on the nation’s mortgage mess to the House Committee on Capital
Markets. He addressed a number of key issues. There was a recital of the
steps being taken to mitigate losses to the taxpayers. A sub set of
that was a discussion of the status quo on the matter of the banks
having to repurchase billions of loans from Fannie and Freddie. These
loans never met the Agency's guidelines and of course, went bust. This
is an old news story. It has been widely reported that the banks were
baulking on their obligations to do the buybacks. DeMarco did not leave
much wiggle room on this issue. Some cut and pastes from the testimony:
I have
been clear that the Enterprises should actively enforce lender
compliance with their contractual obligations, which includes pursuing
repurchases from those institutions whose loans did not meet the
Enterprises’ underwriting and eligibility guidelines.
As of the end of the second quarter 2010, Fannie Mae had $4.7 billion in outstanding repurchase requests, and Freddie Mac had $6.4 billion in outstanding repurchase requests.
More than one-third of these repurchase requests have been outstanding for more than 90 days.
Many of the lenders with aged, outstanding repurchase requests are among the largest financial institutions in the United States.
FHFA may look to its supervisory and conservatorship authorities provided under the statute to resolve the situation.
I love it when they talk tough like this. DeMarco is saying that he
sitting on $11b of IOUs from the same banks who got the biggest chunks
of the TARP money. He calls them “the largest in the US”. Okay, we know that list. Pikers.
DeMarco says this matter is under discussion. But he leaves little room
for what the outcome will be. The banks will pay. Or he will sue them
and they will pay.
$12 billion is nothing to these banks. If that were all there was to
this there would not be any nasty Congressional testimony. They would
have written the check(s) and said that they now had a clean book with
D.C. Clearly that is not the case.
Based on his bio
I guess that DeMarco is in his early 40’s. So no gray hair. Possibly
that is the reason why he has not yet been appointed as the Director of
the FHFA (vs acting). That’s too bad. My guess is if this guy had the
title and the backing he could kick some butt. He’s the only one who has
a vision of what housing finance in the US should be, and what role
government support should play.
These big issues will be up for discussion in 2011. As of now the only
plans have come from Barney Frank and the Mortgage Bankers Association.
Barney does not really have a plan. But his primary objective will be to
use credit as an elixir rather than a right. The Mortgage Bankers want
to break Fannie and Freddie into small pieces. They want to own the
stock of these pieces. They want the government to guarantee all of the
debts of the new pieces. With these plans we would repeat both sins of
the past. We need a better voice and a different plan. This is too
important to screw up again.
Something else DeMarco said on the Hill that I thought was significant.
This stuff doesn’t win votes. But the idea that someone is trying to
save the taxpayer some bucks is welcome:
I am
very supportive of the efforts to discourage borrowers who can otherwise
make their mortgage payments from walking away from their obligations.
So-called “strategic defaults” not only result in increased losses for
taxpayers, but also have a deleterious effect on neighborhoods.
"Hate" is a mild term when thinking of the TBTF banks.
The big guys may be holding out, but the little guys aren't. The little guys have no choice - and if they can't come up with the money, they're done. More consolidation.
----------I am very supportive of the efforts to discourage borrowers who can otherwise make their mortgage payments from walking away from their obligations. So-called “strategic defaults” not only result in increased losses for taxpayers, but also have a deleterious effect on neighborhoods. ---------------
They are going to break your knee caps for non-payment. You borrowed the money and Big Barney wants his money back. I think the part about banks repayments was a smoke screen for a move to go after the dead beat, no count, didn’t pay home buyer. The reverse bailout.
We are in the midst of a FINANICAL GENOCIDE. Or maybe it is only at the start or maybe toward the end. Or maybe it goes on until they own everything. Don’t try to walk away from your credit card debt or your student loan. They got a law that will take your first born. No bankruptcy or federal bail out here for the Citizen. You believed the media and the government about buying a home at big bubble prices, tough. Lost a big chunk of your stock savings, tough. Your kid, the recently graduated engineer, cant find a job, tough. THEY FEEL OUR PAIN. And they apparently want to FEEL MORE OF OUR PAIN.
Sanity and fair play are gone. The unified forces of the banking system can not be defeated with individual elected officials. They can be bought off or taken out via the media. Who controls the media? Not the citizen of the elected officials. This puts the citizen of our democracy into a state of non-self determined government.
One of George Washington’s recent articles suggests that speaking out against bad government may not be safe. However, not speaking out is a greater danger. This is definitely a game with more than one set of rules, and the citizen does not have access to all of the play book.
Why would the banks waste their precious resources to pay back these massively insolvent GSEs, when they know that GSE means that everyone else will?
QE 2 to the rescue!
Surely F and F couldn't be stupid enough to neglect charging interest on these deadbeat banksters. Surely. A repurchase request is just that....a request. At 10%/month interest the banksters would have paid up long ago.
Free money for everybody and nobody has to pay.
I must say, hearing the word "piker" certainly got a laugh out of me. Blew the dust off of that one huh?
now it makes sense :)
http://en.wikipedia.org/wiki/Pikey
He'll be Bach
DeMarco needs to take great care when crossing the road.
What we need to do is quit talking about the banks like they are private enterprises. At this point they are just robbing one arm of taxpayer funded Gov't to prop up the other. Whether they admit it our not they have the same implicit guarantees as Fannie and Freddy. Don't believe me? If they start to totter again, watch how fast they trot out with a brand new trillion dollar bailout. As for the working guy?; well here is 60bil for a country wide job package. Or as George Bush so accidently and aptly stated. "The left hand don't know what the other hand is doing"
bwawney will no doubt have the taxpayer in mind when breaks f and f up and finances their purchase thru a special one time funding of several trillion to the new owners. the new owners will pay the taxpayer back by charging rents.
is that what you mean by theft?
we should stop talking about the country "bailing out" the banks....that complete bullshit...
Paulson and crew held the country hostage, terrified the wussie Congress, and forced them to sign blank checks on the US Treasury.
In other words, the banks didn't get "bailed out", we got robbed.
We need to seriously start talking about what really happened.
+1
Has anybody heard or know of a detailed study that would have shown exactly what would have happened if we had let the banks fail? I'd like to see someone who had looked at it impartially with the end result being a set of conclusions of what exactly should happen if the banks were allowed to fail.
I distinctly recall the financial community along with high level officials in the govt scolding Japan in the 90s for not coming clean on their bank loans. Apparently that has long been forgotten as the thieves took control.
I would like to shut people up fast by coming up with a digestible fact based reasoning on why the banks should be forced to come clean and fail when they do if their capital isn't in line with FDIC guidelines. Also what happens to the assets: Do they get auctioned off at pennies on the dollar thereby profitably cutting the debt load down by 60-70%. What would that type of de-leveraging do to the economy? With a double dip not happening because we never left the recession with the exception of stimulus initialized statistical noise that was converted into screaming optimism about the near term future based on nothing, I think we have another shot at shutting these banks down again. Lets not blow it this time.
IMO, it depends upon where you are but "the country", in the sense that you are talking about about the citizens of the country, is beginning to talk about what really happened. The popular press is somewhat behind; they must stay "safe", but magazines like Newsweek have covered a lot of this pretty well. When Paulson was making his push, Newsweek labeled him "King Henry".
The problem is that much of the population doesn't read. I know one person that listens to Rush Limbaugh with little other imput than local events. What has Limbaugh done to discuss the extreme actions of Paulson or the bank power accumulation.
Most people are busy with their daily lives and those things that provide immediate pleasure.
If you want attention on this issue, try to distrubute the message locally.
Today, Senators and Representatives have e-Mail addresses. My Senators aren't well positioned for action on banking issues and personal contact requires the right situation. A Representative is a different matter and legislation starts in the House. I know mine and he knows me. Do you know yours or at least e-Mail him?
Michigan's Senators are not well positioned for action on banking issues but they can be contact
You are absofuckinglutely right. This was nothing more than a terror tactic to steal from every man, woman, and child in the country.
This was orchestrated theft plain and simple.
In old america, not dominated by corporate proxies running criminal syndicates, people would be charged and put on trial. Sadly, this world they get record bonuses.
If you're not mad demanding answers you aren't paying attention (or are a fag lapping up handouts yourself).
Expect more secret money freeloading by the same thugs courtesy of the US treasury, run by the same criminal thugs.
Thank you for calling it like it is. Now let's get down to the indictments.
I haven't heard the word "piker" in a long time. It's usage here is correct, banksters are pikers. As for Barney frank, he's a Wall Street tool. I wouldn't expect too much from him on any real legislation. Barney Frank = Major Asshole
Banks, even big banks are easy to create. The system should allow the current banks to take the losses, fail if necessary and then reform.
There is every reason to believe that structural defaults of the worst banks will result in a cleansing and restart. Otherwise we are doomed to be Japan, keeping corpses alive because the head of these banks want their undeserved bonuses.
What did people think the banksters would take a risky loan if it wasn't backed by the taxpayers? I guess if they want to kill off the housing market this is the way to go.
BK,
Thanks for the post. Again and again, excellent work!
One problem here (surburbian Detroit) is that the "housing boom" was primarily in the large house market. In many cases, size beyond common sense. At the peak there was a newspaper article on an offering of a 20,000 house built on a space created by the combined lots from two existing older homes. Asking was $11 million. The reported sale price was $4 million.
In other words, in this area the volume is in 1960's and 70's construction at early 1980's prices. In the big ticket category, only places that have special architectural or landscape appeal are selling.
Is a piker the same as a pikey ;)