Credit Crunch

Monday, October 27, 2008

Korea Development Bank Accesses Fed

Amazing news that a Korean Government bank is about to float commerical paper to the Fed?

Oct. 28 (Bloomberg) -- State-run Korea Development Bank received Federal Reserve approval to sell as much as $830 million of commercial paper to the U.S. central bank, becoming the first Korean bank to tap the new funding facility.

KDB, South Korea's largest issuer of overseas debt, can raise $400 million in the U.S. by selling short-term notes, Sung Joo Yung, a spokesman for the Seoul-based bank, said today by telephone. The bank will roll over an existing $430 million of debt, he said.

Kookmin Bank, South Korea's largest, was also deemed eligible to sell commercial paper to the Fed, spokesman You Jung Youn said by telephone from Seoul. The amount of debt the Seoul- based lender will sell hasn't been determined, he said. The Maeil Business Newspaper today reported Kookmin would be able to borrow as much as $50 million.


Bloomberg.

Sunday, October 19, 2008

Cuomo on the GSE Goals

Here is the village voice article on the steps taken by Cuomo to increase the subprime activity for GSE's.

In 2000, Cuomo required a quantum leap in the number of affordable, low-to-moderate-income loans that the two mortgage banks—known collectively as Government Sponsored Enterprises—would have to buy. The GSEs don't actually sell mortgages to borrowers. They buy them from banks and mortgage companies, allowing lenders to replenish their capital and make more loans. They also purchase mortgage-backed securities, which are pools of mortgages regularly acquired by the GSEs from investment firms. The government chartered these banks to pump money into the mortgage market and, while they did it, to make a strong enough profit to attract shareholders. That created a tug-of-war between their efforts to maximize shareholder value, which drove them toward high-end mortgages, and their congressionally mandated obligation to finance loans for those who needed help. The 1992 law required HUD's secretary to make sure housing goals were being met and, every four years, set new goals for Fannie and Freddie.



Cuomo's predecessor, Henry Cisneros, did that for the first time in December 1995, taking a cautious approach and moving the GSEs toward a requirement that 42 percent of their mortgages serve low- and moderate-income families. Cuomo raised that number to 50 percent and dramatically hiked GSE mandates to buy mortgages in underserved neighborhoods and for the "very-low-income." Part of the pitch was racial, with Cuomo contending that Fannie and Freddie weren't granting mortgages to minorities at the same rate as the private market. William Apgar, Cuomo's top aide, told The Washington Post: "We believe that there are a lot of loans to black Americans that could be safely purchased by Fannie Mae and Freddie Mac if these companies were more flexible." ... Cuomo wasn't shy about embracing subprime mortgages as a possible consequence of his goals. "GSE presence in the subprime market could be of significant benefit to lower-income families, minorities, and families living in underserved areas," his report on the new goals noted.


Village Voice.

Immigration's effect on per capita income in CA

Uneducated immigration expected to reduce per catia income of CA.


Californians' per capita income will drop 11 percent over the first two decades of this century unless the state closes the educational gap of its expanding Latino population, a nonpartisan research center forecast in a report released today.

Latinos are the fastest-growing segment of the state's population and work force, and among the least-educated, said the National Center for Public Policy and Higher Education.

According to 2000 census figures, in the 25-to-64 age group, 52 percent of Latinos lacked a high school diploma, compared with 8 percent of non-Latino whites, and 12 percent of Latinos had a college degree, compared with 46 percent of whites.


Cisneros Housing Development

It is hard to argue that Henry Cisneros had bad motives in building housing for a certain segment of the population. And he blames his agents for making things go bad. But they were just trying to sell his product. Could they have done it in a way that would have prevented this? Seems the only way they could have done that was not to sell the houses at all.

While Mr. Cisneros says he remains proud of his work, he has misgivings over what his passion has wrought. He insists that the worst problems developed only after “bad actors” hijacked his good intentions but acknowledges that “people came to homeownership who should not have been homeowners.”

They were lured by “unscrupulous participants — bankers, brokers, secondary market people,” he says. “The country is paying for that, and families are hurt because we as a society did not draw a line.” [Would the properties have sold at all then?]

The causes of the housing implosion are many: lax regulation, financial innovation gone awry, excessive debt, raw greed. The players are also varied: bankers, borrowers, developers, politicians and bureaucrats.

Mr. Cisneros, 61, had a foot in a number of those worlds. Despite his qualms, he encouraged the unprepared to buy homes — part of a broad national trend with dire economic consequences.

He reflects often on his role in the debacle, he says, which has changed homeownership from something that secured a place in the middle class to something that is ejecting people from it. “I’ve been waiting for someone to put all the blame at my doorstep,” he says lightly, but with a bit of worry, too.


NYT.

isteve

Monday, October 13, 2008

FHLMC Origination



This is interesting in that it shows origination came from the commerical houses during the worst three years.

Fannie Activity from 2004-2006



The second graph is a bit misleading because it only shows Alt-A loans.

Source

Bush on GSEs in 2002

This has some audio of Bush pushing more money into the market for "minority" loans.




There is also one with full video of Bush, but I can't find it.

Followers