Headlines...

NEW -> Contingent Buyer Assistance Program
Holy moly awgee.

But did saving Bear save the financial world?

Should there be no such thing as credit derivatives? Should everybody simply accept their share of

risks?
 
lawyerliz said:
Holy moly awgee.

But did saving Bear save the financial world?[?quote]

I do not think it saved anything, but rather just put off the inevitable. The counterparty risk that Bear Stearns is liable for still exists. It did not dissappear. It is now either JP Morgan's or the Federal Reserve's liability. My guess is that most if not all of the downside risk will be born by the taxpayer.

Should there be no such thing as credit derivatives? Should everybody simply accept their share of

risks?
Click to expand...

I do not think CDSs should be outlawed or even regulated. But, there would be no risk to the public from them without a central bank and fractional reserve banking system with fiat currency. When you ask, should everybody accept their share of the risk, legally the only party to the risk is those who hold either side of the contract. It is an insurance contract. You and I are not responsible for any share of the risk, yet you and I will probably be the ones to pay.
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I read somewhere--a reference on Calculated Risk perhaps--that 63% of

the RE mkt in San Diego was either REOs or short sales.

Since we are going to pay for the Great Derivatives Debacle, and since

there is that tendency to race to the bottom described in terrifying detail

in your reference, and since we aren't going to go to anything but a fiat

currency for the foreseeable future, regulation is necessary.

Over at C Risk, there was a lively, snarky discussion about how the only

way to prevent walk-aways was serfdon--tie those non paying boogers

to the property!! While that is not going to happen for the near future, there

is another form of serfdom going on, to wit: student loans.

My developer buddy has 2 kids, one in med school, one finished and doing

his internship. the one in internship has $300,000 is school loans. I don't

care if you are a well paid dr, this is absolutely crushing. And suppose

in the Greater Depression, drs, like everybody else are not being paid so

much. You can't get out of it by bankruptcy. Are these students going

to end up in a socialized medicine thing forced to work, like bonded servants

of yore, for many years for whoever they are assigned to?
 
The debate over what caused the mortgage mess and how best to fix it is now taking a sharp turn, as new problems surrounding liar's loans and payment-option mortgages reveal the pervasive fraud, lying and deceit that permeated the market at its height.

As loans made to borrowers with decent credit begin to fail at a surprisingly rapid rate, it's becoming clear that widespread fraud helped support the entire mortgage system -- from borrowers who lied on their loans, to brokers who encouraged it, to lenders who misled some low income borrowers, to the many lenders, investors and ratings agencies that conveniently and deliberately looked the other way as profits rolled in.

Despite its widespread role, fraud hasn't yet been at the forefront of proposed rescue plans, which center on refinancing people out of loans now resetting to higher rates. That may begin to change as the mortgage market continues a meltdown that seems to have no end. As fraud becomes a focus, the question of who did most of the lying and cheating will be crucial in deciding who deserves help in any housing rescue plan.

And the search for causes of the crisis may challenge long-held but erroneous beliefs about what homeowners did and why. Many people think borrowers got in trouble by buying bigger houses than they could afford, but the numbers show the majority were refinancing their homes.....
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How Fraud Fueled the Mortgage Crisis: Brokers Pushed Borrowers to Lie, Lenders Misled and Ratings Agencies Looked the Other Way
 
Government Intensifies Mortgage Investigation

By LYNNLEY BROWNING

Published: May 5, 2008

Federal agencies are intensifying a criminal investigation of the mortgage industry and focusing on whether some lenders turned a blind eye to inflated income figures provided by borrowers.

The Federal Bureau of Investigation and the criminal division of the Internal Revenue Service have formed a task force to examine mortgages that were made with little or no proof of the earnings or assets of borrowers, a government official who had been briefed on the matter said Sunday.

The group also includes federal prosecutors in New York, Los Angeles, Philadelphia, Dallas and Atlanta, said the official, who spoke on the condition that he not be identified.

The task force, which was established in January, stepped up its investigation in recent weeks as the financial industry disclosed billions of dollars in additional write-downs from bad mortgage investments. The latest inquiry is broader and deeper than a separate F.B.I. investigation of mortgage lenders that is also under way.

While the new task force is focusing on the role of mortgage lenders and brokers in low- or no-documentation loans, it is also examining how the loans were bundled into securities.

?This is a look at the mortgage industry across the board, and it has gotten a lot more momentum in recent weeks because of the banks? earnings shortfalls,? the official said.

In January, the F.B.I. began a wide-ranging investigation of 14 unnamed mortgage companies over their lending and business practices. Those smaller inquiries have tended to focus on local foreclosure schemes. That F.B.I.-led inquiry has since expanded to include several more firms.

In March, the Justice Department and the F.B.I. began investigating whether the Countrywide Financial Corporation, the troubled mortgage giant, misrepresented its financial condition and loans in filings with the Securities and Exchange Commission.

Countrywide is also under scrutiny by California and Illinois; federal prosecutors in Sacramento; and the United States Trustee, the federal agency that monitors bankruptcy courts. The S.E.C., meanwhile, is examining stock sales by certain Countrywide executives.

A spokesman for Countrywide did not return calls for comment on Sunday.
 
B of A may lower Countrywide bid

Check CR, Tanta is wondering if B of A isn't going to walk from the whole thing.

Friedman analyst Paul Miller, in a note to clients, said Countrywide's loan portfolio has deteriorated so rapidly that it currently has negative equity and the proposed takeover of the company will be a drag on Bank of America's earnings due to the elevated credit expenses at Countrywide,

Miller cut his target on Countrywide's stock to $2 from $7.

Hey Graph ! This is what your two bucks can buy you !

Reuters
 
Fannie Mae Swings to Loss,

Will Seek Fresh $6 Billion

Regulators Trim Amount of Capital

Mortgage Giant Must Keep on Hand

WSJ

By DONNA KARDOS

May 6, 2008 10:44 a.m.

U.S. regulators lifted a consent order on Fannie Mae and lowered the amount of capital it must hold, even as the government-sponsored mortgage finance giant swung to a $2.19 billion first-quarter loss amid another round of hefty write-downs and credit costs.

Fannie, meanwhile, said it will raise another $6 billion in capital and cut its dividend to free up funds for further growth and announced a series of new measures to support the mortgage market.

Taken together, the announcements are testament to the integral role the government sees Fannie playing in its multipronged plan to bolster the housing market. They also highlight the mortgage giant's efforts to simultaneously shore up its balance sheet while taking on more risk. As such, they could provide further ammunition for critics who already fear Fannie Mae is overextended.
 
jumpcut said:
Good news everybody! The housing crisis is over! April 2008 was the bottom!

http://online.wsj.com/article/SB121003604494869449.html
Click to expand...

Well, it's about time. This whole housing crisis thing was getting a bit boring anyways.
 
awgee said:
jumpcut said:
Good news everybody! The housing crisis is over! April 2008 was the bottom!

http://online.wsj.com/article/SB121003604494869449.html
Click to expand...

Well, it's about time. This whole housing crisis thing was getting a bit boring anyways.
Click to expand...

I guess all the bubble blogs will shut down too.
 
IrvineRenter said:
awgee said:
jumpcut said:
Good news everybody! The housing crisis is over! April 2008 was the bottom!

http://online.wsj.com/article/SB121003604494869449.html
Click to expand...

Well, it's about time. This whole housing crisis thing was getting a bit boring anyways.
Click to expand...

I guess all the bubble blogs will shut down too.
Click to expand...

What am i going to read in the morning over my coffee? Does that mean I will have to do some real work instead of reading the housing blogs?
 
jumpcut said:
Good news everybody! The housing crisis is over! April 2008 was the bottom!

http://online.wsj.com/article/SB121003604494869449.html
Click to expand...

What are ya'lls' thoughts on this article? He does bring up some points that he claims will lead to a turn-around but what is he neglecting?

Irvine Renter? What are your thoughts?
 
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