Time shows you the Twits!

[JackLuis]

Who's to blame for the fine mess we are in?

The top twenty-five are here.

 

[Teloz]

Who's to blame for the fine mess we are in?

The top twenty-five are here.

That was really interesting Jack, thanks. When do the executions start?

 

[DeeZire]

This quote caught my eye. It also explains why Barney Frank isn't on the Time top 25 list, although he does catch a lot of flack around here from time to time.

During the 2008 election campaign, Republicans attempted to pin blame for the crisis on the Community Reinvestment Act (CRA) and mortgage giants Fannie Mae and Freddie Mac. Nice try: there's virtually no evidence to back up the CRA charge, and while Fannie and Freddie aren't blameless, they were mostly sidelined during the worst of the mortgage frenzy, from 2003 to 2006.

 

[JackLuis]

That was really interesting Jack, thanks. When do the executions start?

Today is Tuesday Right? Or Wednesday over there? How about Saturday, the NFL is starting the season Sunday and we wouldn't want to compete with the Cheerleaders.

 

[Teloz]

Today is Tuesday Right? Or Wednesday over there? How about Saturday, the NFL is starting the season Sunday and we wouldn't want to compete with the Cheerleaders.

Maybe it would solve the problem of half-time entertainment?

 

[ishtat]

Who's to blame for the fine mess we are in?

The top twenty-five are here.

Any list which excludes the US congress both individually and collectively has to be wrong.

A pollie sold this to Time perhaps?

 

[Handley_Page]

Save a few for us!.
I'd personally add those twits who bought and sold the debts on.
Pass me the machine gun, Mabel

 

[bronzeage]

Any list which excludes the US congress both individually and collectively has to be wrong.

A pollie sold this to Time perhaps?

Phil Gramm is #1 on the list.


"As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington's most prominent and outspoken champion of financial deregulation. He played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street. He also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far."

 

[trysail]

This quote caught my eye. It also explains why Barney Frank isn't on the Time top 25 list, although he does catch a lot of flack around here from time to time.

... and he richly deserves every bit of it. I couldn't care less if he's a "D." or an "R." What I do care about is knowledge of the industry and competence— and believe me— he's got neither. Time got many of the names right but relying on that magazine ( remember, it was the progenitor of People [ a/k/a "Peephole" ] ) to accurately identify the culprits is a bit like reading Nature in hope of getting correct college football point spreads.


"I think this is a case where Freddie Mac (FRE) and Fannie Mae (FNM) are fundamentally sound. They're not in danger of going under…I think they are in good shape going forward.''
—Barney Frank (D-Mass.),
House Financial Services Committee Chairman,
July 14, 2008.
( Two months later, the government forced the mortgage giants into conservatorships and pledged to invest up to $100 billion in each. )







Below are excerpts from Warren Buffett's 2008 Annual Letter to Shareholders ( of Berkshire Hathaway Corporation ). It is required reading for many ( and should be for many others ). Buffett's extraordinary success is, by now, well-known. Less appreciated is the fact that his accomplishment has been achieved by high ethical standards, honesty, "fair dealing" and candor.

These are his views on Fannie Mae, Freddie Mac, government oversight of those entities and residential real estate finance. The Annual Letter is copyrighted material and I quote small portions of it.

Derivatives are dangerous. They have dramatically increased the leverage and risks in our financial system. They have made it almost impossible for investors to understand and analyze our largest commercial banks and investment banks. They allowed Fannie Mae and Freddie Mac to engage in massive misstatements of earnings for years. So indecipherable were Freddie and Fannie that their federal regulator, OFHEO, whose more than 100 employees had no job except the oversight of these two institutions, totally missed their cooking of the books.

For a case study on regulatory effectiveness, let’s look harder at the Freddie and Fannie example. These giant institutions were created by Congress, which retained control over them, dictating what they could and could not do. To aid its oversight, Congress created OFHEO in 1992, admonishing it to make sure the two behemoths were behaving themselves. With that move, Fannie and Freddie became the most intensely-regulated companies of which I am aware, as measured by manpower assigned to the task. On June 15, 2003, OFHEO (whose annual reports are available on the Internet) sent its 2002 report to Congress – specifically to its four bosses in the Senate and House, among them none other than Messrs. Sarbanes and Oxley.

The report’s 127 pages included a self-congratulatory cover-line: “Celebrating 10 Years of Excellence.” The transmittal letter and report were delivered nine days after the CEO and CFO of Freddie had resigned in disgrace and the COO had been fired. No mention of their departures was made in the letter, even while the report concluded, as it always did, that “Both Enterprises were financially sound and well managed.” In truth, both enterprises had engaged in massive accounting shenanigans for some time. Finally, in 2006, OFHEO issued a 340-page scathing chronicle of the sins of Fannie that, more or less, blamed the fiasco on every party but – you guessed it – Congress and OFHEO...

*******​

[ On housing and residential real estate mortgages ]

...Commentary about the current housing crisis often ignores the crucial fact that most foreclosures do not occur because a house is worth less than its mortgage (so-called “upside-down” loans). Rather, foreclosures take place because borrowers can’t pay the monthly payment that they agreed to pay. Homeowners who have made a meaningful down-payment – derived from savings and not from other borrowing – seldom walk away from a primary residence simply because its value today is less than the mortgage. Instead, they walk when they can’t make the monthly payments.

Home ownership is a wonderful thing. My family and I have enjoyed my present home for 50 years, with more to come. But enjoyment and utility should be the primary motives for purchase, not profit or refi possibilities. And the home purchased ought to fit the income of the purchaser.

The present housing debacle should teach home buyers, lenders, brokers and government some simple lessons that will ensure stability in the future. Home purchases should involve an honest-to-God down payment of at least 10% and monthly payments that can be comfortably handled by the borrower’s income. That income should be carefully verified.

Putting people into homes, though a desirable goal, shouldn’t be our country’s primary objective...

 

[trysail]

I didn't write this but I think it makes sense. The author would not wish to be identified ( on this forum ).

...It is not entirely appropriate to say that too much consumer debt caused the market collapse. Individuals and entities can accumulate increasing levels of debt without causing a collapse. Instead, problems occur when borrowers can’t repay the debt. In the recent downturn, high debt levels accrued just as things became particularly painful.

Over the past decade, consumers and financial institutions piled on more and more mortgage debt. Consumers based their optimism on the belief they would remain employed, the price of their home would rise or stay flat, and that they could refinance (if they really understood) their adjustable-rate mortgage. Financial institutions bought mortgage debt on the premise they understood the risks associated with an increase in defaults.

When oil prices spiked and pushed the world into one of its regular downturns, these optimisms and premises fell apart. Consumers began to default on their mortgages at unprecedented rates. Banks discovered they did not fully understand the credit risks of their mortgage debt and were faced with insolvency as asset values collapsed. In turn, the stock market collapsed as lending froze. The market did not turn around until housing and mortgage assets were written down to sufficiently low levels such that a) consumers could step in again and buy houses and b) banks and their creditors could foresee an end to write-downs...

... Government debt is a whole other problem. As the economy recovers, tax revenues will help close the deficit. However, we will face a systemic problem. Regardless of whether we pass more stimulus measures or expand access to healthcare, the trend over the next ten to twenty years is ugly. Two forces are at work. First, the baby boom’s retirement places great stress on entitlement programs as retirees become a larger percentage of the population. Second, healthcare costs are rising at rates in excess of inflation. The reason for the second problem is fairly simply. The existing “rationing” system for both private and public healthcare programs basically isn’t functioning very well. Governments ration by limiting access to services. Private companies ration by pricing services beyond the means of some customers.

Americans want neither government nor insurance companies to refuse their healthcare claims. Insurance companies that deny healthcare claims are accused of putting profits before people (even in regions of the country where not-for-profit companies control close to 80% of the market). Alternatively, rationing by the government creates visions of “Government Death Panels” for some and the very real prospect the government will have to limit services to control costs.

Both government and insurance companies argue that if we modify the system, we will realize better outcomes for less money. Perhaps this is the case. At the end of the day, however, healthcare seems to be a service people in this country will demand without restraint if it isn’t limited by either private market prices or government fiat. Unless consumer behavior changes dramatically, healthcare budgets will probably rise in excess of the inflation rate for a sustained period until some rationing is built into the system...

 

[ishtat]

Phil Gramm is #1 on the list.


"As chairman of the Senate Banking Committee from 1995 through 2000, Gramm was Washington's most prominent and outspoken champion of financial deregulation. He played a leading role in writing and pushing through Congress the 1999 repeal of the Depression-era Glass-Steagall Act, which separated commercial banks from Wall Street. He also inserted a key provision into the 2000 Commodity Futures Modernization Act that exempted over-the-counter derivatives like credit-default swaps from regulation by the Commodity Futures Trading Commission. Credit-default swaps took down AIG, which has cost the U.S. $150 billion thus far."

Thanks for the correction. I was thinking of the current Congress completely escaping censure. Gramm left in 2002. I don't think the current lot can absolve themselves from resposibility.

Trysail I note has pointed out Barney Frank but he is only one of many, tho' one of the worst.

 

[trysail]

I am delighted that Time nailed Joseph Cassano. That sonofabitch bears tremendous personal responsibility for detonating the financial weapons of mass destruction and bankrupting AIG.

Like Franklin Raines at Fannie Mae, he could easily claim he didn't have a frickin' clue what he was doing and resort to blaming others for not stopping him.

He'd be right with the first claim but no one who looks in a mirror can seriously assert the second with a straight face.