Mortgage Market Shakedown: Popsicle Index Down, Goldman Sachs Up

November 21, 2007 at 8:44 pm · Filed under News & Commentary

Meet Andrew Cuomo:




Andrew was Secretary of the US Department of Housing and Urban Development overseeing the largest mortgage insurance and securities operation in the world when it “lost” $17 billion in fiscal 1998 and $59 billion in fiscal 1999.


On November 7, as the Attorney General of the State of New York, Andrew Cuomo announced he is subpoening Freddie and Fannie. (Cuomo Subpoenas Fannie, Freddie, Widening Loan Probe / By Karen Freifeld, James Tyson & Sharon L. Crenson - Bloomberg.com)


At which point, Freddie and Fannie’s stock takes a dive:

FNM = Fannie Mae, FRE = Freddie Mac. DJ= Dow Jones, GS= Goldman Sachs, CEF = Central Fund of Canada (precious metals)




Meanwhile, Goldman Sachs and Lehman insist that they are untouched by mortgage market losses. (Goldman Sachs Rakes in Profit in Credit Crisis / By Jenny Anderson - New York Times - 19 Nov 2007)


And Freddie announces it has hired Goldman and Lehman as advisors. (Freddie Mac Bleeding $2 Billion, Needs Cash / By Marcy Gordon - Seattle Times - 21 Nov 2007)


Here is the Goldman Sachs donation(s) listed for Cuomo’s 2006 race for Attorney General at Follow the Money.

Are we surprised that Goldman is doing well on a crashing dollar, a manipulated gold market and a busting housing bubble?

Well, look how well they did on 9-11:

Goldman Sachs 2001 stock chart




http://www.solari.com/blog/

To shake down Freddie and Fannie! They both lost 25% of value the other day if u didn't notice.

But now they have hired Goldman so we can expect them to recover.

Fitts knows alot about HUD.. She used to work there.
http://www.google.com/search?hl=en&rlz=1T4GGIG_enUS236US236&q=Catherine+Austin+Fitts%2BHUD&btnG=Search

FYI, I've filed an affidavit on Mario Cuomo's behalf when unsubstantiated accusations were made against him. He settled his case for an undisclosed sum.

I repeat, where's the scandal?

http://www.scoop.co.nz/stories/HL0609/S00420.htm

And something up with GS. They are the only firm that hasn't lost any money from the Credit crisis yet. Everybody is talking about them but nothing can be proven yet. I'll see if I can find something else.

any allegation of misconduct is directed at civil servants. I understand the sentiment, but this accusation does not deserve the light of day.

Oh I know he doesn't act alone. The whole damn housing market is seeped in corruption and it's been goiing on for decades. In my state of Ohio. HUD is buying houses that have foreclosed on longer than six months and buying them for a dollar. They turn around and give the list to their friends. I know I tried to buy one of those houses in 1991 and I couldn't get the list becuase the fuckers wouldn't put it in the paper until they bought all the good stuff. I hope they all get busted this time.

Lot's of gossip going on. International finace is way out of my league. Rumors are Goldman is shorting Citi and Arab investors looking to buy if it gets cheap enough. People are pissed. Freddie and Fannie are partially government owned. People want to privatize it. The housing market. HUD and the others are always getting used for washing machines. It's a really dirty complicated story. But as this crisis goes on I think we'll get more info.


http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=te&bn=2895&tid=134852&mid=134852&tof=23&frt=2#134852
It now seems Obvious why G S downgraded Citi (3 Ratings) 24-Nov-07 10:03 am Goldman Sachs is doing their best to panic financial holders. Downgrading the financials at the bottom like C and FNM, and yelling fire in the crowded sub-prime theater. Buy them, when Goldman screams. They are the ones that need to cover their shorts.

Maybe their trading agenda is different from the reality facing the marketplace. It might be getting a tad crowded, especially since Paulson, one of the largest shorts is looking to go long. And if you don't know what his track record is, you shouldn't be listening to the drivel that the brokerage firms are spouting.

The firms, who have bet against sub-prime need sellers so they can cover. So yell "fire' in the crowded theater. And get the fools to sell, at prices, only fools would sell at.
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roullatourk

55/Male
huma au



Re: It now seems Obvious why G S downgraded Citi (1 Rating) 24-Nov-07 11:02 am i HOPE THEY GET SCREWED
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Re: It now seems Obvious why G S downgraded Citi (1 Rating) 24-Nov-07 11:14 am You're exactly right dude!
Goldman refused to comment on the specifics of "why" they didn't have to take write downs while everyone was. Well finally they admit their short the mortgage market, probably in many ways including shorting companies and definitly in shorting what they pushed to clients. Now the the volume has died down as these stocks hit lows, they can't really cover without sparking more volume. If they can't cover, they can't realize a cash gain. No one's going to fall for a Positive Mark to Market on outstanding positions on their next report.
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Re: It now seems Obvious why G S downgraded Citi (Not rated) 24-Nov-07 11:49 am You are absolutely right. GS is creating lots of problem in stock market unnecessary. They are really bastard. Just wait they get their ass kicked too.
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panna1us

Male
http://messages.finance.yahoo.com/Stocks_%28A_to_Z%29/Stocks_C/threadview?m=te&bn=2895&tid=134852&mid=134852&tof=23&frt=2#134852

BTW I play Investapedia. So I hang out in the yahoo messages boards a lot.

We may just have different perspectives ... I work w/guys who walked away from Wall Street and I've never succumbed. But what does any of GS's antics have to do with official misconduct?

How is that possible. No losses from sub-prime when they were bundling them up. I wish Fitts would have said more. I probably shouldn't have posted this without more info. She's hinting at something but she doesn't explain.

If you know guys who have walked away from WS. I'd be interested to hear what they have to say about GS's "good luck".

I just hope they don't take down Freddie. They own a huge amount of mortgages. Including mine.

I'll be here if developments warrant. In the meantime, sorry that your education has been painful, but market manipulation - if done publicly - is not a crime unless the underlying information is privileged or false. In this case, if insider trading of future prosecutorial action could be proved, it would be fatal for anyone's career who was involved.

Which is why I doubt Andrew is involved. A lot has been invested in his career ... why blow it for a quick buck? It doesn't fit in with the rest of his behavior.

Good luck in future investigations.

I do remember hearing something about Goldman Sachs being involved in a scandal during the summer of 2001 that went away after the bulding (one of the WTC's) collapsed to the ground.

But maybe I have it confused with some other scandal. I think it had to do with gold though.

GS always seems to make out like a bandit every time we have a crisis! I think she's saying.. Keep your eyes on GS!

being conducted at/though GS, although GS itself had not been implicated. Sorry, I've got bupkiss in the way of documentation. However, I agree that GS's being unscathed by this neo-structured finance is odd. I've read that they made lots of money on derivatives placed against these mortgages. Still, it's odd, and they are heavily connected in Washington. I think the whole thing - not just GS - reeks of a crime of neglect of fiduciary responsibility. Seemed to me that the whole point of hedge funds was to avoid regulation, and that Greenspan's blessing on structured finance always amounted to Enronizing our economy. No surprise now that wee, the little people, will suffer while the connected banks are protected and will profit again from the bankruptcies.

It concerns a mere 240 Billion Dollars:

Sioux City, Iowa -- September 4, 2005 -- TomFlocco.com -- According to leaked documents from an intelligence file obtained through a military source in the Office of Naval Intelligence (ONI), on or about September 12, 1991 non-performing and unauthorized gold-backed debt instruments were used to purchase ten-year "Brady" bonds. The bonds in turn were illegally employed as collateral to borrow $240 billion--120 in Japanese Yen and 120 in Deutsch Marks--exchanged for U.S. currency under false pretenses; or counterfeit and unlawful conversion of collateral against which an unlimited amount of money could be created in derivatives and debt instruments.



Crusing the Florida Keys (1984) Then VP George H. W. Bush (second from left) and former CIA Director who led the National Security Council during Iran contra, with Nicholas F. Brady (third from left) then chairman of Wall St. Investment firm Dillon Read and later Bush 41 Secretary of the Treasury.
The illegal transactions are also linked to the murder of a U.S. Army colonel charged with overseeing approximately 175 secret CIA bank accounts, according to the officer’s wife, Mrs. V. K. Durham. During multiple interviews, Durham told TomFlocco.com that Bush 41 and Clinton administration officials visited her husband Colonel Russell Hermann several times in the months prior to and three days before his torture and murder on August 29, 1994.

Durham told us the $240 billion in stolen currency was obtained resulting from George H. W. Bush’s presidential abuse of power, when he authorized former Treasury Secretary Nicholas Brady and former Secretary of State James Baker III to make fraudulent use of the Durham Family Trust collateral without her permission. There is evidence that Colonel Hermann’s and V. K. Durham’s signatures were forged on a Goldman-Sachs bank account certification requesting the conversions to U.S. currency.

The money was never repaid since the ten-year Brady bonds--purchased before September 13, 1991 using the fraudulent collateral and gold bullion as security came due on September 12, 2001--the day after the 9.11 attacks, having allegedly been underwritten and held by the trustee, Cantor-Fitzgerald bond brokerage firm .

You know none of this would have happened if they had not deregulated the mortgage industry. It smells like a setup!


Cuomo Subpoenas Fannie, Freddie, Widening Loan Probe (Update5)


By Karen Freifeld, James Tyson and Sharon L. Crenson

Nov. 7 (Bloomberg) -- New York Attorney General Andrew Cuomo subpoenaed Fannie Mae and Freddie Mac as he expanded his investigation into ``widespread'' collusion between real estate appraisers and lenders including Washington Mutual Inc.

Cuomo is seeking information on whether home loans purchased by Fannie Mae and Freddie Mac, the two biggest investors in U.S. mortgages, were based on tainted property appraisals. Investment banks were also subpoenaed, he said, declining to name them.

The attorney general's investigation calls into question the value of securities Fannie Mae and Freddie Mac have guaranteed from mortgages provided by lenders. Cuomo said he discovered a ``pattern of collusion'' between lenders and appraisers and that he's targeting banks beyond Seattle-based Washington Mutual for potentially pressuring appraisers.

``I don't believe it's just about Washington Mutual,'' Cuomo said at a press conference in Manhattan today. ``I believe it's widespread. I believe it's the rule not the exception. And we're investigating Fannie Mae and Freddie Mac and other investment banks as to the underlying practices that have allowed this to go on for so long.''

First American Suit

Today's announcement came a week after Cuomo sued First American Corp.'s eAppraiseIT LLC unit for artificially increasing home values. eAppraiseIT caved to pressure from WaMu, Cuomo said. The savings and loan wasn't sued because it is regulated by federal rather than state agencies, he said.

Fannie and Freddie have agreed to continue purchasing WaMu's loans, the thrift said in a statement.

``The integrity of WaMu's appraisal process is very important and the company works hard to ensure that it operates properly,'' Washington Mutual said.

Cuomo's subpoenas strike at the foundation of the mortgage industry, which has profited from making home loans and then repackaging and selling them to investors.

Appraisals are a basis for Fannie Mae and Freddie Mac deciding whether to purchase home loans to put in their combined $1.5 trillion investment portfolios. Home valuations also are vital for their second main business line of guaranteeing pools of home loans for sale to investors. The companies guarantee about $4.7 trillion of mortgage securities.

``If the appraisal process is broken, the loans may not be worth what investors are led to believe they're worth,'' Eric Corngold, a senior prosecutor in Cuomo's office, said at the press conference.

Examiner Hired

The subpoenas give Cuomo access to information about mortgages Fannie Mae and Freddie Mac own or guarantee. The two companies own or guarantee 40 percent of $11.5 trillion of U.S. residential mortgage debt.

Fannie Mae and Freddie Mac also agreed to supply documents and hire an independent examiner to evaluate loans they bought from WaMu, Cuomo said.

David Schneider, president of Washington Mutual's home-loan division, said at a conference with investors that the thrift takes the accusations ``very seriously.''

Fannie Mae is ``concerned about the allegations in the complaint,'' said managing director Brian Faith in a statement. ``It is against our interest to purchase or guarantee mortgages with inflated appraisals, and so it is in Fannie Mae's interest that these appraisal practices be investigated.''

States Investigate

New York opened an investigation into the home loan industry nine months ago just after data from the Washington-based Mortgage Bankers Association showed an increase in delinquencies among subprime borrowers and a record rate of late payments by buyers who purchased houses with minimal down payments. States including California, Colorado, Ohio, and Connecticut are also investigating.

New York state sued First American, the largest U.S. title insurer, on Nov. 1 for artificially boosting home values through its eAppraiseIT LLC unit. The companies acted under pressure from eAppraiseIT's biggest client, Washington Mutual, which is the largest U.S. thrift, Cuomo said.

WaMu immediately suspended business with eAppraiseIT pending further investigation.

Washington Mutual shares tumbled after Cuomo's announcement. The stock fell $4.19, or 17 percent, to $20.04 at 4 p.m. That's the biggest decline in 20 years.

Fannie Mae also plummeted after Cuomo's announcement. The stock fell 10 percent to $49.79. Freddie Mac fell 8.5 percent to $45.18, and First American dropped 6.2 percent to $30.07.

Washington Mutual is the third largest provider of loans to Freddie Mac, selling $24.7 billion in loans in 2007 alone, Cuomo said. The thrift is also the fourteenth largest provider of loans to Fannie Mae, selling $7.8 billion in loans in 2007, he said.

Possible Fraud

``Every company that buys loans from Washington Mutual must be sure that the loans they purchased are not corrupted by this systemic fraud,'' Cuomo said.

Cuomo may prompt a decline in financing for U.S. mortgages should he allege widespread collusion in inflating appraisals before gathering sufficient evidence of such abuses, said Parham Behrooz, who helps oversee $18 billion of fixed-income assets at Tattersall Advisory Group in Richmond, Virginia.

``If you want to keep people in their houses you don't add pressure to a system that already has a lot of pressure on it,'' he said.

Fannie Mae and Freddie Mac said they will appoint an independent examiner to review appraisal practices. If the examiner determines Fannie Mae owns or guarantees mortgages backed by inflated appraisals, company policy requires that the lender buy back the loans.

Washington Mutual said it has enough money to buy back any loans that went sour if the thrift is shown to be responsible.

Fitch Subpoena

Cuomo, 49, has issued hundreds of subpoenas and interviewed hundreds of witnesses in the mortgage investigation. In September, credit rating companies Standard & Poor's and Fitch Ratings were subpoenaed. Fitch said Cuomo's office demanded information on residential mortgage-backed securities and collateralized-debt obligations, which hold mortgage-backed securities.

Until July and August, most mortgage lenders sold their loans to Wall Street firms that would bundle them into bonds and other securities for investors to buy. The practice came to a halt as the number of delinquencies among borrowers with weak or spotty credit histories doubled in the third quarter.

In August, lenders sent notices of default to 108,716 homeowners, more than double the 42,144 a year earlier and up 50 percent from July, according to Irvine, California-based RealtyTrac, which sells foreclosure data.

To contact the reporters on this story: Karen Freifeld
http://www.bloomberg.com/apps/news?pid=20601087&sid=ajFo10xQYMd0&refer=home