Blown Mortgage - Latest Comments in Freddie Mac Employees Speak Out

Re: Freddie Mac Employees Speak Out

thomas — Sun, 26 Apr 2009 20:24:47 -0000

I am a freddie mac shareholder. I did not know i was and had no intent to be one.
My financial advisor steered me to safe low risk corporate bonds. but they were not corporate bonds and they were not gauranteed by the government. Implied gauranteed
but what does that mean. They are not worth 2-3 cents on the dollar.

Well if i had a meaningful vote as a shareholder i would vote NO to the $200 million bonus. What a joke retention bonus- they should be lucky to have a job. the bigger their bonus the greater their culpability. There is need for new blood at Freddie and no one there should earn more than the President of the USA. I am sure the shareholders say NO , the taxpayers say NO. Give those jobs to those who are unemployed who deserve it.

Re: Freddie Mac Employees Speak Out

POHearn — Mon, 06 Oct 2008 11:45:01 -0000

You're correct about Fannie and Freddie being in conservatorship rather than receivership. Thanks for calling out my mistake. I'll fix that in the text.

As for the comparison of the dot com industry vs. the housing industry, I worked in both, so I have some experience with the difference. In the dot com industry, we offered mainly ideas and services, not assets. Homes are assets and traditionally the best asset one can own.

Secondly, while there was a level of tension between lenders and the GSEs, it was still a relationship that served lenders well. You could argue that the industry would have done just as well, or better, without the GSEs, but you would need to show some evidence. If you have such evidence, I would love to see it.

Finally, the problem we're facing now came because lenders and GSEs left their long-standing practices of controlling risk. Moving so forcefully into the sub-prime market came because congress was pressuring the industry to better support "low-income households." The move to support those households without finding some way to control for all the increased risk was a huge mistake, and both the industry and congress share the blame for that.

Re: Freddie Mac Employees Speak Out

mortgage analyst — Mon, 06 Oct 2008 07:16:44 -0000

Neither Fannie nor Freddie are in receivership, they are in a conservatorship. They are very different. Please get your facts correct. Thanks.

Re: Freddie Mac Employees Speak Out

Aaron Krowne — Mon, 06 Oct 2008 00:02:13 -0000

Oh cry me a freaking river.

Do you know how many imploded mortgage companies were voted/ranked "great places to work"? A lot. The reason should be obvious: companies that are flush with cash can afford to be generous to their employees, and bumper profits bring about euphoria in general. Believe me, plenty of now-extinct dot-coms were "great places to work" before the previous crash. That is no reason to wish it all back.

And the fact that the GSEs haven't tapped the Treasury line yet isn't too meaningful. The trajectory is not good; that is why they were seized. The reason they haven't tapped the line is that the government has suspend all sorts of reserve requirements and has moved the banking system to a "no cash until you crash" model.

Sorry for the annoyed tone, but Fannie and Freddie benefited inestimably from having an "implicit" government backing, and also by having DC in a lobbying stranglehold.

Any mortgage people wistful for this kind of largesse to come back need to grow up. Dot-com people seem to have learned a lot more quickly that their jobs weren't coming back, and in a sense weren't "real" in the first place. It was more like a nice dream.

Same goes for Fannie, Freddie, and the rest of the major players in the "mortgage bubble era."

Sure, the Republican-driven attempt to re-cast the whole mortgage crisis as the fault of the GSEs is revisionist at best, but I don't know how you can say Fannie and Freddie have "served the country well". It was a fraudulent scheme of privatized profits derived from an implicit government guarantee (backed by no formal provisions). So saying they have "served us well" is like saying FHA downpayment laundering scams have "served us well" because, of course, they get people into homes. Nevermind how, or what happens afterwards.