Tuesday, April 27, 2010

As the Goldman "hearing" begins, a frame of reference

The SEC investigation into Goldman continues, but Carl Levin is bringing in Goldman CEO Blankfein and "rogue" trader Fabrice Tourre

"Today we will explore the role of investment banks in the crisis," said Levin a minute ago.  He is reading off a tirade against Goldman, apparently for the sin of trading for a profit.  This will be a "teachable moment" for those in the chattering class who seek to "ban" trading amongst adults in securities they both understand and consider themselves to be experts in.

This country's "housing as a universal right" mantra has been in motion for a long, long time, and Goldman is no more responsible than is a stupid 26year old borrowing from his parents and the taxpayer to put down 3.5% on a home 7times his income.

For background, here's the NYTimes talking about how to "aid mortgage lending" back in 1999:

Fannie Mae Eases Credit To Aid Mortgage Lending
WASHINGTON, Sept. 29— In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''

Copyright 2010 AlphaNinja

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