There are several factors that brought about the problems at Freddie Mac and Fannie Mae, but the one thing that I continue to come back to is regulation, oversight and auditing. This isn't finding a cure for cancer or building a battery that will power a car 400 miles. These kind of challenges we don't have answers to. But running the mortgage business correctly is not brain surgery or rocket science. What I would like to do with the heads of these two organizations is fire them; however, my kind of firing would be against a wall and put on TV. This is more about mismanagement and greed than anything else. The Federal Reserve Bank and the U.S. Treasury need to make the case for a better and more vigorous enforcement of standards. In my opinion, too much shit passes for acceptable business practice. Everyone wants their piece of heaven and so the struggle for more money continues. Too many people are in these businesses for the wrong reason. Greed unfortunatley is at the top of the list.
Yes, the price of some homes are coming down, but as buyers enter the market a market level will be established where buyers and sellers can do business. The cost of building new homes is not going to come down a lot because the cost of materials is not falling by much if at all. Labor cost may be down as a result of higher unemplyment, but this will be only temporary. The big screw up occurred in the financing of homes and the securtizing of mortgages. Had the rating companies and the investment banks behaved in an ethical manner much of this would have never got on the ground. Why hasn't the Justice Department looked into the business practices of the rating companies and the investment banks? As I have always said, money talks and bullshit walks. No investigation because we don't want to know who did the bad things. Let us just call it the economic cycle and cover it up. The people that lost money in Freddie and Fannie, the shareholders, they are not at fault. The authorities should be looking at the upper levels of management for their clues of mismanagement. But, it appears these guys will just get to walk away from the wreck they helped create. Don't want to make an example of nice greedy people.