Barney Frank - Spinmeister!

Behold this one:

So he initially supported a Republican measure in 2005 that would have imposed stricter standards on the lenders. But he voted against it in the full chamber because it did not include funding for affordable housing, he said. The bill passed the House.

When the legislation went to the Senate, Republican support was splintered, and the White House withdrew its backing, saying the bill was not strong enough.

Top Bush strategist Karl Rove still blames Frank for its failure, saying Frank and other Democrats portrayed a vote to regulate Fannie and Freddie as "anti-black, anti-brown, anti-poor, anti-homeowner" because of the enterprises’ affordable housing mission.

"They were brutal," Rove said in a recent interview. "And so Republicans shied away from confronting it."

Frank dismissed those assertions, saying the splintering of GOP support was not his fault.

"They couldn’t get their act together," he said.

Did y'all catch that one - that spinner?

Barney may have been wrong (actually dead wrong) but blame really lies with his opponents who *couldn't get their act together*!!!

You know once my wife went to play tennis with an old high school friend in Brooklyn, a dude. When she came back I asked her, half-jokingly, if she had won:

Mrs. C-Nut - I would have beat him if he wasn't so bad!

Barney now says that he was against homeownership for low income people!!! Click the link.

And the quoted passage above is from a puff piece on Barney in the Boston Globe - although, actually a whole bunch of Morons (400+ comments), so used to even more egregious partisanship, think it *criticism*.

See also:

Hope For Frankophobes

Barney Frank - An Invert's Grand Inversion

Raw Footage In Mouthage - Barney Frank

Barney Frank Redefines ZERO LIKELIHOOD

Facts On Fannie Mae = Homophobia

Barney Frank - Unapologetic Shakedown Artist

Dodging Barney Frank

Barney Frank-ly Is A Dissembling Socialist

Fannie & Freddie....Rearranging Deck Chairs

Here's an article that broached the subject of buying a foreclosed home from a *bank*:

Foreclosures Can Offer Deals, but Buyer Beware

Fannie Mae does give prospective homebuyers a leg up. Last month, it introduced a program that shuts out investor buyers for the first 15 days a home is on the market. Moreover, Fannie also has a financing program, which allows buyers to put down as little as 3 percent and doesn’t require them to carry mortgage insurance. It also provides loans that allow borrowers to wrap in costs for home renovations.

Freddie is testing a program that also initially shuts out investor buyers, and it is currently offering consumers who buy one of its properties up to 3.5 percent of a home’s purchase price, which can be used for closing costs, moving or even furnishings. The program was recently extended to buyers who submit a purchase offer by Jan. 31 and close by March 26. Primary homebuyers are also eligible for a two-year warranty on certain home repairs.

The title - Buyer Beware - is obviously ridiculous.

It's more like - Buyer Rejoice!

Rejoice because they don't have to compete with *investors*, Fannie will *finance* the purchase (i.e. merely change the name on the house!), no mortgage insurance is needed, AND Freddie will even donate what amounts to a taxpayer-backed HELOC on top of the taxpayer-backed no-money-down mortgage!

This country is doomed.

Hank Paulson - Alarmist, Scapegoating POS Thief

Paulson Says Russia Urged China to Dump Fannie, Freddie Bonds

Jan. 29 (Bloomberg) -- Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, former Treasury Secretary Henry Paulson said.

Paulson learned of the "disruptive scheme" while attending the Beijing Summer Olympics, according to his new memoir, "On The Brink."

The Russians made a "top-level approach" to the Chinese "that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies," Paulson said, referring to the acronym for government sponsored entities. The Chinese declined, he said.

"The report was deeply troubling -- heavy selling could create a sudden loss of confidence in the GSEs and shake the capital markets," Paulson wrote. "I waited till I was back home and in a secure environment to inform the president."

Russia sold all of its Fannie and Freddie debt in 2008, after holding $65.6 billion of the notes at the start of that year, according to central bank data. Fannie and Freddie were seized by regulators on Sept. 6, 2008, amid the worst U.S. housing slump since the Great Depression.

Paulson said he was surprised not to have been asked about the Fannie and Freddie bonds during a trip to Moscow in June. "I was soon to learn, though, that the Russians had been doing a lot of thinking about our GSE securities," he said of his meeting with Dmitry Medvedev, who succeeded Putin in the Kremlin the previous month.

So there, we've got them!

Russia is guilty of *thinking about our GSE securities*!!!

If I owned them, I'd certainly dump those bonds as well. Who with an iota of brains wouldn't?

This is just another pathetic, deflective ruse on the part of Goldman's secret-agent crook. Does Paulson really think people are going to read this and re-direct their blame to Russia - a Third World country?

First of all, the hypothetical *dumping* of Fannie and Freddie bonds by investors WOULD NOT force the U.S. to prop up any companies. Bond prices all over the world, for centuries, have fluctuated to find new market values. Nobody forced Congress, Bush, Obama, or the Fed to *monetize*, (i.e. print money) to artificially prop up the debt of the GSEs. If their extant bonds fell, that would only effect NEW FUNDING for GSE debt. It'd become harder for Fannie and Freddie (and FHA) to issue any more mortgages....AND THAT WOULD BE A WONDROUS THING!

Secondly, it's not the trading of Fannie and Freddie debt that got these *companies* in trouble. It was their ill-conceived mandate, their flouting of lending standards, and their typical unbusiness-like operation that did them in. For crying out loud, Freddie Mac wasn't even listing a loan as *delinquent* until the mortgage had been unpaid for 2 FREAKIN' YEARS!!!





Mr. Mortgage reports:

The approval process was for the underwriter to run the loan through DU/LP and if the system did not issue an approval (or an approval the borrower and the loan officer were happy with) to go back into the input file and edit the income, assets, retirement (or all three) until the system approved it. Some loans were edited 30 or 40 times until the system issued an approval.

I believe Big Government has already dumped a staggering $85 billion into these entities which should never have existed in the first place.

Only a Moron could possibly believe any of this is Russia's (or China's) fault!

Paulson's book is well-titled, "On The Brink"...

A lying thievery of this magnitude certainly put him on the *brink* - of going to hell!

Seriously, this is how wars break out. Paulson gets mad at Russia, and then threatens China, "If you dump our bonds, we'll tax your imports..." China gets pissed and threatens to monkey with their dollar peg....And who knows what one of our clueless Presidents ends up doing in the heat of this needless provocation - in the fog of this alarmist smokescreen designed so Paulson could funnel taxpayer monies to his Goldman cronies.

This isn't to make Paulson's case of Russia as an antagonist. If a country wants to float bonds to international buyers and perhaps make itself somewhat dependent on their funding....then that country can't or SHOULDN'T tell its investors what to do with the bonds THEY PURCHASED. Is our *capitalist* nation selling with strings attached or what?

See also - Wall Street Alarmism.

Complimenting Barry Ritholtz - Consistently Ignorant

From my buddy Barry Ritholtz's recent post - Fed Reserve Endorses "Crony Communism" For Wealthy:

My pet theory is that all of the anger about Health Care Reform is misdirected rage at the corrupt Bailouts. I don’t want to get too Continental on you, but the conversation in Europe I encountered repeatedly was the sheer perplexity at why people are protesting health care coverage for all. One fund manager said to me in Berlin, "You give trillions to rogue bankers, yet you have 40 million uninsured American. Why is that?"

My answer: I haven’t the foggiest idea why.

He's right!

He really DOESN'T have the foggiest idea about healthcare economics.

Dear Barry Ritholtz,

The problem with having Big Government just health insure 40 million Americans...

Well, for a hint, just take a look at a look at freakin' Fannie Mae, Freddie Mac, and FHA!

Fannie:

The company was carrying $198.3 billion(!) in non-performing loans in its guaranty book of business on September 30, up from $171.0 billion on June 30 and $119.2 billion at the end of 2008. The carrying value of foreclosed properties was $7.3 billion in the third quarter, $6.2 billion in the second and $6.6 billion in the same quarter last year.

Freddie:

Freddie Mac said it didn't need any additional federal aid for the second straight quarter as it reported a loss of $6.3 billion for the third quarter on Friday.

But the company said it expected to ask for more handouts from the U.S. Treasury in the future as rising unemployment and falling home prices continue to drive higher credit-related losses for both Freddie and its larger rival, Fannie Mae.

Together with Fannie Mae, which said on Thursday it would need a $15 billion capital injection, the tab for the U.S. government's bailout of both mortgage-finance giants has climbed over the past year to $112 billion, making it one of the costliest government interventions ever to stabilize housing and financial markets.

The U.S. Treasury has agreed to provide as much as $200 billion in capital to each company by buying preferred stock that pays 10% dividends. Regulators took control of Fannie and Freddie through a legal process known as conservatorship 14 months ago

.

FHA:

Defaults spiked. About 24 percent of FHA loans were in default in 2007 and 20 percent in 2008, according to the agency. The agency's reserves kept tumbling.

As mortgages continue to sour, the Federal Housing Administration's reserve fund continues to deteriorate. That's not a big surprise. What might be a surprise is the fact that the FHA can get bailout money from the U.S. Treasury without seeking approval from Congress.

An automatic FHA bailout is part of the 1990 law under which the FHA turns over to the Treasury any excess money the agency collects in insurance premiums after it pays out its losses. This excess money goes into an FHA emergency reserve fund. Whenever the FHA needs money, it can draw from the reserve fund. The surprising thing is that there is no limit on the amount that can be withdrawn from the the reserve fund. All FHA loans are backed by the full faith and credit of the government, so if the FHA needs more than the amount of funds in the emergency reserve, it gets it, without the need for Congressional approval.

Meanwhile, Barry Ritholtz is musing among his Euro comrades, "What could possibly be wrong with merely granting everyone a house and a mortgage? With granting everyone a government job, a government pension, and a taxpayer-subsidized education????"

Amazingly, he complains aplenty about the broad daylight theivery on Wall Street - even wrote a book on the subject. Yet Barry hasn't the slightest idea that it's a government sanctioned and subsidized crime zone.

That's right, the stock exchanges, i-banks, and money management business are born of *public*, er regulated, securities' markets, the 401k income tax exemption, *fractional reserve* lending, the venal political connections of Goldman Sachs, etc.

I smacked the poop out of Ritholtz, and touched upon this very issue of his encyclopedic ignorance in - A Fight Where No One Got Hurt.

Only three minutes after publishing the blog post featured atop, Barry posted this addendum in the comment section:

Don’t get boggged down discussing Health Care — it isn’t my bailiwick, and I don’t have a professional interest in — but the Europeans are utterly perplexed by the debate.

The real issue is what will the Fed’s largesse and our collective refusal to hold people accountable for their actions lead to?

Hah!

Why doesn't he just say *I don't understand basic economics....it isn't my bailiwick*?

The sad thing is, on politicized Wall Street, economics is irrelevant. It's all who you know, self-marketing, momentum, and luck. And relatively speaking, in all honesty, Barry knows a heck of a lot more than most of the Morons out there allocating billions of soon-to-be-worthless dollars.

[Click that last link above "A Fight..." as it contains considerable overlap to this post.]

The Cheapest Rent

Remember this last year? It was when IndyMac went bankrupt and was taken over by Big Government. Now it's actually called IndyMac Federal Bank!

So what happens to any enterprise or industry when those most incompetent, unionized bureaucrats take over?

Yeah....things get even worse.

When I was down in Naples last week my buddy remarked that his brother was living in a condo for the past 18 months without paying his mortgage.

I asked who the lender was.

You guessed it, "IndyMac".

This is no anomaly. I've read some time ago that those other Big Government financiers, Fannie and Freddie Mac, didn't even list a loan as *delinquent* until it had been for a full two years - never mind initiate a foreclosure proceeding. We all know how *efficient* government is, right?

Meanwhile, there are going to be some clowns who really luck out. I'll bet scores of deadbeats will be able to stay in their taxpayers' homes rent-free for quite some time. My landlord seems to be such a candidate.

If only I had the foresight/balls to stop paying rent and the brains to figure out a way to forestall eviction...

A Fight Where No One Got Hurt

First, visit - Itching For A Fight.

After screaming far and wide that he'd put $100,000 of his money against anyone in a narrowly-defined, subjective debate Barry Ritholtz has gone silent on the issue of Big Government's role in the *housing mess* - via subprime lending mandates and whatnot.

First, I jabbed him in the comments of his own blog.

And then afterwards I swung again on Steve Sailor's blog. Steve whacked him good as well and enjoyed the bonus of a direct response from Barry. Click here for the entire post with comments. Below I'm just going to copy Barry's feckless response to Steve, along with my *helpful* rejoinder:

Ritholtz said...

I think we are approaching this from two entirely different universes.

I am looking for cause and effect; I want to see data that supports or detracts from the proposition at hand. PROVE TO ME that X caused Y (including actual statistics).

Your proposal of Diversity causing the housing crash reads to me as a soft philosophical argument that is by definition unprovable -- and undisprovable.

At the very least, I see no proof in your writings. They are cogent arguments that leap from A to B to C -- but they lack the rigorous statistical evidence to demonstrate something convincingly to people who insist on hard data.

In my belief system, I use as few assumptions as possible. I try to avoid things that are unquantifiable. Statistical back testing is just on[sic] way to do that.

But even softer analyses such as war-gaming and alternative scenarios have to have some reasonable basis for proceeding. It cant be all assumptions, beliefs guesses
and hunches.

7/02/2009

My trenchant, and still unanswered, reply:

CaptiousNut said...

Barry Ritholtz deprecates counterarguments as *soft* and *philosophical*. He wants comers to statistically:

PROVE that X caused Y.

But what precisely are X and Y? And how exactly could one PROVE causation?

Here’s his own wording:

"Is the CRA significantly to blame for the credit crisis?

Let’s go term by term:

CRA = narrow, but treatable in debate.

significantly = vague and hardly mathematically defined.

blame = loaded, subjective term.

credit crisis = also amorphous and thoroughly subjective.

So Barry has the gall(or gap?) to stand before us and demand *actual statistics* to address his own fuzzier-than-a-Sicilian-backside question!!!

Mr. Ritholtz,

Economics is a SOCIAL SCIENCE. Macroeconomics is a JUNK SCIENCE. And political science is a misnomer!

(BTW, what exactly is the statistical, scientific basis of the term *wingnuttery* in your analyses? Mentally trapped in *binary*, huh? It must be a real intellectually superior universe that you hail from.)

It’s bad enough that you frame a subjective question and then rule out *cogent*, subjective responses...

But what kills me is you stickling for *causation* when you are a freakin’ quantitative trader. You so-called quants traffic in CORRELATIONS all day long and bet gobs of, well, other people’s money thereupon. So not only is your universe an unfit perspective for this debate – it’s unclear whether or not you understand your own livelihood.

Now, if Barry Ritholtz insists that the massive subsidization of our nation’s least creditworthy homebuyers had an insignificant effect on the overall housing market...

Then I guess Barry believes the subsidization of underperformers (via quotas and race-based financial aid) hasn’t significantly affected national academic standards or costs.

And I guess he believes that the subsidization of our most unhealthy (i.e. the aged via Medicare) hasn’t significantly affected healthcare in this country in terms of cost, efficiency, research direction, etc,...either.

Alright I was just kidding. I know he probably doesn’t have well-developed positions on those subjects - nor should he.

He really ought to limit himself to his wheelhouse – stockpicking; which he seems quite good at. Listening to him on wider socio-economic issues is like bearing a 22 year old Hollywood starlet on geopolitics.

The empirical fact is that the CORRELATION between Big Government and severe economic distortion remains the same as it's been throughout history - 100%.

7/07/2009

Now this is an important debate, an important battle to be fought.

It's just too bad that the prospects for real dialogue on this were, like most things Ritholtz,....all bluster.

I would have really liked to see someone like the sharp-tongued Don Luskin, neither a friend of mine nor Barry's, step up for a slugfest.

Alas, Luskin has been a housing bull the whole way down. This subject has proven beyond his ken.

"What about Mr. Mortgage?", I thought. And I even emailed him to ask but was *underwhelmed* to say the least. He replied:

Ritholtz is right -- the investment banks made this...then the commercials followed the IBs because their earnings were suffering. The cra was a small part.

Say what?

I respectfully pointed out to Mr. M. that:

PS - by the way, barry doesn't heap blame upon the investment banks as you say. he has them ranked 13-17 as culprits. you might want to revisit what he wrote because it's clear to me that he doesn't see the connections between the low end, middle end, and high end of the housing markets.

and i forgot that you at one time were contributing to his blog....

Anyway, enough on this subject for the moment.

But I do want y'all to check out a very well-written and informative piece on *political lending* by Zombietime - that photo-journalist from California.

Seriously, take the minute to click on it. What's chilling beyond the blog post's substance is how easily a non-financial layman can grasp the reality on housing better than pros in the business and on Wall Street.

Fannie Mae & Freddie Mac....Killing US!

For $37.52 a square foot, y'all could buy this foreclosed Naples, Fl condo - 7985 Preserve Circle #1114. (It's right across from Arrowhead GC on Immokolee, a track I happened to play in January.)





Less than 2.5 years ago, this condo sold for a whopping $310,000.

The loan underwriter - Freddie Mac!!!

My real estate guy down there informs me that this condo may have theoretically been worth 200k at the peak - but never 310k by any stretch.

AND, he tells me that condo would sell for close to 60k today. So Freddie Mac will have gotten ripped off at both ends.

Check that. Us taxpayers will have been ripped twice on this property!

See also - Fannie Mae Reincarnated - It's Called FHA.

Addendum - What's interesting about this 1,250 square foot condo is that its annual upkeep of $8,263 (condo fees + taxes) vastly outweighs the purchase carrying cost since a 50k house can currently be financed for less than $300 per month, or $3,600 per year.

In other words, owning this condo will cost almost $12,000 per year - EVERY YEAR - and that's fantastically presuming fees and taxes NEVER RISE. Why would anyone commit to those payments when they can seasonally rent for so much cheaper? Remember the place I leased in January was bigger, nicer, in a far superior location, and only cost $2,200 for the entire month.

Conclusion - the real, rational, market value of the that condo could soon be $0, or less.

My "Moron Policy"

Single digits here we come! Atta boy, Ken Lewis!

Here's a very long article on Bank of America, with an update on its Merrill Lynch acquisition, which weirdly also offers up an extended biographical sketch of my whipping boy Ken Lewis. It reads, ironically or perhaps presciently, like an epitaph. The article is average at best so you lazy arses don't have to read it!

I just pulled one quote for its comic value:

The deepening U.S. recession is squeezing off Bank of America’s lifeblood: consumer spending. American households probably lost a staggering $7 trillion in net worth in 2008, according to an analysis of Federal Reserve, housing and stock market data by Thomas Lawler, former senior vice president of risk policy at Fannie Mae.

Did y'all get that?

*Risk manager* had to be one of the most ridiculous, most phony job titles in corporate America today.

But how about those crumbs at Fannie Mae!?!?!?

They don't even pretend to *manage* risk.....they merely have a *policy* toward it.

And that *policy* would be.....to ignore it, then to hide it, when caught redefine it, and ultimately to dump it all onto taxpayers!

Marginalizing David Malpass

David Malpass is a perma-bull Moron who writes for Forbes. Here's an excerpt from his November 10th, 2008 column:

--Now that the Treasury controls Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ), it could push mortgage rates down sharply to support home purchases. Instead, mortgage rates have been going up.

What kind of loaded gibberish is that?

Yeah, the Treasury COULD push mortgage rates down. To do that it would have to bid up mortgage backed debt across the board. Everyone would dump their bonds on the Feds and the private mortgage market would cease to exist. Taxpayers would take a (bigger) bath.

Offering up what someone or something COULD DO and then leaping to another *point* is to say nothing at all.

Sure, I could've punched the last guy who walked past me in the face, but I DIDN'T. Good luck extrapolating anything meaningful from that.

One has to presume that Malpass is advocating for the Feds to buy up a ton (more) of mortgages and force rates down.

So he's, most cowardly, advocating that Big Government SHOULD embark (further) down this disastrous path.

Now consider that the self-rebutting dope titled his piece "Containing Washington's Power Bulge"!!!

[Online it's titled "Curbing Washington's Growing Power".]

Allow me a minute a day an eternity to ponder how nationalizing the home lending market will retard the statists in Washington.

Malpass' drivel certainly ain't *analysis*....at best it's a wounded perma-bull's gripe.

The preppies at Forbes (and the National Review) repulse at the tack of people like Ann Coulter and scaty-mouthed bloggers like myself. Offend propriety and their panties all bunch up....

But they offend the sh*t out of Lady Reason - and have been doing so for years.

Facts On Fannie Mae = Homophobia

From the Boston Globe:

Frank is new target of McCain on the trail,

FAYETTEVILLE, N.C. - Much of John McCain's stump speech is devoted to warning voters about the fiscal dangers that would accompany a Barack Obama presidency, but lately McCain has been picking on a lower-profile bogeyman to make his case.

"And he can't do that without raising our taxes or digging us further into debt like Congressman Barney Frank promised to do," McCain said last night, causing a part-time rodeo arena to rumble with boos at the mention of the Massachusetts Democrat.

Frank has found a comfortable home in McCain's speeches in the campaign's closing days, as one of three congressional Democrats McCain picks out by name as he warns his audience to resist Democratic control of both the executive and legislative branches. McCain mentions Frank along with House Speaker Nancy Pelosi and Senate majority leader Harry Reid.

Frank yesterday dismissed McCain's words as "an appeal to prejudice" that he said reminded him of past Republican efforts to raise voter concerns about the prospect of congressmen Charles Rangel and John Conyers, who are black, becoming committee chairs.

"I'm flattered by this," said Frank, who is gay. "But I don't think I'm the single most important member of the House after Nancy Pelosi. There are also a lot of straight white men who are committee chairmen."



Missed that?

Barney Frank is trying to deflect political criticism by branding it HOMOPHOBIC.

Such is the anti-intellectual political climate we live in. Note the diction of *journalist* Sasha Issenberg:

Frank is a *target".

McCain has been picking on a *lower-profile bogeyman*.

A bogeyman? Gee, I wonder whom Sasha is going to vote for?

Here's a homophobic AND racist clip of Congressional hearings on Fannie Mae from 2004.

Bogeyman Barney Frank will appear at the 4:50 and 6:03 marks.



Barney Frank - I don't see anything in this report that raises safety and soundness problems....



And there it is, dropping straight to zero.

Ironically, there's actually homophilia involved in the Fannie Mae fiasco.

Media Mum on Barney Frank's Fannie Mae Love Connection



From that link:

Frank has argued that family life "should be fair game for campaign discussion," wrote the Associated Press on Sept. 2. The comment was in reference to GOP vice presidential nominee Sarah Palin and her pregnant daughter. "They’re the ones that made an issue of her family," the Massachusetts Democrat said to the AP.

Make sure you click on that link. It's a wellspring of documented Barney Frank shenanigans.

Did you know that Fannie Mae wouldn't list one of its borrowers as delinquent until it was TWO YEARS BEHIND IN PAYMENTS?!?!?!