I swore I wouldn’t post a Jim Cramer video again, but when Cramer starts raving on that "Cuomo says, ‘I’m going to shut down the mortgage market,’" because of the New York Attorney General’s probe into Washington Mutual, Fannie Mae and Freddie Mac, well, you’ve just got to see it.
Oh, and Cramer, the house fell on the Wicked Witch of the East. The Good Witch of the North escaped a falling house market. She possibly was a renter.
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Breaking News
First it was Benny & the Feds who where having “no clue” of what was happening according to Cramer a couple of months ago, and now it’s supposed to be bad when fraudulent lending behavior is targeted?
Yes, Jim, it’s more difficult to get a HELOC if all the “ghost equity” created by fraudulent appraisals would dissapear. As the “invible hand of the free market” is clearly not working…
Moin,
ahhh…
On Monday he was bragging about that nobody can take this market down, the shorts/bears are stupid, weak $ is great blah, blah, blah,….
What a difference 48 hours made…..
They are both idiots. Cuomo is a grandstander my BiL knows him personally and thinks he is a lightweight. As for Cramer it is always about his buddies on Wall Street and not regular folks. I hope his frends get their collective heads handed to them for such risky behavior with other peoples money.
Cuomo is a grandstander but the issue is a serious one. Inflated appraisals have accounted for about 4% per year price inflation. Over 5 years thats about 20%. 4% is not much, it was usually due to extra closing costs being tacked on to an already heated sales price. But time and time again the evidence shows that truly independent appraisers (those with a firewall between them and the lender) are, on average, about 4% lower than those being jawboned by lenders.
Note that this does NOT apply to refis which show a significant discrepancy of about 9% between independent appraisers and those on the lender’s leash. But refis don’t directly affect home prices, they just screw the borrower if he needs to sell.
A lot of buzz in the appraiser community right now as to who is on that Washington Mutual “preferred appraiser” list. Can’t be good.
FYI – the main reasons appraisers WON’T be targeted by congress: 1- Congress blamed them already in the 90′s after the S&L debacle resulting in heavy regulation. 2- Appraisal organizations are already on congressional record over the past 5 years complaining about this problem. Not to mention the online appraiser petition (5000+ signatures) asking conress to regulate the lender – appraiser relationship. 3- Appraisers don’t make much money, but they do make good witnesses.
From an email I just sent to Senator Charles Schumer of New York:
Senator,
I am well aware that I am not one of your direct constituents, but as Chairman of the Joint Economic Committee of the United States, I AM directly impacted by your actions.
I felt it necessary to communicate my disdain and sheer appal at some of the statements you made in today’s meeting with the Fed Chairman (which is not the first time I have heard your positions).
They are as follows:
“I do want to applaud you and the Federal Reserve Board for your aggressive, and I believe appropriate, response to this summer’s liquidity crisis. It is vital that we maintain the health of our financial markets, and to ensure that they function smoothly, and you deserve credit for your prompt actions.”
To commend the reckless, irresponsible action taken by the Fed to allow Wall Street a few extra paydays and a prolonging/escalation of the inevitable financial day of reckoning that will be coming is bewildering. Make no mistake, it is America that will pay the price of these and any other rate cuts. You/they have introduced moral hazard into the market where risks have only upside, with artifically mitigated consequences. The dollar gets destroyed, as do the investments of normal Americans, and noone learns their lessons. And this fiasco was not unanticipated – I have been awaiting it for nearly two years with the exact implications that have come to be realized. Perhaps, you should search the internet and discover the economic data that many others have relied upon to allow them to easily contradict the Fed’s statements since the beginning of the year. You should be ashamed of that statement.
“I am glad to see that so much of your statement is given over to the importance of helping distressed subprime borrowers. You mention some of the efforts my colleagues and I have made, and I won’t spend more time on that right now. But I will say that it would be nice if the Administration would join us in our attempts to protect American families from the fallout of the subprime lending disaster. The policy responses from the administration have not come close to matching the magnitude of the crisis. There is a lack of confidence that anyone is in charge. Mr. Chairman, if you feel that in your position you cannot speak publicly about the changes that are needed, then I urge you to speak privately to members of the administration. Use your position to jawbone them into action. Your predecessor was not shy about putting his prestige and credibility to work behind the scenes, and I encourage you to do the same.”
It is unfathomable that you and others would leverage tax dollars to “bail out” homeowners who do not deserve to be in their home in the first place. Here’s a question: If you can’t afford something, why should you deserve to keep it? Should I now go out and buy the biggest, most luxurious houses and cars that I can get my hands on, and when I approach default, I get in line for my hand-out as well? After all, your policy discourages accountability and stokes the insatiable consumption that has put the US in this situation. Not to mention that for a Democratic Senator who is concerned with issues such as housing affordability, all your policy would do is artificially stabilize inflated, extremely overpriced housing, thereby preventing the housing market from re-achieving a level of homeostasis, which benefits the greater good. Since when did losing a house that you never should have been in absent of the greed of Wall St, mortgage brokers, etc., mean that you were homeless. What happened to renting?
Perhaps it is all political pandering to a base that you believe doesn’t truly understand the consequences of your actions, but I and many others do. I strongly urge you to reconsider your positions, because I can promise you that this is something that will be closely watched by the masses.
Didn’t Glenda the Good Witch ride around in a bubble?
Techscan-
Good point about the bubble- maybe she ended up being hit by a house after all.
This Cramer video is tame compared to last night’s Mad Money rant on Cuomo. Did anybody see that. Jimbo has lost it totally. He had a picture of Cuomo and another of a babe with big boobs out. He’s dancing around with that fake pirates sword of his which he then pokes through the picture of Cuomo but not the boobs. I half expected to see fake blood coming out! I guess this is what you get when the regular comedy writers are on strike. What was that all about, sex and violence? He really needs to see somebody about his anger management.
(Tobby said)”Note that this does NOT apply to refis which show a significant discrepancy of about 9% between independent appraisers and those on the lender’s leash. But refis don’t directly affect home prices, they just screw the borrower if he needs to sell.”
I can already smell the lawsuits from investors in products whose collateral consists of fraudulently priced refis. Probably Cramer’s friends can too.