It took JFK three months to stumble over the no-win Cuban invasion he inherited in 1961, but Barack Obama is in a deeper mess as he makes his first visit to the Oval Office more than two months before taking over.
The Bush Administration is fumbling the financial bailout in ways that make CIA planning for the Bay of Pigs look brilliant, and this time the new president won't have the option of pulling back and starting all over.
First results from takeovers of Fannie Mae and AIG show huge losses, reflecting a failure to stop the bleeding, and according to the Washington Post, "underscore the government's difficulty in intervening in private markets in a way that both protects taxpayers and ensures that the rescue efforts succeed...a cautionary tale at a time when Washington is debating whether to extend the federal umbrella to Detroit automakers and other beleaguered firms."
After interest rates on the original handouts proved too high to keep AIG from drowning in debt, the government agreed yesterday to offer a stronger lifeline with a new $152 billion loan on easier terms.
Fannie Mae executives are warning that their bailout funds "may prove insufficient" to allow the company to pay off loans or "continue to fulfill our mission of providing liquidity to the mortgage market at appropriate levels."
Meanwhile, Bloomberg News is suing under the Freedom of Information Act to force the Federal Reserve to identify the recipients of almost $2 trillion of emergency loans from American taxpayers and the troubled assets the central bank is accepting as collateral.
Even before he takes office, President Obama may find himself asking the question that plagued Casey Stengel when he took over the hapless New York Mets, "Can't anybody here play this game?"
Showing posts with label Fannie Mae. Show all posts
Showing posts with label Fannie Mae. Show all posts
Tuesday, November 11, 2008
Friday, March 07, 2008
Home Wrecking: Victims and Walkaways
The housing crisis started out looking like a death in the family but is now resembling divorce as well. Added to the record numbers of Americans losing their homes because they can't make the mortgage payments are others who can afford to but decide to cut their losses and default voluntarily.
The category of walkaways is made up of speculators as well as new homeowners who were lured by introductory rates into buying bigger homes than they can afford.
"Some financial advisers," the Wall Street Journal reports, "are even encouraging homeowners who are upside down to consider foreclosure, which they see as a purely financial decision with limited negative consequences...(A) web site started in January that offers foreclosure counseling to homeowners advises that borrowers who default on one mortgage can typically get another mortgage between two and four years after a foreclosure. Then, 'before you know it, you will have this behind you and a fresh start!'"
As the politicians ponder ways to ease the crisis with rate freezes and subsidies, the emphasis is on the more than 900,000 households now in involuntary foreclosure, up 71% from a year ago, according to a survey by the Mortgage Bankers Association.
But as home prices continue in free fall, it will be necessary to separate the victims of predatory loan practices from those who saw a free lunch and are now walking out without paying the tab.
Fannie Mae, the government sponsor of loan guarantees, is working on harsher penalties for walking away, pursuing some borrowers in court and lengthening the time between when borrowers default and when they become eligible again for a Fannie Mae-backed loan.
"Of course, we will make exceptions for extenuating circumstances, like divorce or death," says a Fannie Mae executive. "But who we are trying to get are the people who can afford to make payments but have decided not to."
The category of walkaways is made up of speculators as well as new homeowners who were lured by introductory rates into buying bigger homes than they can afford.
"Some financial advisers," the Wall Street Journal reports, "are even encouraging homeowners who are upside down to consider foreclosure, which they see as a purely financial decision with limited negative consequences...(A) web site started in January that offers foreclosure counseling to homeowners advises that borrowers who default on one mortgage can typically get another mortgage between two and four years after a foreclosure. Then, 'before you know it, you will have this behind you and a fresh start!'"
As the politicians ponder ways to ease the crisis with rate freezes and subsidies, the emphasis is on the more than 900,000 households now in involuntary foreclosure, up 71% from a year ago, according to a survey by the Mortgage Bankers Association.
But as home prices continue in free fall, it will be necessary to separate the victims of predatory loan practices from those who saw a free lunch and are now walking out without paying the tab.
Fannie Mae, the government sponsor of loan guarantees, is working on harsher penalties for walking away, pursuing some borrowers in court and lengthening the time between when borrowers default and when they become eligible again for a Fannie Mae-backed loan.
"Of course, we will make exceptions for extenuating circumstances, like divorce or death," says a Fannie Mae executive. "But who we are trying to get are the people who can afford to make payments but have decided not to."
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