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Ed Pinto | Foreclosure settlement: The shortest distance between two points is a straight line
Great blast from Ed Pinto at AEI on the state AG settlement and how the proponents of "affordable housing" have suddenly become concerned with foreclosure abuse, fraud and poor loan underwriting standards. How quickly we forget the role played by the affordable housing coalition of the 1990s and beyond in creating the housing mess. Chris
National People’s Action, vocal in calling for loosened underwriting standards in 1991, is now calling for “restitution” for the damages that resulted from banks doing what NPA asked for, namely following Fannie and Freddie’s aggressive lead and abandoning their “conservative standards.”
Point 1: National People’s Action’s testimony before the U.S. Senate Banking Committee in 1991:
“Lenders will respond to the most conservative standards unless [Fannie Mae and Freddie Mac] are aggressive and convincing in their efforts to expand historically narrow underwriting.” Testimony of National People’s Action representative before the U.S. Senate Committee on Banking, Housing, and Urban Affairs on February 28, 1991.
Point 2: February 7, 2012 - interview with a representative of National People’s Action:*
“George Goehl of the National People's Action, a collection of community housing groups, said $25 billion for homeowners would be a ‘paltry down payment,’ considering that roughly 11 million homes are underwater by a combined $750 billion.
"’Anything less than $300 billion is a win for the 1 percent that lets the banks off too easily and falls short of helping both middle-class families and communities targeted most by big bank fraud,’ Goehl said.”
One more point - in about 1986, during my tenure as Fannie Mae’s senior vice president for marketing, I warned NPA that any effort by Fannie Mae to launch a massive national affordable housing program would be as disastrous for homebuyers and neighborhoods as FHA’s failed efforts were in the 1960s and 1970s.
*http://abcnews.go.com/Business/wireStory/calif-ny-foreclosure-abuse-deal...
Edward Pinto <edward.pinto@aei.org>
Resident Fellow
American Enterprise Institute
Cell: 240-423-2848
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When asked why he appeared to have changed his position on an issue, German post-war Chancellor Konrad Adenauer responded "Was kuemmert mich mein dummes Geschwaetz von Gestern?"
-- roughly, "What do I care about my silly chatter from yesterday?"
I call BS. This is more propaganda that its all CRA's fault. I will agree that CRA and the push to soften GSE lending standards was ill advised at best. But shoot Whalen, Countrywide was writing paper on anything with a pulse because BOA, JPM and others were bundling dreck to stuff investors (pension funds and the like), while running a backdoor shorting game. What happened between 2001 and 2008 was a debt mania, a stupid belief that RE values always go up (and its opposite for the likes of John Paulson), and a game of hot potato in which the potato got hotter and hotter as time went by and finally blew up. I know you are quoting another, but without any commentary that the CRA was but one, small element that created the euphoria your post tends to deflect the blame from the 1%, particularly the 1% who ran the table on RE to the poor and their champions. Let me be clear - it was your cohorts who blew global finance to hell, not the poor schmuck who was convinced by RE sharpies to get in over his head because "RE always goes up."
Zero down mortgages still being handed out....FHA 3.5% combined with other fed handouts gives a person a house with zippo down.
This Bubble will continue for a decade unless this stops.
In the immortal words of Pogo, "We have met the enemy, and he is us."
We have squandered "real wealth". Just go look at any landfill. We borrowed from the future to consume in the present. Everyone felt good....for a while.
The only way out is through "real growth", with "real savings", so that we can have "real investment".
I don't see any of that happening anytime soon.
Do you expect anything else from the American Enterprise Institute? Of course they're going to blame someone for having the gall to promote "affordable housing" in fucking 1991 for the housing mess we have today. How many times to we have to hear shills for banks lie by blaming the government for forcing them to make loans to bad credit risks? Minorities and low income folks were preyed upon by mortgage lenders and securitizers, then in order to save money ruined the chain of custody for the mortgage notes, then forged documents and anything else thy could get away with in order to foreclose.
The banks and lenders, and MBS suppliers, ruined the housing market. Fannie and Freddie are partially to blame, but so what? They were private companies with a government guarantee, no different from Goldman Sachs or JP Morgan.
Pinto is a jokster!
countless data points for Fannie et al and their executives show they were gaming the system with phony standards and fraud - see the article in NYT sunday on Nye Lavalle in 2003 - aided and abetted by the commercial banks - whatever loosening of underwriting standards that were being promoted by the left - none of it required committing fraud to accomplish that - all self induced by Raines and his followers for personal gain - I'm sure Pinto went away with a ridiculous bonus for marketing what (?)
please stop the lecture!
How do you steal money from people who don't have any?
That's easy. Just give it to them.
The notion that these entities were pushed around by anyone under the guise of helping minorities is ludicrous.
Another question: If an entity can not establish legal standing to foreclose, how on earth can they have standing to "modify" or "correct" anything?
This boondoggle was explained in great detail in 2006 by Nye Lavalle. His report was in a story by Gretchen Morgenson in The New York Times - February 4, 2012.
A Mortgage Tornado Warning, Unheeded
Here's the straight up report:
Report to Fannie Mae by Mr. Nye Lavalle Regarding Shareholder Complaints OCJ Case No. 5595
With these people running Fannie Mae what could possibly go wrong?
FRANKLIN RAINES [D] – FNMA CEO (1999 – 2004) Raines accepted “early retirement” from his CEO position while the SEC pretended to investigate accounting irregularities. Fannie’s own OHFHEO also accused him of abetting widespread accounting errors, including the shifting of losses, so he and his fellow execs could “earn” large bonuses. The WSJ reported back in 2008 that Raines was one of several cronies that received below market rates for mortgages from Countrywide. Raines alone receive loans for over $3 million while CEO of FNMA. Raines’ compensation for his “work” at FNMA - $90 million.
RAINES GRADE – F
DANIEL MUDD [R] – FNMA CEO (2005 – 2008) Before becoming CEO of FNMA, Mudd worked at the Office of the Secretary of Defense, was an advisor to Asia-Pacific Economic Corp., “served” on the board of the Council of Foreign Relations, “consulted” at the World Bank, and held many positions at GE Capital including president and CEO. Mudd was dismissed as CEO of FNMA when FHFA became conservator in 2008. In 2011 Mudd and other GSE execs were charged by SEC with securities fraud. After his career at FNMA Mudd became CEO of a NYC hedge fund named “Fortress”. Fortress invested in purchasing tax liens on delinquent property taxes from local governments under many benign corporate names such as “Pleasant Valley Capital” and “Travis Farm Investments”. Cozy. Mudd’s compensation for his “work” at FNMA - $80 million.
MUDD GRADE – F
NEEL KASHKARI [R] – FNMA CEO (Tenure is murky) Kaskari was a former investment banker for Goldman Sachs, was tapped by Hank “The Shank” Paulson to lend his skills over at TARP HQ, and now rather ironically, continues God’s work as a Managing Director at PIMCO. Kaskari’s compensation for his “work” at FNMA is also murky; I’ll just assume it was too much.
KASHKARI GRADE - F
HERB ALLISON [D] – FNMA CEO (2008 – 2009) The esteemed Mr. Allison was quickly whisked off to oversee the wildly successful TARP program. I didn’t find much on his compensation during his brief stint as FNMA CEO. Allison served in various positions at Merrill Lynch and became a member of the board in 1997. He was a director of the NYSE from 2003 – 2005.
ALLISON GRADE – F
MICHAEL WILLIAMS [?] – FNMA CEO (2009 – Jan 1, 2012) Mr. Williams is a 20 year veteran at FNMA. While “serving” as FNMA CEO, Williams managed to scrape by on less than $6 million in 2011 alone. This could and should be considered a hardship, given the complexities involved in purloining ~ $60 billion of Fed bailout money.
WILLIAMS GRADE – F
Fannie’s major dance partner – Freddie – has performed equally abysmally.
Charles (my friends call me “Ed”) Haldeman has announced his retirement plans but intends to be a good sport and stay on with insolvent FHLMC until another crony can be found to fill his wing-tips.
That might take a while. “Serving” as CEO of the ultimate backstops for the lion’s share of the MBS Ponzi is very stressful.
We’ll have to accept former Freddie exec David Kellermann’s testimony posthumously. Mr. Kellermann was found hanging by the neck in the basement of his posh Vienna, VA home in the affluent suburb of Washington. D.C. way back in April of 2009. It is presumed he had no help and local police have stated there was no evidence of foul play.
A truly memorable quote. Yours?
Yup.
Some of them I deny; but that one I take credit for.
I've been saying it for a while...lol.
[edit] SOPA Disclosure - All copyrights waived
Great post. I put your words out to a less educated audience.
I wonder if people will ever get it through their heads that any bailout will cost US not the banks. All business costs are simply written into the business plan and passed along. I am not saying the banks are innocent. In fact, there are NO innocents in this whole mess. Each and every one of us madly played the game in one fashion or another. We were all banking on "a great and better tomorrow". The endless fountain of wealth that will flow forever.
We bitch about the banks and want to punish them. Somebody has to be to blame and it's not us!! So we want to save those who bought homes, they could not afford (the vast majority knew it when they signed), and now are crying the blues. We buy into the blame game, demand they be saved and then bitch when it's our money saving them. I, very clearly, remember hearing the cheering, the bragging, the "I'm gonna get rich", the "look at my new truck and boat" and all the other crap. Now it's "I didn't understand what I was doing" and some body else made me. Remember using that one was a kid? Well that's where we're at.
I junked you but part of what you say is true. Many people that went into debt were thoughtless and just wanted more than they had an economic right to. So in reality everyone that took part in the credit bubble is responsible but to different degrees.
When the propaganda machine works tirelessly to bait a borrower and government assists the dumbing down of the population through misplaced education and tax policies, the predominant proportion of the blame lies squarely with the financial institutions and government that greased the path to easy street. Government, finance, news media, and advertising promoted the party atmosphere that sucked in the mis-educated people trained to want to emulate the lifestyles of the rich and famous.
"where we are at"..........is the banks committed fraud! - end to end - nothing else is relevant - systemic fraud causes the entire market to go down in value - multiples - more than the cyclical effects of unemployment - creating the debacle
How about reversing the principal / interest calculations made by the servicing agents for every servicer living in the home they've been paying on for the last 7-10 years or so? Surely something along these lines can / should be easily able to place equity back to responsible folks and transfer it fairly orderly from the institutitions that have already been paid in full via their AIG bet winnings.
There's absolutely nothing Euclidean about the geometry of modern finance.
Are you going to try to blame the private label foreclosure wave on them too?
Hmm- OK then, Ed- what happened when you "warned"? Raising your hand AFTER the fact is self-serving. You had a very impressive-sounding title at the time, so apparently you had some clout;
What went wrong?
Amazing how Fannie Mae is full of people who "understood the problem".....
Umm... what's your point? He warned them before the fact (in 1986) not after.
Note, I'm not offering a defense of Ed, but I don't see where you're going here (other than falling into a divide and conquer trap by "choosing sides").
"One more point - in about 1986, during my tenure as Fannie Mae’s senior vice president for marketing, I warned NPA that any effort by Fannie Mae to launch a massive national affordable housing program would be as disastrous for homebuyers and neighborhoods as FHA’s failed efforts were in the 1960s and 1970s. "
He's making the point NOW, not 1986- pretty obvious what my point is.
What are you babbling about?