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Another Stinker For Obama
In 2008, Fannie Mae and Freddie Mac went bust. The collapse of the mortgage giants put the economy into a tailspin. You can’t blame Obama for that. In 2009 with Fan and Fred in receivership, the White House revved up D.C.’s other mortgage giant, the Federal Housing Authority (FHA). Everything that happened at FHA since January of 2009 is Obama’s headache.
The Government Accountability Office (GAO) released a report on the activities at FHA in 2009 and 2010. These were critical years for FHA as it was growing like crazy due to policy actions by the White House. The most significant effort to prop up the housing market was the First-Time Home Buyers Credit (FTHBC). In 2009 FHA doled out $12 billion of FTHBC money.
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There was only one catch to getting the FTHBC money. The borrower had to be current on their federal taxes to become eligible. However, it seems that the nice folks at FHA overlooked those rules. The summary conclusions from the GAO report:
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That’s right. The GAO found that the FHA "insured over $1.44 billion in mortgages for 6,327 borrowers with $77.6 million in federal tax debt who benefited from the 2008 American Recovery and Reinvestment Act. Of these borrowers, 3,815 individuals claimed and received $27.4 million in Recovery Act First-Time Homebuyer Credits (FTHBC).
In addition, the GAO found that those borrowers were 3X’s more likely to default.
To apply for FHA mortgage insurance, one has to supply a valid Social Security Number. It's the law that an individual can’t get FHA insurance, or FTHBC money with a federal tax judgement outstanding. If the GAO can track who got money and who owed taxes, then surely the FHA could have taken the time to look. But they didn’t.
Note: There is a raging debate about austerity in the US. Fellows like Paul Krugman have been leading the battle for a much bigger role of the government. What the Keynesians fail to understand is that governments are imbeciles about spending money.
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When one doles out someone else's money, it doesn't matter where it goes to them.
We are all tax debtors, we just haven't been presented with the bill.
Every country with a central bank is a country with debt beyond its' ability to pay. Balance the books tomorrow and voila, we are all tax debtors.
Where did the money come from for the FHA? Pretty sure it was borrowed into existence. For homes that if paid off over thirty years, ends up costing three times the original price. Wiping out most of the productive labor of a lifetime.
Some slaves, obviously feed at the trough a little more than others and the government doesn't care. Why? It's the debt, the glorious fees and debt that feed the central bankers. Always investing in the slaves of the future.
In light of the absence of a debt jubilee, perhaps it is time for all the outliers to take over the city? Declare all debts cancelled and property dispersed evenly, then watch again as all the debtors fall into debt to the savers. The most boring history in the world.
The state of nature is liberty, savage, uncompromising liberty. Still, man in all his intelligence and wisdom, thinks he knows better- he can build a better mousetrap! Like every attempt in the past, present and future, he will fail, but not without the shouts of our glorious advancements and improvements to security and sanitation- as we die from the cancers and gunshots from our resulting largess.
Humans are morons and easily trained to the leash.
Crony capitalism at it's finest. Everyone with money and power got that way by cheating on their taxes. The simple reason why nothing changes today is due to the fact that in order to really change the people in charge would have to begin by indicting themselves.
There is no accountability among leaders in the public or private sector. No one ever actually fails anymore, at least not in a way that they experience real fucking consequences. That in a nutshell is why everyone should view all paper promises as complete junk.
Come on, dude. I generally agree with your sentiments that there is a lot of fraud and corruption, but there are plenty of people who get ahead without cheating on their taxes. Be real here. Because when you make stupid generalizations you undermine your other valid points.
Doesn't everything I sign with the govvies say, "Under penalty of perjury", and something about 10 years for fibbing?
If it says that's a requirement and you sign, are you not claiming to meet said requirements?
Book em Dan-o!
Wasn't 0bama a senator at this time? Probably just voted "present". The Bush admin warned several times there were big problems at fannie and freddie.
Bwaney Fwank jumped right up and said "there's no problem!" So here we are.
Kill Bwaney Fwank! and the rest of 'em....
No violence or hate speech please, even in jest - we don't want this place shit down. Thanks.
I can see why revisionist history is so appealing for amnesiacs like yourself, but some of us can remember things that happened more than a year ago.
"We dont want fine print preventing folks from owning their own home. We can change the fine print."
"Fannie mae and Freddie mac as well as federal home loan banks will increase their commitment to minority home markets by 440 billion dollars."
http://www.youtube.com/watch?v=BHIhmNIbDnk
bush - white with black stripes
obama - black with white stripes
no one is fooled....
jb
That was in the old days. Now all the prison jumpsuits are orange. Easier to see them when they make a run for it.
i was thinking more the zebra thang.....
FHA closes the barn door after the horses are gone. Loans to the 600-640 FICO crowd are being tightened up. The default rate for this group is 30% !
http://www.trulia.com/blog/sam_thompson/2012/05/high_default_rate_on_fha_loans_causes_lenders_to_tighten_guidelines_for_borrowers_in_the_600_640_segment
Fucking bulemics.
Seems like there is no accountability at any level.
I really enjoy your articles Bruce. Thought provoking and cogent. If we do not know the problems, we can never work to solve them.
Thanks.
I think everyone knows what the fucking problems are. Solutions are in short supply. The easiest solution would be to actually make sure that there are real consequences for bad behavior at all levels.
Want equity markets to rally around the world? Hang John Corzine in times square for starters.
Seriously though, if your leadership drives an organization or company into the ground then you (and everyone else who profitted) should be reasponsible for paying back the creditor. A cut in pay from 50 million to 25 million is not a real fucking consequence.
Enough of the socialization of private losses on to the backs of taxpayers. The other solution I see is to make banks just be banks again. Separate the houses (Hello Glass Steagall) and let's see if the banks can really make money trading their own damn money.
Keywords, state, state-society relations, signals, uncertainty, ambivalence, lawyers, journalists, NGO
Welcome to no man legal status. They do not even begin to care and you cannot stop them.
Take these little fuckin idiots and hang them from the tallest tree you can find. The plunder will continue and moral hazzard will not abate until we start holding people accountable for their wrong doings. This country has sat back on it's laurels long enough and watched the theives plunder the treasury. It's time folks. The town of D.C. needs a good ole fashion burning like Sherman burned down Atlanta.
sansnobel : burning the town won't rid us of the plunderers. guillotines?
Start with K Street. Lighters for Liberty! Flick your bic for Freedom!
'Note: There is a raging debate about austerity in the US. Fellows like Paul Krugman have been leading the battle for a much bigger role of the government. What the Keynesians fail to understand is that governments are imbeciles about spending money.'
Why does this specific libertarian talking point get constantly expounded like it's some kind of natural law observed empirically since Antiquity? Some sort of constant of nature? How does this supposed fact of capital markets relate to the Norwegian government for example? You'd think that it was only government that failed in 2008 with this type of rhetoric.
Be more careful Bruce, this writing style makes you seem like an average syndic or at best, corporate drone. In truth the "debate" is nonexistent and only there for the benefit of those who haven't completely collapsed into apathy.
What, no mention of their 680 billion in national debt? A 60% debt to GDP ratio? Sure, Norway is doing just fine- until the collateral is compromised. Anyone can run a successful economy on debt financing if its' currency remains acceptable (The US has been doing it better than all but Britain for thirty years).
This does nothing to drag down the arguments against Keynsian and monetarist spending.
https://en.wikipedia.org/wiki/Economy_of_Norway
Why does this specific libertarian talking point get constantly expounded like it's some kind of natural law observed empirically since Antiquity?
Just like "Norway" is generally dragged out routinely to demonstrate the "SOCIALISM WOKZ!!!!!!!!!111!1!1!!!" meme - right?
Well, let's see - Norway, a constitutional monarchy run by a single-house parliament with proportional representation, has an essentially monolithic population of about 5-million people who culturally have a very strong work ethic as Mother Nature has over the centuries tended to use winter to take care of most of their lazy people, and gets tons and tons of cash living off the state ownership of their very rich base of natural resources (evil petrol products, mostly).
Yeah, that's a perfect analog for the US of A, right there.
Would you prefer Singapore?
The cultural argument is nonsense long since debunked, so that you can forget altogether. The rest is a clumsy description of how things actually operate but let's just say State capitalism is a better description.
The meme is your own creation so I suppose you have to live in it now, I merely pointed out how it's always brought out for the purpose of extreme scrutiny of government yet is rarely applied to private enterprise.
Just seems odd is all.
Wow, Gene says my "cultural argument" has been "debunked". I suppose I'll just go FOAD now.
But before I go, let me try to clear-up your apparent confusion - on one hand you have a private entity spending their own money while on the other you have a public enterprise spending other people's money. That the enterprise spending other people's money tends to get more scrutiny doesn't seem - what's the word you used? oh yeah - odd to me at all, but whatever get's you through the night I suppose.
Where do I ask you to "FOAD"? Moreover, it isn't I who say this but decades of nonsensical rationalizations for the economic development of nations worldwide.
http://analepsis.files.wordpress.com/2011/08/ha-joon-chang-bad-samaritan...
Chapter 9 should enlighten.
Please don't invoke mythology to support your hallucinations, mmmkay?
Name ONE THING that the US government spends "wisely" on......ONE thing.
It does not take a corporate drone or cynic to see this.
Old, sclerotic, corrupt governments then.
Alternatively, they can privatize the function by selling it off to a non-accountable, and even more corrupt "business".
Bruce, your age is showing ;-) It is now (laughably) the "Government Accountability Office" another oxymoron www.gao.gov.
And check out the three word motto. That, sir, is oh-for-three!
- Ned
When I typed this up I wrote "General Accounting Office". It was late and I did not see the error.
I sent this to my editor and she writes back that it is "Government" not "General". So I fixed that and still missed the Accountability thing.
New rule: Don't drink and write.....
I fixed it. Tks.
bk
new rule should be : write when drunk; edit when sober. That way you get the right ring without losing the sting.
Ummm....I can't read this chicken-scratch and I think this olive belongs in your Martini glass.
Governements should employ more workers, give them obscene pensions, union and medical benefits because its worked out so well for Europeans.
Yes, no, no, and yes.
Mad scientist indeed. I hope you aren't doing your experimentation in these parts.
"What the Keynesians fail to understand is that governments are imbeciles about spending money."
You cannot place a large basket of cash in front of a bureaucrat or politician and expect discipline or frugality. They will spend it. The more given the more spent.
It is the intractable problem that divides and vexs populations everywhere.
Part of the people will always say its not enough, the other will say its too much. To the government, its never enough.
The government has about as much self-control as this guy who found he suddenly had access to funds that weren't his.
The government will always take more.
Baseline, Bitchez !
Chicago politics at its best!
It seems that I can find myself getting taken to the wood shed every time the US Federal Government has a good idea.
Our road to Hell is paved with their good intentions.
Nice turn of phrase. Congrats if that was original.
Doubt it's original, credit for the underlying quote should go to Hayek, C. S. Lewis, or Bernard of Clairvaux, depending upon how far back in time one wants to reach.
Thanks.
Maybe they are leaking this stuff because the US oligarchs have decided to let the white guy Romney appear in charge for the next phase of US dictatorship ...
Now that Obama has signed off on a lot of the Hitler-type crush-dissenter laws they wanted.
BK, you certainly get up and post things early there in America!