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1 researchok  Mon, Nov 7, 2011 12:53:53am

The good news is the fine folks and managers at Fannie and Freddie just gave themselves huge bonuses.
/

2 (I Stand By What I Said Whatever It Was)  Mon, Nov 7, 2011 2:26:14am
In part because of the Basel capital standards, which required banks to hold far less capital for a given volume of whole mortgages than for an equal volume of mortgage-backed securities, Wall Street banks were far more inclined to hold mortgage-backed securities rather than whole loans.

Huh? Shouldn't the conclusion be the opposite, i.e. shouldn't banks want to require to hold less capital rather than more? What they need to hold they cannot loan out and make profits with. This is why they have railed against Basel III, when the capital holding requirements were upped.

3 (I Stand By What I Said Whatever It Was)  Mon, Nov 7, 2011 2:30:22am

Also:

mortgage-backed securities

This term makes as much sense as "nitroglycerin-backed airbag" or "plutonium-backed multivitamins".

But it's the Koch brother's Cato Institute, so of course its BS apologetic to fraudulent bankers and largely trying to pin all blame on government and "welfare".

4 (I Stand By What I Said Whatever It Was)  Mon, Nov 7, 2011 2:34:03am

re: #2 000G

Huh? Shouldn't the conclusion be the opposite, i.e. shouldn't banks want to require to hold less capital rather than more? What they need to hold they cannot loan out and make profits with. This is why they have railed against Basel III, when the capital holding requirements were upped.

See [Link: littlegreenfootballs.com...]

I call BS on this whole paper, sorry.

5 Holidays are Family Fun Time  Mon, Nov 7, 2011 5:53:55am

I thought the "skin in the game" requirments of Dodd-Frank was an attempt to counter-act Basel I?

I know people aren't big on Cato right now. I feel everybody has something to offer. Sorry if you don't agree.

6 garhighway  Mon, Nov 7, 2011 6:34:39am

Funny how cato misses these key facts:

1> Government requirements to lend to minorities (the dreaded CRA) did not extend to non-banks like Countrywide, First Century and the like. Those guys, who led the subprime boom and whose lending, once converted into RMBS's of various stripes, blew up the holders of those securities, were exempt from the CRA.
2> It was the aggressive subprime lending of the non-banks that pushed the GSEs into that space: they were being left behind and made irrelevant.
3> No less than a free market icon as Alan Greenspan, in his survey of the wreckage of the subprime mess, gave something like two paragraphs out of 40-some pages to the activities of the GSEs and government mandates in mortgage lending.

Blaming the CRA or the GSEs for the subprime mess and the smoking crater it left in our economy has become a right wing, fact free fable. So of course Cato believes it.

That's their job.

7 garhighway  Mon, Nov 7, 2011 6:39:18am

re: #5 ggt

I thought the "skin in the game" requirments of Dodd-Frank was an attempt to counter-act Basel I?

I know people aren't big on Cato right now. I feel everybody has something to offer. Sorry if you don't agree.

Apply the "everyone has something to offer" standard to the following and let me know how that works:

1> The Tobacco Institute
2> The Heartland Institute
3> The George C. Marshall Institute
4> The Oregon Institute of Science and Medicine.

8 Holidays are Family Fun Time  Mon, Nov 7, 2011 9:49:07am

re: #7 garhighway

Apply the "everyone has something to offer" standard to the following and let me know how that works:

1> The Tobacco Institute
2> The Heartland Institute
3> The George C. Marshall Institute
4> The Oregon Institute of Science and Medicine.

If I ignore the sources that are not-currently PC, am I not playing into the "other" sides hands as well?

I've read from many sources, I thought the perspective was worth sharing. I love Lizard input.

Thanks for yours.

9 garhighway  Mon, Nov 7, 2011 9:51:50am

Is it theoretically possible that The Cato Institute will publish something that isn't just a right-wing talking point? I suppose. But they certainly missed this time, didn't they?

10 Holidays are Family Fun Time  Mon, Nov 7, 2011 10:13:09am

re: #9 garhighway

Is it theoretically possible that The Cato Institute will publish something that isn't just a right-wing talking point? I suppose. But they certainly missed this time, didn't they?

Somewhere in the middle is information I can use. I don't trust any source completely.

It does seem a little naive to me that Fannie and Freddie would have their quota's increased and not expect the sellers to produce something to sell.

If they are buying higher-risk mortgages, then that is what the banks will sell them. no?

This situation is more complex than that.

At this point I don't see it getting better until we GET THE MONEY out of Congress. Too much lobbying, too much insider crap. As Congress Critters don't have to disclose by line item, we will never know exactly how much money individual critters might have profited from the mess.

11 garhighway  Mon, Nov 7, 2011 10:42:11am

re: #10 ggt

Somewhere in the middle is information I can use. I don't trust any source completely.

It does seem a little naive to me that Fannie and Freddie would have their quota's increased and not expect the sellers to produce something to sell.

If they are buying higher-risk mortgages, then that is what the banks will sell them. no?

This situation is more complex than that.

At this point I don't see it getting better until we GET THE MONEY out of Congress. Too much lobbying, too much insider crap. As Congress Critters don't have to disclose by line item, we will never know exactly how much money individual critters might have profited from the mess.

No one in and around the financial services world has demonstrated any connection between any behavior of the GSEs and the size and scope of the credit crisis. Simply put, the Countrywides and their ilk were having a high old time generating crap loans for the secondary market with or without the GSEs. There has been NO demonstrated link between GSE behavior and lender behavior. None. If you have seen that demonstrated somewhere in an other-than-talking-point fashion, I would love to hear it.

12 Obdicut  Mon, Nov 7, 2011 3:40:17pm

re: #10 ggt

The information is rarely in the middle. Often, there is one wild extreme pulling it off-center.

13 Holidays are Family Fun Time  Mon, Nov 7, 2011 7:07:12pm

re: #12 Obdicut

The information is rarely in the middle. Often, there is one wild extreme pulling it off-center.

I'd go with the latter.

As it is Freddie and Fannie are not solvent. It is a problem. I try to post different articles here to get feedback to help me understand. Some people choose to contribute, others to rant.


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