Fed reduces benchmark rate to as low as zero

Kabuki theater at its finest.

The most interesting comment in the article was the one stating that no one at Freddie or Fannie was willing to accept any responsibility just like the Republicans and Democrats grilling them.

After reading the article and having watched some of the testimony on C Span, all I can say is God help us all.

Freddy and Fanny two government sponsored organizations, fueled by greed.  Greedneedy people need to give it back, go to jail or move to another country.  Too bad we can't use greed in our gas tanks, this country would have enough energy to power the world for years.  Lets call President elect Obama and have him take all the greedneedy peoples personal assets over....I'm generous.....say 5 million, and anyone who makes 5 million can either retire or keep working for 1$ per year.  Not spread the wealth, cap the wealth.  We could probably pay off a huge portion of our countries debt and end the recession.  Really, with just Warren Buffets ill gotten gains and the Walton families we pay off the Wall Street bailout and the Big Three!  Lets vote, all in favor say I.

Is this the future we can expect from our Democratic controlled congress?, talk talk talk, finger pointing everywhere but at themselfs, the root of this crash will never be admited to

and yes it was allowing greed to override commonsence. Solutions they are clearly devoid of

so instead waste time crying over the spilled milk and seem to think staying the course will do for now.

  The solutions are not so tough to figure out..just hard to get done...who wants to be told..stop spending someone else's money....pay off your cards leave within your means.

The governments role ..they should of used from freddie and fannie distressed home owners (not investors) fixed long term morgates so the borrower would send payments to the US treseary..this money could turn around and assist more distressed home owners, the distresed lenders would of gotten the remainder of the loans owned (tho i would of added simple conditions) both distressed lender and borrower absorb equally the loss to the home's , value, lenders wouldnt get late fees and borrowers would have to remain on the gov loan for 10 hears before having the ability to refinance - at a fixed morgage rate).

 This i beleive would of more quickly allowed creditors to once again open their purse strings. The Homes in distress would dwindle as more and more took the fed long term plan.

Republicans argued that the primary causes of the financial meltdown were weak government regulation of Fannie and Freddie and Clinton administration policies to promote homeownership

Democrats acknowledged that the two government-sponsored companies contributed to the financial crisis. But they stressed that Wall Street banks — not Fannie and Freddie — led the dramatic decline in lending standards that caused mortgages to start defaulting in huge numbers two years ago.

$11.7 million was paid to 52 outside lobbyists and consultants in 2006 as part of a campaign to preserve weak regulatory oversight, with particular pressure exerted on the Republicans who led Congress at the time.

There now it's everybodies fault. Now we can get together and fix it.

How can we fix a problem that no one will admit exists? 

CRA changes put in by clinton created this morase. Then to handle the bad mortgages, countrywide first started the securitization of mortgages and fannie and freddie should have never been allowed to partake in this madness.

But the problem that caused it was CRA changes. No one will admit it and it is still in place. o.0

I say clinton to pinpoint the legislation, I do not care who did it or why.. UNDO IT!

So sure we can fix it ... but you can not leave the causes in place.

Doing the same thing over and over expecting a different result is the definition of insanity.

How can we fix a problem that no one will admit exists? 

CRA changes put in by clinton created this morase. Then to handle the bad mortgages, countrywide first started the securitization of mortgages and fannie and freddie should have never been allowed to partake in this madness.

But the problem that caused it was CRA changes. No one will admit it and it is still in place. o.0

I say clinton to pinpoint the legislation, I do not care who did it or why.. UNDO IT!

So sure we can fix it ... but you can not leave the causes in place.

Doing the same thing over and over expecting a different result is the definition of insanity.

    Republicans coming to the rescue of the real people who caused this problem. Plain and simple Freddie with a couple of ill advised moves got causht up in the same CDO CDS game that wall street invented. As the article states

They traditionally backed the safest loans — 30-year fixed rate mortgages that required a down payment of at least 20 percent. But in recent years, they lowered their standards, matching a decline fueled by Wall Street banks that backed the now-defunct subprime lending industry.

Rep. Carolyn Maloney, D-N.Y., grilled Syron about the Freddie Mac's decision to fire David Andrukonis, its former chief risk officer. Andrukonis had sounded warnings as far back as 2004 about the risks posed by loans in which borrowers didn't provide proof of their incomes or detail their assets, according to e-mails released by the committee.

Likewise, lawmakers pressed Mudd about an internal Fannie Mae presentation from June 2005. It showed the company at a key juncture. Its competitors on Wall Street were starting to reap lucrative fees on investments backed by risky loans. Fannie Mae had to decide whether to compete in that market or take the less risky, but also less profitable, path.

Fannie Mae executives worried at the time about "becoming a niche player" and "becoming less of a market leader" at the time, according to the confidential internal presentation, which noted that mortgage securities sold by Wall Street investors exceeded those sold by Fannie Mae for the first time in 2004.

With competitors entering the market, Mudd said, "we couldn't afford to make the bet that the changes were not going to be permanent."

This is the primary reason for the defaults

 But they stressed that Wall Street banks — not Fannie and Freddie — led the dramatic decline in lending standards that caused mortgages to start defaulting in huge numbers two years ago.

   Now it is the Republicans chatter to blame Clinton for this mess when in fact it was the CDS's invented by the wall street lending institutions that caused the snowball to gather speed rolling down the hill. It was to a banks advantage to sell as many mortages as they could. They could insure them whether they were solid sales or not. The risk was alleviated by the fact that you could move the risk from your bank to a CDS so they did not care if a buyer was qualified or not so the zero down shaky credit risks including tons of investors who were overstretched got bad loans and as the housing market hit the wall their investments ended up upside down. The houses were worth less than they paid for the, Banks then forced people into foreclosure so they could cash in on the CDS they bought and had no reason to work with the homeowners to keep them in their houses.

Risk Management:

Rep. Carolyn Maloney, D-N.Y., grilled Syron about the Freddie Mac's decision to fire David Andrukonis, its former chief risk officer. Andrukonis had sounded warnings as far back as 2004 about the risks posed by loans in which borrowers didn't provide proof of their incomes or detail their assets, according to e-mails released by the committee.

AIG did the same thing and they got 100 billion from the government. The former CEO said they dismantled all of the risk management controls he had in place when he left AIG so they could sell more CDS's.

     Many trusting homeowners lost all their savings in this mess. They lost their homes and whtever they put down on their homes in this swindle. Blaming them for this is like blaming a store owner when he is robbed for causing the robbery because he kept cash in the store. It is convenient for the banks and lending institutions to have their lackeys get out the word that it is somebody elses fault but the truth is it was them not the homeowners who walked away with the cash sunk a lot of campanies and almost sunk the entire ship. All because of greed.

Well, let's see. First we had the National Security threat under Bush. The result was an unwanted, unwinable, war in the Middle East with what was probably the one country in the region that actually had nothing to do with the 9/11 attacks. The end result is that alot of Daddy Bush's war machine buddies got rich.

Then we saw the price of oil nearly quadruple over a five year period. For reasons yet to be explained. We all do know that G.H. Bush got his money in the oil business, do we not? Once again the cronies of the Bush family got rich.

The whole time in between, we saw the Fed make money so cheap and easy to get for Mortgage lenders and credit card companies that the risks were well worth the profit. Now that the balloon has busted, these bankers are being rewarded with billions of taxpayer money. So now Bush's banker buddies are making the gravy.

Do we see a pattern here? I'm just asking the question, is it possible that this Bush administration could possibly the most corrupt organization since the Mafia? I mean really, since 2001 we have seen nothing but crisis after crisis in this Country. Yet, these people, high powered and close to the people in the Oval Office have profited tremendously while the middle and lower classes have suffered the ills and paid the bills. You might write me off as a conspiracy theorist, and I'm sure that many will, but really, this is just too obvious. I really do think this entire Presidency has been about a few people making a ton of money, nothing more, nothing less.

"Republicans argued that the primary causes of the financial meltdown were weak government regulation of Fannie and Freddie and Clinton administration policies to promote homeownership. "We knew a long time ago that this train was going to crash," said Rep. Christopher Shays, R-Conn." 

They knew "along time ago that this train was going to crash"? They are blaming this mess on Clinton? Are you serious? Just exactly which party has had control of the Executive and Legislative branches of the Federal Government from 2001 to 2006? I believe that would be the Rebulicans, Bob! If they were in office, and saw this coming, why in Heaven's name did they not do something, anything, about it then? It really doesn't even matter at this point if it was anything that Clinton did or not do that put the train in danger. With this comment,  Rep. Shays is saying, "We saw the wreck was going to happen, we had our hand on the  switch lever, and we refused to take the action required to prevent the crash." Are you serious?  

The  reason the banks are in trouble is not because they loaned money to a few people they shouldn't have. No, the ENTIRE reason is that the banks became so greedy when they saw what they could do to the American people with interest rates, fees, penalties that they drove the entire middle class into bankruptcy. They priced themselves out of business. But hey, why not? If they could get money at under 5% and sell it for 38% and collect another 30% or better in annual, late, over limit, just for the fun of it fees, why not ride that gravy train? Well, in the midst of this, people hit their credit limits, had to choose between paying that "minimum payment" or feeding their children. Those "low rate" adjustable mortgages got adjusted all right, then that low payment became a huge payment overnight. The banks ran a scam on us. Thirty years ago all of these s.o.b.'s would have been arrested for racketeering! Now, the very people they were screwing (us) are covering their losses! I say let these criminals fall. The banks that did smart, scrupulous business (if there were any) will survive.  Then the Government can use the 700 billion to bail out the people that unwittingly gave their money to these thugs. Then we will see this economy get on it's feet. But alas, just another case of the wealthy few feeding on the impoverished many. The American Way right?

Comunity Redistribution Act (CRA), prior to Clinton's changes only had assisted in the tune of 8.8 billion dollars.  Clinton's changes to CRA  allowed Banks to be pressured by (ACORN and others) pushed banks to take higher and higher risk loans to the toon of over 4 Trillion ..that

both freddie and fannie had over 80% of their loans tied up in this..sure gives the impression CRA had a big role when it comes to Freddie and Fannie, i am sure others as well. This pressure to take the risk and the lack of oversight that allowed the few to reap huge rewards at the expence of the entire system.

This is just a guess but I don't think people are going and actually reading the CRA to see why people keep saying this.   We the people are being hurt. I do not care who did it, I just want them to stop it.

And yes they all knew it was happening... their sudden amnesia is only surpassed by our williness to believe they had no clue. Yes the banks did this magic numbers game and crashed the market, but people, please wake up. The securities were created as a way to handle the unreasonable loans the banks were forced to take. Shenanagans abounded. Countrywide was the first to do this.... what happened with countrywide?.. and people say... we didnt have a clue :O .... oh my... yes they did. The response to handling the CRA was stupid, imo.... criminal. But they, to include our congress, and president KNEW what it was doing. The bubble was building.. almost at a horrendous incline and they stuck their heads in the sand.

Now they claim they did not know O.0  

All you have said is true, except the CRA involvement.   No one wants to believe a law that was supposed to do GOOD things could go so wrong.  But it did go wrong, and burying your head in sand is not going to fix it.

You force a capitalist to do take on risk they would NOT normally take, unreasonably, and they will find a way to hedge the loss incurred. You there make the loans, and if you don't we will essentially cripple you, until you do, and the more loans the better your rating!! And don't worry about the risk, fannie will save you.  Only fannie jumped on the band wagon too.

Point is the CRA caused this and it is still in place. 

Quite frankly commenting on a persons spelling or saying a word incorrectly when you are fully aware of the MEANING is so rude.

 You can print up the entire changed CRA yet it was used (redline) to pressure banks (ask OBAMA who helped train ACORN in going after banks and credit unions) yes PRESSURE to take these higer risk loans so up the risk up the rates...and pop goes the bubble

They're called "Off-Site Weekends"—rituals of the high-finance world in which teams of bankers gather someplace sunny to blow off steam and celebrate their successes as Masters of the Universe. Think yacht parties, bikini models, $1,000 bottles of Cristal. One 1994 trip by a group of JPMorgan bankers to the tony Boca Raton Resort & Club in Florida has become the stuff of Wall Street legend—though not for the raucous partying (although there was plenty of that, too). Holed up for most of the weekend in a conference room at the pink, Spanish-style resort, the JPMorgan bankers were trying to get their heads around a question as old as banking itself: how do you mitigate your risk when you loan money to someone? By the mid-'90s, JPMorgan's books were loaded with tens of billions of dollars in loans to corporations and foreign governments, and by federal law it had to keep huge amounts of capital in reserve in case any of them went bad. But what if JPMorgan could create a device that would protect it if those loans defaulted, and free up that capital?

What the bankers hit on was a sort of insurance policy: a third party would assume the risk of the debt going sour, and in exchange would receive regular payments from the bank, similar to insurance premiums. JPMorgan would then get to remove the risk from its books and free up the reserves. The scheme was called a "credit default swap," and it was a twist on something bankers had been doing for a while to hedge against fluctuations in interest rates and commodity prices. While the concept had been floating around the markets for a couple of years, JPMorgan was the first bank to make a big bet on credit default swaps. It built up a "swaps" desk in the mid-'90s and hired young math and science grads from schools like MIT and Cambridge to create a market for the complex instruments. Within a few years, the credit default swap (CDS) became the hot financial instrument, the safest way to parse out risk while maintaining a steady return. "I've known people who worked on the Manhattan Project," says Mark Brickell, who at the time was a 40-year-old managing director at JPMorgan. "And for those of us on that trip, there was the same kind of feeling of being present at the creation of something incredibly important."

http://www.newsweek.com/id/161199

You gotta love the suggestion of getting us out of this mess...once again spend borrowed money...if ya ask me they should just remove Franklin from the 100 dollar bill and replace em with Clinton blowing a bubble lol  Lets face it...our government is disfunctional....do you really beleive having czars overseeing companys is a solution? Lawyers of all things lawyers telling US they know better haha way to funny the blind leading the stupid.

The basic question not being ask is how the influx of this money has balanced the asset vs. liability side of the worksheet.

The Bush administration again has rushed to a conclusion that in order for the USA to survive this crisis the country must repay the misappropriated and unqualified loans of not the American citizen but the international corporations and banking institutions who obviously were not doing the job of review as the original appropriations were granted.

 I recall a statement from this administration where the people when given there hard earn tax dollars to spend would spend the money more effectively than any government agency.

Why not now? If every American family were given a million dollars of this money how affective would this economy become?

The oversers CANNOT be the Congress. It could be a Department within the FBI dedicated to discovering fraud in the use of Federal funds - taxpayer money - either public or private.

As an incentive to be ethical, there should be the threat of long prison terms for the greed-driven financiers, bankers and traders plus confiscation of their wealth.

I have no quarrel with small time entrepreneurs who often take extraordinary risks, but offer the most significant number of jobs in the US.

And sometimes lose it all, but they simply start over.

As far as exported jobs, that is directly-related to the cost of labor here versus abroad.

There is no Constitutionally-guaranteed "living pay rate". The wealthy are just as entitled to the wealth they've earned, as those without the courage to risk it all.

We have the right to "the pursuit of happiness", not the RIGHT to happiness.

Oh, and BTW, the composition of the "oversight panel" strongly suggests they are a major part of the problem.

But then, is there ANY panel within the Congress that could be 100% ethical?

The American people don't seem to think so: there is no person or group with lower "job approval" than the Congress of the United States.

Separately, the U.S. trade deficit rose unexpectedly in October, partly because of dampened demand for American exports.

Dampened demand for American exports? What about our jobs and tax dollars? Aren`t they still begging for them?

From the article:

For years, cutting the funds rate had been the Fed's most potent weapon for snapping an economy out of trouble.

Huh? The fed funds rate merely trailed interest rates set by private-sector markets in Treasury debt instruments. If anything, the economy "snapped" itself out of trouble.

Gotta love this one:

"The Fed will employ all available tools to promote the resumption of sustainable economic growth," the Fed said.

The Fed said. Is the Fed the Great Oz? If not, please get back to us with names, O dear reporter.