Fannie Mae, Freddie Mac clamping down on banks- too little, too late

Courtesy of Lee Adler of the Wall Street Examiner

Fannie and Freddie are trying to get back some of the $188 billion in US taxpayer money that they’ve already had to fork over to holders of their guaranteed securities as a result of all the bad loans the banks packaged up and sold them.

It’s ugly. The banks knowingly packaged up this toxic crap and sold it to Fannie and Freddie. They should be forced to buy every penny of it back.

Somebody please explain to me why we are paying off China, Japan, the Fed and other holders of this bad paper, when the crooks who packaged it walk free and collect their fat bonuses.

The investors who bought the Fannie paper had to know it was full of crap when they bought it. I mean, I knew. You knew. They knew or should have known. What they were buying was the outrageous US Government guarantee that put us on the hook for the fraud committed by the banks. The  originators and bundlers who created the mess, and the skilled investors who bought it should take the haircut, not us.

I’m glad to see F and F go through the motions. I commend Ed Demarco for looking out for our interests. But it’s too little and too late.

Government-owned Fannie Mae and Freddie Mac are stepping up efforts to find bad home loans that they can force mortgage lenders to buy back from them, providing an increasingly bigger headache to banks.

The government-controlled companies are squabbling with banks over who should bear the burden of losses from the housing crunch, in particular loans made between 2005 and 2008, when the market was at its frothiest.

Fannie Mae and Freddie Mac’s efforts will translate to higher mortgage losses for banks in the coming quarters. But the end of the fighting may be in sight. Fannie Mae, the larger of the two finance companies, is more than halfway through its review of loans to try to sell back to banks and is mainly focusing on that four-year period, a source familiar with the matter said.

via Insight: Fannie Mae, Freddie Mac clamping down on banks | Reuters.

Get regular updates the machinations of the Fed, Treasury, Primary Dealers and foreign central banks in the US market, in the Fed Report in the Professional Edition, Money Liquidity, and Real Estate Package. Click this link to try WSE's Professional Edition risk free for 30 days!

Copyright © 2012 The Wall Street Examiner. All Rights Reserved. The above may be reposted with attribution and a prominent link to the Wall Street Examiner.

Enter Email Address

%d bloggers like this: