Wow this thread reduces ones IQ considerably.

I can't believe people think it was the Democrats only that made the rules that let people abuse the system...you have to be fuckin kidding me guys

derek bomar wrote: I can't believe people think it was the Democrats only that made the rules that let people abuse the system...you have to be fuckin kidding me guys

I don't think that, but anyone supporting removing the things that were working is an idiot/evil.

I Wear Pants wrote:

derek bomar wrote: I can't believe people think it was the Democrats only that made the rules that let people abuse the system...you have to be fuckin kidding me guys

I don't think that, but anyone supporting removing the things that were working is an idiot/evil.

I agree - both sides are equally at fault...I just don't see anyone on the Right (on here) willing to admit it, and I don't see anyone currently in Congress on the Right trying to do anything about fixing the problem (going back to what previously was in place)

derek bomar wrote:

I Wear Pants wrote:

derek bomar wrote: I can't believe people think it was the Democrats only that made the rules that let people abuse the system...you have to be fuckin kidding me guys

I don't think that, but anyone supporting removing the things that were working is an idiot/evil.

I agree - both sides are equally at fault...I just don't see anyone on the Right (on here) willing to admit it, and I don't see anyone currently in Congress on the Right trying to do anything about fixing the problem (going back to what previously was in place)

Both sides had a hand in it, but the original order came from Carter, it was fully implemented by Clinton, and when the Bush administration wanted to reign in what was happening -- they were publicly chastised and blocked from doing it by Barney Frank and the black congressional delegation who claimed it was racist to try and stop what was happening.

Republicans are at fault for wimping out and not making more of an issue to get this regulated -- but the Democrats fingerprints are all over this, much more so than the Republicans.

Writerbuckeye wrote:

derek bomar wrote:

I Wear Pants wrote:

derek bomar wrote: I can't believe people think it was the Democrats only that made the rules that let people abuse the system...you have to be fuckin kidding me guys

I don't think that, but anyone supporting removing the things that were working is an idiot/evil.

I agree - both sides are equally at fault...I just don't see anyone on the Right (on here) willing to admit it, and I don't see anyone currently in Congress on the Right trying to do anything about fixing the problem (going back to what previously was in place)

Both sides had a hand in it, but the original order came from Carter, it was fully implemented by Clinton, and when the Bush administration wanted to reign in what was happening -- they were publicly chastised and blocked from doing it by Barney Frank and the black congressional delegation who claimed it was racist to try and stop what was happening.

Republicans are at fault for wimping out and not making more of an issue to get this regulated -- but the Democrats fingerprints are all over this, much more so than the Republicans.

At least one person gets it.
And yes, the Bush Admin. and Republicans do not get a free pass either. But it is a classic example of how the govrenment screws things up when it changes the status quo to push a SOCIAL agenda.
http://www.usnews.com/blogs/barone/2008/10/06/democrats-were-wrong-on-fannie-mae-and-freddie-mac.html
http://online.wsj.com/article/SB122290574391296381.html

LJ wrote:

Footwedge wrote:

Writerbuckeye wrote:

I Wear Pants wrote: I'd argue that conservatives are the ones that believe people can change/trust in people too much. I mean, why else would you want to leave the banking industry alone, it certainly isn't because the market has been making the fair and correct decisions.

Perhaps it's because history tells us that government interference in free markets makes things even worse.

I'll use Fannie and Freddie as exhibits one and two.

Fannie and Freddie interfered with free markets? How was their interference any different than any other corporation?

Fannie and Freddie run the exact same way as the oil industry, the pharmaceutical industry, the oil industry, and the banking industry.

F & F has high paid/overpaid CEO's, lobbyist perks, , stockholders, board of directors, and benefit from artificially inflated prices.

And......they were and are publicly traded companies.

Exactly the way Pfizer, XOM. AIG, Lehman Bros and the rest of them operate.

Their execs voted themselves huge bonuses with the good ole boy tacit nod of approval from the board members.

If you are gonna rail on maleveolent behaviors of F & F, then you by default are playing by the so called "liberal playbook" in bashing American oligopolistic corporations.

Fannie and Freddie are GSE's who have always had the explicit backing of the Federal Government.

I, on the other hand, am in the Oil Industry. My company is not a GSE nor do I have the explicit backing of the Federal Government.

"Government sponsorship" does not alter any of the corallations that I stated above.

The government does not run nor operate F & F. Not the daily operations nor any operations.

I contend that F % F are run by the exact same business model as AIG, XOM, or Pfizer.

As stated above in my previous post....,.

1. Publicly traded
2. Overpaid execs
3. BOA "controlled"
4. Have lobbyists for special political favors
5. Pay bonuses based on performance
6. For profit business
7. Bailed out by the government when needed
8. Artificial pricing (OK, maybe I stretch with this one..but I would love to debate it)

My point is simply this...as I pointed out to WB. If you rail on F & F, like the minnie Limbaughs are so prone to do, then by default you are also railing on Corporate America en masse. If you rail on Corporate America en masse...then you are by default a liberal.

Show me where I'm wrong. The term "government sponsorship" has no intrinsic meaning in the overall picture of things.

From wiki......

Guarantees and subsidies
Speculation that the U.S. government would bail out an insolvent Fannie Mae is a hypothesis that had never been tested until recently, when the subprime mortgage crisis hit the U.S.

On July 11, 2008, the New York Times reported that U.S. government officials were considering a plan for the U.S. government to take over Fannie Mae and/or Freddie Mac should their financial situations worsen due to the U.S. housing crisis.[7] The government officials also stated that the government had also considered calling for explicit government guarantee through legislation of $5 trillion on debt owned or guaranteed by the two companies.

Shares in U.S. mortgage finance firms Fannie Mae and Freddie Mac plunged on Friday, July 11, 2008, and market speculation mounted that the government was set to take them over to resolve their funding problems.

Shares continued to plummet[24] as investors became unsure about the adequacy of the capital held by FNMA. U.S. Treasury Secretary Henry M. Paulson as well as the White House went on the air to defend the financial soundness of Fannie Mae.

Fannie Mae and smaller Freddie Mac own or guarantee almost half of all home loans in the United States. They face billions of dollars in potential losses, and may need to raise additional, potentially substantial, amounts of new capital as the current downturn in the U.S. housing market continues.

Markets assume that the taxpayer will if necessary take on the burden of all their mortgages because they underpin the whole U.S. mortgage market. If they were to collapse, mortgages would be harder to obtain and much more expensive. U.S. Treasury Secretary Henry Paulson has said the government's primary focus is in supporting Fannie Mae and Freddie Mac in their current form.[25]

[edit] No actual guarantees
Fannie Mae receives no direct government funding or backing; Fannie Mae securities carry no government guarantee of being repaid. This is explicitly stated in the law that authorizes GSEs, on the securities themselves, and in many public communications issued by Fannie Mae.

Neither the certificates nor payments of principal and interest on the certificates are guaranteed by the United States government. The certificates do not constitute a debt or obligation of the United States or any of its agencies or instrumentalities other than Fannie Mae.

http://en.wikipedia.org/wiki/Fannie_Mae

There is no real difference between F & F...and the investment bankers as it relates to the government's backing...

And for the record...I think all of these artificial programs...including those force fed by GW Bush to enable more people to own homes, are all fundamentally flawed.

I never said the instruments were gov't backed, I said Fannie and Freddie themselves are gov't backed (solvency). Thank you for proving my point.

They were the first ones to have explicit gov't backing promised then it was passed on to the other banks and such. This allowed Fannie and Freddie to be more aggressive with their practices. If you know that someone promises to bail your ass out if you screw up is going to allow you to be more aggressive. Do I think Fannie and Freddie are any more to blame than other banks? No, not really, I just think your comparison is off.

Fannie and Freddie were started by the gov't to do what they do and to increase lending and free up bank credit. They have the explicit backing (we're talking solvency here, not guaranteed return on their stock or securities, don't confuse the 2) of the U.S. gov't.

Exxon started to create profit through petroleum products with no public explicit backing for solvency. How you can compare those 2 is astounding. They had some of the same operating procedures and issued stock because the gov't tried to free up their balance sheet so they sold their company to the american stockholder. You know, DFAS operates a lot like a normal CPA firm. Their budget is based directly off revenue, their execs are overpaid in some instances, have their own lobbyists inside the DoD, pay bonuses based on performance, etc, but they are nothing like Jim Bob CPA Consulting down the road.

I love how you take small parts of a wiki entry and try to make it fit your argument

Federal subsidies

The FNMA receives no direct federal government aid. However, the corporation and the securities it issues are widely believed to be implicitly backed by the U.S. government. In 1996, the Congressional Budget Office wrote "there have been no federal appropriations for cash payments or guarantee subsidies. But in the place of federal funds the government provides considerable unpriced benefits to the enterprises... Government-sponsored enterprises are costly to the government and taxpayers... the benefit is currently worth $6.5 billion annually.".[30] Fannie Mae and Freddie Mac are allowed to hold less capital than normal financial institutions: e.g., it is allowed to sell mortgage-backed securities with only half as much capital backing them up as would be required of other financial institutions. Specifically, regulations exist through the FDIC Bank Holding Company Act that govern the solvency of financial institutions. The regulations require normal financial institutions to maintain a capital/asset ratio greater than or equal to 3%.[31] The GSEs, Fannie Mae and Freddie Mac, are exempt from this capital/asset ratio requirement and can, and often do, maintain a capital/asset ratio less than 3%. The additional leverage allows for greater returns in good times, but put the companies at greater risk in bad times, such as during the current subprime mortgage crisis. FNMA is also exempt from state and local taxes. In addition, FNMA and FHLMC are exempt from SEC filing requirements; however, both GSEs voluntarily file their SEC 10-K and 10-Q.

Yep, they operate just like any other investment bank LOL

LJ just owned you

LJ wrote: I never said the instruments were gov't backed, I said Fannie and Freddie themselves are gov't backed (solvency). Thank you for proving my point.

They are not backed by the government (solvency) at least not since 1968. Reread the history portion of the article from Wiki. At least in stated theory they're not. But we also found out that the investment banking industry falls under the exact same theoreticals and practicals. In other words....F & F are NOT backed up by the taxpayer according to all official documents and neither are the investment banks. At least that was the theory, right?

In actual practice, we all found out 16 months ago, that both the investment banking comglomerates AND F & F are all "too big too fail". And as such....THEY BOTH have been backed or securiturized by the tax payer. That IS my point.

In both instances...blatant corporate welfarism. Investment banking....same as F & F.....700 billion bailout collectively for both.

They were the first ones to have explicit gov't backing promised then it was passed on to the other banks and such. This allowed Fannie and Freddie to be more aggressive with their practices. If you know that someone promises to bail your ass out if you screw up is going to allow you to be more aggressive. Do I think Fannie and Freddie are any more to blame than other banks? No, not really, I just think your comparison is off.

I understand the point you're making here. And I agree that F & F were more liberal in their business practices. But liberalization of the entire industry was running rampant and completely out of control. The business transactions between F/F and the investment bankers were greatly intertwined. They are both just as culpable in the financial meltdown. The little "mini Limbaughs" love to use F/F as the punching bag for the entire economic meltdown. Well, the repeal of Glass-Steegle led to unfounded liberties for the AIG's, WaMu's, Bear Stearns, and the Lehman Brothers of the world.

I am not defending F & F. What I'm doing is showing the hypocracy in blaming the "government sponsored" corporate welfarists vs the other corporate welfarists.

Fannie and Freddie were started by the gov't to do what they do and to increase lending and free up bank credit. They have the explicit backing (we're talking solvency here, not guaranteed return on their stock or securities, don't confuse the 2) of the U.S. gov't.

Once again, they were privatized in 1968..reread the article in Wiki. As a private, for profit enterprise, with investors, BOA, CEO's (crooked I agree), performance driven, self bonus check paying, maximizing profit entity....they had NO liquidity protections or otherwise from the government built into their business model.

Exxon started to create profit through petroleum products with no public explicit backing for solvency. How you can compare those 2 is astounding.

Save it for a different thread. My comparison for this thread's purpose is to allign F & F with corporate oligopolies. Same structure, same model, same business ambitions. That is the comparison that I made.

If you want to "go there" again, then there should be a separate thread regarding real world corporate power...which far and away transcends any and all free market theories and practices as espoused by Ricardo, A Smith and other laisse-fairites.

They had some of the same operating procedures and issued stock because the gov't tried to free up their balance sheet so they sold their company to the american stockholder. You know, DFAS operates a lot like a normal CPA firm. Their budget is based directly off revenue, their execs are overpaid in some instances, have their own lobbyists inside the DoD, pay bonuses based on performance, etc, but they are nothing like Jim Bob CPA Consulting down the road.

Agree with that.

Writerbuckeye wrote: LJ just owned you

You betcha.

Footwedge wrote:

In actual practice, we all found out 16 months ago, that both the investment banking comglomerates AND F & F are all "too big too fail". And as such....THEY BOTH have been backed or securiturized by the tax payer. That IS my point.

And thanks for proving mine.

I am not defending F & F.

and I never blamed them

Once again, they were privatized in 1968..reread the article in Wiki.

I believe I was the first one to mention that, without citing wikipedia.

they had NO liquidity protections or otherwise from the government built into their business model.

Yes they did. Exempt from taxes and lower requirements allowed them to stay more "liquid" in the sense that they could leverage more and still be considered "liquid"

The GSEs, Fannie Mae and Freddie Mac, are exempt from this capital/asset ratio requirement and can, and often do, maintain a capital/asset ratio less than 3%. The additional leverage allows for greater returns in good times, but put the companies at greater risk in bad times, such as during the current subprime mortgage crisis. FNMA is also exempt from state and local taxes.

Same structure, same model, same business ambitions. That is the comparison that I made.

But that's a false comparison.

The GSEs, Fannie Mae and Freddie Mac, are exempt from this capital/asset ratio requirement and can, and often do, maintain a capital/asset ratio less than 3%. The additional leverage allows for greater returns in good times, but put the companies at greater risk in bad times, such as during the current subprime mortgage crisis. FNMA is also exempt from state and local taxes.

LJ wrote: I love how you take small parts of a wiki entry and try to make it fit your argument

Federal subsidies

The FNMA receives no direct federal government aid. However, the corporation and the securities it issues are widely believed to be implicitly backed by the U.S. government. In 1996, the Congressional Budget Office wrote "there have been no federal appropriations for cash payments or guarantee subsidies. But in the place of federal funds the government provides considerable unpriced benefits to the enterprises... Government-sponsored enterprises are costly to the government and taxpayers... the benefit is currently worth $6.5 billion annually.".[30] Fannie Mae and Freddie Mac are allowed to hold less capital than normal financial institutions: e.g., it is allowed to sell mortgage-backed securities with only half as much capital backing them up as would be required of other financial institutions. Specifically, regulations exist through the FDIC Bank Holding Company Act that govern the solvency of financial institutions. The regulations require normal financial institutions to maintain a capital/asset ratio greater than or equal to 3%.[31] The GSEs, Fannie Mae and Freddie Mac, are exempt from this capital/asset ratio requirement and can, and often do, maintain a capital/asset ratio less than 3%. The additional leverage allows for greater returns in good times, but put the companies at greater risk in bad times, such as during the current subprime mortgage crisis. FNMA is also exempt from state and local taxes. In addition, FNMA and FHLMC are exempt from SEC filing requirements; however, both GSEs voluntarily file their SEC 10-K and 10-Q.

Yep, they operate just like any other investment bank LOL

They do operate like investment banks. I will concede your point that they can take higher risks, with less equity on hand, but they still operate in the same fashion.

Funny how you criticize me in highlighting my point, yet you do the exact same thing in highlighting yours.

Touche bro.

LJ wrote:

Footwedge wrote:

In actual practice, we all found out 16 months ago, that both the investment banking comglomerates AND F & F are all "too big too fail". And as such....THEY BOTH have been backed or securiturized by the tax payer. That IS my point.

And thanks for proving mine.

I am not defending F & F.

and I never blamed them

Once again, they were privatized in 1968..reread the article in Wiki.

I believe I was the first one to mention that, without citing wikipedia.

they had NO liquidity protections or otherwise from the government built into their business model.

Yes they did. Exempt from taxes and lower requirements allowed them to stay more "liquid" in the sense that they could leverage more and still be considered "liquid"

The GSEs, Fannie Mae and Freddie Mac, are exempt from this capital/asset ratio requirement and can, and often do, maintain a capital/asset ratio less than 3%. The additional leverage allows for greater returns in good times, but put the companies at greater risk in bad times, such as during the current subprime mortgage crisis. FNMA is also exempt from state and local taxes.

Same structure, same model, same business ambitions. That is the comparison that I made.

But that's a false comparison.

The GSEs, Fannie Mae and Freddie Mac, are exempt from this capital/asset ratio requirement and can, and often do, maintain a capital/asset ratio less than 3%. The additional leverage allows for greater returns in good times, but put the companies at greater risk in bad times, such as during the current subprime mortgage crisis. FNMA is also exempt from state and local taxes.

Later man. It's Friday night...know what I'm sayin? Have a great weekend.

Footwedge wrote:

LJ wrote: I love how you take small parts of a wiki entry and try to make it fit your argument

Federal subsidies

The FNMA receives no direct federal government aid. However, the corporation and the securities it issues are widely believed to be implicitly backed by the U.S. government. In 1996, the Congressional Budget Office wrote "there have been no federal appropriations for cash payments or guarantee subsidies. But in the place of federal funds the government provides considerable unpriced benefits to the enterprises... Government-sponsored enterprises are costly to the government and taxpayers... the benefit is currently worth $6.5 billion annually.".[30] Fannie Mae and Freddie Mac are allowed to hold less capital than normal financial institutions: e.g., it is allowed to sell mortgage-backed securities with only half as much capital backing them up as would be required of other financial institutions. Specifically, regulations exist through the FDIC Bank Holding Company Act that govern the solvency of financial institutions. The regulations require normal financial institutions to maintain a capital/asset ratio greater than or equal to 3%.[31] The GSEs, Fannie Mae and Freddie Mac, are exempt from this capital/asset ratio requirement and can, and often do, maintain a capital/asset ratio less than 3%. The additional leverage allows for greater returns in good times, but put the companies at greater risk in bad times, such as during the current subprime mortgage crisis. FNMA is also exempt from state and local taxes. In addition, FNMA and FHLMC are exempt from SEC filing requirements; however, both GSEs voluntarily file their SEC 10-K and 10-Q.

Yep, they operate just like any other investment bank LOL

They do operate like investment banks. I will concede your point that they can take higher risks, with less equity on hand, but they still operate in the same fashion.

Funny how you criticize me in highlighting my point, yet you do the exact same thing in highlighting yours.

Touche bro.

I cut nothing out. I already said that they operate the same way, but they are and were not set up the same way, governed the same way, and are able to take risks outside the realm of a normal company. In other words. 1+1 /=3

footwedge wrote:
"They do operate like investment banks. I will concede your point that they can take higher risks, with less equity on hand, but they still operate in the same fashion."

...and thus illustrates the flawed thinking that the author of this article points out....the notion that government affiliated/sponsored/ run agencies are the same as private 'normal companies'. They are NOT. They don't operate by the same rules, enjoy special advantages, and are publically percieved to have the backing of the government whether it is legally backed full faith or merely implied. This would apply to the government option of Obamacare as it does with F&F or any other GSE.

To Hits and LJ. I concede the point that that F & F can play the game of business with slightly different parameters. I am happy that you pointed that out. See how easy it is to admit when one is wrong? But what exactly are the paramaters, and what exactly do they mean?

The AIG's of the world are required to maintain "collateral" of 3% or greater. And F/F can get away with less.

And who sets these so called "rules"? I thought unfettered capitalism is such that industry would dictate "rules", and the government should butt out. no?

If nothing else, the entry from Wiki should make it verty clear. Deregulation and the liberalization of asset backing rules is a fuggin joke.

Go back through my posts and you will find that I denounced F/F from the very start. Just as I have denounced the behavior of the investment bankers collectively. The basic premise of my argument remains the same and steadfast..

F/F are a for profit business. F/F is a private entity. F/F have have overpaid execs. F/F have investors. F/F are publicly traded companies. F/F was supposed to be "too big to fail". F/F has a B.O.D. Absolutely no different structurally than the investment bankers.

And I still contend just as strongly that the minnie Limbaughs that run around blaming F/F for the entirety of the housing collapse/economic collapse are not at all pragmatic nor realistic in their assessments.

If F/F is really any different than AIG, then tell me why the Troubled Asset Relief Program (TARP) was given to both GSE AND the AIG's of the world?

F/F==Failed monopoly....AIG/Lehman Bros/Bear Stearns==Failed oligopolies. Both run as private corporations/entities, without any true free market competitive forces in play. None. Neither of them. Both entities running wreckless operations...with the devious understanding that failed risk ventures===bailout from the government/taxpayers.

The people at F/F that ran that corporate monopoly are no different than the people that run AIG. Same structure, same corporate model. Neither of which were held accountable for massive failure. Both were equally complicit in playing the game of "heads I win, and tails I win as well"...because both were "too big to fail".

Footwedge wrote:
F/F are a for profit business. F/F is a private entity. F/F have have overpaid execs. F/F have investors. F/F are publicly traded companies. F/F was supposed to be "too big to fail". F/F has a B.O.D. Absolutely no different structurally than the investment bankers.

You keep saying this, but it is wrong. They have a lot of the same operating procedures, but if one is a GSE and the other is a strictly private entity, then OBVIOUSLY they are different. There is no WAY that can possibly be true that they are the same, because it's impossible. They are not. 1 is a GSE the other is a private entity.

If F/F is really any different than AIG, then tell me why the Troubled Asset Relief Program (TARP) was given to both GSE AND the AIG's of the world?

Well first off, Fannie and Freddie were taken into Conservatorship as per the GSE rules. Secondly, Fannie and Freddie were the first. AIG being treating like a GSE and getting a bailout is the question, not the other way around.