the desperation to get in at a lower price by the banks is to obvious...bob corker the sock monkey for the banks and real estate crowd who want FNMA and FMCC all for themselves orchestrated this selloff today...criminal
people like explosions and Americas funniest home videos...the media treats the american people like shrums...it seeds them #$%$ and keeps them in the dark
If Fannie and Freddie are taken away, their business goes to big banks. Nic Retsinas argues that a smaller government footprint and more banks handling mortgages would provide “more market discipline”: investors would punish the worst banks, and the good banks would rise to the top.
There are two main drawbacks to that.
The biggest is that banks haven't been good corporate citizens when presented with large amounts of mortgages. Private banks have only issued the majority of mortgage-backed securities once in history: from 2002 to 2006, the housing boom that became the precursor to the greatest financial collapse since the Depression. Banks bought millions of toxic mortgages from fly-by-night brokers, misled investors about the quality of those mortgages in order to sell them, and made risky derivative bets on the side to magnify the risk. They have paid tens of billions in fines for this misconduct, with the recent JPMorgan Chase settlement being one example.
“Nothing has been fixed in the securitization arena, so expect the same reprobates that helped grow the market the last time to help again,” says Janet Takavoli of Takavoli Structured Finance. “How did that work out?”
The other drawback is that banks and other private firms would be in way over their heads if they tried to take over the mortgage market. In testimony before Congress, Georgetown Law Professor Adam Levitin estimated that private investors would only fill 1/8th of the housing market’s annual capital needs. This lack of capital would have a damaging impact on the market, as prospective homebuyers would have difficulty getting mortgages.
see all the money to be made and poor people to be punished by getting rid of FNMA ...this is a win win for angry old white men worried about "jungle Drums" as one of corkers campaign ads proclaimed...he is a sycophant pushed forwar by thoughts of personal gain...he would be an embarrassment to the state of Tennessee but lets face Tennessee has lots to be embarrassed about.
For example, the bipartisan reform bill from Sens. Bob Corker (R-TN) and Mark Warner (D-VA) would have banks take some losses on mortgages that go bad – up to 10%. From there, the government insurance would kick in.
If it sounds like a sweet deal for taxpayers, it's not. The banks always have an out. That 10% could be defined in any way the banks want – banks are far more clever about money than the government - and they could create hedges against that risk could practically eliminate the chance they would actually have to absorb losses. So even the 10% of losses that banks promise to take could end up being nothing at all.
When banks find a way to back out of even a small loss – even that teensy 10% - it becomes a dangerous world. They would understand that the mortgages they buy would be fully backed by the government. That, in turn, would create moral hazard, or the fear that banks would believe they have a government-backed subsidy– the promise of a bailout - to take stupid risks.
“Banks would have a direct incentive to stick the government with bad debts which will be extremely difficult to monitor,” says economist Dean Baker.
What is often omitted from all the grand plans wending their way through the legislative alleyways, for instance, is who would benefit if Fannie and Freddie were destroyed. The answer: all their financial power in mortgages, and their government backing, would shift to the nation's big banks. The last time that happened, it led to the financial crisis and the Great Recession.
“The main actors in this debate are financed by the banks and real estate lobby,” says economist Dean Baker. “As a result, we see a solution that is very conducive to their interests.”
Corker is a real estate Barron who made money selling properties that he had inside dealings on while in public office...he is a criminal a #$%$ a bigot and a liar ...when election season comes around DONATE small amounts of money to his opponent
corker hates poor people and minorities and the middle class who these entities help by creating complex financial instruments resulting in the financing of 30 year mortgages. Corker is a real estate wolf and cares nothing for the people