Obama Complicit In Fannie/Freddie Debacle?

[iplaw]

No one at ABC bothered to tell anyone that they sampled democrats 3:2 in that 9+ poll...

Pay no attention to the man behind the curtain.

[Hoss]

quote:Originally posted by guido911

quote:Originally posted by swake

quote:Originally posted by guido911

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers.

Uh, okay:

http://gallup.com/Home.aspx

Um, yes

CBS: 5 point Obama lead:
http://www.cbsnews.com/sections/opinion/polls/main500160.shtml

ABC: 9 point Obama lead:
http://abcnews.go.com/PollingUnit/

NBC: 2 point Obama lead:
http://firstread.msnbc.msn.com/archive/2008/09/24/1443011.aspx

Fox: 6 point Obama lead:
http://www.foxnews.com/story/0,2933,427241,00.html

And again:

McCain +2

http://www.zogby.com/

Zogby & Gallup today.

I have repeatedly said that polls are meaningless. When Waterboy links decreasing polls numbers to decisions made by candidates, he is ignoring the inherent volatility in this very close race.

They must not be that meaniningless; why the McCain grandstanding after one of the polls has him down by 9?

And yes, the consensus is that it IS grandstanding.

[waterboy]

quote:Originally posted by guido911

quote:Originally posted by swake

quote:Originally posted by guido911

quote:Originally posted by waterboy

Sorry, Conan, your credibility and readability is slipping as fast as McCain's polling numbers.

Uh, okay:

http://gallup.com/Home.aspx

Um, yes

CBS: 5 point Obama lead:
http://www.cbsnews.com/sections/opinion/polls/main500160.shtml

ABC: 9 point Obama lead:
http://abcnews.go.com/PollingUnit/

NBC: 2 point Obama lead:
http://firstread.msnbc.msn.com/archive/2008/09/24/1443011.aspx

Fox: 6 point Obama lead:
http://www.foxnews.com/story/0,2933,427241,00.html

And again:

McCain +2

http://www.zogby.com/

Zogby & Gallup today.

I have repeatedly said that polls are meaningless. When Waterboy links decreasing polls numbers to decisions made by candidates, he is ignoring the inherent volatility in this very close race.

Waterboy here. The one that didn't make any links between decreasing poll numbers and decisions made by candidates on this thread.[] But its naive to think the candidates aren't doing that. They pay for polls for a reason. That's the reason.

[guido911]

quote:

Waterboy here. The one that didn't make any links between decreasing poll numbers and decisions made by candidates on this thread.[] But its naive to think the candidates aren't doing that. They pay for polls for a reason. That's the reason.

I certainly cannot disagree with that. I think you can agree with me that not only are the polls (non-campaign internals) are all over place, but that some are intentionally skewed to achieve political ends--both parties.

[waterboy]

quote:Originally posted by guido911

quote:

Waterboy here. The one that didn't make any links between decreasing poll numbers and decisions made by candidates on this thread.[] But its naive to think the candidates aren't doing that. They pay for polls for a reason. That's the reason.

I certainly cannot disagree with that. I think you can agree with me that not only are the polls (non-campaign internals) are all over place, but that some are intentionally skewed to achieve political ends--both parties.

Absolutely. They're looking to create excitement, momentum and mostly...advertising potential. Heh, maybe they should be regulated or sumpin'.

[pmcalk]

quote:Originally posted by iplaw

I think you're narrowly interpreting Stein's comments.  CDSs aren't standalone investments.  They themselves depend, as do MBSs, on the underlying mortgages backing them.  I would agree with you in priciple if banks were the only ones involved. Unfortunately, Sterns, Lehman and AIG didn't provide mortgages to a single person, so the tinfoil hat theory doesn't work.  They bought bundled mortgages from banks and used them as collateral.

These companies had no idea that the subprimes values would be depressed as low as they are.  Stein said he didn't see it coming.  The Feds didn't either, and neither did the investment banks and security firms.

Here is the text of his article.

http://finance.yahoo.com/expert/article/yourlife/109609

As far as regulation, that would have been wonderful, but as you can see from Stein's explaination, we wouldn't have known what to look for in the first place.  This is the achilles heel of regulation.  Regulation is, by nature, reactive not proactive.  

IOW, without illiquid subprimes the system would have ticked along just fine.

Stein did foresee the problem of the subprime mortages, and didn't think it would destroy our economy.  He, and others who don't hold CDS, didn't see the extent of the cost, because no one knew how deep the problem went, given that no one regulated the trades.  But those who owned them, should have asked themselves, I wonder what will happen if people start defaulting on mortgages?  To say regulation is reactionary misses the fact that Gramm's bill actually deregulated them.  After Enron, also Gramm's fault, someone should have foreseen this.

If a house of cards comes tumbling down, you don't blame the first card that fell.  You blame the whole ill-conceived idea.  If this were only subprime mortgages, if the government were asking me to fork over 200 billion to compensate for foreclosures, I wouldn't like it, but I would deal with it.  

But that is not what is happening--we are being asked to fork over 4X that amount because some idiots on Wallstreet thought betting on whether someone defaults on a loan is a good thing to do.  Now we owe nearly a trillion dollars, not because of stupid loans, but because of stupid Wallstreet.

I am not sure what you mean by a "not stand alone investment", but you do understand that you don't have to own the underlying bond to create a CDS?  It's like betting on whether your neighbor will keep his car.  And as your neighbor becomes poorer, the value of your bet increases.

Just because you can package something and sell it doesn't mean you should.

[pmcalk]

quote:Originally posted by Conan71

quote:Originally posted by pmcalk

Conan, you keep harping on FreddieMac/FannieMae, as though that were the entire problem.  Even if the democrats or republicans had put in some regulations on those entities, we would still be in this problem.  The failure of Lehman brothers & bailout of AIG signaled the collapse of the market--not because of subprime mortgages, but because of the deregulation of Credit Default Swaps.  When did McCain ("I favor deregulation") ever attempt to tackle that?

I'm not saying that the Democrats (who barely had a majority--not enough to override a veto) shouldn't have done something.  But it was McCain's economic advisor that slipped in a bill that eroded the very protections that were put into place after the great depression.  He allowed gambling on whether the housing bubble would burst (it always amazes me the stupidity of these companies.  How could you not see that the housing bubble would burst?)

I am mad at both sides of the aisle for this stupid mess.  It was created by lobbyist who corrupt democrats and republicans alike.

But who would I like to fix the mess?  Clearly not the guy who is being advised by the guy that created the mess.  Not the guy who thinks lobbyist are good people.  Not the republicans who constantly scream for less regulation--sometimes regulation is a very, very good thing.

I'm glad to see you haven't been so easily bamboozled as to which political party is or isn't responsible for this.  Now if we can just get you over being bamboozled as to who is best to lead us out []

Still no one has been able to point to a SINGLE proactive solution Obama has attempted to be even a part of during his stay in Washington.  Nothing.

Credit swaps would be irrelevant if not for the Pandora's Box of lending stupidity and individual loan defaults which followed banks being blackmailed by the government into making the kinds of loans they learned not to make after the collapse of the thrift and S & L industry.  Risky loans and high default rates is what necessitated the creation of the RTC.  That lesson was short-lived.

Anyone who calls out the Clinton homeowner initiative as being problematic isn't being racist.  You went a little over the top on hyperbole there.  The program was not targeted specifically to blacks, native 'Mercans, and Hispanics, it was also targeted at low-income white families as well.

Banks and the institutions they sell their mortgages to saw they could get a higher yield by making a riskier loan.  In turn, they sought out a quid-pro-quo from the gov't to help securitize their risk, all while making a higher yield on their mortgage products.  They started promoting the lending vehicles most abusive to consumers: ARM's and interest-only balloons.

Once the financial markets and lenders saw the potential, then the push went off into total stupidity, like not having to document income or employment.  Lenders started "over-lending" to people with outstanding credit but who were hedging (and leveraging their future) that their fortunes would improve.  

Incomes would go up with raging investment markets or as they gained seniority in their occupation (ARM's).  

The robust housing market would allow someone to flip their house in a year or two and make a tidy profit (interest-only balloons).

Either way, they lowered the entrance requirements for borrowers, who at standard fixed-rate terms would have been ineligible and with next year's rate adjustment might very well be ineligible.

They also got away from the old wisdom of a house payment could not be any higher than 1/3 of household NDI with total indebtedness of around 50%.  It got stretched to 50% mortgage and, in some cases, 80% total indebtedness.

Credit swaps is a problem, but there wouldn't have been default in that market without the thousands of defaults in our neighborhoods.  Lenders and their investors kept making senseless loans to bolster housing markets and their bottom lines by getting more and more paper out on the street.  If credit swaps had been backed in the first place with viable loans at street level, we wouldn't have this huge debacle.

FWIW, Bill Clinton did have veto power, and he is considered one of the brightest men of the 20th Century.  He didn't have to sign off on the 2000 reauthorization bill.  Any number of people could have put a hold on Gramm's little peach of legislation, any one Democrat or Republican could have done it.  Just like voting for the war in Iraq, it's like cockroaches scattering when the day of reckoning comes.

I have never been under the delusion that democrats are squeaky-clean.  They should not have let Gramm's bill through, and Clinton should have vetoed it.

To say that encouraging lower income households to purchase homes resulted in the ridiculous loans that were being offered at the height of the bubble is a stretch.  But I go back to what I said to IP--when you build a house of cards and it comes crumbling down, you cannot simply blame the first card that fell.  AIG failed because of CDSs, not because of subprime mortgages:

quote:
American International Group was a counterparty in huge amounts of credit-default swaps with some of the world's biggest financial institutions. That is a large part of the reason, when A.I.G. teetered on the edge of collapse, the United States government agreed to step in with a $85 billion bailout loan.

Credit-default swaps function like a kind of insurance, allowing the holder of a piece of debt to collect the debt's face value if the issuer defaults. But credit-default swaps were specifically carved out of regulation covering insurance — as well as any other kind of market regulation, for that matter.

What's more, holders of credit-default swaps don't necessarily need to own the underlying debt — so instead of serving as protection, the swaps function as a speculative bet on the issuer's financial health. If the issuer's creditworthiness declines, the value of the swap goes up.

http://dealbook.blogs.nytimes.com/2008/09/23/sec-chair-regulate-credit-default-swaps-now/

But who is going to fix it?  The party that's been beating the drum of deregulation since Reagan?  The guy associated with the Keating five?  The party that brought you Enron?  The guy who chose an inexperienced, untested woman for VP that won't talk to reporters?


Thanks, but no thanks.