Posts Tagged ‘Government Positions’
Government officials have stepped up an investigation into whether crimes were committed when the subprime-mortgage market collapsed. Although a task force was announced in January this is a new effort. Primary focus will be on non-doc and liar loans, what the lenders knew about them, and how they were packaged and sold on the secondary market. Many of our readers sent reports about funding of illegal loans.
One point is perfectly clear after the subprime debacle, which is the need for federal-level regualtors that will actually do something. Finger pointing is frustrating for consumers and mortgage holders. Recently we received a report of a mortage holder who was bounced from the OCC to the FTC, later to be told that the FTC gathers complaints but does not take action on individual complaints.
We strive to stay away from individual politics. There are times, however, when issues such as subprime are politicized by those who think they know what is best. We reported a few days ago on Hillary Clinton’s latest idea. Our article – Clinton’s desire to protect lenders is questioned – also drew immediate fire from the Obama campaign.
Hilliary Clinton’s ruse to protect her friends while playing up to homeowners is so shallow it’s not even funny. Consider Whitewater and other “Clinton” dramas they wish you would forget about. Clinton proposed greater protections for lenders from possible lawsuits by investors, a variation of so-called tort reform. For years, GOP leaders have called for restrictions on what they consider unwarranted lawsuits against businesses. Democrats have often resisted them on grounds they limit injured parties’ legitimate rights to redress.
Fannie Mae and Freddie Mac have new revised capital requirements granted by their regulator, the Office of Federal Housing Enterprise Oversight. The two were previously required to hold 30 percent of extra capital. Now they are only required to have 20 percent. The net result is the two can now pump up to $200 billion into the distressed U.S. mortgage market. Remember, however, that the original 30 percent capital requirement was a hedge against accidents after Fannie Mae and Freddie Mac were found to have lax accounting standards and risk controls a few years ago.