Washington’s capacity to foster crony capitalist larceny and corruption never ceases to amaze. But according to Bloomberg, Wall Street’s shameless thievery from US taxpayers is about to get a whole new definition.
To wit, Freddie Mac is handing three private equity billionaires deeply subsidized debt financing in order to undertake $18 billion in rental apartment deals. According to no less an authority than Morgan Stanley, the subsidy embedded in this cheap financing amounts to 150 basis points or roughly $150 million per year on the loan amounts in play.
– New York Times Reports – “Fannie and Freddie are Back, Bigger and Badder Than Ever” (Liberty Blitzkrieg, July 22, 2015):
Just in case you still harbored any doubt that absolutely zero lessons were learned from the cataclysmic financial collapse of 2008/09. We learn from the New York Times that:
AFTER the financial crisis of 2008, there was one thing that almost everyone agreed on. The government-sponsored mortgage giants, Fannie Mae and Freddie Mac, had to go. While shareholders and executives reaped the profits from Fannie and Freddie in good times, taxpayers were stuck with the bill in a crisis. President Obama described their dysfunctional business model as “Heads we win, tails you lose.” But here we are, seven years after the crisis, and nothing has changed.
– Government Hints Fannie/Freddie Would Need Another Bailout If Conditions Deteriorate (ZeroHedge, March 19, 2015):
FHFA finds that the GSEs might well need billions more in taxpayer dollars in the event of a downturn, suggesting the deck may be stakced against those the companies’ common.
– If At First You Fail Miserably & Blow Up The Financial System, Do It Again! (ZeroHedge, Dec 9, 2014):
Here we go again! Mortgage giants Fannie Mae and Freddie Mac have now officially approved 3% down payment mortgages. Having government entities provide low down payment mortgages to people who can’t afford to buy a house is always a good move. Keynesians like Krugman approve wholeheartedly. The housing market will get a nice boost and the working taxpayers will fund the bad debt through Fannie and Freddie. You own Fannie and Freddie. Everyone wins. In case you forgot, the closing costs to sell a house are usually 8% of the home price. So these home buyers are immediately 5% underwater when they move in… “Sometimes I can’t believe I live in a world this f##ked up. And no one notices and no one cares.”
– Mel Watt, Federal Housing Finance Agency Head, is Pushing Banks to Make Extremely Risky Home Loans (Liberty Blitzkrieg, Oct 16, 2014):
Mel Watt is one of the most dangerous financial oligarch puppets operating in America today. The first time he came across my radar screen was back in 2009, when he “gutted” Ron Paul’s End the Fed bill while it was in subcommittee, something I outlined in the post: Leverage in PE Deals Soars Despite Fed Warnings; Amidst Insatiable Demand for Risky Fannie Mae Debt.
– Bank Of America Caught Frontrunning Clients (ZeroHedge, Jan 25, 2014):
Every time a TBTF bank releases its 10-Q, we head straight for the section, usually well over 100 pages in, that discloses the bank’s total profitable trading days.
This is what the most recent Bank of America 10-Q said on this topic:
The histogram below is a graphic depiction of trading volatility and illustrates the daily level of trading-related revenue for the three months ended September 30, 2013 compared to the three months ended June 30, 2013 and March 31, 2013. During the three months ended September 30, 2013, positive trading-related revenue was recorded for 97 percent, or 62 trading days, of which 69 percent (44 days) were daily trading gains of over $25 million and the largest loss was $21 million. These results can be compared to the three months ended June 30, 2013, where positive trading-related revenue was recorded for 89 percent, or 57 trading days, of which 67 percent (43 days) were daily trading gains of over $25 million and the largest loss was $54 million. During the three months ended March 31, 2013, positive trading-related revenue was recorded for 100 percent, or 60 trading days, of which 97 percent (58 days) were daily trading gains over $25 million.
– US Gov’t Takes Bank Of America To Court And Wins, Jury Finds Countrywide Liable For Fraud (Forbes, Oct 23, 2013):
Thought those mortgage lawsuits against banks were winding down? Think again.
Today a jury found Bank of America liable for defrauding Fannie Mae and Freddie Mac when its Countrywide unit sold it bad mortgages.
The jury also found former Countrywide executive, Rebecca Mairone, liable on the one fraud charge facing her, Reuters reports.
The verdict is a win for the US government as this is one of the few cases stemming from the financial crisis that it’s taken to trial.
“In a rush to feed at the trough of easy mortgage money on the eve of the financial crisis, Bank of America purchased Countrywide, thinking it had gobbled up a cash cow. That profit, however, was built on fraud, as the jury unanimously found,” US Attorney Preet Bharara said in a statement.
The U.S. Department of Justice is looking to get a $848 million out of BofA.
– ALL IS WELL!!! (The Burning Platform, Feb 6, 2013)