Home › Forums › Financial Markets/Economics › Fed claims $13B profit on lending facilities
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davelj.
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February 17, 2011 at 1:48 PM #668643February 17, 2011 at 2:34 PM #667522
Diego Mamani
Participant[quote=briansd1]But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]
Brian, the GSEs were part of the system that caused the crisis. I agree that the GSEs were not the sole cause, but the implicit government guarantee behind paper issued (or repackaged) by the GSEs introduced a great deal of distortion in the market, which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.
February 17, 2011 at 2:34 PM #667583Participant[quote=briansd1]But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]
Brian, the GSEs were part of the system that caused the crisis. I agree that the GSEs were not the sole cause, but the implicit government guarantee behind paper issued (or repackaged) by the GSEs introduced a great deal of distortion in the market, which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.
February 17, 2011 at 2:34 PM #668192Participant[quote=briansd1]But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]
Brian, the GSEs were part of the system that caused the crisis. I agree that the GSEs were not the sole cause, but the implicit government guarantee behind paper issued (or repackaged) by the GSEs introduced a great deal of distortion in the market, which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.
February 17, 2011 at 2:34 PM #668330Participant[quote=briansd1]But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]
Brian, the GSEs were part of the system that caused the crisis. I agree that the GSEs were not the sole cause, but the implicit government guarantee behind paper issued (or repackaged) by the GSEs introduced a great deal of distortion in the market, which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.
February 17, 2011 at 2:34 PM #668673Participant[quote=briansd1]But certain uninformed people who just don’t understand the chain of events accuse the GSEs of CAUSING the crisis.[/quote]
Brian, the GSEs were part of the system that caused the crisis. I agree that the GSEs were not the sole cause, but the implicit government guarantee behind paper issued (or repackaged) by the GSEs introduced a great deal of distortion in the market, which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.
February 17, 2011 at 3:04 PM #667551Eugene
Participant[quote]Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates[/quote]
We (taxpayers) didn’t lose anything with Fannie and Freddie, nor will we. We essentially loaned them $150 billion at 10% interest, because Fannie and Freddie’s officials like to have positive mark-to-market net worth. They sit on that cash and pay us back dividends for the privilege of having it. By the time they are done repaying the loan, we the taxpayers will probably end up making more money from the Frannie deal than from the latest GOP proposed budget cuts.
[quote]which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.[/quote]
You have a logic gap here. Money flowing into mortgage brokers and subprime borrowers was not going into bonds with even a shred of implicit government guarantee.
February 17, 2011 at 3:04 PM #667613Participant[quote]Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates[/quote]
We (taxpayers) didn’t lose anything with Fannie and Freddie, nor will we. We essentially loaned them $150 billion at 10% interest, because Fannie and Freddie’s officials like to have positive mark-to-market net worth. They sit on that cash and pay us back dividends for the privilege of having it. By the time they are done repaying the loan, we the taxpayers will probably end up making more money from the Frannie deal than from the latest GOP proposed budget cuts.
[quote]which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.[/quote]
You have a logic gap here. Money flowing into mortgage brokers and subprime borrowers was not going into bonds with even a shred of implicit government guarantee.
February 17, 2011 at 3:04 PM #668222Participant[quote]Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates[/quote]
We (taxpayers) didn’t lose anything with Fannie and Freddie, nor will we. We essentially loaned them $150 billion at 10% interest, because Fannie and Freddie’s officials like to have positive mark-to-market net worth. They sit on that cash and pay us back dividends for the privilege of having it. By the time they are done repaying the loan, we the taxpayers will probably end up making more money from the Frannie deal than from the latest GOP proposed budget cuts.
[quote]which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.[/quote]
You have a logic gap here. Money flowing into mortgage brokers and subprime borrowers was not going into bonds with even a shred of implicit government guarantee.
February 17, 2011 at 3:04 PM #668360Participant[quote]Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates[/quote]
We (taxpayers) didn’t lose anything with Fannie and Freddie, nor will we. We essentially loaned them $150 billion at 10% interest, because Fannie and Freddie’s officials like to have positive mark-to-market net worth. They sit on that cash and pay us back dividends for the privilege of having it. By the time they are done repaying the loan, we the taxpayers will probably end up making more money from the Frannie deal than from the latest GOP proposed budget cuts.
[quote]which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.[/quote]
You have a logic gap here. Money flowing into mortgage brokers and subprime borrowers was not going into bonds with even a shred of implicit government guarantee.
February 17, 2011 at 3:04 PM #668703Participant[quote]Anyways, the $13B pales in comparison to the money that we (taxpayers) will lose with Fannie and Freddie. We’ve already lost close to $150 BILLION, and we stand to lose another $160 billion to $1 trillion, according to conservative estimates[/quote]
We (taxpayers) didn’t lose anything with Fannie and Freddie, nor will we. We essentially loaned them $150 billion at 10% interest, because Fannie and Freddie’s officials like to have positive mark-to-market net worth. They sit on that cash and pay us back dividends for the privilege of having it. By the time they are done repaying the loan, we the taxpayers will probably end up making more money from the Frannie deal than from the latest GOP proposed budget cuts.
[quote]which resulted in cheap money flowing into mortgage brokers and subprime borrowers, inflating house prices to ridiculous levels.[/quote]
You have a logic gap here. Money flowing into mortgage brokers and subprime borrowers was not going into bonds with even a shred of implicit government guarantee.
February 17, 2011 at 3:07 PM #667556briansd1
GuestDiego, the GSEs were part of the system. But their share of market went down during the bubble.
The GSEs hardly CAUSED the crisis. The privately issued mortgages CAUSED the crisis.
http://www.ritholtz.com/blog/2011/02/fannie-freddie-market-share/
http://www.ritholtz.com/blog/wp-content/uploads/2011/02/OB-MK956_FANFRE_NS_20110208232002.jpg
Need I mention how some ignorant folks believe that the Community Reinvestment Act caused the crisis?
February 17, 2011 at 3:07 PM #667618GuestDiego, the GSEs were part of the system. But their share of market went down during the bubble.
The GSEs hardly CAUSED the crisis. The privately issued mortgages CAUSED the crisis.
http://www.ritholtz.com/blog/2011/02/fannie-freddie-market-share/
http://www.ritholtz.com/blog/wp-content/uploads/2011/02/OB-MK956_FANFRE_NS_20110208232002.jpg
Need I mention how some ignorant folks believe that the Community Reinvestment Act caused the crisis?
February 17, 2011 at 3:07 PM #668227GuestDiego, the GSEs were part of the system. But their share of market went down during the bubble.
The GSEs hardly CAUSED the crisis. The privately issued mortgages CAUSED the crisis.
http://www.ritholtz.com/blog/2011/02/fannie-freddie-market-share/
http://www.ritholtz.com/blog/wp-content/uploads/2011/02/OB-MK956_FANFRE_NS_20110208232002.jpg
Need I mention how some ignorant folks believe that the Community Reinvestment Act caused the crisis?
February 17, 2011 at 3:07 PM #668365GuestDiego, the GSEs were part of the system. But their share of market went down during the bubble.
The GSEs hardly CAUSED the crisis. The privately issued mortgages CAUSED the crisis.
http://www.ritholtz.com/blog/2011/02/fannie-freddie-market-share/
http://www.ritholtz.com/blog/wp-content/uploads/2011/02/OB-MK956_FANFRE_NS_20110208232002.jpg
Need I mention how some ignorant folks believe that the Community Reinvestment Act caused the crisis?
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