OT: OY!

I see by the morning paper that we, the taxpayers, are going to buy Fannie Mae and Freddie Mac. It's going to cost us "billions of dollars" according to the article.
Why are we bailing out companies that knowingly gave mortgages to people who couldn't afford them? If a mortgage holder has been defrauded by a company, he should have legal recourse. If a company has been defrauded by a mortgage holder, likewise. Other than that, let them eat cake.
Just watch - I'll bet the bailout goes into the pockets of some fat cats on Wall Street. It's the S&L bailout all over again.
Are we on the same side this time, Doug and Tim?
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[snip]
And McCain won't have ANYthing to with it again...right?
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Larry Blanchard wrote:

You do realize that Fannie May and Freddie Mac aren't really private companies. They are "Government Sponsored Enterprises" that were designed to provide low-income loans (i.e., loans to people who more than likely are not going to be able to pay them back). In addition to poor business management, it appears that these two federal government enterprises are also being used to channel money to politically oriented groups: <http://www.marketwatch.com/news/story/nlpc-blasts-fannie-mae-freddie/story.aspx?guid =&dist=hppr> One of the previous overseers of Fannie May was forced to resign because of malfeasance.

This isn't a federal bailout of private institutions. This is paying the consequences of another set of tender-hearted fuzzy thinking on Congress's part.

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If you're going to be dumb, you better be tough

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Yep. No authority under the Constitution for the federal government to be involved in this in any way.
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You don't seem to understand.
Here's how the game is played
You "privatize" profits.
If there's a profit - it goes to the "investors"
You "socialize" losses. If there's a loss it's paid for by the tax payer.
Why we don't crucify - and I mean upside down, naked, crown of thorns crucifiction (sp?) during the Super Bowl at least a few of these greedy bastards still amazes me.
Let "The Market" have its way and it'll solve all problems Mr. Friedman? Have you studied history - at all?
So this is just another installment in a very old story - that has no end in sight.
They are hungry? Let them eat cake!
Have you lost your head?
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charlieb wrote:

The problem with your rant on this topic is that both Freddie Mac and Fannie May are GOVERNMENT agencies. Fannie May was started during the Roosevelt administration. The "fat cats" of which you speak are former government employees who lined their pockets knowing the government would bail out the agencies. People who cashed in? Franklin Raines to the tune of $52M, Jamie Gorelick (yep the one who helped enable the 9/11 attacks by erecting the "wall" between the CIA and FBI, preventing sharing of information): $15M, James A Johnson: $1.9M. There were plenty of warnings, but because this is a quasi-government organization, nobody was willing to take on the political fallout. Imagine the howls of outrage over those evil Republicans going after agencies that assure low-income people of loans. This information can be found in stories in the Washington Post and Barron's.
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You're both of the mark. This crisis was manufactured the day the banks decided on the idea that you can safely lend to people who may be unable to repay. And almost everyone happily and profitably promoted that idea, including government agencies and regulators. It's as simple as that.
In a real free market system the banks and the people who borrowed would all go out on the street in their birthday suits. Some rich guys would profit because they could buy the lost properties at 5 cent to the $, sit on them until the economy recovered, then sell them at 20-fold profit.
In reality, too much harm would come to everyone (the economy as a whole) if that script were to be followed. So, now we all have to suffer somewhat by rescuing at least some of the institutions and private individuals. That was the way it happened (for the god of most) during the savings and loan crisis, and that should (IMO) happen now.
What is the lesson? If it sounds too good to be true, it probably is too good to be true. Ponzi schemes work only so long. Should someone be prosecuted? Yes! But I am not going to decide who should be.
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Han
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On Sat, 06 Sep 2008 22:46:00 -0700, Mark & Juanita wrote:

I've heard them described more as quasi-governmental entities. But regardless of that, I suspect the buyout will also protect those private entities who purchased the mortgages that were securitized.
I doubt any of it will "trickle down" to the people who took out those liar loans. Even though it takes two to tango :-).
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Larry Blanchard wrote:

Yes, with one provise. We shouldn't be bailing out the lenders, but we also should not be bailing out the *borrowers* either.
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On Sun, 07 Sep 2008 10:44:34 -0500, Tim Daneliuk wrote:

Agreed.
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What about overpaid executives? Should they get their exit bonuses if they are even considered fired without cause (apparently not small bonuses either).
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Han wrote:

They should get whatever they are owed by contract (as should anyone who enters into a contract) and/or what their stockholders deem appropriate. (I'm assuming here that there has been no fraud or malfeasance on their part.)
The constant whining we hear about "overpaid executives" is mostly bogus and is nothing more than class envy. Most executives work for corporations that have stock holders. Those stock holders can vote execs' compensation via the board they elect. The reason execs make what they do is because that is the market rate for a fairly rare skill (relatively speaking, say, compared to someone to work on an assembly line).
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Larry Blanchard wrote:

Actually. Larry, from what I have read, the Fed. Govt. passed a law (either G.H.W. Bush and/or Clinton) that all lending institutions MUST make a percentage of all mortgages in the sub-prime category. The lenders obliged, and, after having made the loans, then bundled them up and sold them off on the financial market, implying that they were perfectly good. After the sub-prime crash, it's all coming back to haunt them. In a way, it is all the Govt's fault, so maybe they are obliged to bail out the institutions involved. Some of the details may be a bit murky, but this is the gist of what I have read so far. We'd all be a lot better off if the Govt. would just stay out of our affairs. This type of legislation is simply none of their business.
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