Archive for October 28th, 2014

by lizard

Ever hear the name Mel Watt? He’s a Democrat and a black man, so in the age of identity politics, what else do people need to know? If you’re tired of the bankers fucking up the world, then you need to know Mel Watt is the most dangerous financial oligarch puppets operating in America today.

Obama picked this guy to head the Federal Housing Finance Agency, so for liberals asleep at the wheel, they probably assume Watt’s advocacy for looser lending is all about helping people buy houses. Nothing could be farther from the truth. Thankfully we have people like Michael Whitney explaining what an oligarch puppet like Watt is actually up to, and it’s bad:

Last week, the country’s biggest mortgage lenders scored a couple of key victories that will allow them to ease lending standards, crank out more toxic assets, and inflate another housing bubble. Here’s what’s going on.

On Monday, the head of the Federal Housing Finance Agency (FHFA), Mel Watt, announced that Fannie and Freddie would slash the minimum down-payment requirement on mortgages from 5 percent to 3 percent while making loans more available to people with spotty credit. If this all sounds hauntingly familiar, it should. It was less than 7 years ago that shoddy lending practices blew up the financial system precipitating the deepest slump since the Great Depression. Now Watt wants to repeat that catastrophe by pumping up another credit bubble.

Crazy? Yes, absolutely batshit crazy. Here’s more:

The reason that Obama picked Watt was because he knew he could be trusted to do whatever Wall Street wanted, and that’s precisely what he’s doing. Smaller down payments and looser underwriting are just the beginning; teaser rates, balloon payments, and liars loans are bound to follow. In fact, there’s a funny story about credit scores in the Washington Post that explains what’s really going on behind the scenes. See if you can figure it out:

“Most housing advocates agree that a bigger bang for the buck would come from having lenders lower the unusually high credit scores that they’re now demanding from borrowers.

After the housing market tanked, Fannie and Freddie forced the industry to buy back billions of dollars in loans. In a bid to protect themselves from further financial penalties, lenders reacted by imposing credit scores that exceed what Fannie and Freddie require. Housing experts say the push to hold lenders accountable for loose lending practices of the past steered the industry toward the highest-quality borrowers, undermining the mission of Fannie and Freddie to serve the broader population, including low- to moderate- income borrowers.

Today, the average credit score on a loan backed by Fannie and Freddie is close to 745, versus about 710 in the early 2000s, according to Moody’s Analytics. And lenders say they won’t ease up until the government clarifies rules that dictate when Fannie and Freddie can take action against them.” (Washington Post)

Can you see what’s going on? The banks have been requiring higher credit scores than Fannie or Freddie.

But why? After all, the banks are in the lending business, so the more loans they issue the more money they make, right?

Right. But the banks don’t care about the short-term dough. They’d rather withhold credit and slow the economy in order to blackmail the government into doing what they want.

And what do they want?

They want looser regulations and they want to know that Fannie and Freddie aren’t going to demand their money back (“put backs”) when they sell them crappy mortgages that won’t get repaid. You see, the banks figure that once they’ve off-loaded a loan to Fannie and Freddie, their job is done. So, if the mortgage blows up two months later, they don’t think they should have to pay for it. They want the taxpayer to pay for it. That’s what they’ve been whining about for the last 5 years. And that’s what Watt is trying to fix for them.

The banks really lucked out with Obama. If this was a Republican administration pulling this bullshit, Democrats might remember what having a spine feels like.

As it stands now, in this sea of corruption that is American politics, Democrats are jellyfish.

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