Fannie Mae and Freddie Mac: The Worst of Both Worlds

[rowyn]

I am not an expert on financial matters, but I've been following financial news for the last ten years or so. I read it because I find the workings of the market and businesses ... fun. Some people like to read about politics or international incidents or local crime; me, I like hearing about why companies are succeeding or failing, why they're

Comments

[pyat]

Thank you. This is the first sensible thing I've read about the issue that wasn't just repeating sound bites. :)

[rowyn]

You're welcome. :) I admit, one of the reasons I decided to write this was that not many people on my friends' list were talking about it, and it seemed like it deserved more attention.

[jordangreywolf]

Well, there are a lot of things that interest me that I don't talk/write about, simply because I don't feel like I have much to say about it

Adjustable Rate Mortgages: Not As Dumb As It Sounds

[rowyn]

Now, I had no intention of getting an ARM (Adjustable Rate Mortgage) myself, but that's because of several factors

[chipuni]

An excellent analysis. Thank you.

[rowyn]

Aww, thanks. *^_^*

[circuit_four]

Wow, we (mostly) agree on an economic issue! :D A momentous day, for an excellent post.

[rowyn]

Thanks! Yeah, beating on the mortgage giants isn't one of my more controversial opinions. Not any more, anyway. >:)

[ladyperegrine]

This is really fascinating. Thank you for increasing a bit of my knowledge about it.

[rowyn]

I'm glad you enjoyed it. :) I was pretty surprised by how interesting I found the Wal Street Journal when I first started reading it. I always thought business news was long columns of boring stock quotes. :)

[caraig]

Thank you for the analysis!

I knew that the home mortgage market was a mess because all those loans were made into little nibbly-sized bits and sold off here and there to virtually anyone. I had no idea that the FMs were at the heart of it, though.

I know I should be worried, but there's an element of schadenfreude in seeing all these financial 'giants' stumbling over their own 'cleverness.' But what's sobering is that the people in charge of these 'giants' are going to come out of this none the worse for wear, with golden-platinum alloy blend parachutes, and it's the people at the bottom who are going to get screwed over.

[terrycloth]

Ah, but we'll have the last laugh. The world they land in will be a ruined, poverty-stricken wasteland!

Wait, no, that's still us getting hurt worst. Damn it.

[rowyn]

But we are much more used to living in poverty and ruin than they are! So when their vast fortunes are worthless paper just like ours it might hurt them more.

Kind of a Pyrrhic victory, though.

[rowyn]

I don't think the FMs pioneered the slice-and-dice selling method, where loans to A, B and C are turned into pools of A1B1C1 and A2B2C2 etc., then investors X, Y and Z would buy A1B1C1 and G, H and I take A2B2C2. That was the brainchild of true geniuses. O_o

But the FMs did start doing that eventually, and they were always one of the biggest players in the "lump all the loans together into a big pool and sell them to a whole bunch of investors" game.

Also, the regulators said they're not paying for the severance packages of the FMs' CEO. With luck, that'll stick and they won't get their golden parachutes after all. It's not much justice but it's something. >:)