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Wednesday, July 23, 2008

Housing/Subprime/Credit Roundup — July 23, 2008

Items of Interest:

Bloomberg:
U.S. House Approves Fannie-Freddie Bill by 272-152 -- The U.S. House of Representatives approved legislation designed to shore up confidence in Fannie Mae and Freddie Mac and stem the record surge in mortgage foreclosures, sending the bill to the Senate.

House members voted 272-152 in favor of the measure, which lawmakers and administration officials expect will be passed in the Senate and signed into law by President George W. Bush. The bill gives Treasury Secretary Henry Paulson power to inject capital into Fannie Mae and Freddie Mac and provides for a federal agency to insure refinanced home loans.

Paulson overcame opposition within his own party after some Republicans said the bill risked taxpayer funds and fell short on overhauling the mortgage-finance firms. The Treasury chief said the measure was critical to U.S. financial-market stability and persuaded Bush to drop a veto threat.

``This is the most important piece of housing legislation in a generation,'' Senate Banking Committee Chairman Christopher Dodd, a Connecticut Democrat, told reporters in Washington today. Paulson said he was ``pleased'' with the vote and would ``look forward to working with the Senate'' to get the bill to Bush's desk this week...

Infectious Greed:
Fannie and Freddie: One HELOC to Go, Please -- Kind of ironic, isn't it? The bailout plan for mortgage-struck Freddie and Fannie includes something awfully similar to the sort of home equity line of credit (HELOC) nuttiness that got the mortgage market in trouble in the first place. Maybe we should call it a NELOC -- a national equity line of credit. Good thing the U.S. still has some.

Housing Doom blog:
Bush To Sign “Carte Blanche” For Fannie And Freddie
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Paul Gigot, Wall Street Journal
The Fannie Mae Gang -- Fan and Fred also couldn't prosper for as long as they have without the support of the political left, both in Congress and the intellectual class. This includes Mr. Frank and Sen. Chuck Schumer (D., N.Y.) on Capitol Hill, as well as Mr. Krugman and the Washington Post's Steven Pearlstein in the press. Their claim is that the companies are essential for homeownership.

Yet as studies have shown, about half of the implicit taxpayer subsidy for Fan and Fred is pocketed by shareholders and management. According to the Federal Reserve, the half that goes to homeowners adds up to a mere seven basis points on mortgages. In return for this, Fannie was able to pay no fewer than 21 of its executives more than $1 million in 2002, and in 2003 Mr. Raines pocketed more than $20 million. Fannie's left-wing defenders are underwriters of crony capitalism, not affordable housing...
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George Bush: Wall Street Got DrunkIf Bush thinks that 'Wall Street Got Drunk' does that mean that Alan Greenspan was the bartender?

NY Times:
A Private, Blunter Bush Declares, ‘Wall Street Got Drunk’ -- When he talks about why the economy is ailing, President Bush often turns to euphemism, citing “challenges in the housing and financial markets.” But Mr. Bush offered a far blunter assessment last week at a closed Republican fund-raiser in Houston: “Wall Street got drunk.” ...

“Wall Street got drunk — that’s one reason I asked you to turn off your TV cameras,” the president said at the fund-raiser, held at a private home on Friday to benefit Pete Olson, the Republican who is challenging Representative Nick Lampson. “It got drunk, and now it’s got a hangover. The question is, How long will it sober up and not try to do all these fancy financial instruments?”

The sentiments were no different from those Mr. Bush has voiced in public, said Tony Fratto, the deputy White House press secretary...
related:
Miya Shay / Houston Political Blog:
What did Bush say at Olson Fundraiser? — The President's folks didn't let the press in, but we got some exclusive video of POTUS talking up a storm at Pete Olson's fundraiser on July 18th. Click and take a look. transcript below the video. — What President Bush said...

Greg Mitchell / The Huffington Post:
“Wall Street Got Drunk”: ‘Banned’ Bush Video Surfaces

Jules / Beltway Confidential:
Bush: Economy was “drunk,” now “hungover”

Andy Barr / The Hill's Blog Briefing Room:
Bush on Economy: ‘Wall Street Got Drunk’

Think Progress:
ThinkFast: July 23, 2008 — “Wall Street got drunk,” …

James Gerstenzang / The LA Times President Bush Blog:
Bush: ‘Wall Street got drunk’
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Thomas Sowell / Real Clear Politics:
Bankrupt 'Exploiters' -- In one of those front-page editorials disguised as "news" stories, the New York Times blames "the lucrative lending practices" of banks and other financial institutions for helping create the current financial crisis of millions of borrowers and of the financial system in general.

It must take either a willful determination to believe whatever they want to believe or a cynical desire to propagandize their readers for the New York Times to call "lucrative" the lending practices that have caused many lenders to lose millions of dollars, some to lose billions and some to go bankrupt themselves.

Blaming the lenders is the party line of Congressional Democrats as well. What we need is more government regulation of lenders, they say, to protect the innocent borrowers from "predatory" lending practices...
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Paul Krugman - NY Times

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