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Moral hazard

It’s a common thread in this story, from the White House on down: Not “how do we punish the leaders and institutions who committed systemic mortgage fraud?” but “how can we best punish the victims?”

Fannie Mae (FNMA) pulled the plug on a 2010 plan to forgive borrowers’ mortgage debt because company executives were “philosophically opposed” to the idea, a former company employee told House investigators.

In a letter today to the Federal Housing Finance Agency, House Democrats challenged a January analysis from Acting Director Edward J. DeMarco that claimed principal writedowns would raise costs and increase taxpayer losses at the government-owned company.

“We have now become aware of new information that calls into serious question the accuracy and completeness of your response, as well as your motivation for continuing to oppose principal reduction programs even when they have the potential to save American taxpayers billions of dollars,” said the letter from representatives Elijah Cummings of Maryland and John F. Teirney of Massachusetts, Democrats on the House Committee on Oversight and Government Reform.

FHFA spokeswoman Corinne Russell did not have an immediate comment. The agency oversees Fannie Mae and Freddie Mac, which were taken over by the federal government in 2008 as they neared bankruptcy.
According to the letter, a former Fannie Mae employee told the committee that the mortgage finance company had developed a pilot program for reducing mortgage debt for borrowers who owe more on their house than the property is worth.

The purpose of the plan was to develop “a responsible way to reduce principal balances for underwater mortgage borrowers without creating undue incremental moral hazard,” the employee told the committee.
The pilot had preliminary approvals from officials at Fannie Mae, FHFA, and the Office of the Comptroller of the Currency, a bank regulator, according to the former employee.

In mid-2010, two weeks before its launch, senior Fannie Mae executives cancelled the program because they were “philosophically opposed to writing down principal balances,” according to the former worker, who was quoted in the letter without being identified.

Taibbi

Why Wall St. should quit whining.

Pay the writer

I love this Harlan Ellison rant:

Snowpocalypse

We’re getting a small storm this afternoon, an inch or less. But the local weather bobbleheads are so starved for snow stories, you’d swear it was an impending blizzard.

F*cked

The United States of Unemployment – The Roller Coaster:

Not one single step back

What Athenae said.

Protecting your internet privacy

Makes you into a suspicious person these days…

Ha ha

Funny, how whiny they get when they’re the ones losing their economic footing!

Personal profit

Does this really surprise anyone? As I’ve mentioned before, there is very little that isn’t permitted under Congressional ethics rules:

A U.S. senator from Alabama directed more than $100 million in federal earmarks to renovate downtown Tuscaloosa near his own commercial office building. A congressman from Georgia secured $6.3 million in taxpayer funds to replenish the beach about 900 feet from his island vacation cottage. A representative from Michigan earmarked $486,000 to add a bike lane to a bridge within walking distance of her home.

Thirty-three members of Congress have directed more than $300 million in earmarks and other spending provisions to dozens of public projects that are next to or within about two miles of the lawmakers’ own property, according to a Washington Post investigation.

The Post analyzed public records on the holdings of all 535 members and compared them with earmarks members had sought for pet projects, most of them since 2008. The process uncovered appropriations for work in close proximity to commercial and residential real estate owned by the lawmakers or their family members. The review also found 16 lawmakers who sent tax dollars to companies, colleges or community programs where their spouses, children or parents work as salaried employees or serve on boards.

Oo oo child

The Five Stairsteps:

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