News reports say that the Federal Housing Finance Agency (FHFA) will sue about 12 major banks in order to recover some of the losses that Fannie Mae and Freddie Mac sustained on mortgage-backed securities the banks issued. The suits will seek to make the banks repay a share of about $30 billion in losses from securities that Fannie Mae and Freddie Mac bought before they essentially failed and the FHFA took them into conservatorship in September 2008. Since any recovered money would reduce the over $150 billion the taxpayers have …
At 300 East 23rd Street in the exclusive Gramercy Park neighborhood of Manhattan, where to get into parts of the park you need a key granted just to residents, a new 98-unit luxury apartment complex has been built with an outdoor movie theater and panoramic city views. The problem is that not enough buyers are coughing up the $820,000 to $3 million the project’s developers are asking for the privilege to own a unit in the building. But don’t worry, the Obama administration is coming to the rescue. Last December, …
Fantastic clear explanation of how federal government intervention with the market directly caused today’s financial turmoil by Peter Schiff in today’s Washington Post: Just as prices in a free market are set by supply and demand, financial and real estate markets are governed by the opposing tension between greed and fear. … [O]ver the past generation, government has removed the necessary counterbalance of fear from the equation. Policies enacted by the Federal Reserve, the Federal Housing Administration, Fannie Mae and Freddie Mac (which were always government entities in disguise), and …
Yesterday we noted how the housing bill’s creation of a National Housing Trust Fund that would funnel money to corrupt and partisan groups such as ACORN (Association of Community Organizations for Reform Now) was reason enough to be skeptical of the bill. Today the New York Times reports that ACORN is one of two prominent national nonprofit groups that “are reeling from public disclosures that large sums of money were misappropriated in unrelated incidents by an employee and a former employee.” Sounds like business as usual at ACORN. But more …
A publicly traded corporation announces a $2.2 billion quarterly loss, a dividend cut and warns that steeper losses are sure to come. One might expect such a company’s stock to go down on such dire news. But not Fannie Mae! On the very day Fannie revealed nothing but bad performance news to investors, its stock went up 9% to $30.81. How is this possible? We’ll give you a hint: big government market intervention is involved. The New York Times explains: “Their optimism stemmed from the belief that Fannie Mae is …
The United States likes to think of itself as a model of free markets. Unfortunately, in far too many sectors of the economy the reality is that the federal government already plays a huge role. Housing is a perfect example. The two Government Sponsored Enterprises (GSE) created to help the feds muck around in the housing market, Freddie Mac and Fannie Mae, already dominate the mortgage industry, handling more than 80% of all mortgages bought by investors in the first quarter of 2008. At the urging of politicians determined to …
President Bush and some members of Congress want to dub the Federal Housing Administration as the White Knight who will rescue America from the mortgage mess. They want the agency to help homeowners refinance their subprime loans by offering to guarantee lenders it will cover the tab if the refinanced deals go into foreclosure. But a New York Times report notes that the FHA is no shape to rescue anybody. Indeed, it’s “grappling with financial woes of its own” and may have to be bailed out by taxpayers, too. The …
Now that the Senate has passed its “Foreclosure Enhancement Act,” attention turns to the House, which will hold hearings on its own response to the housing “crisis.” As the Christian Science Monitor reports, “at the heart of the emerging consensus is a bigger role for the Federal Housing Administration in helping borrowers refinance loans they cannot afford to pay. … [A]ll competing plans require an FHA that is up to the task of dealing with a crisis that industry experts say is uncharted territory.” But is the FHA up to …
Building on news that the bipartisan consensus behind the Senate’s “Foreclosure Enhancement Act” is beginning “to crumble,” the White House sent a letter to Speaker Nancy Pelosi (D-Calif.) today outlining what they would accept in housing legislation. The letter includes many strong principles that ought to be congratulated, including: We must not prolong unnecessary corrections in the housing market, bail out lenders, or subsidize irresponsible borrowing and lending, at the expense of hardworking people who have played by the rules. … Housing legislation should not penalize the millions of American …
