BlackRock's Fink Warns Housing More "Unsound" Now Than During Last Bubble

Tyler Durden's picture

More than half a decade after the collapse, and with talking heads proclaiming the recovery as strong as ever and the Fed remarking on the housing market's foundational pillar to that recovery, BlackRock's CEO Larry Fink has a few words of warning for the exuberant - the US housing market is "structurally more unsound" today that before the last financial crisis. As the data comes in weaker and weaker, despite hopes for a post-weather bounce, the fact that the US housing market is "more dependent on Fannie and Freddie than we were before the crisis," is a problem for the US taxpayer and - unlike Mel Watt's 'free credit for everyone' approach to expanding the GSE's role, Fink says with strong underwriting standards, ownership of affordable homes can again become a foundation for American families. So Watt's easy 'Subprime 2.0' or Fink's hard 'American Dream'.


As Bloomberg reports,

BlackRock's Chief Executive Officer Laurence D. Fink said the U.S. housing market is “structurally more unsound” today than before the financial crisis because it depends more on government-backed mortgage companies such as Fannie Mae and Freddie Mac.


“We’re more dependent on Fannie and Freddie than we were before the crisis,” Fink said today at a conference held by the Investment Company Institute in Washington, noting that he was one of the first Freddie Mac bond traders on Wall Street.


Fink co-founded BlackRock in 1988 after a career at First Boston Corp., now part of Credit Suisse AG, where he was known for his work slicing and pooling mortgages and selling them as bonds. Fink, who has built New York-based BlackRock into a $4.4 trillion money manager, said today that with strong underwriting standards, ownership of affordable homes can again become a foundation for American families.

But how is this possible? Eveyone say the banks are in great shape? That housing is recovering? That everything is on its way back to normal? As Fink highlights... it is not and we are well on our way to Subprime 2.0 if the administration gets their way.

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Cattender's picture

back in 2006' Uncle Ben said we were all FINE...

whatsinaname's picture

Why are the big guns all sounding so negative these days ?

pods's picture

Help blow the bubble, get out with a handy profit, then walk away and talk about a bubble?

Thanks Larry.


NotApplicable's picture

Even with "strong underwriting standards," how does one find these "affordable homes?"

Did I miss something?

NihilistZero's picture

Apparently the Housing Bubble is now like herpes.  A recurring infection on our economy for which their is no cure.

Shizzmoney's picture

Exactly what I thought.  Fuck this guy.

Dr. Engali's picture

They all know the end is close and they want to be on record as predicting it.

Bay of Pigs's picture

What Doc? Nobody could have seen this coming.  :/

NotApplicable's picture

"Don't need to be a weatherman to know which way the wind blows."

nuclearsquid's picture

more like, cause they have sold their long positions and now they need it all to come crashing down so they can go long again.


daveO's picture

Shorted to the hilt, like Paulson was in 2008?

813kml's picture

Because the big guns are positioned short and want to speed things up so they can extract the last drops of blood on the way down.

Bunga Bunga's picture

Betting against own customers ... I believe I heard about it somewhere.

Cthonic's picture

It's all about who was paying the speaking fee...

Cattender's picture

That Kooky guy Peter schiff disagreed...

Zirpedge's picture

I call bear trap. *moves all in*

Tenshin Headache's picture

Watch out for the steamroller.

nope-1004's picture

Problem is the banks need housing to rebound to encourage more leverage and speculation, to keep the debt based system going.  Without houses worth something, what else will the bank use as security to enslave you?  Your credit card debt?  lol.

TBTF banks need house prices to rise to encourage more leverage and borrowing.  ZIRP and NIRP are not to stimulate the "economy", but to stimulate another round of housing speculation.

Can't wait for housing to blow up the banks and bring down the USD, which it surely will because of this grand failed experiment in asset bubble speculation through currency debauchery.  The price of money is zero (ZIRP) - what other bench mark admission do you need from the Fed that their financial structure is a failure?


LawsofPhysics's picture

Yes, in addition, these homes are assets on the banks books.


Mark to fantasy   for them ZIRP (NIRP in real terms) for you!!!

BrosephStiglitz's picture

For now that'd be student loans.  In future, who knows?  Loans for food?  Loans for energy?

Bunga Bunga's picture

Get a six pack of beer .... and the collateral goes pooof.

Better are loans for breast augmentation, the bank gets the boobs as collateral.

maskone909's picture

which part is unsound?  the 40% all cash buyers, or the ARM loans?

curious what % the all cash buyers al la 2008?

Blankenstein's picture

The cash buyers aren't end users.

LawsofPhysics's picture

Interesting, just like wages, I wonder if there is a connection?



Dr. Engali's picture

Translation... we've run out of suckers to sell these loans to. 

The Most Interesting Frog in the World's picture

Larry is way off script....

Zirpedge's picture

...hope he wears tin foil over his blood pump.

pods's picture

I'd rather his blood be pumped out all over tin foil, but I am a bit jaded by big money investment types.


Zirpedge's picture

Don't quote me on this, but I overhead David Icke say you could freebase their lizard annunaki blood and really trip out. 

greatbeard's picture

>> a bit jaded by big money investment types.

I like the cut of your jib.

Kaiser Sousa's picture

nothing will change until the banks r restrained....


the power is in the hands of every man, woman, and child...

withdraw from their debt based paradigm, reject their debt based currency, and accumulate either of the only 2 forms of real money...

otherwise, remain a slave of the international bankers...


Angelo Misterioso's picture

Kaiser - that is the solution but 85% of the population is too far gone to do anything about it - at least until there is the rioting... most have no savings, no home equity, car with no equity, no gold, no art, no summer house, no ideas, no nuttin, in fact they barely have a crappy public school education... just grinding it out month by month waiting for something to maybe some crafty people on this sight can get it done but the rest are just banker fodder....

AccreditedEYE's picture

Anybody watching the Yellen headlines coming out? This woman is N.U.T.S.... NUTS!

NotApplicable's picture

Well, I've got to agree with her that Bernanke was "courageous." It takes a lot of nerve to say all the stupid shit he's uttered.

So much nerve that it made his lip quiver.

Bay of Pigs's picture

Fannie and Freddie being nationalized were the end of the line for the country, not just the housing market.

The Most Interesting Frog in the World's picture

I think stapeling their mounth shut, then nail gunning them would be more fun than just using the nail gun.  I guess it all comes down to preference.

orangegeek's picture

And markets are at all time highs.


Thanks for showing up Fuck, oops, I mean Fink.

Max Cynical's picture

And this from a guy that owns 41,000 units? Sounds like Blackrock may already be heading for the exit.

cowdiddly's picture

Was'nt Blackrock the one's who were going to be the US landlord kings by buying up thousands of properties and driving the "Affordable Housing" crowd into a nation of indentured servants to the manor house? Yep tighten the lending standards on a nation with a median income of 50k and millenials with a mortgage sized educational debt.

Just reportin in massa, just don't beat me tired old bones massa, I be good.

NotApplicable's picture

No, that was Blackstone, and the magical "REO to Rent" program.

cowdiddly's picture

Oh, my bad, His name was Fink. I don't know why I mind inmediatly jumped to Rat Fink. Wrong cockroack.

"The american dream. It's called a dream because you would have to be asleep to believe it." George Carlin

short screwed's picture

Blackstone? Aren't they the mercenary (I mean security)company in Ukraine? I'm all confused!!

NotApplicable's picture

That would be Blackwater.

I know, I know... they all look alike.

FreeNewEnergy's picture

In other words, "renters are fleeing our properties like rats from a sinking ship and we intend to dump our inventory, screw our investors, walk away with cash and leave many more empty and deteriorating homes across the country."

Larry Yun, upon hearing the news promptly issued the following statement:


Hulk's picture

At least thermonuclear war will be bullish for the developers. I recommend we rebuild in brick!!!

Mr. Delicious's picture

Just more proof that in an age of universal stupidity, grasping the obvious is a sign of great insight.

No fucking shit. And not only are things worse than before - they're gonna have you bail out Fannie/Freddie. And you're going to like it... and when those banks get in trouble? You'd think they'd just print and spray fiat out the window, but they'll find a way to fuck you and your savings. Recall that fiat is fucking paper - the name of the game is the transfer of real wealth.

Tell me Larry, how is it really "affordable" for the average bear when after paying principal plus interest for 30 years, they end up paying about 3 times the price of the house sticker? Bear in mind, the fucking bank created 90% of this out of thin air, and the other 10% was the borrower's own fucking deposit.

It's a fuckin' scam, Larry. And you know who's at the top of the pyramid. {I mean a relatively tiny number of owners of mega banks}

It just seems so crazy, that there'd be more bailouts... but those with the mental acuity to protest will be smeared as "tea partiers" and {somehow} racist.

It's so fucked up, it's kinda beautiful. The sheer audacity, the sheer depth of the rape.