I throw thy name against the bruising stones

Worried about a housing bubble, top Goldman executives decided in December 2006 to change the firm’s overall stance on the mortgage market, from positive to negative, though it did not disclose that publicly.  @#$@#$#@

oops. that should have been: )(*&&()({}+  h/t to Kat Herding.

Dick and Dave and Dan and Herb minus Dave (and Dick)

David Moffett, featured in these motley pages some time ago, has deleted himself from Fred: WSJ

Freddie Mac CEO Will Resign

Freddie Mac's chief executive officer, David Moffett, announced his resignation from the U.S. government-backed mortgage company just six months after being installed in that post by the company's regulator as part of a rescue operation.

The McLean, Va., company offered no immediate explanation for the resignation, effective March 13, but said that Mr. Moffett "indicated that he wants to return to a role in the financial services sector." A spokeswoman for Freddie said that the decision was Mr. Moffett's and that his resignation wasn't sought by the company's regulator, the Federal Housing Finance Agency.

Though Mr. Moffett's title is CEO, his job in many ways is more akin to that of a chief operating officer because the FHFA is running Freddie under a legal procedure known as conservatorship. As the conservator, the regulator assumes all the powers of the board and shareholders and seeks to restore the company to financial health.

A person close to Mr. Moffett said his decision partly reflected "frustration" with a job offering little freedom of maneuver. "He's a private sector guy," this person said.

Mr. Moffett is not anomalous:

In January alone, three of Fannie's most experienced investment managers -- Ramon de Castro, Paul Norris and Mike Lebowitz -- defected to other companies. Freddie recently lost Gary Kain, who was the head of its investments and capital markets operations before joining a private equity firm. Freddie has had only an acting chief financial officer since September.

Mr. Lockhart, the regulator, has argued that government ownership has gone well and that mortgage-market conditions would be much worse if it hadn't happened. Without government backing, he says, Fannie and Freddie "would have had to pull back dramatically from the market, which would have accelerated the downward spiral." When he was asked about the prospect that the federal government soon will be calling the shots at many more major financial institutions, though, Mr. Lockhart said in a recent interview: "I sure hope not."

I'd love to hear Paulson explain why this isn't a good idea

Andrew Caplin:

In most parts of the country, house prices are plummeting. Families are defaulting on their mortgages and being kicked out of their homes. That's bad news for them, but also for us, because bonds issued on the backs of those mortgages are being bought by the government as part of the Wall Street bailout. The more borrowers who default, the less those bonds -- our bonds -- are worth. Future taxpayers -- our children -- are being condemned to a subprime future.

But there is a way out of this mess. Meet SAM. SAM is a shared appreciation mortgage, [Wikipedia offers some cautionary comment] where the lender and the borrower essentially become stakeholders in the house, and where both profit when a home increases in value. SAM can reduce defaults and loan losses and give us taxpayers a fighting chance of coming out on top.

Here's how: Imagine a family that took out a $200,000 mortgage but can only afford payments on a loan only three-quarters that size. The hole they're in gets deeper when the value of the house falls. Rather than repossess the house the lender can opt to refinance the mortgage with a $150,000 SAM. That way, the lender gets something in exchange for the write-down: a significant share of any future appreciation in the house. So, if five years later, the house is sold into a recovered market for $200,000, the lender would get an appropriate share of that profit.

If we allowed SAM in this country, taxpayers would get a share of the appreciation in any houses that got written down. This would reduce the odds of the homeowner defaulting and increase the value of those bonds that you and I now own.

Tragically, as useful as SAMs could be to our economy, we can't use them. The IRS imposed a block on SAMs nearly 40 years ago. But that block could be lifted with the stroke of the Treasury secretary's pen. Henry Paulson should pick that pen up and save our children from a subprime future.

Two ways to not build a community

Our neighborhood is changing. A number of homes are undergoing major renovations that will double their sizes, and new homes are being built that are much larger than existing homes in the community. . ..

The building boom began across the street early in the spring. Our neighbor started an addition, doubling the size of his home. Then another home, one of the smallest in our neighborhood -- a tiny two-bedroom, situated on a 100 ft. by 100 ft. lot -- was purchased for $285,000 and quickly razed by a building company. A three story, five-bedroom "castle" is taking its place -- complete with spire. As summer began, our next-door neighbors' contractor began adding a third floor to their home. Up the block, three large five-bedroom homes have sprung up on a lot where neighborhood kids used to play baseball. ($ - sub. req'd)

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Funny, that's from the Wall St. Journal's fiscal fitness columnist, who lives in New Jersey. We have the 8-bathroom Richerbyalongfuckthanthousistan specials here in Florida as well. But there's more to the sub-prime world of Florida real estate. This evening a neighbor tells me that a house across the street from her has been abandoned. It's a modest three BR with a pool, not a McManse on the Bay. The people who bought it (for $330,000) got a "silent" second mortgage from the former owner. It seems they also got a nice home equity loan once they closed, because they instantly went out and bought a shiteload of Things - electronics, toys, a trampolene.

The Things are still there. The former owner is out his $65,000 second mortgage. The "homeowners" left a couple of months ago, after which the house sat there for a month before the neighbor, overcome by curiosity, found the back door wide open, the nice new Things, the AC running at 73 degrees, the pool a smooth and fecund lime green.

The bank -- whoever that might be -- seems not to know it is the proud owner of the house -- no one has been out to do anything, according to the neighbor. Anyone could walk in, take what they want. The neighbor took me to see the trampolene this evening, then began disassembling it before my eyes.

A fellow we know is thriving in the business of cleaning out foreclosed-upon homes. He's done a number of them around the state, finding shiny new stuff in many. As the banks tend to have no interest in Things, he either gives them away or, more often, trashes them.

Even thieves are not working right now, it seems.