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Fannie Mae, Freddie Mac and some good old government intervention

TCBTCB Registered User regular
edited September 2008 in Debate and/or Discourse
The federal government took control of Fannie Mae and Freddie Mac today in a bid to keep the two mortgage giants from failing, catastrophes that would have made home loans harder to get and taken the nation's housing collapse to a new level of crisis.

The rest of the story.

Not entirely sure how the government is going to solve these problems but go ahead and try. Looks like I won't be getting that house in the near future. I really think that we're going in over out heads. Spending money we don't really have. Plus, having the government have to take over the biggest mortgage company in the country, that isn't exactly going to look well to the rest of the world. I think this could very well be something that's going to cause problems.

TCB on
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    SheepSheep Registered User, __BANNED USERS regular
    edited September 2008
    Good old fashioned socialism.

    Sheep on
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    werehippywerehippy Registered User regular
    edited September 2008
    For once they did it fairly right. There's nothing at all wrong with the fundamentals of the business, and the government will provide the capital to keep what's currently out there from imploding and to continue providing the necessary service it was design to provide to people who need help. Once things settle down and the industry is out of danger (and hopefully better regulated so this doesn't happen again) fannie and freddie can be reprivatized, likely recovering everything the taxpayer will have to invest now anyway.

    All government control will do is keep the clearly incompetent mortgage industry from screwing the economy by overreacting to their own idiotic embrace of clearly unsupportable exotic loans. And for once we've decided to skip the whole "privatize gains and socialize loses" and instead let the people who screwed the pouch suffer while the rest of the population isn't punished.

    werehippy on
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    RentRent I'm always right Fuckin' deal with itRegistered User regular
    edited September 2008
    Well well well. So capitalism has become no-risk as long as you're a significant market leader.
    What. The. Fuck.

    Rent on
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    RentRent I'm always right Fuckin' deal with itRegistered User regular
    edited September 2008
    werehippy wrote: »
    For once they did it fairly right. There's nothing at all wrong with the fundamentals of the business, and the government will provide the capital to keep what's currently out there from imploding and to continue providing the necessary service it was design to provide to people who need help.

    All government control will do is keep the clearly incompetent mortgage industry from screwing the economy by overreacting to their own idiotic embrace of clearly unsupportable exotic loans. And for once we've decided to skip the whole "privatize gains and socialize loses" and instead let the people who screwed the pouch suffer while the rest of the population isn't punished.
    If they wanted to do it right they would've given just enough money to Freddie Mae/Fannie Mac to transfer all of their loans to another mortgage house(s). As it stands no this is socialism and is against all tenets of capitalism and I completely and totally disapprove of this.

    Rent on
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    werehippywerehippy Registered User regular
    edited September 2008
    Rent wrote: »
    Well well well. So capitalism has become no-risk as long as you're a significant market leader.
    What. The. Fuck.

    Not really.
    Sunday's developments transformed the too-big-to-fail doctrine from a theory to a reality. Nonetheless, it's not a full bailout. Top Fannie Mae and Freddie Mac executives are being replaced and the companies will be put under the supervision of conservators. They will be forced to stop lobbying efforts.

    Dividends to shareholders are suspended. And if losses continue, common shareholders could find their stock worthless. However, holders of Fannie Mae and Freddie Mac mortgage securities and other debt will be paid in full.

    The executives are out, and the investors are almost sure to find themselves punished pretty brutally financially. The mortgages and related debt are the only thing the government has guaranteed.

    edit: And socialism isn't a dirty word, especially when it's purely as a lender-of-last-resort in a extremely competitive market. If the government is going the guarantee that service, there's no reason we should be paying someone else to do it poorly and at a profit.

    werehippy on
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    Wonder_HippieWonder_Hippie __BANNED USERS regular
    edited September 2008
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    Wonder_Hippie on
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    OrganichuOrganichu poops peesRegistered User, Moderator mod
    edited September 2008
    Rent wrote: »
    Well well well. So capitalism has become no-risk as long as you're a significant market leader.
    What. The. Fuck.

    It's not no risk. These people aren't being 'bailed out'. They lose everything.

    Organichu on
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    DetharinDetharin Registered User regular
    edited September 2008
    In Soviet Russia, this shit happens.

    Detharin on
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    Dunadan019Dunadan019 Registered User regular
    edited September 2008
    from what i understand its business as usual for both freddie and fannie. the government intervention was to garuntee that any losses due to unpaid mortgages would be covered and that people could actually get a mortgage again. if you havent looked for a house recently its pretty hard to get a mortgage atm even if you have good credit and a stable job just because banks are unwilling to take the risk in an unstable market.

    my only question is does this mean that you can no longer walk away from a freddie or fannie mortgage? i know that student loans are nondefaultable since they are federally funded but it kind of sounds like the government is just saying "a loss is a loss" which is odd for them to do without trying to recoup.

    Dunadan019 on
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    JebuJebu Registered User regular
    edited September 2008
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    Seriously. I don't understand how anyone can look at the housing crisis and not see how stupid excessive deregulation is.

    Jebu on
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    SheepSheep Registered User, __BANNED USERS regular
    edited September 2008
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    My statement wasn't an opinion on the situation.

    There was a brief discussion of socialism in another thread where I explained that socialism is fairly well ingrained in American culture, regardless of how much bitching the Right do about it.

    To paraphrase myself, "Right wing love socialism when it comes from tax breaks and incentives. They hate it when it comes to giving up corporations or helping someone."

    Like the pundits on TV and Blogs who decry that Obama will turn the US into a socialist state.

    We've been well entrenched in socialism for quite some time.

    The benefits are just pretty well hidden, and the consumer/little man largely gets them in the form of cheaper goods, while corporations get to pocket all that extra cash instead of giving it back.

    Sheep on
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    templewulftemplewulf The Team Chump USARegistered User regular
    edited September 2008
    Jebu wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    Seriously. I don't understand how anyone can look at the housing crisis and not see how stupid excessive deregulation is.

    Still, I disapprove of this as well. I understand it's necessary to prop up the economy and keep construction-related businesses from collapsing, but it's pretty repulsive from a "privatize profits, socialize losses" point of view.

    Speaking of which, can anyone summarize the particulars of how executives and investors are being punished? I want to know if I can stop being repulsed by this.

    templewulf on
    Twitch.tv/FiercePunchStudios | PSN | Steam | Discord | SFV CFN: templewulf
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    saggiosaggio Registered User regular
    edited September 2008
    Sheep wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    My statement wasn't an opinion on the situation.

    There was a brief discussion of socialism in another thread where I explained that socialism is fairly well ingrained in American culture, regardless of how much bitching the Right do about it.

    To paraphrase myself, "Right wing love socialism when it comes from tax breaks and incentives. They hate it when it comes to giving up corporations or helping someone."

    Like the pundits on TV and Blogs who decry that Obama will turn the US into a socialist state.

    We've been well entrenched in socialism for quite some time.

    The benefits are just pretty well hidden, and the consumer/little man largely gets them in the form of cheaper goods, while corporations get to pocket all that extra cash instead of giving it back.

    That is a pack of lies. I've lived under an out-and-out socialist government. Government ownership or control of certain industries or services is not socialism.

    saggio on
    3DS: 0232-9436-6893
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    KatholicKatholic Registered User regular
    edited September 2008
    saggio wrote: »
    Sheep wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    My statement wasn't an opinion on the situation.

    There was a brief discussion of socialism in another thread where I explained that socialism is fairly well ingrained in American culture, regardless of how much bitching the Right do about it.

    To paraphrase myself, "Right wing love socialism when it comes from tax breaks and incentives. They hate it when it comes to giving up corporations or helping someone."

    Like the pundits on TV and Blogs who decry that Obama will turn the US into a socialist state.

    We've been well entrenched in socialism for quite some time.

    The benefits are just pretty well hidden, and the consumer/little man largely gets them in the form of cheaper goods, while corporations get to pocket all that extra cash instead of giving it back.

    That is a pack of lies. I've lived under an out-and-out socialist government. Government ownership or control of certain industries or services is not socialism.

    Communism, w/e.

    Katholic on
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    Dunadan019Dunadan019 Registered User regular
    edited September 2008
    Katholic wrote: »
    saggio wrote: »
    Sheep wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    My statement wasn't an opinion on the situation.

    There was a brief discussion of socialism in another thread where I explained that socialism is fairly well ingrained in American culture, regardless of how much bitching the Right do about it.

    To paraphrase myself, "Right wing love socialism when it comes from tax breaks and incentives. They hate it when it comes to giving up corporations or helping someone."

    Like the pundits on TV and Blogs who decry that Obama will turn the US into a socialist state.

    We've been well entrenched in socialism for quite some time.

    The benefits are just pretty well hidden, and the consumer/little man largely gets them in the form of cheaper goods, while corporations get to pocket all that extra cash instead of giving it back.

    That is a pack of lies. I've lived under an out-and-out socialist government. Government ownership or control of certain industries or services is not socialism.

    Communism, w/e.

    still no

    Dunadan019 on
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    mcdermottmcdermott Registered User regular
    edited September 2008
    Organichu wrote: »
    Rent wrote: »
    Well well well. So capitalism has become no-risk as long as you're a significant market leader.
    What. The. Fuck.

    It's not no risk. These people aren't being 'bailed out'. They lose everything.

    It's not "no risk," but the risk is fairly limited. Executives at these companies still get to keep all their earning from this time period (though obviously shares of the company, which are often part of benefit packages, will be worth less). None of them will be living in vans down by the river, put it that way. Investors will lose no more than they invested, which any halfway intelligent investor is diversified enough that this loss, while significant, won't be catastrophic. It's not like stocks can go negative.

    Obviously this is just the nature of corporations in general, so I guess I'm just bitching for bitching's sake. It's not going to change, and is in many ways necessary. It's just that all too often when things go sideways corporations act as the invisible man everybody can point at and go, "Him! It was his fault! He's liable!"

    mcdermott on
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    KatholicKatholic Registered User regular
    edited September 2008
    Dunadan019 wrote: »
    Katholic wrote: »
    saggio wrote: »
    Sheep wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    My statement wasn't an opinion on the situation.

    There was a brief discussion of socialism in another thread where I explained that socialism is fairly well ingrained in American culture, regardless of how much bitching the Right do about it.

    To paraphrase myself, "Right wing love socialism when it comes from tax breaks and incentives. They hate it when it comes to giving up corporations or helping someone."

    Like the pundits on TV and Blogs who decry that Obama will turn the US into a socialist state.

    We've been well entrenched in socialism for quite some time.

    The benefits are just pretty well hidden, and the consumer/little man largely gets them in the form of cheaper goods, while corporations get to pocket all that extra cash instead of giving it back.

    That is a pack of lies. I've lived under an out-and-out socialist government. Government ownership or control of certain industries or services is not socialism.

    Communism, w/e.

    still no

    What else would you call collective ownership of a business through the government?

    Katholic on
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    DaedalusDaedalus Registered User regular
    edited September 2008
    templewulf wrote: »
    Speaking of which, can anyone summarize the particulars of how executives and investors are being punished? I want to know if I can stop being repulsed by this.

    According to the article, a ton of executives are getting fired and the stock price will probably go through the floor.

    Daedalus on
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    AngelHedgieAngelHedgie Registered User regular
    edited September 2008
    mcdermott wrote: »
    Organichu wrote: »
    Rent wrote: »
    Well well well. So capitalism has become no-risk as long as you're a significant market leader.
    What. The. Fuck.

    It's not no risk. These people aren't being 'bailed out'. They lose everything.

    It's not "no risk," but the risk is fairly limited. Executives at these companies still get to keep all their earning from this time period (though obviously shares of the company, which are often part of benefit packages, will be worth less). None of them will be living in vans down by the river, put it that way. Investors will lose no more than they invested, which any halfway intelligent investor is diversified enough that this loss, while significant, won't be catastrophic. It's not like stocks can go negative.

    Obviously this is just the nature of corporations in general, so I guess I'm just bitching for bitching's sake. It's not going to change, and is in many ways necessary. It's just that all too often when things go sideways corporations act as the invisible man everybody can point at and go, "Him! It was his fault! He's liable!"

    Gotta love the corporate veil.

    AngelHedgie on
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    templewulftemplewulf The Team Chump USARegistered User regular
    edited September 2008
    Daedalus wrote: »
    templewulf wrote: »
    Speaking of which, can anyone summarize the particulars of how executives and investors are being punished? I want to know if I can stop being repulsed by this.

    According to the article, a ton of executives are getting fired and the stock price will probably go through the floor.
    Thanks.

    I'm still not sure about this, though. Is that a sufficient punishment for practically tanking the housing industry? A friend of mine is a drawaller who normally commands $40+ / hr, but lately he's having trouble making just enough to pay rent.

    To put it another way, what would happen to them with no government bailout? Putting aside the implications for the rest of the economy, what would executives and investors be dealing with if they had to bear the full burden themselves? Is this bailout in any way beneficial for the jackasses who got us into this mess?

    templewulf on
    Twitch.tv/FiercePunchStudios | PSN | Steam | Discord | SFV CFN: templewulf
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    EndEnd Registered User regular
    edited September 2008
    Rent wrote: »
    Well well well. So capitalism has become no-risk as long as you're a significant market leader.
    What. The. Fuck.

    Before, they were ACTING like it was no risk, even though it wasn't.

    Edit: Although, I should note, they were using tactics to "reduce" risk, by taking into account what percent of loans they expected would fail. More failed.

    End on
    I wish that someway, somehow, that I could save every one of us
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    acronomiconacronomicon Registered User regular
    edited September 2008
    templewulf wrote: »
    Daedalus wrote: »
    templewulf wrote: »
    Speaking of which, can anyone summarize the particulars of how executives and investors are being punished? I want to know if I can stop being repulsed by this.

    According to the article, a ton of executives are getting fired and the stock price will probably go through the floor.
    Thanks.

    I'm still not sure about this, though. Is that a sufficient punishment for practically tanking the housing industry? A friend of mine is a drawaller who normally commands $40+ / hr, but lately he's having trouble making just enough to pay rent.

    To put it another way, what would happen to them with no government bailout? Putting aside the implications for the rest of the economy, what would executives and investors be dealing with if they had to bear the full burden themselves? Is this bailout in any way beneficial for the jackasses who got us into this mess?

    Putting aside the implications for the rest of the economy...I don't know. My cynical side believes that all the executives have golden parachutes with platinum ripcords, and would've just gotten richer as the corporation crumbled. Individual investors would lose their shirt, hurting the economy.

    acronomicon on
    32340.jpg
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    MrMonroeMrMonroe passed out on the floor nowRegistered User regular
    edited September 2008
    This whole situation really aggravates me. There is no indication that F&F were about to collapse, there were billions in guarantees for federal funds that F&F hadn't had to ask for, and they go in and tell them to give up peacefully or they will be taken over in a hostile manner.

    The Feds assume trillions more in risk, and to cap it off, they do the whole thing just by calling in the top execs and telling them to hand over $2b in stock for no payment. That's some good old-fashioned nationalization of industry. We have started wars with other countries and deposed regimes in covert operations for doing exactly what we are doing now.

    MrMonroe on
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    MrMonroeMrMonroe passed out on the floor nowRegistered User regular
    edited September 2008
    templewulf wrote: »
    Daedalus wrote: »
    templewulf wrote: »
    Speaking of which, can anyone summarize the particulars of how executives and investors are being punished? I want to know if I can stop being repulsed by this.

    According to the article, a ton of executives are getting fired and the stock price will probably go through the floor.
    Thanks.

    I'm still not sure about this, though. Is that a sufficient punishment for practically tanking the housing industry? A friend of mine is a drawaller who normally commands $40+ / hr, but lately he's having trouble making just enough to pay rent.

    To put it another way, what would happen to them with no government bailout? Putting aside the implications for the rest of the economy, what would executives and investors be dealing with if they had to bear the full burden themselves? Is this bailout in any way beneficial for the jackasses who got us into this mess?

    F&F insure prime mortgages much more than subprime. If you're looking for someone who needs to be punished for the housing crisis, you're looking in the wrong place.

    MrMonroe on
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    YarYar Registered User regular
    edited September 2008
    Jebu wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    Seriously. I don't understand how anyone can look at the housing crisis and not see how stupid excessive deregulation is.
    There are arguments on both sides of this. For example CRA, an act of legislation that specifically required lenders to lend to less and less capable borrowers using more and more creative loan structures. Lenders were audited on this regularly and could be shut down if they weren't working to lend to more poor people with crazier loans. Or, for example, Federal Reserve and tax policies that fueled what was already recognized as an unrealistic housing bubble.

    One can certainly make a case as to how much those things caused this, just as I could make a case as to just how much deregulation in GLBA caused this.

    The fact is that the real reason for this was that a housing/mortgage boom was fueling itself through new technology and business structures that got out of control before anyone knew what regulations ought to apply to them. Lenders were lending to people who "couldn't pay," except those borrowers were using those loans to buy houses that were skyrocketing in value, so it ended up that they could pay once they realized their new real estate wealth. Mortgage clearing houses were buying up all these mortgages and packaging them like stocks and selling off pieces of them, and analysts were rating those securities as "stong buys." Investors were buying them up, which firehosed more capital into mortgage investors, which, in combination with the spread of PC and Internet computing technology, made it even easier for lenders to give out crazier and crazier loans to worse and worse lenders, who then could go out and buy even more expensive homes, driving the housing market up more and more, and it all repeats. Eventually the difference between paper and reality stretched so far that it all fell apart. Blaming "deregulation" for all that doesn't quite explain it.

    As for socialism or a bailout, these were always federally-chartered, quasi-government entities to begin with, and like everyone said, executives and shareholders are getting the screw, so just who do you think is getting bailed out here?

    Yar on
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    SavantSavant Simply Barbaric Registered User regular
    edited September 2008
    I haven't been paying as much attention to the financial crisis now as I was earlier, but it seems like the setup of Fannie Mae and Freddie Mac as kinda-sorta private and kinda-sorta government backed leading up to this mess was not the best. If the fed is going to be in position to keep these guys afloat when things turn south then they really need to have enough oversight and a big enough stick to beat them over the head in order to reduce the risk the present to the taxpayers. You get insane risk taking and gigantic messes like the one we're in now if there's a belief that the system is set up to privatize the gains but socialize the losses.

    That being said, this looks like it isn't going to be a get-out-jail-free card with the government stepping in here. They're chopping off the dividends on both the common and preferred stock, and they are probably going to tank if they haven't already this morning. I know from firsthand experience that there are going to be a lot of investors that are going to be none too thrilled about this, and there are going to be more than a few banks that take a big kick in the pants as a result.

    Savant on
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    TCBTCB Registered User regular
    edited September 2008
    What do yall think this means for other government funded things? I mean, the hundreds of billions of dollars that we are pumping into Fannie Mae and Freddie Mac have to come from somewhere. I guess I'm trying to get opinions on how this is going to affect the war or education. Stuff like that.

    TCB on
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    an_altan_alt Registered User regular
    edited September 2008
    I pretty much agree with Yar here - there's a lot of blame to go around for the sub-prime fiasco and anyone looking to pin it on a single cause is either really misinformed or has an axe to grind.

    As much as companies who do stupid things deserve to go bankrupt, this really isn't a simple situation. As Savant said, Fannie and Freddie aren't *really* private companies, plus the ripple effect of them closing up shop would hurt nearly everyone, libertarian and communist alike. Probably the biggest factor is that the government won't just be writing a huge check from the taxpayers, but rather come out somewhere near zero considering the huge dollar amounts involved. All in all, the loan guarantees and take-over really do seem like sound policy.

    an_alt on
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    SavantSavant Simply Barbaric Registered User regular
    edited September 2008
    Yeah, their stock completely tanked today. They dropped about 80% in value pretty much right away, including the preferred shares. The investors got wiped out on this one.

    Savant on
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    SheepSheep Registered User, __BANNED USERS regular
    edited September 2008
    saggio wrote: »
    Sheep wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    My statement wasn't an opinion on the situation.

    There was a brief discussion of socialism in another thread where I explained that socialism is fairly well ingrained in American culture, regardless of how much bitching the Right do about it.

    To paraphrase myself, "Right wing love socialism when it comes from tax breaks and incentives. They hate it when it comes to giving up corporations or helping someone."

    Like the pundits on TV and Blogs who decry that Obama will turn the US into a socialist state.

    We've been well entrenched in socialism for quite some time.

    The benefits are just pretty well hidden, and the consumer/little man largely gets them in the form of cheaper goods, while corporations get to pocket all that extra cash instead of giving it back.

    That is a pack of lies. I've lived under an out-and-out socialist government. Government ownership or control of certain industries or services is not socialism.

    Uh, actually, Government owned or controlled industries are socialism. Out government now controls the mortage industry.

    Socialism.

    Sheep on
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    Dunadan019Dunadan019 Registered User regular
    edited September 2008
    Sheep wrote: »
    saggio wrote: »
    Sheep wrote: »
    Sheep wrote: »
    Good old fashioned socialism.

    We are where we are because of deregulation. People don't get to bitch about socialism and big government when we have to do this because of stupid fucking conservative fundamentals.

    My statement wasn't an opinion on the situation.

    There was a brief discussion of socialism in another thread where I explained that socialism is fairly well ingrained in American culture, regardless of how much bitching the Right do about it.

    To paraphrase myself, "Right wing love socialism when it comes from tax breaks and incentives. They hate it when it comes to giving up corporations or helping someone."

    Like the pundits on TV and Blogs who decry that Obama will turn the US into a socialist state.

    We've been well entrenched in socialism for quite some time.

    The benefits are just pretty well hidden, and the consumer/little man largely gets them in the form of cheaper goods, while corporations get to pocket all that extra cash instead of giving it back.

    That is a pack of lies. I've lived under an out-and-out socialist government. Government ownership or control of certain industries or services is not socialism.

    Uh, actually, Government owned or controlled industries are socialism. Out government now controls the mortage industry.

    Socialism.

    control is the wrong word, our government insures the mortgage industry against losses. so its kinda like our government banks the mortgage industry.

    unless it turns out they actually tell fm&fm what to do, i wouldnt call it control.

    Dunadan019 on
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    SheepSheep Registered User, __BANNED USERS regular
    edited September 2008
    They pretty much run the show now.

    Sheep on
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    JebusUDJebusUD Adventure! Candy IslandRegistered User regular
    edited September 2008
    Savant wrote: »
    Yeah, their stock completely tanked today. They dropped about 80% in value pretty much right away, including the preferred shares. The investors got wiped out on this one.

    Good. They were assholes who blindly clammored for more profit. The executives obliged by pushing less regulation and totally irresponsible loans.

    It's like building a gold mine six inches under your headquarters. Except they screwed everyone else along with themselves.

    JebusUD on
    and I wonder about my neighbors even though I don't have them
    but they're listening to every word I say
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    bowenbowen How you doin'? Registered User regular
    edited September 2008
    I'd be for some socialism if they'd subsidized private education loans too. I could really dig a 5% interest rate on my loans instead of 15%.

    bowen on
    not a doctor, not a lawyer, examples I use may not be fully researched so don't take out of context plz, don't @ me
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    YarYar Registered User regular
    edited September 2008
    JebusUD wrote: »
    Savant wrote: »
    Yeah, their stock completely tanked today. They dropped about 80% in value pretty much right away, including the preferred shares. The investors got wiped out on this one.

    Good. They were assholes who blindly clammored for more profit. The executives obliged by pushing less regulation and totally irresponsible loans.

    It's like building a gold mine six inches under your headquarters. Except they screwed everyone else along with themselves.
    The way I read it, FNMA and FRMC were pushed into it because of competitive pressures.

    Yar on
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    JebusUDJebusUD Adventure! Candy IslandRegistered User regular
    edited September 2008
    Rent wrote: »
    If they wanted to do it right they would've given just enough money to Freddie Mae/Fannie Mac to transfer all of their loans to another mortgage house(s). As it stands no this is socialism and is against all tenets of capitalism and I completely and totally disapprove of this.

    Except there really isn't anyone to transfer to. They were really the one and only. This is a product of deregulation. Hell they were full blown government agencys until the sixties. Then they got privitized and the investors pushed for more profits. They lobbied hard and the government looked the other way. If anything this is totally free market capitalism screwing us over.

    If this was socialism the company never would have been privitzed and this never would have happened.

    Now you could argue that having it private spurred more growth and allowed more people to buy houses. But a treasury department study says that is bullcrap. Very little savings were passed on to consumers but instead were passed on to executives and shareholders.

    JebusUD on
    and I wonder about my neighbors even though I don't have them
    but they're listening to every word I say
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    JebusUDJebusUD Adventure! Candy IslandRegistered User regular
    edited September 2008
    Yar wrote: »
    JebusUD wrote: »
    Savant wrote: »
    Yeah, their stock completely tanked today. They dropped about 80% in value pretty much right away, including the preferred shares. The investors got wiped out on this one.

    Good. They were assholes who blindly clammored for more profit. The executives obliged by pushing less regulation and totally irresponsible loans.

    It's like building a gold mine six inches under your headquarters. Except they screwed everyone else along with themselves.
    The way I read it, FNMA and FRMC were pushed into it because of competitive pressures.

    Im not really sure, but I heard it went out with some privitization frenzy in the late 60s. Then FRMC was made to compete with FRMA.

    According to here Johnson sold it to try and bail us out of some vietnam war debt to get a paper victory so he could look good

    edit: what a dick....

    JebusUD on
    and I wonder about my neighbors even though I don't have them
    but they're listening to every word I say
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    YarYar Registered User regular
    edited September 2008
    Well I just meant that they started buying the subprimes because everyone else was and they were losing market share and all the analysts were saying that subprimes were a good investment.

    Yar on
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    MrMonroeMrMonroe passed out on the floor nowRegistered User regular
    edited September 2008
    JebusUD wrote: »
    Rent wrote: »
    If they wanted to do it right they would've given just enough money to Freddie Mae/Fannie Mac to transfer all of their loans to another mortgage house(s). As it stands no this is socialism and is against all tenets of capitalism and I completely and totally disapprove of this.

    Except there really isn't anyone to transfer to. They were really the one and only. This is a product of deregulation. Hell they were full blown government agencys until the sixties. Then they got privitized and the investors pushed for more profits. They lobbied hard and the government looked the other way. If anything this is totally free market capitalism screwing us over.

    If this was socialism the company never would have been privitzed and this never would have happened.

    Now you could argue that having it private spurred more growth and allowed more people to buy houses. But a treasury department study says that is bullcrap. Very little savings were passed on to consumers but instead were passed on to executives and shareholders.

    You can't really say this for sure. There were people in government pushing these loans (heavily due to pressure from lobbyists to be sure) who would have tried to get F&F to securitize these loans.

    MrMonroe on
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    MatrijsMatrijs Registered User regular
    edited September 2008
    Savant wrote: »
    Yeah, their stock completely tanked today. They dropped about 80% in value pretty much right away, including the preferred shares. The investors got wiped out on this one.

    I'm glad that this part of it happened. I was concerned that, due to the federal government's willingness to guarantee their risk, these investors wouldn't lose more than a minority of the value of the stock they own. Hopefully, the federal government allowing losses of this size will convince investors that these guarantees don't incentivize risky behavior.

    Matrijs on
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