Thank gawd! To finally see the two agencies almost single-handedly responsible for the financial crisis of the last 2 years on the ropes almost makes up for last night’s horror show. Almost.
“It’s clear that Fannie and Freddie, as they currently exist, should be put out of existence, which means the important question is what combination of entities public and private will replace them,” said Rep. Barney Frank (D-Mass.), chairman of the House Financial Services Committee.
This is, hands down, the most baffling aspect of the financial crisis I have come across.
The reason we are in recession is because of the greedy bankers. They made bad loans in order to extend their profit.
I gotz nothin’
So lemme see, it goes something like this:
Greedy Banker: Hello Poor Sucker, you would like to take out a loan on a house?
Poor Sucker: Well yes sir.
GB: Well, I’m the guy you need to see. How much are ya looking to borrow?
GB: Wow, quite a house. What’s the askin’ price?
PS: Ahh, well, you know, I mean…..$380,000. If I had the money I wouldn’t be here.
GB: I see. So you wanna borrow the whole value of the house? No down payment?
PS: Well, I could prolly’ scrape up about 2 grand if I can talk my folks into not chargin’ me rent. For 10 months.
GB: Ahh, jeez Poor Sucker. Um, well, how much do you make?
PS: Does it matter?
GB: Let’s go at this another way. Do you have a loan repayment history?
PS: Ahhh, umm, well…. No. No I don’t.
GB: Why not?
PS: Umm, because I’ve never repaid any loan I’ve ever taken.
GB: You know what?!? YOU are exactly the kinda guy we’re lookin for here at Weiss, Crew, Em and How. Let’s draw up the paper work and getcha in that house today!
Serious. By the time I was 5 I knew which kids on my block would return my Hot Wheels and which ones wouldn’t. Or would but would trash ’em making me have to go buy a new one. FIVE!
Now, what would make even a 5 year old willing to loan out his Hot Wheel to the kid who would trash it? Wanna know?
A 5 year old would loan out his Hot Wheel to the kid that had no chance of returning it IF HE KNEW HIS MOM WOULD BUY HIM A NEW ONE!
There isn’t a bank in all of history that would loan a shit load of money to a guy that has no chance of payin’ it back. Not ONE.
Except for the bank that knows it can sell that loan to another bank that’s buyin’ those loans. Can you guess which banks were buyin’ those loans?
Fannie Mae and Freddie Mac. That’s who.