Financial Reform

[crb]

After the fraud-fueled-failings of Enron and Wordcom we got Sarbanes-Oxley, to stop the failures of large companies from accounting problems from ever happening again. This was in 2002.

In November 2007 the unelected unaccountable FASB issued a rule regarding Mark to Market accounting, which was rubberstamped by the SEC. This regulation directly led to the credit crisis (http://www.cnbc.com/id/27100454) and failures of Lehman Brothers and Bear Stearns.

March 9th 2009 Bernanke walked it back, saying he supported changing it, this was a culmination in outcry against the rule. The stock market bottomed the next day, then started going back up. 6 days later the FASB proposed changing it, officially doing so on April 9th.

July 21st, 2010, in response to the financial crisis. Obama signed "Dodd-Frank" into law. To prevent big company failures and bailouts from ever happening again.

On September 17th 2011 Occupy Wall Street was launched by Canadian Marketing Firm Adbusters. One of their primary complaints is they want more government regulation (still) over the most regulated area of our economy (in addition to general revolution, overthrow of capitalism and the government, asset seizures from the wealthy, communism, student loan forgiveness, jobs for puppeteers, higher taxes, etc etc).

On October 25th 2011, MF Global, headed by Jon Corzine, former Democratic Governor of New Jersey, former Obama supporter, former Obama Whitehouse advisor on banking reform[url], filed for the 8th largest bankruptcy in US history.

On November 10th 2011. Fannie Mae asked for an additional $7.8 billion dollar bailout, on top of the already received $112.6 billion. Freddie Mac requested another $6 billion as well. Meanwhile, 10 top executes got bonuses in aggregate of [url=http://www.politico.com/news/stories/1011/67292.html]$12.79 million. (http://www.youtube.com/watch?feature=player_embedded&v=xm3VMrKqJSA) The TARP program, which authorized bailouts, which private banks have paid back (with interest) had limits later added to it by Obama in regards to executive compensation. Fannie and Freddie, whose executives are often political placements, were exempted from such rules, why?

Albert Einstein said, the definition of insanity is doing the same thing over and over again and expecting a different result. I won't tell you that there should be no regulations on the financial industry, but I will tell you that the federal government sucks at it, and maybe we don't need more regulations, maybe we just need smarter regulators, and maybe we need to move the process out of washington, where politics get in the way.

[Parkbandit]

WASHINGTON (AP) -- Mortgage giant Fannie Mae said Wednesday that it lost money in its fourth quarter and is asking the federal government for $4.57 billion in aid to cover its deficit.

Washington-based Fannie said it lost $2.41 billion in the October-December quarter, stung by declining home prices. Revenue was $4.53 billion.
The government rescued Fannie and sibling company Freddie Mac in September 2008 to cover their losses on soured mortgage loans. Since then, a federal regulator — the Federal Housing Finance Agency — has controlled their financial decisions.

Taxpayers have spent more than $150 billion to prop up Fannie and Freddie, the most expensive bailout of the 2008 financial crisis. The government estimates that figure could top $259 billion to support the companies through 2014 after subtracting dividend payments.

Fannie has received more than $116 billion so far from the Treasury Department, the most expensive bailout of a single company.
Fannie officials say losses have increased in recent quarters for two reasons: Some homeowners are paying less interest after refinancing at historically low mortgage rates; others are defaulting on their mortgages.

When property values drop, homeowners default, either because they are unable to afford the payments or because they owe more than the property is worth. Because of the guarantees, Fannie and Freddie must pay for the losses.

Fannie's October-December loss takes into account $2.6 billion in dividend payments to the government. That compares with a loss of $2.1 billion in the fourth quarter of 2010.

In November, Freddie requested $6 billion in extra aid — the largest request since April 2010 — after it reported losing $6 billion in the third quarter.
Fannie Mae and McLean, Va.-based Freddie Mac own or guarantee about half of all mortgages in the U.S., or nearly 31 million home loans. Along with other federal agencies, they backed nearly 90 percent of new mortgages over the past few years.

Fannie and Freddie buy home loans from banks and other lenders, package them with bonds with a guarantee against default and sell them to investors around the world. The companies nearly folded more than three years ago because of big losses on risky mortgages they purchased.

The Obama administration unveiled a plan one year ago to slowly dissolve the two mortgage giants. The aim is to shrink the government's role in the mortgage system, remaking decades of federal policy aimed at getting Americans to buy homes. It would also probably make home loans more expensive.

The firms' regulator, the FHFA, submitted a plan to Congress last week that would reduce the companies' role in the mortgage market. Under the plan, Fannie and Freddie could also increase its prices to guarantee loans and establish agreements with private investors to take on added credit risk.
Exactly how far the government's role in mortgage lending would be reduced was left to Congress to decide. But all three options the administration presented would create a housing finance system that relies far more on private money.

http://finance.yahoo.com/news/fannie-asks-govt-almost-4-152028535.html

http://netanimations.net/Moving-picture-100-dollar-bill-money-to-burn-animated-gif.gif

[Tgo01]

Why aren't we occupying Fannie Mae and Freddie Mac?

[Atlanteax]

Why aren't we occupying Fannie Mae and Freddie Mac?

We already did ... well, the working poor did, and they obviously were not in the position of affording the homes in the first place, but politicians wanted their votes.

Obviously it was not limited to the working poor, as there were speculators involved too, but when they decide to just walk away (strategically for financial reasons), Fannie/Freddie are left holding the unwanted assets.

All due to overly liberal home-mortgage acceptance processes, encouraged by politicians, and now fiscally responsible tax-playing home-owners are footing the bill, after already having subsided the unqualified home-owners ... ie a double-whammy.