Wednesday, December 30, 2009

Lifting Fannie, Freddie Cap Called Policy Disaster! (News Max Wednesday, 30 December, 2009 15:55 hrs) by Julie Crawshaw

BS Ranch Perspective:

Looks like the Government is going to relieve the CAP, that was placed onto Freddie and Fannie, when the Real Estate Losses started, but since the whole thing is ruled to be passed history the Cap was lifted, If this is the case then History is bound to repeat itself!!

Also I bet that the big Banks that President Obama has Mentioned, whom have paid off their portion of the Money's that were given to them reference the bill that was designed to keep our country out of a full on depression, well they had a certain amount of time to pay them off. The Larger Banks (Bank of America, Chase, & Wells Fargo) have paid their Debt back to the Federal Government. President Obama now wants to target them again, even thought they paid off their Debt faster then they were allowed, President Obama wants more, so he has proposed a "New TAX" that is to get more money from them. The reason that this happened was the bank Honored their Employee's Employment Contracts, that stated that they were entitled to a portion of the Banks Good Fortune. These employee's are in Management, and their contract basically says that if their Bank or Department within the bank makes money, they are entitled to a portion of the Profits that were made. They are paid in the form of "Bonuses"

The Banks are currently making money and they decided to Honor their Profit Sharing portion of their Employee's Contracts and they paid the Bonuses to their Employee's! But this is something that is bad in the thoughts and mind of the President of the United States, so he as devised this new Tax to gain the Bonuses that is owed to their employee's via a Profit Share portion of their Labor Contract, So he feels that the monies paid to these DESERVING EMPLOYEE'S for their Hard Work, is not good business.

Now let me be clear that if the Bank didn't pay their employee's in this manner the Employee could go after them for breech of a labor contract. I am certainly not a Lawyer and I am not sure on this but if you are a deserving Employee and the bonus is entitled to go to you certainly you would want that money that you worked so hard for!

Once again the President has ATTACKED our Capitalist Ways and is reverting back to Socialist Terrorism against these Banks for their decision to run their MONEY MAKING Business as they see fit!! This Socialist Terrorism by the President is designed to make these companies not to recognise their good work, and give their earned bonuses to the Federal Government.

NOT GOOD!! It really makes these Strong Arming Tactics Look Like Terrorism against Capitalism!!

BS Ranch

Lifting Fannie, Freddie Cap Called Policy Disaster

By: Julie Crawshaw

Fannie Mae and Freddie Mac got a huge gift this Christmas: The Treasury Department removed the $400 billion spending cap from what the administration believes will be necessary to keep the huge government sponsored enterprises, or GSEs, solvent.

"This action confirms that the decade-long congressional failure to more closely regulate these two government-sponsored enterprises will rank for U.S. taxpayers as one of the worst policy disasters in our history," Peter Wallison, a senior fellow at the American Enterprise Institute writes in The Wall Street Journal.

"Fannie and Freddie's congressional sponsors — some of whom are now leading the administration's effort to 'reform' the financial system — have a lot to answer for."

Most of the damage, Wallison notes, was done from 2005 through 2007, when Fannie and Freddie were binging on risky mortgages.

However, new research by Edward Pinto, a former chief credit officer for Fannie Mae and a housing expert, reveals that the GSEs began buying risky loans as early as 1993.

Pinto says Fannie and Freddie routinely misrepresented the mortgages they were acquiring, reporting them as prime when they had characteristics that clearly made them subprime or Alt-A.

By the end of 2008, the two GSEs held or guaranteed approximately 10 million risky loans with a total principal balance of $1.6 trillion that are now defaulting at unprecedented rates.

Since then, under government control, the two agencies have continued to buy dicey mortgages in order to stabilize housing prices.

After mortgage giant Freddie Mac reported a 13 percent drop in mortgage purchases in November, Fannie Mae said its book of business declined at an annualized rate of 6.7 percent in the same month, Housing Wire reports.

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