Ed Pinto: Fannie and Freddie accept responsibility for misleading investors

rcwhalen's picture

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Steve in Greensboro's picture

For you libtards out there, let me make it very clear. There would not have been a financial crisis in 2008 had it not been for the actions of the U.S. government. Wallison's and Pinto's research makes it painfully clear that without the efforts of Fannie and Freddie and their leftist accomplices, Barney Frank, Maxine Waters, Franklin Raines, et al there would not have been a housing bubble the collapse of which precipitated the 2008 collapse.

There are two elements to the solution. 1) Shut down Fannie and Freddie permanently. 2) Take the management of the supply of USD out of the hands of the U.S. government and turn it over to a currency board whose charter is to fix its value in terms of a basket of commodities.

NotApplicable's picture

You surely realize the libtards of which you speak do not frequent here?

*looks at comment up/down votes*

Ok, maybe one, LOL.

Esculent 69's picture

If you want to see how fraudulent Fannie and Freddie were just go read the OFHEO report that describes in detail how the execs were manipulating the numbers for their personal financial benefit. Franklin Raines, Jamie Gorelick, all democrats. Barney Frank, Maxine Waters were attacking the regulator Armando Falcone Jr. for shedding light and asking for more strict regulation of the GSE's. Maxine Waters husbands bank was givien $12 million of bailout money,  and what exactly did happen to those ethics charges.  This is all the government doing, and it is purposeful. What is the first plank of Communism?  Abolish private propery. What better way to do that then to taint the entire market while having a vast majority of the loans to go into foreclosure only to be owned by the GSE's or banks that have a boot on their necks by the government on who does and who doesn't get a loan. Not to mention that some of these loans are help by foreign investors.  Wacca Wacca.

sasebo's picture

All these greedy assholes have got their's comimg --------- just elect Dr. Ron Paul to make sure they get it ------

Romney & Ginrich are just white Obamas.

Snakeeyes's picture

Whalen and Pinto make some good points. But it does really boil down to HOW subprime is defined. Pinto uses a strict definition. 

SEC Versus Fannie’s Mudd and Freddie’s Syron: It Boils Down to the Definition of Subprime

http://confoundedinterest.wordpress.com/2011/12/19/sec-versus-fannies-mu...

 

Esculent 69's picture

Consfearacy by Slayer

I need to redefine 

all the things I hate today

Politics that fail 

from a President derailed

I hate the shitty economy 

it might as well be sodomy

I know that in the end 

that i'm expected to pretend

But I can't relate 

to your literal idiocy

No one's in control 

when the government is the enemy

So lite the fuse

Impose your views

Consfearacy is anarchy

Actions of hostility

Breeds conformity

Annihlation will begin

Extermination from within

so lite the fuse

impose your views

consfearacy 

insanity

I need to redefine 

how i see the world today

Seems the last war 

didn't even up the score

It's only mind pollution 

there is no resolution

still i know that in the end

i'm expected to pretend

that i can't think for myself 

living off someone else

halfhearted smile 

while you look the other way

i can't relate 

to your verbal idiocy

no one's in control

when the government's the enemy

ENEMY!

So lite the fuse

impose your views

Consfearacy

COMPLACENCY IS YOUR DEMISE!!!!!!!!!!!

Merrrrry New Year

 

 

Esculent 69's picture

Its funny how this guy writes a book about how the senate undermined obama and the country of housing. do you think this guy knows that in 2008, senator Obama was the #2 recipient of campaign cash from fannie/freddie. #1 was chris dodd (senator and democrat) who was head of the senate banking committee and was involved in the countrywide scandal with angelo mozillo. He got a great deal on his mortgage through a friends of angelo program. go look at james johnson who along with the clinton admin help create not only the subprime loans, but the mbs, derivatives as such to goldman sachs and others to give value to worhtless paper. go look at the former fannie execs who also worked at goldman. just a coincidence? Jon Corzine democrat gov and senator of Joyzee who MF'd everyone was Obama and Biden's go to guy on the financial crisis, CYA.  And lastly, Fannie Mae traded on the NYSE and the execs at the GSE's were manipulating the data to meet their maximum  bonuses as well as to meet the affordable housing goals. Fannie couldn't care less when they were the gov't and giving an implicit guarantee that these loans would be bailed out. 

SwingForce's picture

In March 2008 I stopped paying my mortgage with Suntrust. In December 2008 it was transferred to FNMA.

chunga's picture

Thats a big no no right there.

See what I mean about the plan to privatize the gains and dump the losses on the taxpayer?

Is the MERS Secret Electronic Mortgage Society involved? If so you may want to read this.

SunTrust MERS Consent Order !

Now they wanna make deals that make all their legal transgressions "go away" along with the fucked chain of title.

If you get one of these...don't sign it.

tOO BiG To fAiL LOan MOdIFiCATioN FOrm r.1.A.002.B.XXXX

"By reading this document, which may change or be withdrawn without notice, you waive any and all rights you may or may not have, past, present, and future and unequivocally agree to the following terms under pain of Death."

 

Esculent 69's picture

or hanging from a rope

 

ebworthen's picture

 

 

Culture of corruption

Seed of greed

Willful destruction

Societal bleed

David Fiderer's picture

"Disclosures contained in SEC complaints further validate the necessity to look behind Fannie and Freddie’s characterization of subprime loans."

OK, but what about the necessity of looking at loan performance--losses, deliqnuencies, default rates? What about the necessity to compare GSE loan performance with that rest of the mortgage market? That's what the FCIC did when it eviscerated Pinto's "research":

http://fcic-static.law.stanford.edu/cdn_media/fcic-docs/2010-08-09%20FCI...

That's what David Min did when he eviscerated Pinto's "research":

http://www.americanprogress.org/issues/2011/02/pdf/pinto.pdf

And that's what the Pinto/Wallison crowd refuse to do, because they cannot deal with the truth. GSE loan performance is about three times better than the rest of the mortagage market, which is why their "theory" about the financial crisis cannot withstand scrutiny.

And nothing in the SEC complaint suggests that the GSE's loan overall loan performance has been any worse than what has been reported over the past four years.

Finally, the SEC complaint debunks the Pinto theory about the GSEs leading the way into the subpriem and Alt-A markets. The SEC confirms what the FCIC found, that the GSEs were late to the game, follwers who were trying to recapture lost market share.

ghostfaceinvestah's picture

Another thing Pinto fails to mention is the role of the private mortgage insurers, which is convenient given his organization was paid by one such insurer to promote the industry.

Under their charters Fannie and Freddie cannot guarantee a mortgage with less than 20% down without credit enhancement, almost always in the form of private mortgage insurance.

So in order to take on this risk, F&F needed the support of the private MI industry.  Think about it - without private mortgage insurance, Fannie and Freddie couldn't have insured a single loan above 80LTV.

Now, of the 7 active MIs during the bubble, three are in runoff with two of those unable to pay all their claims (and probably more to come).

The whole setup between the GSEs and the MIs is a farce that continues to this day, but yet Pinto and Wallison recently wrote a paper, paid for by Genworth, the support the MI industry.

 

David Fiderer's picture

It's also worth remembering that the GSE guidelines dictated that whenever a loan had an LTV higher than 80%, then the GSE risk exposure must be below 80%. For instance if a mortagge had an 85% LTV, the GSE's uninsured risk exposure was 72%.

http://georgiaappraiser.com/pdf/FNMAUnderwritingGuide.pdf

Lmo Mutton's picture

Banksters are exempt from all legal implications.

Get back to work serfs.

tony bonn's picture

this article was really a fine piece of analysis and much appreciated especially so since it documents the link between corrupt government policy (affordable housing for even ninjas) and spineless clueless gse "leaders" who rode the banana peel down the peter coffin staircase....

fuck the banksters who promoted it....

rawsienna's picture

Question to Ed

What about all the exposure to subprime and alt a in the investment portfolios.  It is my understanding that FANNE in particluar was very aggressive in purchasing the AAA tranches from most subprime backed private label MBS (perhaps as much as 250bb at Libor + 25 spreads) and took massive losses.  Alhough the bonds were rated AAA at the time (now many are rated D), it DOES count as subprime exposure becasue it was backed by subprime loans. Freddie did similar in the CMbs market..  These guys DID NOT dsiclose this to congress when asked as well as misleading investors.

newstreet's picture

But Raines remains untouchable.

Bob Sacamano's picture

Until they get Franklin Raines no justice will be done.....but he is untouchable for some obvious reasons.

prains's picture

That's not what my wife says

Sweet Chicken's picture

Can somebody please tell me when we get to hang all these mother fuckers!?!?!?!?

MrBoompi's picture

Fannie and Freddie were a very small percentage of the subprime and Alt-A markets until they saw the enormous profits that were being made by the other mortgage securitization firms.  Then they increased their holdings of these mortgages as well.  F/F is being singled out for doing what others are doing as we speak, refusing to mark-to-market and holding bad debt "off balance sheet".  Where do you think all the new high-risk loans on their books came from, Santa Claus?  Wall St is using F/F as a toxic waste dumping ground.

But now we're talking about the unholy partnership of government and Wall St.  They've done NOTHING but protect each other's asses for 4 years.  There is still not enough capital to go around, even after years of fraudulent activity.  Even if this suit is successful, you'll see the same approach, a small fine relative to the profiteering, and no admittance of guilt.  Well, maybe they'll appear to act "tough" this time and make somebody actually admit they did something wrong.  But I guarantee whatever they do won't harm any of the Wall St gang.

GCT's picture

No they lined the politicians pockets to look the other way starting with Barney Franks.  But thats ok they still give the incompetant CEO's yearly salaries more then some of us will make in a life time.  I am all for capitalism but not stealing from the taxpayers that subsidize Freddie and Fannie.  They ought to be capped at 150 k or even better get the scoundrels that did this and put them in jail. 

Ancona's picture

We're so sorry we fucked you up the ass. Can you please forgive us?

GMadScientist's picture

Because nobody was making private-label sausage right alongside them?

Lulz.

Widowmaker's picture

They lied, cheated, and stole. It's a gov sponsored racket, executed on the backs of poor, Middle class taxation, and vulnerable. Incorporated fraud and theft from top to motherfucking bottom!

No accountability, no punishment, not even a fucking "we're sorry."

These guys deserve every record bonus, every asset stripped from them, and then blacklisted from the industry. Every last injust cock sucking one of them. I want their mommys to see their names and faces tarred and feathered on TV.

It's bullshit from top to bottom, and it should be blatantly obvious there is continued collusion and monopolistic market coverup to this second.

I'm ashamed to be an American. Shame shame shame on these fucks in pinstripes. Shame on the system in its entirety. No wonder " terrorists " hate the US, we deserve it!!!

History will reflect these fucks broke the US's spine for future generations.

Destroy them.

chunga's picture

+30 trillion and counting.

Like the guy from Ohio said while they were walking by a bunch of homes slated for demolition on 60 Minutes.

"The money was looking for people". You could get a loan in the drive-thru, or if that was too much trouble, they'd come to you and do the closing at your house.

I guess now would be a good time to shoot the greedy homeowners.

It’s crystal clear. From the very beginning the homeowners have gamed the system. They started by tricking the property appraiser (lender’s agent) into submitting an outcome-based appraisal.

Then, millions of homeowners shrewdly conned the “lenders” into dismissing all agency and fiduciary responsibility in the underwriting process….going so far as to force the “lenders” into forging documents.

Then, the greedy homeowners forced the “lenders” to securitize the loan in such a fashion as to bifurcate the mortgage from the note.

On top of that, the homeowners secretly cooked up the concept of “Credit Default Swaps” and forced the “lenders” to insure the collateral at the full (outcome based) value 30X over.

Having successfully pulled the wool over everyone’s eyes – these irresponsible homeowners showered themselves with well deserved bonuses.

Realizing they were too big to fail, these irresponsible, reckless homeowners lined the pockets of legislators and received enormous sums of taxpayer bailouts.

The result of these cunning maneuvers by the fraudulent homeowner scheme has them sitting fat and happy in the cat birds seat. Yup, that’s how they did it. And they’re getting away with it.

Savings drained – check, 401ks all gone – check. Kicked out of their homes – check. “Lenders” made whole many times over via Credit Default Swaps – check. Homeowners foreclosed and “lender” buys back property for pennies on the dollar – check.

Follow the money and you’ll find the culprit. It’s about time we hold these homeowners accountable.

All of this was done under the guise of helping the "little guy", minorities, etc. Thats all bullshit.

Good call. The websites below are sponsored by a well-healed, politically connected, PR machine of greedy volunteers… and contain detailed information on how the collusion on Main Street has ripped off Wall Street.

Don’t look though… it’s just spam.

http://www.4closurefraud.org

http://www.foreclosurehamlet.org

ebworthen's picture

Nicely spiced sarcasm.

Yes, those wily homeowners with their MBA's, wool suits, and silver spoons.

DeadFinks's picture

The great big brains that "lead" us tinker with our lives like it's game.  Who pays when they fuck up, line their pockets with our money and cover their cronies' asses?  We do. Why? Because they were only doing it for our own good.(/s) Fucking crooks, all of them.

Blue Water's picture

This was bad governmental policy plain and simple.  Push as many people to buy a home as possible, regardless of the consequences.  Congress started it all with the CRA regulations, and HUD policies that required lending to low to moderate income regardless of qualification.  Once lending standards started to depend on demographics rather than ability to pay, the housing market was doomed.

Clark Bent's picture

Demographics means politically useful constituency. This is the alternative approach to Constitutional liberty. 

chunga's picture

The CRA was a red-herring.

Do you really believe anybody in DC gives a fuck about minorities and low income people? How can you steal money from someone who doesn't have any?

It's easy. Just give it to them, then insure the ass off of it. All the intermediaries KNEW it would be backstopped by the GSEs. So they whipped out the TBTF card, partied on, and created a situation where we'd all be pointing fingers at each-other. The poor minorities fucked up the world economy. The pinstriped ponzi players are flush with cash.

 

Clark Bent's picture

"helping the underprivileged" is the cover story of choice to obtain the power to seize assets from those who actually produce them, and then disseminate them as is most politically useful. Some of this goes to the ignorant poor to prime the pump for the next round of seizures as you can explain that the first seizure was useful, but underfunded. Now more is needed. You also get payola to garner the support of the Reverend Wrights who cajole the wholly ignorant into supporting candidates that are supposed to care about the underpriviliged. The Honorable Reverend has to deliver the votes which he does by telling his credulous followers that the CIA invented AIDS to kill black people and Obama, Rahm Emanuel, or whomever is going to put a stop to that. Then the media spins it all to enhance their own opportunities to segue into governmental positions and break bread with the elite. All of this works very well, and all inside know what their roles are to continue the game. 

Benjamin Glutton's picture

this policy was not a systemic problem until BANKS sought ways around proper lending standards. this is the wrong place to tell half truths.

 

sell that tripe to Yahoo sheep!

Clark Bent's picture

Get the sequence right, banks are regulated by government. They are also protected from garrulous mobs filling their lobbies and screaming "racism!" and threatening employees at their homes. Or, the government decides not to protect them from this activity and community organizers like Obama have careers. Once the government corrupted the banks, the banks were fiull of corrupt persons who made their loot from more exciting gambits than earning interest. In tunr these risky-to-criminal players were overlooked by government regulators who kow-towed to the shrill swindlers in Congress like Barney Fwank. And the Jamie Gorelicks, Franklin Raines's, and Rahm Emanuels all got jobs at the banks while Goldman Sachs alumni populated the halls of government. 

Northeaster's picture

Reads like a "covering my ass" letter.

Everybodys All American's picture

Is it too soon to close the entire department at HUD? When a crime has been comitted to this degree it's time to close the entire enterprise. 

metastar's picture

Accepting responsibility means doing time.