Fatalism about secondary market reform. A defense of Charlie Keating's notorious American Continental Corp. bonds. Thoughtful points that advance the discussion. Ad hominem cracks that do not advance the discussion.
All of these and more have been posted in the comments sections of my blogs in the past several months. The most useful comments are the ones I learn something from.
GSE reform, the subject of two recent blogs, certainly strikes an industry nerve. It's interesting to find that a couple of commenters kind of like the status quo.
"Isn't Fannie making a hundred billion or so per year now?" Ronald LePrade writes. David Geiselhart seems to concur, saying, "Fannie and Freddie have been reformed and revitalized. Fannie Mae alone has an estimated net worth of $200 billion. The mortgage market has been resuscitated. It makes no sense to kill and start over with a new, experimental agency."
Robert Rosen seconds LePrade's and Geiselhart's comments. "The government is trying to fix this with political answers when all that is needed is to fix the issues that got us here," he writes. "The existing system worked extremely well for many years. Why throw it out and start all over? It is basically working right now and doing well. Regulate out the problems, move on quickly and create strength in housing and mortgages."
On the other hand, commenter Julie Messina lauds the Johnson-Crapo bill that's currently before the Senate Banking Committee for keeping an integral element of the system. The bill would establish a new regulator and includes a 10% capital requirement for private market participation. "Needs some work," Julie writes, "but it does one very important thing: preserves the TBA (to be announced) market for conventional pricing which most broker-dealers will say supports better prices for bonds and translates to lowest interest rates for the consumer, keeping housing affordable."
There's an air of fatalism, though, to an anonymous response that marks down Johnson-Crapo in a second GSE blog on two counts: Banks will have difficulty acting as guarantors due to high Basel III-mandated risk weighting, and the anticipated yield premiums "would not provide an adequate ROE to most banks."
You can almost see him or her shrugging when he or she adds, "I suspect no one believes this bill will pass, so these details are being ignored."
My blog on the passing of S&L scandal figure Charlie Keating brought back memories to some old-timers, including one who feels Charlie's ACC bonds, which he sold by getting depositors at his Lincoln Savings and Loan Association to swap their insured deposits for his uninsured bonds, weren't so bad after all.
"My mother bought some of those bonds," "John" writes. "She never had a bad word to say about Keating. Seems she was well informed that they were high yielding and not insured. Because of that she did not put her life savings into them but rather spare change. She received a 22% return for three years which she considered returned 66% of her original investment.
"She also received a lump sum settlement that amounted to a little over 50% of her original investment. She made about 12% on her money over three years which isn't much during that period of outrageous interest rates, but she did not lose a dime."
After Keating's operation failed, of course, those bonds were worthless. Good thing John's mom only put her "spare change" into them.
A poster who identified himself with the single initial "D" raises a good question that compares the criminal treatment of mortgage debacle operatives then and now (the savings and loan scandal was a quarter of a century ago now). Charlie went to jail for a couple of years, and David Paul of CenTrust got a 10-year sentence, in two of the highest-profile cases. Not so the last time around. "What is the reason for the lack of convictions with the most recent mortgage collapse?" he wants to know. Good question.
Sandra Lane wrote me a thoughtful email about my blog that noted the oil fracking boom had benefited North Dakota by producing the lowest percentage of foreclosures in the nation, according to a Mortgage Bankers Association report.
She points out that the fracking may well hurt property values in the Peace Garden State (yes, that is North Dakota's official nickname).
"Some homes may not be easy to sell because of damage caused by the fracking operations. Chemicals used in the fracking process frequently pollute the water supply as well as the air, making people sick. The overall appearance of a neighborhood is not one that most people would want to live in."
Sandra has a friend who manages foreclosed properties. "If she gets a property that has a gas or oil well next to it or nearby, she downgrades the value of the property by one-third." Good point!
I have a small amen corner in the comments box, but there's no need to quote them. I do have a couple of pet peeves, though.
The guys and gals whose comments turn out to be spam for their businesses are certainly annoying. So are the ad hominem comments, which add nothing to what can be valuable discussions of industry issues.
So to the guy who commented "Stupid article," I can only reply "Stupid comment."
Mark Fogarty, Editor at Large at National Mortgage News, writes analysis and commentary based on his 30 years covering the mortgage industry.