Yearly Archives: 2012

Why “Firing Ed DeMarco” is No Solution to FHFA Refusal to Engage in Principal Modifications (Updated)

Today, Acting FHFA Director Ed DeMarco wrote to Congress, after due consideration, reaffirming his position that he will not permit Fannie and Freddie to lower principal balances of mortgages of borrowers that are delinquent. This is despite the fact that the top analyst in this space, Laurie Goodman, has determined that principal modifications are the most effective form of mortgage modification, resulting in much lower refault rates than interest rate mods or capitalization mods. And that makes sense. Why should a borrower struggle to hang on to a home when even if they make all the payments, when they sell they they are stuck with a big tax bill? And as we’ve stressed, private label investors are overwhelmingly in favor of deep principal mods for viable borrowers, and that’s because foreclosure is costly and leaves them worse off.

As much as this blogger is firmly of the view that this is a poor economic decision (deep principal mods are a sound idea, as long as you have a decent approach for vetting borrower income and other debt payments to see if they are viable with a mod), I have to hand it to DeMarco as a bureaucratic infighter.

Links 7/31/12

Cathy O’Neil: Data Science – The Problem Isn’t Statisticians, It’s Too Many Poseurs

By Cathy O’Neil, a data scientist who lives in New York City and writes at mathbabe.org

Without naming names, I’d like to characterize problematic pseudo-mathematical behavior that I witness often enough that I’m consistently riled up.

More on Draghi’s “The ECB is All In” Bluff

The more news comes out, the more it looks like Mario Draghi’s pledge that the ECB would do all it would take to save the Euro was a bluff.

Mirabile Dictu! ECB Chief Draghi Being Investigated for Membership in the Group of Thirty

It’s easy for Americans to labor under the delusion that other parts of the the world have less obvious forms of corruption or its milder form, conflict of interest, than our revolving door system (one of my favorites was when the NY Fed staffer tasked to overseeing AIG left….to AIG).

And ex banking, that actually is true in most advanced economies. But as a reminder of how backs get scratched in Europe, we have Mario Draghi.

The Obama Enabler’s Big Lie: “We Never Had the Votes”

One man quote machine Drew Westen had an Op-Ed in Pravda the other day that included the following passage:

Obama’s administration made three crucial errors that enabled the Republican obstructionism that has tied his hands for the past two years, with GOP leaders shooting down any idea — even if it’s one of their own — that might have helped the president strengthen the economy.

Got the D talking point? “R obstructionism.”

Is Facebook’s Ad Model a Scam?

I’ve watched the Facebook phenomenon with considerable skepticism, and have refrained from commenting on it, save linking to stories such as GM canceling all of its Facebook ads because they didn’t see the benefit.

But this item via reader Chuck L was a real eye-opener.

Yet Another Barmy Obama Administration Excuse for Preserving the Banking Status Quo

The Administration, meaning the Treasury Department, is never wanting for a defense of the big financial services incumbents.

Links 7/30/2012

Is Romney Going to Repeat the Palin Strategy and Choose Florida’s Attorney General Pam Bondi?

Romney may be determined to snatch defeat from the jaws of a possible victory. Business Insider reports that the newest addition to the list of possible VP candidates is…Florida’s Pam Bondi

Germans Getting Even More Opposed to Being in the Eurozone

Over the weekend, the newspaper Bild released the results of a new poll on German sentiment on the Euro. It found that 51% thought Germany would do better by leaving the Eurozone with 29% saying Germany would fare worse. In addition, 71% of the respondents said Greece should be expelled from the Eurozone if it could not live up to its austerity commitments.

These results aren’t particularly novel; a large cohort of Germans have been vocally opposed to Eurorescues for some time. What is new about this poll is how low the percentage is that sees being in the Euro as good for Germany.

Money is power

By Sell on News, a global macro equities analyst. Originally published at Macrobusiness.

Lambert here. Note the use of the phrase “market state,” invented if not exactly defined by Phillip Bobbit in his The Shield of Achilles, and portrayed as a historical inevitability.

For the last couple of years, in the wake of the financial crisis, the banking and finance community has darkly warned about the dangers of over regulating the sector. “We mustn’t impede the free flow of capital”, it is claimed, “otherwise efficiency and productivity will be lost and the real economy will not recover.” The other camp claims that the finance sector must be reined in, re-regulated, otherwise crises will continue to happen. The dichotomy is entirely false. Finance is rules. You cannot increase or decrease the amount of rules in rules. You can only change their character. And you can decide who will set them.