Roscoe,

You are correct, but you did not mention that many, many of the so called sub-prime loans were not originated as sub-prime, but rather made to become sub-prime by lenders greed.

By many unscrupulous lenders raising rates when the LIBOR rate remains low, is just greed. These lenders bought every corner in America and built new buildings based on "Future Income". Sound familiar? (Aurther Anderson)??

The mortgage companies raised the mortgage rates on many people when the LIBOR rate was dropping and in turn foreclosed on the property.

So, to say that all the foreclosures were made (originated) to people who could not normally qualify for a loan. I would have to respectfully disagree with you on that statement. ;)


Edited to add:
I do agree with you that many were made to people who should not have been granted these types of loans. They should have been better qualified and given fixed rate mortgages.

interesting article on this topic.......

Lehman CEO Fuld's hubris contributed to meltdown



http://www.reuters.com/article/reute...080914?sp=true

Fannie was a very profitable entity at least until 1996,as Fannie had 10 consecutive years of record profits up to 1996.So,what happened between 1996 and now that brought Fannie to her knees?

Let me first plot a timeline of events and we'll see if we can spot where the Fannie hit the fan.

Fannie was created in 1938 and operated for close to 50 years within the guidelines as mandated by Congress. In 1983 Fannie was pushed by HUD to enter the multi-family market and Fannie became a landlord. I remember hearing through the years about apartments that the rent was based on your earnings and this must have been Fannie in action. I had one rental property and I swore I would never rent anything else. I doubt Fannie fared much better.

In 1991 a program called"Opening the Doors to Affordable Housing" was started and by 1993 more than $10 billion in mortgages had been originated in this program. In 1994 a new program started and it was called "The Trillion Dollar Commitment" for affordable housing. By 1998 this program had originated half a trillion dollars in low income mortgages. Mr. Fleckenstein stated that Greenspan didn't have anything or didn't want anything to do with Fannie. Greenspan made at least one decision on Fannie and that was to loosen lending regulations and this led to one of the main reasons we got to this point. He let the banks get by with fewer appraisals. I think this is as dangerous as not verifying employment or income. How can you make a loan on some property when you have no clue what it's worth. So,later we went from no appraisal to not verifying employment to not verifying income and I read tonight not to discriminate against people that already owed to much money. So,from March 1994 Fannie has gone from making qualified loans based on sane lending to no appraisal,no income or employment verification and don't worry if you already owe more than you could ever hope to repay,your just the type of person were looking for.

A couple of more interesting points., In 1994 Fannie bought back $634 million "risky securities" which I assume was Fannie paper from Orange County,Ca for $577 million and I bet Fannie lost on this transaction. March,10,1994 Clinton visits Fannie as he has called for Fannie to relax their lending policy so more poor and lower-middle class can qualify for loans. In 2001 HUD pushed Fannie for more multi-family and subprime loans to be approved.

This Raines worked at Fannie once before he returned in 1998. Raines worked in the Clinton cabinet and was appointed by Clinton in 1998 to the Fannie board. The President can appoint 5 people to the board so we have Raines and 4 more appointed by Clinton and this was the beginning of the end. Raines ran amuck from 1998 to 2003 and he was succeeded by Mudd that was already at Fannie. Raines decided his 5 years were worth some $90 million of which an estimated $52 million was gotten frauduantly. Raines,Gorelick and Jim Johnson all played a part in this fraud and Johnson was eying the VP slot with O'Bama until the Fannie hit the Fan!

Y'all remember Gorelick from the 9-11 hearings. She was the asst AG and was responsible for the 'wall' between CIA and FBI.

Roscoe

Interesting article on AIG

Well worth the read.


http://money.cnn.com/2008/09/16/news...ion=2008091613

Well Ernie we have something in common. also put some of my money in a annuity, so at least i know what i will be getting. Just left my local state farm ins guy. Getting rid of my AIG car and home owners ins before they raise my rates or fold.
joeg

Do you guys know about the 'ninja' loans the lenders were pushing?. They were actually approving 'no income, no assets' loans. Not only was that a recipe for disaster, it was a disaster.

Oh man you had to brim Gore-Lick back into this? I spose she will sit on the next commission looking into why Bush let this happen to. What did he know and when did he know it?

Fannie is dem controlled and dem run. But of course, its the republican's fault.

Mike

The last thing Obama wants is an investigation into Fannie and Freddie. Both have been donating to "O" over a decade. They are his second largest contributors. He also has close connections with Raines, Johnson and Gorelick.

Roscoe

Look at it this way, your portfolio manager makes money whether the market is up or down - you are fully supporting his/her lifestyle and even if you are in a mutual fund - the costs don't change, up or down - so at least the cost levels are consistent - once again, with you supporting a very good lifestyle for brokers.

Ernie, I know what you are saying. Moved mine into protected a while ago and will come out ahead at the end of the year.

:D :D :D

Its the end of the world as we know it, and I feel fine... REM

http://en.wikipedia.org/wiki/Leonard_Bernstein

;)