What I’m reading in this part of the thread is Martin Hyde doing a creditable job of setting his partisan leanings aside and doing some very smart and cogent analysis about Michigan and the Dem primary season. And the response from you guys is basically ‘U R a pawn of the rich.’
Exactly. It would cause gnashing of teeth and rending of garments. Hopefully it won’t come to that.
You’re joking, but now that you mention it, I wonder if the similarity in names does engender a certain amount of, not confusion, but a vague feeling of familiarity and affection.
This has already happened. A good friend emailed me the following today (slightly redacted for his privacy)
As someone who worked for a mortgage broker before and during the crisis, I can tell you your facts are wrong, at least as far as Fannie Mae is concerned. I didn’t work with GNMA loans, so I couldn’t talk about those, but Fannie Mae had the highest requirements for loan approval in the industry. You didn’t just automatically get a Fannie Mae mortgage (which, btw, are 30-year fixed loans, one of the most stable of all loan types).
It was the loan industry coming up with all these questionable financial instruments and then bundling them for sale to investors that caused the crisis. If anything, it was a lack of regulation on the part of the government that, if not caused, abetted the situation. Those government programs were in no way to blame for institutionalized greed on the part of banks and Wall Street.
What ever happened to caveat emptor? If you start saying financial instruments can never turn out to be worth far less than people think they are at a given point, you are going the way that got China into trouble recently. I think bitcoin, for instance, is utterly ridiculous, but I’m not keen to tell people they can’t sell one for $1,000 because that price is obviously overvalued and is going to crash.
I did not make any claims about the requirements . But a 30-year fixed rate loan is actually incredibly risky, and before the government of the Western world decided to create subsidized home ownership they largely did not exist. This is because a 30-year term subjects the lender to incredible risks. A hundred years ago a lot of loans were very short in duration and had very high downpayment requirements. It’s Federal intervention and creation of an artificial mortgage economy that has allowed people to buy homes with 5% down and pay it off over 30 years time. A truly free market would not offer such products to the majority of consumers.
Well mortgage backed securities from Fannie and GNMA were both implicitly and explicitly (respectively) guaranteed by the government, their MBSes represented a huge share of the market, and caused perverse pricing/risk assessments of the MBS market at large.
But it’s not a “50/50 national race”. While the RCP average was about 5 points a couple weeks ago, it’s been drifting since super Tuesday and is now at +11 for Clinton. In no reality was Clinton “supposed” to lose Michigan, only this hypothetical reality that nobody thought we lived in… until maybe yesterday.
So let me restart–Michigan was an upset. When I said “Sanders was supposed to win Michigan” (or whatever it was I said), I mean that according to the FiveThirtyEight 50/50 scorecard, Clinton was assumed to lose there by 4 delegates. That scorecard is just a demographically weighted path for both candidates to get 2025.5 delegates. So what I’m saying here is “if Sanders is running a competitive campaign with Clinton he’s supposed to walk away with net 4 delegates here, based on the demographic projections.”
I think people are for some weird reason reading too much into what I said–that scorecard isn’t represented by me as “predictive”, it’s benchmark of the candidates versus one hypothetical “path to the nomination.” It’s just one of many possible paths to the nomination, but one that is based on demographic estimates (as opposed to say, randomly selecting delegate numbers from the 56 races to come up with 2025.5 for each candidate.)
Exactly what risks are those? For the first half of the life of the loan the lender is getting mostly interest up front. If the borrower defaults on the loan, the lender gets the property. (Yes, I realize that banks don’t want to deal with the costs of selling that property and maintaining it in the interim, but in general they’re extremely low compared to the size of the loan.) And the longer the borrower goes before he/she defaults on the loan, the more money the lender makes. In short, if it didn’t make good financial sense to make those loans, banks would not make them, regardless of the backing of the government. Period.
30-year fixed loans made the American dream of home ownership possible for generations of people. In no way were they a bad thing. You could argue otherwise now, since it’s getting more and more difficult for the average person to buy a home, but overall its benefits have far outweighed its shortcomings.
It was the variations that lenders came up with to make even more money that caused the real trouble. ARMs and reverse mortgages were the culprits, not 30-year fixed. For some people these types of loans make sense, but mostly they were damaging to the borrower and simply sold to them by money-hungry banks and brokers.
I’m also curious where you got the idea that it was the government guaranteeing MBS’s. It was insurance companies in the main, primarily (and famously) AIG. The trigger for the entire domino effect was when they stopped offering credit default swaps after Lehman Brothers failed.
You can criticize the government for a lot of things, but in this case the only thing it was guilty of was lack of oversight.
What are you talking about? Ginnie Maes have full faith and credit of the United States, Fannie Mae MBS had an “implicit” government backing. The “idea” is based on reality.