Freddie Mac CFO Apparently Commits Suicide

[Lindsey 0]

Credit card payments are due next month. Graduation from college typically takes a few years. That's where those "minimum payments" come in, and that's when kids start getting in debt, owning more than they can afford. Seems they'd get a clue eventually. There's a lot of wisdom in the saying, "Don't count your chickens before they hatch." It was easy for these home buyers to imagine themselves being able to pay their loans too. Fantasy would be a nice place to live if it'd only last through next month's mortgage payment.

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A conservative is just a liberal who's been mugged. A liberal is just a conservative who's been to jail

[jcd11235 0]

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Credit card payments are due next month. Graduation from college typically takes a few years. That's where those "minimum payments" come in, and that's when kids start getting in debt, owning more than they can afford. Seems they'd get a clue eventually. There's a lot of wisdom in the saying, "Don't count your chickens before they hatch." It was easy for these home buyers to imagine themselves being able to pay their loans too. Fantasy would be a nice place to live if it'd only last through next month's mortgage payment.

Don't get me wrong, I don't think it's a good idea to offer college students such consumer credit. However, the offers are made to college students over their peers not attending college for good reason.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[Lindsey 0]

Point is, though, that we're quite used to getting credit offers that are beyond our means to pay. That doesn't excuse taking advantage of those offers. Can't blame others for our own stupid mistakes.

Likewise, if I give a friend who isn't trustworth a loan, I shouldn't be surprised if she never pays me back.

~linz

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A conservative is just a liberal who's been mugged. A liberal is just a conservative who's been to jail

[jcd11235 0]

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Point is, though, that we're quite used to getting credit offers that are beyond our means to pay. That doesn't excuse taking advantage of those offers. Can't blame others for our own stupid mistakes.

Considering the minimum payment for many credit cards, they are not beyond typical students' means to make the payments. It may not be wise to take out the credit, but it is typically within their means.

Also, credit cards generally have much higher interest rates than mortgages because the the issuing banks expect a higher rate of default, but still want to ensure a profit on their investment with that higher default rate.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[Lindsey 0]

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Point is, though, that we're quite used to getting credit offers that are beyond our means to pay. That doesn't excuse taking advantage of those offers. Can't blame others for our own stupid mistakes.

Considering the minimum payment for many credit cards, they are not beyond typical students' means to make the payments. It may not be wise to take out the credit, but it is typically within their means.

Also, credit cards generally have much higher interest rates than mortgages because the the issuing banks expect a higher rate of default, but still want to ensure a profit on their investment with that higher default rate.

That's what those unwise borrowers seem to think too. But somehow, between paying for rent, food, utilities, car payments, gas for the car, ENTERTAINMENT (of various sorts), and whatever other stuff comes up, credit cards and debt seem to start here for a lot of folks. And I think it's been pretty clearly demonstrated that a lot of kids just aren't able to pay....or they don't pay, for one reason or another. Regardless, the money is offered. Cash advances are offered. People love getting stuff and rationalize it easily (with factoids like "being in college makes me a *good* credit risk).

Welp...here we are talking about this Freddie Mac CFO shooting himself in the head.

~linz

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A conservative is just a liberal who's been mugged. A liberal is just a conservative who's been to jail

[Amazon 7]

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Point is, though, that we're quite used to getting credit offers that are beyond our means to pay. That doesn't excuse taking advantage of those offers. Can't blame others for our own stupid mistakes.

Considering the minimum payment for many credit cards, they are not beyond typical students' means to make the payments. It may not be wise to take out the credit, but it is typically within their means.

Also, credit cards generally have much higher interest rates than mortgages because the the issuing banks expect a higher rate of default, but still want to ensure a profit on their investment with that higher default rate.

That's what those unwise borrowers seem to think too. But somehow, between paying for rent, food, utilities, car payments, gas for the car, ENTERTAINMENT (of various sorts), and whatever other stuff comes up, credit cards and debt seem to start here for a lot of folks. And I think it's been pretty clearly demonstrated that a lot of kids just aren't able to pay....or they don't pay, for one reason or another. Regardless, the money is offered. Cash advances are offered. People love getting stuff and rationalize it easily (with factoids like "being in college makes me a *good* credit risk).

Welp...here we are talking about this Freddie Mac CFO shooting himself in the head.

~linz

Hey it could get to the point it did in 1929..... just think of all the BASE pioneers after the crash of the stock market back then.... BASE rigs were not much back then...

[jcd11235 0]

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Point is, though, that we're quite used to getting credit offers that are beyond our means to pay. That doesn't excuse taking advantage of those offers. Can't blame others for our own stupid mistakes.

Considering the minimum payment for many credit cards, they are not beyond typical students' means to make the payments. It may not be wise to take out the credit, but it is typically within their means.

Also, credit cards generally have much higher interest rates than mortgages because the the issuing banks expect a higher rate of default, but still want to ensure a profit on their investment with that higher default rate.

That's what those unwise borrowers seem to think too. But somehow, between paying for rent, food, utilities, car payments, gas for the car, ENTERTAINMENT (of various sorts), and whatever other stuff comes up, credit cards and debt seem to start here for a lot of folks. And I think it's been pretty clearly demonstrated that a lot of kids just aren't able to pay....or they don't pay, for one reason or another. Regardless, the money is offered. Cash advances are offered. People love getting stuff and rationalize it easily (with factoids like "being in college makes me a *good* credit risk).

Welp...here we are talking about this Freddie Mac CFO shooting himself in the head.

~linz

But the difference is that as banks started to more frequently roll up mortgages into CDO's, the risk of defaulting borrowers was shifted away from them. They stopped taking all of the precautions they previously took to avoid lending to borrowers that could not afford to repay the loans.

Banks that were less likely to resell the mortgages have experienced lower default rates with their borrowers. They didn't offer larger loans than borrowers could afford. The traditional safeguard remained in place.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[Amazon 7]

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But the difference is that as banks started to more frequently roll up mortgages into CDO's, the risk of defaulting borrowers was shifted away from them. They stopped taking all of the precautions they previously took to avoid lending to borrowers that could not afford to repay the loans.

Banks that were less likely to resell the mortgages have experienced lower default rates with their borrowers. They didn't offer larger loans than borrowers could afford. The traditional safeguard remained in place.

That is what I would expect of ETHICAL business people.. I guess that is not an expectation by many on here.

[Lindsey 0]

But the difference is that as banks started to more frequently roll up mortgages into CDO's, the risk of defaulting borrowers was shifted away from them. They stopped taking all of the precautions they previously took to avoid lending to borrowers that could not afford to repay the loans.

Banks that were less likely to resell the mortgages have experienced lower default rates with their borrowers. They didn't offer larger loans than borrowers could afford. The traditional safeguard remained in place.

Yep. So knowing they could sell the mortgages to other dimwits, they offered loans to people who could not pay. People who couldn't afford their mortgages were enamoured with the thought of owning homes bigger than their pocketbooks.

I'm hypo-impressed with any attempt to let these borrowers off the hook. They aren't victims. The lenders were greedy, knowing they'd have no liability after they sold the loans. Greed is more evil than dimwittedness, but I'm not sure which is more worthy to be removed from the gene pool.

~linz

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A conservative is just a liberal who's been mugged. A liberal is just a conservative who's been to jail

[jcd11235 0]

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I'm hypo-impressed with any attempt to let these borrowers off the hook. They aren't victims. The lenders were greedy, knowing they'd have no liability after they sold the loans. Greed is more evil than dimwittedness, but I'm not sure which is more worthy to be removed from the gene pool.

I didn't say the borrowers were victims. I said the safeguard that had traditionally been in place was largely removed as lenders were selling off more of their mortgages.

Math tutoring available. Only $6! per hour! First lesson: Factorials!

[billvon 2,427]

>Did you think it was funny when one of our fellow friends on here
>snuffed himself out?

Do NOT use JP's death to try to win the usual asinine arguments here on SC. (Goes for everyone.) One and only warning.

[Lindsey 0]

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I'm hypo-impressed with any attempt to let these borrowers off the hook. They aren't victims. The lenders were greedy, knowing they'd have no liability after they sold the loans. Greed is more evil than dimwittedness, but I'm not sure which is more worthy to be removed from the gene pool.

I didn't say the borrowers were victims. I said the safeguard that had traditionally been in place was largely removed as lenders were selling off more of their mortgages.

Well, yeah. That goes without saying. And I'm still back there on page one or two, responding to that idea that it's the bank's fault. Well, they're greedy. DUH! There's plenty of blame to be spread around, but we PEOPLE have to learn to be more responsible for ourselves.

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A conservative is just a liberal who's been mugged. A liberal is just a conservative who's been to jail

[lawrocket 3]

Ethical businesspeople. Are you confusing "ethics" with "morals?". They are distinct.

And as an aside - this wasn't Joe the Plumber, was it? I and jcd think there is plenty of room to blame the uneducated Christian right-wing hicks who thought they could afford a home that had no odometer.

On the other hand, I think there is plenty of blame for the highly educated Northeast Ivy League sophisticates who thought up these ideas. Indeed - this was a revolutionary and "progressive" system. Home ownership for those who couldn't afford it before! Equity in homes. Rising home values (and property tax revenues) were expected.

And - there was money to be made, to boot.

Change and progress. I'm all for progress. Change, however, can fuck you up.

My wife is hotter than your wife.

[Capt.Slog 0]

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True. The blue collar crooks who took $400k to buy a house and didn't repay it didn't do anythong wrong. They just didn't pay it back.

Not all defaulters were scumbags. Many, I'd suggest most, were caught by circumstances beyond their control.

And even then, $400k is peanuts compared with the thievery of people like Madoff, Lay, Skilling, Swartz, Kozlowski, etc.

The circumstances may have been beyond their control, but better planning....even barely-reasonable planning....would've prevented them from being "caught."

A lot of people want some standard of living that they can't afford, so they see what they want to see. Instead of looking at their own situations realistically, they sugar-coat it for themselves. Well, they screwed up. Can't blame anybody but themselves.

Those who gave the loans were greedy. I think these folks could easily foresee what was likely to happen, but they, too, put blinders on and believed the lies they told themselves. They deserve what befell them.

Unfortunately when those folks got what was theirs, the rest of us got it too. There's gotta be a lesson in there...somewhere.

~linz

I suspect you differentiate between a first time homebuyer unable to comprehend the terms of a mortgage, and a mortgage broker making millions by knowingly selling NINJA mortgages to the unwary, knowing full well that some investor down the line would end up holding the bad loan.

I suspect you also differentiate between a first time homebuyer unable to comprehend the terms of a mortgage, and a wall street banker hoping to making a fortune off of derivative trades.

I suspect you also differentiate between a first time homebuyer unable to comprehend the terms of a mortgage, and a scam-artist likee Bernie Madoff or Ken Lay.

[billvon 2,427]

>I suspect you differentiate between a first time homebuyer . . .

Yep, there are all kinds. There are first time homebuyers who are just plain not smart enough to understand their mortgages. There are homebuyers who knowingly take risks because they want a bigger house than they can afford, and getting an ARM always worked before. There are homebuyers who don't read the details because that's what their friend got, and he's doing just great. There are homebuyers perfectly capable of understanding the terms of their mortgages, but are simply too lazy to do so. There are homebuyers who buy a new house thinking they will sell immediately when the price climbs 30%, and thus line their wallets with an extra $100K courtesy of the next homebuyer.

Most of the above could have avoided their problems by exercising just a little common sense. Unfortunately, often greed, laziness and incompetence trumps common sense.

[alge 0]

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[...]There are homebuyers who knowingly take risks because they want a bigger house than they can afford, and getting an ARM always worked before.[...]

Hey, don't drag ARM into this discussion! How typical of Qualcommites, blame it on the ARMs. What else should they choose anyway? MIPS?!

(:

[Amazon 7]

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I suspect you differentiate between a first time homebuyer unable to comprehend the terms of a mortgage, and a mortgage broker making millions by knowingly selling NINJA mortgages to the unwary, knowing full well that some investor down the line would end up holding the bad loan.

I suspect you also differentiate between a first time homebuyer unable to comprehend the terms of a mortgage, and a wall street banker hoping to making a fortune off of derivative trades.

I suspect you also differentiate between a first time homebuyer unable to comprehend the terms of a mortgage, and a scam-artist likee Bernie Madoff or Ken Lay.

You are kidding right... to Lawrocket.. and several others here.... there is no difference to them their posts prove it

[lawrocket 3]

Have ypu been reading what I've been writing? I have not suggested that there is no difference - there are loads of differences.

And plenty of similarities - sufficient similarities to be able to assign some responsibility to the borrowers.

Note: greater than half of all foreclosures were from refinances. Do you think that any of these folks might have been just a bit greedy? Yes - a lot of them remodeled their homes, put in energy efficient systems, etc. Not really a bad thing unless you cannot afford the amortization.

A whole ot of people refinanced to pay off other debts. This was also a good thing - except they merely exchanged debts for an admittedlly lower interest rate - an effort to be responsible.

And then there are those who used their home equity as an ATM.

But billvon pointed it out - lots of the buyers figured they'd pocket $100k in a year or two... They gambled and lost.

I don't think altruism had much to do with it. Nor did altruism play any role in lender decisions.

My wife is hotter than your wife.

[jerryzflies 0]

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I don't think altruism had much to do with it. Nor did altruism play any role in lender decisions.

What DID play a role in a broker's decision to push a NINJA loan, besides pure greed?

For that matter, what played a role in AIG Financial Services' decision to go huge into CDS's, besides greed?

If you can't fix it with a hammer, the problem's electrical.

[billvon 2,427]

>What DID play a role in a broker's decision to push a NINJA loan, \
>besides pure greed?

Most of capitalism is greed. Everyone from the brokers to the homebuyers, the refinancers and the CDS holders did what they did primarily out of greed. The brokers wanted commissions, and so got the most affordable (initially) mortgages they could find. The buyers wanted a gargantuan house for little money, and so they overextended themselves.

But none of that should come as a surprise. That's how capitalism works.