program Principal Reduction Alternative (HAMP PRA). After extensive analysis of the revised HAMP PRA, including the determination by the Treasury Department to begin using Troubled Asset Relief Program (TARP) monies to make incentive payments to Fannie Mae and Freddie Mac, FHFA has concluded that the anticipated benefits do not outweigh the costs and risks.

Given our multiple responsibilities to conserve the assets of Fannie Mae and Freddie Mac, maximize assistance to homeowners to avoid foreclosures, and minimize the expense of such assistance to taxpayers, FHFA concluded that HAMP PRA did not clearly improve foreclosure avoidance while reducing costs to taxpayers relative to the approaches in place today.

Fannie & Freddie Executives Sued by SEC

nunrulerThe SEC had sued Fannie Mae and Freddie Mac executives with securities fraud, three years after the fact. The fraud charges are about lying to investors over subprime loans.

They knew and approved of misleading statements claiming the companies had minimal holdings of higher-risk mortgage loans, including subprime loans.

This is a civil case, not a criminal one. Most interesting while going after some ex-executives the SEC lets Fannie and Freddie off the hook. Nothing happens to the two GSEs now.

Fannie Mae and Freddie Mac each entered into a Non-Prosecution Agreement with the Commission in which each company agreed to accept responsibility for its conduct and not dispute, contest, or contradict the contents of an agreed-upon Statement of Facts without admitting nor denying liability. Each also agreed to cooperate with the Commission's litigation against the former executives.

The case is being filed in New York State and the three former executives from Fannie Mae are Chief Executive Officer Daniel H. Mudd, former Chief Risk Officer Enrico Dallavecchia, and former Executive Vice President of Fannie Mae's Single Family Mortgage business, Thomas A. Lund.

Freddie Macs sacrificial lambs are Chairman of the Board and CEO Richard F. Syron, former Executive Vice President and Chief Business Officer Patricia L. Cook, and former Executive Vice President for the Single Family Guarantee business Donald J. Bisenius.

Saturday Reads Around The Internets - Just Another $8.5 Billion Please

Welcome to the weekly roundup of great articles, facts and figures. These are the weekly finds that made our eyes pop.


China iPhone Manufacturer Foxconn's Horrific Working Conditions

Think the iPhone is made in America? Like most things these days, manufacturing is offshore outsourced to China. Out comes another report on the terrible working conditions at the iPhone/iPad factory.

Scapegoating Fannie and Freddie - the New Republican Orthodoxy

You have to be blind, dumb, or maliciously misleading to miss the contribution of Wall Street to the housing bubble and the financial crisis.

By Numerian posted by Michael Collins

Yesterday the four Republican members of the 10-member Financial Crisis Inquiry Commission issued their own report on what caused the credit crisis of 2008-2009. They did this because they wanted to put down a “marker” on what they think happened to the markets and the economy, before the whole commission releases its official report next month. Many observers say this unusual move will damage the credibility of the official report, and reflects yet again the bitter partisan struggle that is taking place in Washington between Republicans and Democrats.

This is not a partisan political struggle going on here, at least not for the most part. Enough Democrats on the Commission have spoken up that we see what is really happening. The Democrats who run the Commission are using fact-based arguments and reality-based research to determine what happened during the financial crisis. The Republican minority members are all theologians using a faith-based approach that says government is evil and fundamentally at fault here, the market is all-pure and all-wise, and the “financial industry” is certainly not to blame.

Get ready for another Wall Street bailout

When you know you are about to do something unpopular you try to hide it. For instance, the public would never know that over 140 banks (not counting credit unions) have gone under this year because their announced failures only happen on Friday evenings.
Another extremely unpopular event would be another round of bailouts for Wall Street banks. That's why the provisions are hidden deep within the financial reform bill.

For all its heft, the bill doesn’t once mention the words “too-big-to-fail,” the main issue confronting the financial system.
Instead, it supports the biggest banks. It authorizes Federal Reserve banks to provide as much as $4 trillion in emergency funding the next time Wall Street crashes. So much for “no-more-bailouts” talk. That is more than twice what the Fed pumped into markets this time around. The size of the fund makes the bribes in the Senate’s health-care bill look minuscule.

Believe it or not, this is not the most outrageous thing Washington has done in the last week.