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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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Wed, 05/21/2014 - 11:54 | 4781522 Cattender
Cattender's picture

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

Wed, 05/21/2014 - 11:59 | 4781542 whatsinaname
whatsinaname's picture

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

Wed, 05/21/2014 - 12:06 | 4781570 pods
pods's picture

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

Thanks Larry.

pods

Wed, 05/21/2014 - 12:10 | 4781589 NotApplicable
NotApplicable's picture

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

Did I miss something?

Wed, 05/21/2014 - 12:38 | 4781709 Never One Roach
Never One Roach's picture

I hear, "It's contained."

Wed, 05/21/2014 - 17:21 | 4782685 NihilistZero
NihilistZero's picture

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

Wed, 05/21/2014 - 12:58 | 4781806 asscannon101
asscannon101's picture

"And where would I find this, 'saved' money?!?"

http://infinitedirectbridgewater.com/tag/steve-martin/

 

 

Wed, 05/21/2014 - 14:26 | 4782106 Shizzmoney
Shizzmoney's picture

Exactly what I thought.  Fuck this guy.

Wed, 05/21/2014 - 12:08 | 4781580 Dr. Engali
Dr. Engali's picture

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

Wed, 05/21/2014 - 12:10 | 4781596 Bay of Pigs
Bay of Pigs's picture

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

Wed, 05/21/2014 - 12:11 | 4781598 NotApplicable
NotApplicable's picture

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

Wed, 05/21/2014 - 13:41 | 4781963 nuclearsquid
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.

 

Wed, 05/21/2014 - 14:59 | 4782198 daveO
daveO's picture

Shorted to the hilt, like Paulson was in 2008?

Wed, 05/21/2014 - 13:05 | 4781845 813kml
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.

Thu, 05/22/2014 - 00:00 | 4783793 Bunga Bunga
Bunga Bunga's picture

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

Wed, 05/21/2014 - 12:10 | 4781599 Cthonic
Cthonic's picture

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

Wed, 05/21/2014 - 11:56 | 4781529 Cattender
Cattender's picture

That Kooky guy Peter schiff disagreed...

Wed, 05/21/2014 - 11:56 | 4781530 Zirpedge
Zirpedge's picture

I call bear trap. *moves all in*

Wed, 05/21/2014 - 12:10 | 4781594 Tenshin Headache
Tenshin Headache's picture

Watch out for the steamroller.

Wed, 05/21/2014 - 12:02 | 4781537 nope-1004
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?

 

Wed, 05/21/2014 - 12:10 | 4781593 LawsofPhysics
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!!!

Wed, 05/21/2014 - 17:34 | 4782729 BrosephStiglitz
BrosephStiglitz's picture

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

Thu, 05/22/2014 - 00:07 | 4783803 Bunga Bunga
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.

Wed, 05/21/2014 - 11:58 | 4781539 maskone909
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?

Wed, 05/21/2014 - 12:31 | 4781700 Blankenstein
Blankenstein's picture

The cash buyers aren't end users.

Wed, 05/21/2014 - 12:08 | 4781541 LawsofPhysics
LawsofPhysics's picture

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

/s

 

Wed, 05/21/2014 - 12:01 | 4781548 Dr. Engali
Dr. Engali's picture

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

Wed, 05/21/2014 - 12:01 | 4781549 The Most Intere...
The Most Interesting Frog in the World's picture

Larry is way off script....

Wed, 05/21/2014 - 12:04 | 4781562 Zirpedge
Zirpedge's picture

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

Wed, 05/21/2014 - 12:07 | 4781576 pods
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.

pods

Wed, 05/21/2014 - 12:14 | 4781614 Zirpedge
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. 

Wed, 05/21/2014 - 12:32 | 4781706 greatbeard
greatbeard's picture

>> a bit jaded by big money investment types.

I like the cut of your jib.

Wed, 05/21/2014 - 12:02 | 4781550 Kaiser Sousa
Kaiser Sousa's picture

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

DEATH TO THE MONEYCHANGERS.

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...

 

Wed, 05/21/2014 - 13:09 | 4781859 Angelo Misterioso
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 happen....so maybe some crafty people on this sight can get it done but the rest are just banker fodder....

Wed, 05/21/2014 - 12:03 | 4781555 AccreditedEYE
AccreditedEYE's picture

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

Wed, 05/21/2014 - 12:14 | 4781611 NotApplicable
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.

Wed, 05/21/2014 - 12:04 | 4781558 Bay of Pigs
Bay of Pigs's picture

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

Wed, 05/21/2014 - 12:05 | 4781567 williambanzai7
williambanzai7's picture

Nail gun alert...

Wed, 05/21/2014 - 14:24 | 4782102 The Most Intere...
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.

Wed, 05/21/2014 - 12:06 | 4781574 orangegeek
orangegeek's picture

And markets are at all time highs.

 

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

Wed, 05/21/2014 - 12:08 | 4781585 Max Cynical
Max Cynical's picture

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

Wed, 05/21/2014 - 12:10 | 4781595 cowdiddly
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.

Wed, 05/21/2014 - 12:15 | 4781618 NotApplicable
NotApplicable's picture

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

Wed, 05/21/2014 - 12:26 | 4781634 cowdiddly
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

Wed, 05/21/2014 - 13:17 | 4781883 short screwed
short screwed's picture

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

Wed, 05/21/2014 - 13:22 | 4781897 NotApplicable
NotApplicable's picture

That would be Blackwater.

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

Wed, 05/21/2014 - 12:12 | 4781606 FreeNewEnergy
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:

"THERE HAS NEVER BEEN A BETTER TIME TO BUY A HOME."

Wed, 05/21/2014 - 12:13 | 4781610 Hulk
Hulk's picture

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

Wed, 05/21/2014 - 12:17 | 4781625 Mr. Delicious
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.

 

 

 

Wed, 05/21/2014 - 15:40 | 4782312 Kayman
Kayman's picture

"The sheer audacity, the sheer depth of the rape."

But their job isn't done until you thank them...

Wed, 05/21/2014 - 12:19 | 4781635 Obama_4_Dictator
Obama_4_Dictator's picture

I don't belive this...I refuse to belive this....real estate agent said it's a great time to buy....get in before rates rise! "Average Amerikan."

Wed, 05/21/2014 - 12:20 | 4781639 khaproperty
khaproperty's picture

They are eficiently working on the same mistake of reducing the standards as Clinton did before - and over some time caused the 2007/8 catastrophy.

 

Wed, 05/21/2014 - 12:23 | 4781656 q99x2
q99x2's picture

Dude is gutter talking up a raise from Yellen the rat queen.

Wed, 05/21/2014 - 12:29 | 4781696 El Hosel
El Hosel's picture

Hmmm, sounds likes Fink Shitting in his shorts or too light in his longs? He better watch it... Nail guns and shitgums may be in order.

Wed, 05/21/2014 - 12:25 | 4781676 kurt
kurt's picture

He and his bloodticks are having a confab on how to profit from an abysmal pit of their own creation. It's good they are plugged in to Washington DC: they can be real close when the blood bursts the doors off Fanny/Freddy. The insiders are paid, paths are laid and covered, shell companies lined up, mouthpieces paid, participants and victims lined up. Cue the post collapse auction where the winning bidders are already picked out. Pennies on the Dollar people. Step right up.

Wed, 05/21/2014 - 12:35 | 4781720 Bastiat
Bastiat's picture

Blackrock is in San Francisco and fully aware of what an absurd market looks like, having helped create it.

Wed, 05/21/2014 - 12:37 | 4781724 Never One Roach
Never One Roach's picture

Those "strong underwriting standards," are very dubious and only as good as the banker person writing the loan [who is 100% guaranteed for any of his losses].

I still hear [non-stop] ads for zero down houses on Saturday morning. The only way to stop this BS is have the person/institution writing the loan responsible for its losses and gains...like in the old days.

Wed, 05/21/2014 - 12:48 | 4781754 GCT
GCT's picture

How are you ZHer's these days.  Building a woodshop on the property!! 

Honestly and I am speaking from my recent experience the banks are holding alot of homes off market.  There is one across the street and 29 more in my subdivision.  We inquired about the home and got the run around about it.  Finally located the mortgage company and we were offering CASH and they blew us off.  Of course we told them to take off the intrest and legal fees on it and they laughed!! The housing market is fucked as far as I am concerned.  Hell my neice who has a masters degree cannot even afford a home right now with her student loan for just her masters degree.  Mommy and daddy paid for the first 4 years.

Where I live and not sure in other states but when a home is foreclosed on the bank is now liable for the property taxes.  I got the drift that banks are not formerly foreclosing when inquiring about the home across the street. So the assholes are holding millions of homes off the market and there is no telling how many the Fed owns hehe!!!

Wed, 05/21/2014 - 13:05 | 4781846 Ban KKiller
Ban KKiller's picture

I think many states are experiencing what you see in your area. 

A huge court decision in NM for homeowners who want to keep their home...ROMERO V BONY Supreme Court Decision! Banks need to show clear chain of title. 

Yes, banks don't take "ownership" to avoid paying taxes after they have foreclosed. As usual the banksters are up to their shady practices. Their attys, scumbags, are getting heat too. See "CASTLE LAW GROUP"  and their scams exposed. 

IF people want to keep their homes...they can. All they have to do is fight! Yeah, fight. Most do not have the spirit and have fallen for the lies from the "lender" or "servicer". 

Death, by law, to Ocwen and Nationstar Mortgage, LLC. Evil crooks....and stupid to boot! Everything they say is a lie. Who, What, Where, When and How are questions about your note they can NOT answer honestly. 

 

Wed, 05/21/2014 - 12:47 | 4781756 wstrub
wstrub's picture

If housing is unsound................then so are the banks!!!!!!

Wed, 05/21/2014 - 12:51 | 4781773 madcows
madcows's picture

So are fannie and freddie.  The banks are sound.  they just make the commission on the loans and sell them to the hacks at Fannie/freddie.

Wed, 05/21/2014 - 13:00 | 4781819 I Write Code
I Write Code's picture

Don't really know what he's talking about here, prices or financing or monetary or jobs or MBO/MBS or wtf.  As bad as Fannie and Freddie were in the last goround, the bubble was the bubble, the derivatives were the derivatives, and the market collapse was the market collapse, and the bailout was the bailout.  So speak clearly Fink or forever hold your piece ... er, peace.

Wed, 05/21/2014 - 13:11 | 4781871 Colonel Klink
Colonel Klink's picture

Fink, what a perfect name for that douchebag.

Wed, 05/21/2014 - 13:15 | 4781880 wallstreetapost...
wallstreetaposteriori's picture

Who is going to win?  Is it the Blackrock or the Blackstone....  dun dun dun....

Wed, 05/21/2014 - 13:26 | 4781908 RMolineaux
RMolineaux's picture

One un-acknowledged fact of the housing market today is the deterioration of the work and saving culture of the population at large.  People have lost the ability to make hard choices in their spending habits, and succomb to the ear-blasting propanda to buy new toys rather than save to buy their own house.  The attraction of the mobility provided by vehicle ownership has been going on long enough to affect the design of towns and villages.  No one knows their neighbors and they consider it routine to drive miles for ordinary groceries.

Wed, 05/21/2014 - 13:29 | 4781918 SheepDog-One
SheepDog-One's picture

Saving at less than the rate of inflation, even the phonied up inflation numbers, is just retarded.

Wed, 05/21/2014 - 13:27 | 4781909 SheepDog-One
SheepDog-One's picture

Yea I'm sure a bit of more pleasant weather will solve all the central banksters problems!

Wed, 05/21/2014 - 13:41 | 4781965 Spungo
Spungo's picture

Why all the hate for ARM loans? Something like 1/3 of all Canadian mortgages use a variable interest rate, and the interest rates adjust every 5 years for fixed mortgages, yet they've never had a problem with widespread bankruptcy. Loans with variable interest rates are generally easier to service than fixed interest rate loans because the fixed interest rate is a combination of a variable loan plus an interest rate swap. This is why the interest rate on a fixed loan is 30% higher than the interest on a variable loan.

Wed, 05/21/2014 - 14:18 | 4782072 BullyBearish
BullyBearish's picture

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

 

Pure...unadulterated...evil...the Luciferians are in Charge with Nothing and No One to stop them

Wed, 05/21/2014 - 14:20 | 4782084 Spungo
Spungo's picture

Yall niggas be hatin. You know they'll never raise the interest rates. Doing so would force the government to cut social security and medicare. Asking old people to find their boot straps and re-learn how to tie shoes is politically impossible.

Wed, 05/21/2014 - 15:11 | 4782223 The Econ Ideal
The Econ Ideal's picture

Fink was one of the creators/originators of MBS. He and Blackrock have benefitted tremendously from the cheap money and credit bonanza over the last several decades. This is likely a CYA on his part, as he is significantly above average in knowing when to hold 'em and when to fold 'em, albeit after some hard lessons along the way. 

Wed, 05/21/2014 - 16:33 | 4782511 RaceToTheBottom
RaceToTheBottom's picture

I think that they should come up with a program that helps first time buyers get a home. 

They should also cancel all student loans when they buy the home as well.

 

Its for the children.

Wed, 05/21/2014 - 16:38 | 4782525 Notsobadwlad
Notsobadwlad's picture

Thank you Mr. FINK for putting so many of your trusting customers' retirement savings into your new real estate "buy to rent" funds.

Guess we could not have seen that coming.

My advice to anyone who has money with Blackrock: MOVE IT. The guy bought a bunch of real estate with your money and is now trash talking the investment you unwittingly made.

You will be pleased to understand that the money you are paying Mr. FINK to invest your money in assets that he is trashing will not be affected at all. You will still be paying him too much money for the poor service he provides.

Wed, 05/21/2014 - 18:48 | 4783000 AdvancingTime
AdvancingTime's picture

Many houses in the area where I live in the Midwest are empty or under leased. In 2005 and 2006 prior to the housing collapse many people were looking at second homes, for investments or as a vacation getaway, today not only have they shed the extra home many have doubled up with family or friends reducing the need for housing.  

We are pushing on a string and calling it demand when someone who can barely pay the rent is encouraged by the government to buy a house they can neither afford or maintain. We have a shortage of "qualified" buyers and renters. More on this subject in the article below.

http://brucewilds.blogspot.com/2013/12/super-low-interest-rates-disservi...

 

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