Quote from fhl:
The whole premise behind your argument is wrong. And I did read that long line of bs article you copied to this thread.
Err I wrote it an copied it in there, yea.
Everyone in this thread and in this one
http://www.elitetrader.com/vb/showthread.php?s=&threadid=144550 agrees with the
over all premise. So you're the odd one out, why don't you tell us idiots how things really work?
How much of the sub prime loan market that fnma HOLDS is irrelevant. It's how much of it is conforming and/or guaranteed that IS relevant. Fnma does not have to own these subprime mortgages for the damage to be done. Fnma does not own all the mortgages that are guaranteed by it.
lol. Oh ok, maybe we will be interested in the total subprime loan
exposure of FNMA then? Yea, its $50 billion. You must be talking about the MBSs....well I've been looking into that too and honestly the information is elusive. Can you find any information on non conforming subprime loans "guaranteed" by FNMA in MBSs?
The reason FNMA EXPOSURE was limited to 10% is because you could get away with doing loans that weren't anywhere NEAR conforming. Conforming guidelines say the loan cant even be greater than a certain amount. How many pay option arms are conforming? How many no ratio loans are conforming? How many no income loans are conforming? How many no asset/ no employment loans are conforming? Yea, exactly.
If they are guaranteed or just conforming, that is what allows the rating agencies to provide the bs ratings on these cmo's and cdo's that weren't in reality worth a pot to p*ss in.
You are right, but the damage extends far beyond what FNMA had to do with. Do you think investors said "No, that loans not conforming, lets not buy it" lol...they didn't give a damn about whether it was conforming or not, because they could "insure" themselves against any losses. Did you really read what I wrote? This problem isnt decades in the making. Subprime loans funded increased DRASTICALLY starting around 2003, the same time CDSs did. What legislation caused such a huge turn in the market at that point? What sparked the sudden change? You and Mav88 act like the government put a gun to everyone's head and said "BUY these securities!" at that exact time. Something was a catalyst for this crisis during that time, if not CDSs then what? The reason these risky securities were being bought up so fast and saw such a massive increase from 2003 to today is because of one reason: money.
When they have a good investment rating, then they can be sold in the marketplace. And that, my friend is the beginning of how these things exploded in number. When fnma, at congressional urging, began accepting these types of loans. All at the urging of the affirmative action loan crowd.
What so FNMA suddenly began its involvement in 2003 and wasn't involved before?
