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Geithner: U.S. far behind on housing finance reform

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  • Howard | | 04 Apr 2012, 08:21 PM Agree 0
    Fannie and Freddie need reform to get them back into better risk management. Understand this that if these two institutions are disolved then the 6 major banks will have won final control as the largest 6 banks now control 77% of the banking industry and that includes mortgages. Just walk into a bank and look at the price they post for a 30 year mortgage, it's horrible compared to what a Mortgage Broker can give you...yes I said a Mortgage Broker. Better rates have always been what a broker can get you and know that now the business has is tightly controlled and you have no chance of being taken for high fees. Believe me the banks are trying to finish off the brokers just like fannie and freddie so they will have no competition.

    What you have after the big banks and investment banks poisoned the economy with irresponsible lending programs and their greed and brought the economy the closest to a depression since the depression, is the results of a recession and that is a horrible Real Estate market with little demmand and pricing power. What we are seeing now is hard times mainly from people being laid off and no way to sell. Most of the bad mortgages have been shaken out of the system already and are continuing to be refinanced or foreclosed upon.
    If Fannie and Freddie are disolved then the big banks would be the ones taking the brunt of the next future recession or bad real estate market and we will be seeing the impossible a huge bank that is too big to fail do exactly that...Fail. Recapitalize and reform FNMA & FHLMC as we need them just like AIG is needed to take that risk that gigantic firms, etc need. What we should be doing is dismantling the banks down to about half their size and cutting Goldman Sachs down to about a tenth of its size as well as getting rid of its influence and bad business practices. Only then will we have truer competition which is what is needed and I'm sure the Republicans agree with competition.
  • cindy | | 05 Apr 2012, 09:45 AM Agree 0
    Fannie and Freddie were /are primarily reponsible for the lending meltdown even more so than the banks. They were./are the primary purchasers of mortgage which allow total controll of underwriting standards. Banks underwrite mortgages according to fannie and freddie quidlines so the mortgages can be sold. The sloppy mismanaged industry is primarily Fannie and Freddies responsibility. They were willing to purchase mortgages from the banks and frankly tried to embarrass any entity that was not willing to lend to those who could not aford it . Stated wage earners, stated social security... rediculous underwriting standards which were acceptable and pushed by both Fannie and Freddie. You have used the media to demonize the broker which truely was the least of the problems and the least powerful. You demonished appraisers to the point that the market is again being controled by Fannie and Freddie underwriting standards. Appraisers now know that if the home is undervalued it will be accepted with little hazzel. The market is now controlled by fear to undervalue homes.

    Let the banks fall, let fannie and freddie collapse and the market place will fix itself. Government and Monopolies should stay out of it. When did too big to fail make sense to anyone but big government and monopolies. We, the average joe, pay for all of the games you play resulting in higher taxes, fees, penalties etc. . Enough is enough... failure is an obtion.
  • Howard | | 06 Apr 2012, 09:35 PM Agree 0
    Cindy,,, you are plain wrong! First if you let Fannie, Freddie, or any of the big banks fail then you could potentialy have a dangerous situation. You keep acting like the market will fix itself, no it would collapse now and we would not have anyone move into the market except the big banks. This would cause a lack of money in the Real Estate market and homes being hard to sell now would be impossible as demmand would further collapse and the ability to finance it would be gone. You don't seem to understand how close we came to financial meltdown. Did you ever imagine prior to this that a corporation the size of General Motors could fail. I know what you are thinking...let it fail. No it would have caused millions of jobs permenantly being lost and an industry that we started being permantly gone. There was also no way to liquidate it because none of the banks were lending especially in light of what was going on with most of the big banks and financial institutions. Losing all those jobs would have created a whirlpool effect with one financial bankruptcy after another and demmand would have totaly collapsed as the populace would have been totally scared out of their mind.
    Your other points about who caused this is also wrong as it was the big financial institutions and big banks that had no experiences with mortgage lending but new how to monitize the mortgages and get rid of them seemingly without liability in the form of Mortgage backed securties. They were the ones that created the monsterous option arms at 1%, stated and no income documentation, and low or no down payments. Mortgage Brokers, I'm ashamed to say took to doing these mortgages like like a starving dog finding food on the ground. They readily wrote up these mortgages to the nieve but also guilty public and can you blame them, they were able to charge a point or 1% origination, get another 1% rebate for a prepayment penalty, and another 1% or so for giving the borrower a higher margin, all without the borrower knowing what they were making. All this coupeled together made the broker around $12,000 to $20,000 on a $400,000 mortgage. The client was not thought of and he rarely saw or new what the margin was and how it affected him. The prepay penalty seemed to be usually a suprise with many brokers explaining it was the only way to get the mortgage. I never wrote an option arm, nor put anyone into a prepayment penalty and always strived for as low of a margin as I could get for the client and there are no foreclosures with any of my clients. I'm not tooting my horn( yes Iam) but I'm a rarity in this whole mess, I could have made lots of money but I was basically honest. I could not live with myself, others could however.
    Where were their principals, their ethics, there sense of fair play? I'll tell you that if you hold food in front of that starving dog, he will nip your hand off for it. Everyone else went wild as it became a feeding frenzy. The big financial institution offered and everyone from mortgage brokers, mortgage agents at banks and savings and mortgages, managers and executives who should have known better, appraisers, Real Estate agents, and the borrowers all took a bite.
    Fannie and Freddie came into the market much later and was not the reason for the initial meltdown. Their losses now are mainly the result of a collapse of the Real Estate market, the inability of people to sell when they lose their jobs or have a drastic change in their income and circumstances. Let's not absolve Fannie and Freddie as they have not been without blame but they didn't cause this castrophe, we all did including John @Q Public.
    If you want to find out about the origination of this mess which goes back into the 1990's, then go to Moyers and Company on PBS.ORG or he might be googled on his own and watch his recent interviews with some of the movers and shakers in the financial industry, paticulary the intervied with the CEO of CitiBank about how they conspired to get rid of the Banking Act of 1933. Also on FRONTLINE on PBS.ORG look for some of the segments that you can view on this crisis, paticulary watch "THE WARNING"...its scary. Also there are numerous books in the mainstream of market but stay away from the ones that offer the more right wing mind set of how it happened and how an orderly disposal and disposition of the institutions involved would cure the market. Open your mind on these things, get some FACTS and quit offering here say without factual backing.
    You know when you say failure is an option its funny as the government has been picking up and helping the financial institution as early as the early 1990's starting with GE and their GE financing arm. It seems they made a serious mistake in judging the market and went directly to the government and more or less told them they had to help or the whole thing would blow up in everyone's faces. The government has been propping up the economy of the country and even the world for a long time now.
    Imagine what the big banks and financial institutions are doing with a $700 TRILLION(that's with a T) diritives market. It is a financial tool that can make such fantastic returns but has the potential to take down the world economy much faster that this problem we are having now. We would be back in the stone age economically speaking and the and it could take generations to recover.
    We are allowing the monied interests in this country and the world to continue to weaken the Dodd Frank Act which was designed to replace the Banking Act of 1933 which was all of 33 pages long. This kept us safe for about 75 years until the conspirators at Citi Bank, Travelors, Mr. Greenspan, Mr. Ruben , Phil Graham and a whole host of characters figured a way to take it down. In comparison the Dodd Frank rule has over 2300 pages and counting as the monied interests and big financial institutions keep figuring ways to weaken it.
    They have done a good job and are continuing now to work on weakening or bureaucrats and regulators by tying their hands. Much like the Oil Cmpanies weakened the rules on drilling in 5,000 feet of open ocean they also were wining and dining all the people at Mineral and Mining Management that they didn't inspect the oil derricks and 11 men ragically paid with their lives. The Gulf of Mexico paid the ultimate price as it is going to be a long time before it recovers and the people in the area are still paying the price economically and health wise.
    Lets grab hold of our political institutions for a start, we need to get the corrupting influence of money out of our governments be they federal, state or local. We need to go back to the original intents of government to govern fairly and without prejudice or corruption. We don't need to shackle the government or to cut off it's legs, we need to make it more efficent. We need every governmemt offical to abide by one rule and that is, "IS IT GOOD FOR AMERICA? If not, it has no business existing.
  • blog network | | 07 Apr 2012, 06:53 AM Agree 0
    <strong>On My Twitter Feed...</strong>

    Next, I looked at my feed and spotted someone sharing one of the links to this site...
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