I've been doing some reading as usual on the mortgage and housing bailout bill that was just signed today, and I came across a very interesting story. Oh, I am sure that there are loads of folks in real estate doing cartwheels today over the Fannie Mae Freddie Mac bail out, and housing bill...but they are short on the real details. Their only concern is that doesn't matter... commission checks will be flowing in again soon. Did you know that we just bailed out the Bank of China? Amongst others...the biggest supporters of the Fannie Mae and Freddie Mac bailouts has been the Chinese government. It seems in one of the blogs I was reading they supposedly warned us that since they own about half a trillion dollars in Fannie and Freddie securities and they expect to be repaid in full.
The federal bailout reluctantly signed today has basically conferred upon Fannie and Freddie securities equal status to Treasury securities... as we move forward housing GSEs now effectively have unlimited use of every taxpayer's dollars. Did you know this? Did you call your elected representatives and put their feet to the fire? I did through this entire process. So is it a bailout or sell out?
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Jim, I am getting ready to weigh in my opinion on this. The more I read, the more, it stinks
I really hope we have not entered into a slippery slope here. The devil is in the details and I think perhaps we just bargained with him.
Bo
Jim I agree that we bailed out the wrong folks! The problem is that we have let the dollar slide so low that we have sold out our country to foriegn interests. The only way to fix it is to save the dollar and stop the funding for an ill concieved war
It's the latter always has been. The US congress doesn't have the future of our country at heart just their re-election.
I'll have to keep reading, and it's going to take another cup of coffee before I can weigh in on this subject.
Jim, I can see your point and agree with Bo the devil is in the details. However to let Fannie and Freddie go belly would insure a money shortage in loans like 1979.... I don't think its about liking or disliking its more about holding our nose and doing whats right for the American people who still need loans
tough subject...very thoughtful post
thx
Jim, what was our government supposed to do? Let Fannie Mae and Freddie Mac fail? Do you realize what a devastating effect that would have had not ONLY on the housing market but the entire global economy? It woud have driven us into a depression. Not recession. Depression. In addition, we would have lost all credibility on the global markets. Yes, we did bail out the Bank of China. But it is time we as Americans realize, we are no longer the only big kid on the block. And if we want our economy to thrive we are going to have to cooperate with others.
I hear people all the time discussing our 10 trillion dollar national debt. Has anyone ever really done the math on this. I have. Albeit loosely. If you take $10 trillion spread out over 300 million Americans, each with an average work life of 40 years, it comes to about $1,000 per person per year over everyone's lifetime to retire that debt. Not a terribly huge number when it's broken down like that. In the meantime we get to enjoy a standard of living envied by about 95% of the world's population.
Look, right now is not the time to be pointing fingers. We have several five alarm fires burning in our economy right now. The Fed has to act like firefighters. Firefighters don't arrive at the scene of a fire and ask "allright who caused this? Someone's gonna pay!" No, they put the fire out first, THEN they do their investigation.
Things will work out. We're not going to hell in a hand basket.
Jim
It only showa the our (America's) reluctance to take the Global Market serious over the last 20 years is coming back to haunt us. Foreign Policy should have been stronger , instead of thinking we were so superior to evryone else. This move has been a long time coming and is no surprise to those of us that follow and are involved with global economics within our business.
Laura
Hi Jim, This is some crazy stuff to read. I had no idea. I agree with John Guiney. I've had enough of the war and all the enemies Bush has made. Now we will never get out of debt. Sad.
Jim.... I've bookmarked the post and will read WSJ article tonight. I don't think that most Americans understand what just happened, we are so deep that I'm worried we will never get out. Thanks for the post... as always.
Jim, I have to agree with Jerry's comment and Laura's. How many timew have we read about foreign investors buying our buildings, and other investments in our country? While I don't totally understand why there couldn't have been some compromise on the 100% payback vs. say a 90% as referenced in the WSJ article, I believe it was prudent, in this situation, to do something. I really appreciate you posting this, but I think whoever the investors were, that Fannie and Freddie couldn't fail at this point in our delicate balance of economy as we work our way out of the double bubble burst of housing and credit.
Jim,
Several people have commented that the impetus for this rush to pass legislation was from foreign investors. You just wonder how much behind the scenes negotiation and deal making was done. The media coverage really just touches on the surface of the bill. I wish some news source could present unbiased but thorough coverage of issues like this.
More transparency would probably disclose some sickening goings on.
Richard
Wow, I had no idea.......I knew it was not a perfect solution, but as usual there was not a whole lot of transparency on this issue.
I think it all comes down to can we let them fail? I have more issue with the Bear Stearns bailout. At the end of the day, I think we're really just helping the wealthy segment get their money back.
Bo Hussung ~ Cogent Closing Associates, LLC (Cogent Closing Associates) I know we have.
John Guiney e-PRO, CBR (Keller Williams Realty) It isn't just the war...it is politics. The president cannot fund the war, cannot balance the budget, create bills to raise or lower taxes...only Congress has that authority!
John Walters (Specialized Real Estate) No patriots in Congress! I agree!
Hope Goss (Ventura Property Shoppe) Dig deep into the subject....it isn't about the mortgages it is a bank bailout!
Ron Bolton (Realtor So it was OK that they left a provision in the bill that does not prevent Fannie Mae and Freddie Mac from lobbying? You are OK with that? We can bail them out with taxpayers money, and they can still endorse ans sway congress for political gain? That is like giving the probation officer a Cadillac!
Jerry Murphy (Windermere Real Estate) Congress could have done its job and enforced the oversight of Fannie Mae and Freddie Mac when they cooked the books for bonuses. They could investigate how the officers are making almost $20 million dollars a year. Legally they could indict for fraud heads and CEOS of mortgage companies that knowingly gave out bad loans. Legally as a quasi Federal agency they should not be allowed to lobby. Senator Dodd (Democrat) should not be allowed to get a favored loan from Mozilo of Countrywide mortgage. Yes they should have let them fail. Because they have failed...now you ware just propping them up with your grand children's future tax dollars.
Laura Gray (RE/MAX Realty Group) It isn't just Globalization...it is enforcing the laws on the books, it is about enforcing the oversight of the banks.
Laura Gray (RE/MAX Realty Group) It isn't just Globalization...it is enforcing the laws on the books, it is about enforcing the oversight of the banks.
Lizette Fitzpatrick, Kentucky Real Estate (Central Kentucky - Prudential Don Foster) Guess what? The budget and expeses are congress alone! The power of the purse. Only they can approve budgets.
Debbie Summers, Seminole County Real Estate (RE/MAX Central Realty Lake Mary, FL) You are more than welcome!
Sharon Alters (Watson Realty) Sorry! I do not know how the wrong response with your name. The reason the 90% won't work is that the bank will have to agree. Why should they? YOU lend out 200K, it has dropped to 175K... and now the banks can only do the deal for 10% less than market value which is 157.5K. No one in their right mond would agree to this...so then it becomes our problem.
Richard Smith - Mortgage & Home Loans - TN GA AL (American Acceptance Mortgage, Inc) Have you noticed it isn't easy to find who voted on this bill and what is in it... It is a piece of junk! It is a bank bailout!
Burbank Real Estate Ana Connell (Exit Family Realty) There are not even items in the bill to address the wrongs! No one is having their saleries cut, lobbying?
Don't know what's going on here, but the above post in my name is not what I posted.
What I said is that even though i agree with the WSJ article that there should have been some negotiation here rather than caving to 100% return, at this time in our delicate balance of an economy, would it be a good idea to let them fail? We're already reeling from housing and credit bubbles and this might just take us over the edge. It's no surprise to me that foreign banks are involved here. I've been reading for the last 20 years about foreign companies buying real estate and companies in the US
Sharon Alters (Watson Realty) ( Sorry for the earlier response..I mis-posted a reply - I've corrected up above.) It is obviously beneficial politically to be beholden to foreign interests. There was a time you would be considered a traitor to do so. The main problem is no accountability for our representatives. We must all hold our elected represenatives to the task!
Have you called them to hold them to task? Have you voiced your displeasure with them? have you asked them why they voted this way? Do you tell them not to expect a vote election day?
This little stunt had unmigitated disaster written all over it. Then again so have 90% of the actions taken by Greenspan, Bernake, Paulson and the nitwits on the Hill. I don't think they're going to be happy until we have to auction off the A in USA. The worst part is they don't listen to Joe & Jane Public but Wall Street can make them dance on command.
Fairbanks Real Estate Broker Jesse Clifton (Jesse & Kathy Clifton, REALTORS - 907.699.6024 ) This may as well have been the signing of an unconditional surrender. In the old days the politicians would be tarred and feathered! Can you say "Benedict Arnold?"
Jim-Simply incredible. How many more days do we have of George W. Bush?
Joe
Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta)
Jim The President might not be able to fund the war but you can't blame congress. What would you have them do, not pay our soldiers or defense contractors that Bush has obligated us to do?
Joseph D. Federico, Westwood, MA Real Estate (RE/MAX Landmark) This one is in Congress court.
John Guiney e-PRO, CBR (Keller Williams Realty Congress does have the power, they do not have what it takes. It is called the power of the purse. If they were real individuals yes they would They are not! They are spineless. That is why they can throw Martha Stewart in jail and give a pass to Mozilo! They can investigate sports figures for steroids, and bail out investment companies on Wall Street that they have no right nor do they have the authority to spend your tax dollars. No one in America is asking for investigations, or indictments.
I worked in DC, and know first hand what lobbying is all about.
Jim Crawford ~ Atlanta Real Estate-ABR E-PRO (RE/MAX Greater Atlanta) Maybe you haven't heard but Ted Stevens was just indicted, Kucinich has called for the impeachment of Bush. Why don't you sign up? I did! So you might know how Washington works but you evidently don't realize that America is asking for investigations and indictments.
kucinich.us - Join Dennis Kucinich & Demand Impeachment Hearings
John Guiney e-PRO, CBR (Keller Williams Realty) Thank you for sharing the news. Any elected representative is not above the law, they should have double sentence for them and throw the key away! So what about Senator Dodd (D-CT)? Should a Senator Dodd in his posiion be receiving loans from a lender that he may have to regulate? That is unethical as you can get. Does Senator Schumer get a pass from starting a run on IndyMac Bank causing the FDIC to pay out 15% of its insurance fund in one day? It was so odd his letter went public especially since Schumer sits on the committtee for over 4 years.
Just love politics -- NOT! It is unfortunate that NAR didn't educate realtors and/or have their lobbyiests weigh in on the bill. I didn't see any calls to action -- now it is law so there is little that can be done.
Sure you can say it's a sellout...but the real question is: "Who sold out first?"
China is directly responsible for the TRILLIONS of investment dollars that went directly into your pockets, my pockets, and the pockets of just about every Real Estate Agent & Loan Officer here on Activerain in the form of commission checks......not to mention the investment capital that went into funding Activerain itself, and the thousands of other Web 2.0 websites out there.
I'm not saying that I support this in any way, but I just think its a bit hypocritical for us to bite the hand that feeds us, you know what I mean? Just because we can't see where our money is coming from, doesn't mean that we should act like we don't know......
Sorry, I don't mean to be some sort of holier-than-thou type pundit, but thats just how this whole situation strikes me.
Peter Hackett, HutHub.com - The National Real Estate Network (HutHub Inc.) A bailout is one thing, backing Fannie Mae and Freddie Mac with the Full Faith and Backing of the US Government means we have written a blank check to the US Goverment to pay whatever it takes with your tax dollars. It isn't just about China..you need to read the entire story. Fannie Mae / Freddie Mac now has the same backing as US Treasury Bills...
Jim....I've read the entire story, and believe me, I don't like it either. Fannie & Freddie are privately owned companies, and if the US Government will back them, then they should give the same amount of backing to Jane & John Doe-Homeowner who just got foreclosed on.....I would personally find that a much more acceptable use of my tax dollars.
However, it is what it is....Fannie & Freddie are LITERALLY the foundation of our entire economy....those two giants fall, combined with a never ending war, soaring gas prices, soggy stock market, and completely deflated housing market = foreign governments stop investing in U.S. markets
From the U.S. government's point of view, the only way to insure our continued global economic dominance is to REASSURE China, Russia, & other major foriegn goverments that the United States is STILL a safe place for them to invest....kind of like how the FDIC insured bank account you have is the only reason your money isn't sitting under your mattress right now.
See what I'm saying? Its all about instilling confidence in the investors that keep dumping all their cash here (China, Russia, Saudi Arabia, etc.)....without them, the U.S. is just one big maxed-out credit card.
Peter Hackett, HutHub.com - The National Real Estate Network (HutHub Inc.) If it is about instilling confidence there was no measure in the bill that removed any political component. Fannie Mae and Freddie Mac are still free to do their political lobbying, Fannie and Freddie Mac that cooked the books in thelast few years, their CEOS make over 20 million a year...go on ...business as usual. No investigations, no changing any of their rules. I think it is totally irresponsible. This bill is not a bailout for any individual buying or selling...this his a way to unload bad mortgage loans on your great grandchildren. It is a total loser.
Jim: The next time we need money from the SWFs or any other investments from China and Abu Dabhai, we are going to have to give them a bigger slice of the pie. Citi and others would already be under if they hadn't bailed them out last year. The last time SWFs invested money, they didn't have any "rights" , the next time they will negotiate a better deal for themselves. I
It's pitiful when we have to depend on foreign investment, foreign oil and foreign bribery.
What they do know is, that if the US goes down, so do they because they have invested enormous amounts of money here, but we have invested abroad also. It's a global market and it makes me fearful just thinking about what could happen because of the "love of money".
Jan Wood, Realtor (R) - Nashville TN Real Estate (RE/MAX ELITE) Who was Citi owned by new agent financial industrialists! Get ready for a new world order is is all about money credit and power.