Market Conditions: Are Freddie and Fannie Condo Loan Regulations Hurting Sales?
The Chicago Association of Realtors and the Illinois Association of Realtors have both been vocal in press releases that the recently tightened Fannie Mae and Freddie Mac loan requirements for condominiums are squeezing sales in Chicago.
Here are some of the new rules recently put in place for buyers seeking to obtain a Fannie or Freddie backed mortgage on a condominium:
- For new construction and newly converted condominium developments, at least 70% of the units must be pre-sold (closed or under contract).
- No more than 15% of condominium units within a single building can be more than 30 days delinquent on HOA fees.
- No more than 10% of units can be owned by a single owner (i.e. an investor owning a large chunk of units in the building)
- Fees have been raised. Buyers without at least a 25% down payment have to pay closing cost fees equal to 0.75% of their loan, no matter what their credit score.
There are a few other restrictions which are also impacting some condo owners, such as one regarding the amount of commercial space in the building which is impacting the smaller 3 and 6-unit buildings.
Are many of you seeing problems with buyers not being able to get loans in your buildings?
Have some associations been raising reserves in order to meet loan requirements for prospective buyers?
Last June, 2 Congressmen wrote Fannie and Freddie asking them to loosen the restrictions.
Since those letters, there hasn’t been any further action by Congress to change the requirements.
Fannie, Freddie asked to relax condo loan rules: report [Reuters, Jun 22, 2009]
Why are people complaining? Haven’t we figured out that the reasons loans went bad is because their were no standards in loan underwriting?
I don’t see problems in getting a loan because I actually plan on putting at least 20% equity down…
Give me a break! Congress got their underwear in a knot about banks being too loose with their underwriting but it’s OK for the taxpayer to throw money around without regard for the risk? Isn’t it enough that we’re handing out $8000 to first time homebuyers?
Besides, it certainly doesn’t seem to be hurting the market right now. Condo inventory is down over last year (see the fourth graph here: http://blog.lucidrealty.com/chicago_real_estate_statistics/ with links at the bottom to stats for individual neighborhoods)and the sales rate appears to be improving.
NAR = waaaa ::sniffle:::: waaaa. We can’t sell overpriced cookie-cutter condos without lax lending standards with little % down, and just how do they expect us to sell condos to unsuspecting buyers in underwater buildings?
Keep in mind, these are HOA loans, which should have more regulations in place. Furthermore Buyers who need or qualify for an HOA shouldn’t be buying luxury condos.
Sounds like there is an issue with developers not offering true affordable housing, you know sans the granite, tile everywhere and stainless.
I actually think some of the Fannie/Freddie regulations are too punitive…especially, the .75% penalty for not putting 25% down. The whole system is fd. Everything is a big contradiction.
Make it impossible for developers to sell condos, but don’t allow the banks that hold the developers loans to fail. Demonize wall street for “excessive leverage and risk taking” and then try to solve the housing mess with even more leverage and excessive risk taking. Bash securitization and CDOs, but then use securitization and re-securitiztion (combined with high leverage) to “cleanse toxic assets” from the banking system.
There are definitely some issues with the guidelines and I say this as someone who has to deal with it on a daily basis. However, the reality is that if someone has chosen to buy and can’t get financing for a particular development, they just find a development that can meet lending guidelines so I don’t think the guidelines are dramatically hurting sales per se.
With that said, many of the deals that fall apart today do so not because of borrower qualifications, but more the technical underwriting issues. Compounding the situation even worse than the guidelines above is that the mortgage insurance companies also have their own standards which are even more strict.
The Chicago market is being penalized because our market is primarily condos. Most of the guidelines were written for a national standard and do not really consider the individual differences across markets. For instance, several banks will not finance condos in developments less than 10 units which is probably the bulk of condo in LP/LV. This makes sense because nationally, 10 unit buildings are much rarer, but here in Chicago it is the norm. The risk in our market are the large high rises, not the smaller walk ups.
The commercial space restriction is another big one. You can no longer have greater than 20% commercial which means all the 3 unit above 1 retail space developments are going to have some problems. We also have issues with HOA reserves as many of the smaller developments do not have adequate reserves/budgets. Finally, deals are also getting killed due to minor lawsuits and mechanical liens.
For the arm chair real estate experts that think their 20% down is their savior, I hope you aren’t disappointed. Your 20% down doesn’t mean a hill of beans. Even if you are a well qualified borrower, if one of the issues above is out of whack with the development, you will find yourself without financing. It is all fun and games until you have to tell the wife you can’t get the place because of some obscure underwriting guidelines that you can’t explain.
Think what would happen to home and condo (especially condo) sales and prices if Fannie, Freddie, Ginnie, the FHA, and the HUD did not exist?
And they should not exist and never should have. These agencies and their housing “affordability” programs have been instrumental in burdening us with trillions in crap mortgages and are the reason for housing inflation. Additionally, they helped destroy our cities in the 50s and 60s, with their housing projects, redlining of city neighborhoods, and underwriting of cheap no-down payment mortgages for crapboxes in new auto suburbs.
These agencies in conjunction with the Federal Reserve and its EZ money policies are the root causes of the credit bubble of the past 10 years. It was always understood though never explicitly stated that the U.S. treasury was the loan insurer of the last resort and would not fail to bail out these agencies if they found themselves in trouble because of the massive number of bad loans they purchased. Lenders, in turn, would never have written these crap loans had these agencies not been there to take all the bad paper off their hands as fast as they could write it.
The tighter rules are minimal steps toward reform of our corrupt financial industry. Tiny little baby steps, really. Anyone who buys into a condo building with more than 15% of its units delinquent on their HOA fees isn’t looking out for himself and exercising responsibility, because an accumulation of arrears in a building will sink the remaining responsible owners. Most people can no way afford to be saddled with other people’s liabilities, which is why you don’t buy into a place with the kind of problems the new rules are designed to screen out…… and most people can’t afford the taxes we’re going to have pay to carry the monstrous government debt we’ve taken on as a result of these agencies which existed only to permit financial institutions to shift their unmanageable risks to, ultimately, the taxpaers.
Further proof that you can find more brains at a garbage dump than in congress or any branch of government.
The big Fannie/Freddie rule issue out there right now for existing builindgs is that over 80% of condos must be owner occupied. This is impossible in a market where homes are not selling for a multitude of reasons. Sellers rent in order to mitigate the cost and then buyers cannot get a Freddie/Fannie loan if the percentage of rentals go above 20% of all units in the building. This seems like a spiral downward to me. The rule about no more than 15% of HOA fees being late might be an issue for some buildings, but I do not have data on this. I do know that the percentage of rentals has become a huge problem.
This will make you all smile…
According to the IRS, 1.4 million home buyers have taken advantage of the $8,000 tax credit at a cost of $11.2 billion ($8k * 1.4mm people). The National Association of Realtors says that 350,000 people bought who otherwise would not due to the tax credit. The National Association of Home Builders says the number is 165,000. Let’s split it down the middle and call it approximately 250,000 people.
In short, Uncle Sam just paid $44,800 ($11.2 Billion/250,000 new home owners) for each additional home sale this year to spur the market…
Even though I am in the business that doesn’t like a good use of funds to me…
russ, your post definitely makes my facial muscles twitch, but somehow I can’t smile.
How nice it is that these buyers got subsidized by you and me to buy their homes, mostly with low-down FHA loans.
Did any of you see the signs popping up on parkways all over Edgewater and Rogers Park? The ones that say BUY A 3 BED 2 BATH CONDO WITH $500 DOWN AND $8K CASH BACK? I called for discovery and was told that you get your tax credit back at the closing and that is your down payment. 3.5% down payment.
Is it any wonder that FHA deliquencies and defaults are at record levels of about 14%?
We’ll pay for this binge a second time when it’s time to bail out the FHA in another year or two.
The saddest part is that the Federal funds to fund this are so desperately needed for critical infrastructure repairs, which is going begging. The road stimulus isn’t beginning to cover all the failing bridges,for almost all the funds allocated for that are going to highway and a few bridges; and critically deficient hydro dams are last. We have not allocated the money for those, even though thousands of human lives are at grave risk. We have about 3500 LARGE (over 200′) hydro dams in this country that are in danger of catastrophic failure and that would cause massive floods were they to fail, that we don’t begin to have the fund to repair.
But we have the money to help people buy overpriced houses and help people buy new cars and destroy perfectly decent used cars.
We’re crazy.
Sorry for some of the missing words and grammatical lapses in my last post- this computer has the worst keyboard in the world with many unresponsive keys, and I dropped some words.
“I actually think some of the Fannie/Freddie regulations are too punitive…especially, the .75% penalty for not putting 25% down. The whole system is fd. Everything is a big contradiction.”
I actually agree with MJ and Russ. Yeah the whole system is f’d, as MJ pointed out, however it seems Fannie and Freddie are proposing arbitrary guidelines with regard to condo sales. I’m not sure why a surcharge applies to downpayments of less than 20% whereas you can get the best terms on a SFH with 20% down. The commercial space restriction is similarly stupid.
One thing I am not as concerned with is mortgage insurance guidelines–if they have 20% down or more these don’t apply. It is disappointing there seems to be no attempt at harmonization at FNM & FRE between SFHs and condos.
” We have about 3500 LARGE (over 200?) hydro dams in this country that are in danger of catastrophic failure”
So, MORE than ALL of the hydro dams in the USA are in danger of failure? I guess if you deem that every dam is in danger of failure, you may have a point, but otherwise that is just alarmist exaggeration.
From the small hydro atlas (small-hydro dot com): “Of the 6356 large dams, 1649 are principally for flood control, 1160 are for water supply, 899 are for recreation, and 612 are for hydropower. A total of 2179 large dams are multipurpose. A further 248 large dams have hydropower as a secondary function.” Meaning that there are–at most–3039 large dams in the USA that have hydro power as a part of their purpose. And, for purposes of this count, “large” means over 50′ (not 200′) tall.
russ, keep in mind that the new home buyers will put money into their home, and I think it is very true and shouln’t be underestimated, I think many will spend more than that 45K. There have been many home improvement projects in my neighborhood people are spending money even if its a bad recession. Plus I think the 8K credit spurred more sales than that. (I am one for sure).
***Solution: a tenth of a cent tax on securities traded (except 401K trades/retirement accounts). That at will rack up enough money to pay for infrastructure and debt servicing.
Also what about (3% tax on MBS from banks/brokers to the FHA default fund) Since they are sending the riskier loans to the gov’t
Err..
“I’m not sure why a surcharge applies to downpayments of at least 20%”
Bob:
The foreclosures on condos are far higher than single family homes. There is much more risk. Condos were a haven for the flippers and speculators. In addition, banks also have to deal with HOAs and other risks associated with condo ownership.
I don’t really have a problem with risk based pricing of condos. It is the other stuff that is making it harder and it is because the actuaries don’t know how to model the risk in individual markets.
As I have often pointed out, underwriting is more of coloring between the lines than any kind of common sense and critical thought of true risk at the individual loan level. Mortgages are underwritten because there is a secondary market and those loans can be sold, not because the loans make sense.
I still believe that the housing market woes are self inflicted by the banks to some degree though.
“I actually agree with MJ and Russ. Yeah the whole system is f’d, as MJ pointed out, however it seems Fannie and Freddie are proposing arbitrary guidelines with regard to condo sales. I’m not sure why a surcharge applies to downpayments of less than 20% whereas you can get the best terms on a SFH with 20% down. The commercial space restriction is similarly stupid.”
But it is all based (perhaps quite poorly, and certainly with an unacceptable time lag) on the defsult risks being seen in the most recent reporting periods. They’re doing some *actual* risk underwriting, but then applying it nation-wide instead of tailoring it for different markets.
Of course, if they tailored it for different markets, a different group would be complaining about that. And uniform standards–even if indefensibly stupid–are easier to defend and enforce than a ton of regional standards.
“I still believe that the housing market woes are self inflicted by the banks to some degree though.”
Developers, buyers, the government (local, state and–esp–federal), investors (foreign and domestic), Alan Greenspan, regulators, rating agencies, the NAR and the lenders (of course) all had a hand in inflicting the damage. This isn’t something that can be blamed–even substantially–on any one stakeholder the overall transaction flow.
“rating agencies…This isn’t something that can be blamed–even substantially–on any one stakeholder the overall transaction flow.”
Two entities: Moody’s and S&P. They were branding pools of crap CDOs as Triple A.
You can blame George Bush like all the dumb liberals do…
“Two entities: Moody’s and S&P. They were branding pools of crap CDOs as Triple A.”
Yeah, and the regulators, banks, governments and investors let them get away with it (and the banks did a hell of a lot of pushing to get their ratings). Anyone with a fundamental understanding of the process could see how messed up the ratings were, yet no one said or did boo–except the *numerous* people who were shorting (in various ways) the RMBS market in 2007–and who got very, very rich b/c of that.
Seriously, trying to blame *just* the ratings agencies is a small-minded way of deflecting blame from all of other the co-conspirators.
“You can blame George Bush like all the dumb liberals do…”
And you can absolve his administration from any blame like all the dumb republicans (ie the so-called “conservatives”) do.
Politics is a team effort and one party cannot be blamed. Many good and poor decisions were made across the board.
“ie the so-called “conservatives”
Neo-cons
“And you can absolve his administration from any blame like all the dumb republicans (ie the so-called “conservatives”) do.”
and LOL @ that statement because its so true
“Seriously, trying to blame *just* the ratings agencies is a small-minded way of deflecting blame from all of other the co-conspirators.”
The ratings agencies were supposed to be impartial fiduciaries responsible for making sure the securities being issued by greedy Wall Street were given a credit rating commensurate with their risk. Sure shady lenders and the government were partly responsible for this as well, but nobody abdicated their fiduciary duty as much as the credit ratings agencies. I am amazed and saddened Moody’s and S&P are continued to allowed to exist.
I hope they get sued out of existence.
“their fiduciary duty”
Who did they owe their fiduciary obligation to? Show us the basis for the obligation.
Just because you think they *should* have been held to a fiduciary standard does not make it so. If you think that they *really* should have been fiduciaries, that’s a regulatory/government failing. And further proves that the buyers of the securities were not responsible enough to invest some kid’s lemonade stand profits, because that’s a fundamental misunderstanding of what the rating is.
***Solution: a tenth of a cent tax on securities traded (except 401K trades/retirement accounts). That at will rack up enough money to pay for infrastructure and debt servicing.
All that will do is shift trades to other countries that do not have the tax. Not too difficult with today’s technology.
“All that will do is shift trades to other countries that do not have the tax. Not too difficult with today’s technology.”
Agreed. Taxing anything that does not require presence in the USA will create a large incentive to relocate.
MJ, perhaps you can list some other country that doesn’t have such a tax…
London, Hong Kong, Singapore, Frankfurt, etc all have this tax. In fact, it has existed in NYC since 1907 but in 1981 New York state started rebating 100% of the tax back to the purchaser at the time of purchase (in effect they stopped collecting the money). It was pulling in $300 million a year for NYC in the late 70s before they started phasing out the tax. It would be in the billions today with the High-Frequency trading that GS and others do.
Because clearly the heavy hitters would march ahead with their penny collection operations in the face of massive transaction costs.
I am all for such a tax. Clearly GS and other hedgies aren’t really providing a service to the market, other than increased volatility, with their high frequency trading operations.
The market was never supposed to be a casino or a horseracing operation, but that’s exactly what happened with all this increased volatility.
Individual investors wouldn’t even notice the tax, only those churning volume would. And such players add little, if any, value to the securities markets.
Actually, you wouldn’t pull in billions with a trading tax; the high frequency shops would shut down any strategy that would be weighed down by the tax. Current estimates are in the 30-40% of the high frequency strats would be eliminated. Given that recent estimate (hate to use it but the Tabb Report) show that high freq is ~60% of the market, overall volumes would be down, spreads would only slightly widen.
MJ – sure, the countries you listed have stamp taxes of some sort, but we do too. We currently have per-ticket settlement fees at the DTCC, hence compression.
You asked what country doesn’t have the tax. Simply move to other fungible assets, say in Canada? The TSX will be able to handle these trades immediately (if their systems hold up).
Whoa, hold on. I was wrong. My Google searching has revealed that in the late 1990s, all of the major exchanges on the European continent eliminated the transaction tax in the hopes of taking market share away from London. The opposite happened.
When the tax is a fraction of a percent of the transaction, it just isn’t big enough for people to change. Things like execution speed are worth way more than 0.1% on a transaction.
“When the tax is a fraction of a percent of the transaction, it just isn’t big enough for people to change. Things like execution speed are worth way more than 0.1% on a transaction.”
Okay, then the question becomes “which of the major exchanges has trouble with execution speed”, right?
Wicker, are you sure the Toronto Stock Exchange is going to allow GS to put a server in their server room like NYSE and NASDAQ currently do? High-frequency trading works so well because they literally get the quote data before anyone else!
And are a whole bunch of corporations going to go through all the trouble to get themselves listed on TSX just so other people can avoid a piddling tax? Not to mention submitting themselves to another regulatory agency that is going to want quarterly (monthly?) filings. Give me a break.
I hate taxes as much as the next guy, but 0.1% is not going to get anyone to deviate from the status quo.
Yeah, we can blame all politicians here…. The 2 gangs (Reps and Dems) that have been running the show need to get kicked out.
Maybe we would all be better off look at the Constitution whereby it boldly stated the ideas of limited government, capitalism and individual rights.
Milton Freidman is my new hero. Wish we had real conversation like this on daytime tv.
http://www.youtube.com/watch?v=RWsx1X8PV_A
“Okay, then the question becomes “which of the major exchanges has trouble with execution speed”, right?”
I have no specific knowledge, I was only pulling something out of my posterior as an example of a “better” service. You know how Target sells the exact same product as Walmart for slightly more money yet somehow stays in business.
If I am faced with a decision of buying 100 shares of Ford for $625.63 on the NYSE vs 100 shares of Ford for $625.00 on the DAX, I’m going to choose the one that’s more convenient, has a trading platform I like better, etc. The price difference is so small it’s the least of my concerns.
“If I am faced with a decision of buying 100 shares of Ford for $625.63 on the NYSE vs 100 shares of Ford for $625.00 on the DAX, I’m going to choose the one that’s more convenient, has a trading platform I like better, etc. The price difference is so small it’s the least of my concerns.”
Sure, but 20 bips (once on the buy, once on the sell) is real money over the volume of trades GS makes. And why wouldn’t GS just move its prop trade desk to Frankfurt, or London, or Singapore, or Toronto?
Tipster,
You are correct, as a infrequent, limited access retail investor the extra .63 might not matter to you. But to anon’s point: for one mil, or $.0001 per share tax (the amount proposed earlier this year), GS would have paid $60k yesterday on stated NYSE volume of 608MM. Annualized out to $15MM, and yes, absolutely the trading pattern will move.
Please note only NYSE shares used, not any other exchange.
Also, yes, the TSX will allow colocation – they are actively soliciting the street to move their strategies there. Just bought a new generator this summer actually to handle the power requirements.
GS is headquartered here. The tax could easily be written to apply to any trades made by a US headquartered entity.
Yeah GS could move their HQ to another city overseas, that is certainly possible. But I doubt the NY boys calling the shots would be in favor of that.
HF trading, from what I have read about it, doesn’t sound like a legitimate form of market making given the additional volatility it introduces and doesn’t necessarily narrow spreads. A very small tax can take most of the noise out of the market, reduce volatility significantly, and raise revenue.
“But to anon’s point: for one mil, or $.0001 per share tax (the amount proposed earlier this year), GS would have paid $60k yesterday on stated NYSE volume of 608MM. Annualized out to $15MM, and yes, absolutely the trading pattern will move.”
So what? Do you think anybody on this thread seriously cares whether GS has their trading platform in NYC or Toronto? The physical placement of a computer server doesn’t really add any value to the real economy.
“GS is headquartered here. The tax could easily be written to apply to any trades made by a US headquartered entity.”
Or, like every other “tax planning” entity, re-charter in Bermuda or the Channel Islands, without moving any genuine executive offices. It ain’t hard.
“So what? Do you think anybody on this thread seriously cares whether GS has their trading platform in NYC or Toronto?”
Speaking of wildly off-topic issues: I am still interested in where you got the impression that ratings agencies owed a fiduciary obligation to the purchasers of rated securities.
Of all the villains, real and alleged, discussed on CribChatter, could high frequency trading algorithms even break into the top 25?
“I am still interested in where you got the impression that ratings agencies owed a fiduciary obligation to the purchasers of rated securities.”
They were purported to be independent organizations (apart from Wall St) and assigned rated the securities. The ratings were assumed to represent the actual risk of the underlying securities and not wildly optimistic scenarios that did not pan out.
Instead of assigning accurate ratings they chose to instead partner with the banks or be pressured by them to the point that it compromised their integrity, reputation and good judgment.
“The ratings were assumed to represent the actual risk of the underlying securities”
So, the real culprits are the bond buyers who trusted what the bamkers (aka “used loan salespeople”) said instead of reading the disclosures themselves. Which provide (don’t have one handy) that the rating is a judgment and doesn’t create any fiduciary obligation, etc., etc., etc.
“They were purported to be independent organizations”
Independent organizations don’t accrue fiduciary obligations under normal circumstances. Then they wouldn’t be independent.
“Instead of assigning accurate ratings they chose to instead partner with the banks or be pressured by them to the point that it compromised their integrity, reputation and good judgment.”
This is a fair point, and, if provable, opens them up to ginormous liability. But it’s not because of any fiduciary duty.
“And why wouldn’t GS just move its prop trade desk to Frankfurt, or London, or Singapore, or Toronto?”
Because guys worth 9 figures ain’t moving. Period!
“Annualized out to $15MM, and yes, absolutely the trading pattern will move.”
15 mil.. you gotta be kidding, that’s not even a rounding error.
“I am still interested in where you got the impression that ratings agencies owed a fiduciary obligation to the purchasers of rated securities.”
Anon.. I hope you are jesting… legal fiduciary maybe not. I just don’t know. But open to liabilities? Open to destroying confidence of the markets going forward? It’s disgusting.
Bob.. how does higher volume positively correlate to increased volatility? I would assume the opposite, if i had to, with a gun to my head.
“Anon.. I hope you are jesting… legal fiduciary maybe not. ”
“Fiduciary duty” has a specific meaning. Being a fiduciary implies certain rights and obligations. So long as words have meaning, no, I am not jesting. The ratings agencies were not fiduciaries and owed no fiduciary duties to buyers of bonds or to the market as a whole. Indeed, they specifically disclaim any such obligations.
Now, did what they did completely f’ everybody? Sure. Should there be repurcussions for that? Probably. But will anyone get anywhere asserting a breach of fiduciary duty? Nope.
Of course, one should ask: Why did the ratings agencies get so much power? And my answer would be two parts: (1) the banks manipulated them (with their consent) to exceed their real competency and (2) failure of regulatory oversight–the ratings agencies should not have been allowed to do what they did w/o accruing obligations w/r/t the rated securities, but then, of course, they most likely wouldn’t have done what they did.
““And why wouldn’t GS just move its prop trade desk to Frankfurt, or London, or Singapore, or Toronto?”
Because guys worth 9 figures ain’t moving. Period!”
Yeah, but why would they have to? Can’t the guys running things (ie, the guys worth 9 figures) be wherever, really?
anon.. you are fact check.com tonight. very good. I vote for # 2. My point on the later was simply over 15 or even 100 mil you ain’t movin GS’s prop desk. Good lord, the moving expenses alone would blow away 15mil.
And fiduciary, I just simply meant I didn’t know. I can admit to never having read the disclosure. Not surprised they absolve themselves from fiduciary responsibility though. Once upon a time i thought the capital markets were the greatest thing in the world. Now I think the whole thing is just a pathetic giant clusterf*k.
“My point on the later was simply over 15 or even 100 mil you ain’t movin GS’s prop desk. Good lord, the moving expenses alone would blow away 15mil.”
Well, yeah, but first it’s 10 bips, then NY decides to stop rebating, then NYC decides it needs its 10 bips, too, then the SEC implements a surcharge to pay for enforcement, etc, etc, etc. And you *know* that Toronto (or Frankfurt or whoever–hell, Chicago) would foot the whole bill and sign all sorts of guarantees about not implementing any local taxes.
Wait – I didn’t mean to imply that the physical traders were going to move, only that the flow would move. Remember the 15MM was only for one year, and for only the increased taxes from trades to one exchange. That amount alone would instigate a move to other execution venues as possible. To do so would only require co-location of the strategies or fiber pulls depending on matching engine speed.
That’s why the tax idea is a poorly thought through one. Retail investors (who can’t simply port trades to other venues easily) will still pay it, and the true high frequency players will a) curtail the frequency thus reducing liquidity and/or b) move the trades to foreign soil. They’ll still pay some sort of income tax, but just avoid the “stamp” or “transfer” tax.
anon… their tentacles reach too far. It won’t happen. It’s like the Merrill bonuses, lots of noise to play to the audience for awhile and then just wait til the Jets and Giants are winning and the Yankees are making a run for the series and let it die out. They know the hand that feeds them. All the players are friends dining at the same tables at the same functions. And if someone gets too uppity just get him with a hooker.
To the poster who questioned my figure on the number of high-hazard major dams in this country:
There are roughly 79,000 dams of all types in this country, ranging from small 20′ unpowered dams clear up to the big mega-dams out west.
There are 8,100 major hydro dams.
Of all the dams in the country, over 15,000 are classified as high hazard. 3500 hazardous dams are major dams.
I don’t know where you get your numbers, but I get mine from a number of sources too numerous to link here. The Infrastructure Report Card is one site, at http://www.infrastructurereportcard.org/fact-sheet/dams. The Energy Information Administration is another reliable source of info, and there are thousands more.
I spend a lot of time studying energy and read dozens of books and publications on the subject.
Thanks for the clarification Wicker.. I thought you did mean physically move them. Maybe it’s just an acceptable deal. Maybe it’s we threw you trillions and took all your junk off your book and gave you cash to pay bonuses against assets you don’t really have and now we need to make it look like we got our pound of flesh to show the sheeple we did something. So shut up take your teeny tiny 15-50 mil hit and make us look good too and that way we keep this carousel spinning.
I would smile, order a round of 50 year old scotch, and take that deal.
Laura,
Not to be confrontational but what you are misinterpreting is the definition of “high hazard”
A dam can be completely safe and in perfect condition but if an incident at that dam should occur and cause loss of life it is automatically considered “high hazard”
The ratings agencies can disclaim away anything they want. I can get someone to sign a piece of paper saying I can shoot them: if after signing this piece of paper I actually do it does not mean I will not be legally liable for my actions and can’t be sued by them.
Their big problem is if sued by these bond purchasers, there will be a jury pool full of people, some like-minded like me. The ratings agencies were and are culpable even if they tried to disclaim away their involvement in these schemes.
“There are 8,100 major hydro dams.”
No, there aren’t. There is *nothing* that sez that. The number is sub-5000 from ALL sources I can find. You said that there are 3500, over 200′ tall, HYDRO dams in the USA at critical risk of failure. That is wrong on every modifier–there are not 3500 200′ tall dams in the USA, there are not 3500 Hydro dams in the USA, and there are not 3500 dams, either hydro or 200′ tall in the USA at critical risk of failure. You’re either typing faster than you’re think about this, or you’re conflating facts.
“Their big problem is if sued by these bond purchasers, there will be a jury pool full of people, some like-minded like me. The ratings agencies were and are culpable even if they tried to disclaim away their involvement in these schemes.”
And if the theory of liability is a breach of fiduciary duty, then the judge would throw out any finding of liability. You bragged about not using words incorrectly, Bob; you’re using “fiduciary” incorrectly. I haven’t disagreed about culpability, I’ve stuck to your fiduciary angle.
“I can get someone to sign a piece of paper saying I can shoot them: if after signing this piece of paper I actually do it does not mean I will not be legally liable for my actions and can’t be sued by them.”
Um, what’s their cause of action? Can’t be battery, as they gave your permission. Criminal liability is another issue, and, if you killed the person, a relative might have a wrongful death action, but if Stevo signed a doc saying you could shoot him in the foot with your .22, and you did, in fact, shoot him in the foot with your .22, I don’t see what claim he could prevail on. Of course, if you shot him with your .45, then he probably would have claims in tort and contract (unless the contract is void under applicable law–which a contract to kill him would clearly be, except maybe in Oregon–while a “shoot me in the foot” contract might be okay).
“Um, what’s their cause of action? Can’t be battery, as they gave your permission.”
It can and is still battery or whatever the local term for it is. Does not diminish the criminal penalty and in civil courts would be treated as, what is the legalese term? Ahh void under applicable law. Yes a contract to shoot someone would most certainly be void under applicable law, whether it resulted in death or not. Their course of action would be to sue if they had money or the means to pay a large settlement.
Just because two people agree to terms and sign a piece of paper does not necessarily a legally binding agreement make. I’m not even a lawyer but even I know that.
And I believe I am using fiduciary correctly as I believe they had a broader duty to society, generally, in their proclaimed independent research and ratings. Afterall they are referred to as ‘ratings agencies’. Put a bunch of people like me on a fraud trial where they are the defendants and we’ll see punitive penalties larger than the tobacco trials.
“Not to be confrontational but what you are misinterpreting is the definition of “high hazard””
She’s also apparently misinterpreting one or more of the definitions of “hydro dam”, major, and 200 feet.
Per the ACE’s National Inventory of Dams, of the ~82000 dams in the USA, there are 1630 over 100 feet tall. There are 2066 Hydroelectric dams (not counting those with secondary purpose of hydropower).
Oh, and the number of dams with “high hazard potential” is 11,881. But “high hazard potential” is the category for dams where the loss of ONE life is likely if the dam fails (OR possible loss of life + significant property destruction OR 25′ tall + 15 acre-feet of storage OR 6′ tall and 50 acre-feet of storage). It has nothing to do with the maintenance status of the dam, but Laura never really implied that, I don’t think.
And, finally, the infrastructure report card Laura linked to sez that there are 1819 (or 1743–it sez both for 2007) “high hazard” dams in need of “repair”. Not 3500, as she did imply, and certainly not 3500 “major” “200′ tall” “hydro” dams. Remember, “high hazard” can be 6 feet tall, if it holds back 50 acre-feet of water (a lot of water, but not what you might think–Hoover Dam/Lake Mead is 29,000,000 acre-feet, and the deep tunnel currently holds in excess of 60,000 acre-feet, still 10 years from completion).
“And I believe I am using fiduciary correctly as I believe they had a broader duty to society, generally, in their proclaimed independent research and ratings.”
Well, it’s lucky for the ratings agencies that the law does not agree with you. The verdict would either get thrown out by the trial judge or on appeal. Oh, and punitive damages don’t just come out of nowhere AND any suit would be tried in the SDNY, not Madison County Illinois, Mississippi or East Texas, with a real judge and no insane pro-plaintiff bias. Federal courts currently have a dim view of large punitive damages awards, unless the statute specifies treble damages.
“It can and is still battery or whatever the local term for it is.”
Look up the elements of “battery”. It isn’t a tort if you request it, even if it may be prohibited under criminal statute. S&M clubs are not illegal, and do not give rise to a cause of action for any injury suffered–barring negligence–as the injured was a willing participant. You’ve set up a willing participant who can revoke his consent after the fact. Using your logic, every woman you’ve had sex with could post hoc revoke consent and sue you for battery (an unwanted touching). Our legal system don’t work that way, dude, for *very* good reason.
And, as I have said more than once, you could still be arrested and prosecuted for it, as there is a public interest in preventing people from shooting each other, even if they ask for it.
Finally, all of that is moot if the agreement were coerced. Coercion voids consent.
Invalid analogy. The ratings agencies were engaged in outright fraud, which is illegal. I’m pretty darn sure that you can’t have a disclaimer statement that “We aren’t responsible for how you use these ratings if we engage in fraudulent practices”, as fraud is illegal and would be void under applicable law.
The only potential issue I see is standing and the investors finding a way to claim standing in suing the credit rating agencies. Depending on their involvement hopefully they should be able to find a way.
2008 Census data Housing is getting even less affordable:
http://www.usatoday.com/money/economy/housing/2009-09-21-housing-affordability-census_N.htm
Bob has had sex? With women?
“Invalid analogy. The ratings agencies were engaged in outright fraud, which is illegal. I’m pretty darn sure that you can’t have a disclaimer statement that “We aren’t responsible for how you use these ratings if we engage in fraudulent practices”, as fraud is illegal and would be void under applicable law.”
Dude, two SEPARATE issues. Separate issues that YOU set up and I merely responded to. You said that you can’t contract around Tort liability; Obviously you can.
You said the ratings agencies owe a fidcuiary duty to the buyers of bonds–they don’t. The lack of a FIDUCIARY duty does not mean the absence of ANY duty. I’ve *repeatedly* acknowledged that there is a likely cause of action for fraud, but you keep prattling on about fidcuiary obligations and how a jury of Bobs would stick it to them for their failure as a fiduciary, notwithstanding the absence of any obligation–and I have pointed out that no verdict based on a theory of liability for failuure to act as a fiduciary when no fidcuiary relationship exists whom be doomed to be thrown out.
“The only potential issue I see is standing”
Well, then you’re FINALLY admitting that there is no fiduciary obligation (did you ask someone who knows something about this, or just actually think it thru, instead of kneejerk saying “they suk”?), b/c if there were, the alleged breach would confer standing.
In any event, proving “outright fraud” will not be nearly as easy as it seems from where you’re sitting.
Hey Chris,
Its a lot easier than you think when you have cash flow in the budget for dating. Actually maybe its not so easy if you’re a home loaner and burdened with a mortgage payment thats 40% of your gross income. LOL! Sucks to be long real estate doesn’t it? 😀
regardless (of the mean of fiduciary duty), people are sick of the bankers and regulators excuses and lack of any justice after this humongous boondoggle, makes the Iraq war look like a foreclosed doll house.
“bout fidcuiary obligations and how a jury of Bobs would stick it to them for their failure as a fiduciary, notwi”
Still regardless of having no legal basis, bring those charges to trial and a jury and every bob, anon, and groove will convict; rightfully so. From what I understand juries decisions have some legal weight and can to some extend make ‘law’, so why not at least try to get the conviction.
“so why not at least try to get the conviction”
Mixing criminal and civil law. No “conviction” in a civil trial.
Also, defendant can opt for a bench trial–ie, no jury, just the judge.
“Still regardless of having no legal basis, bring those charges to trial”
If you have no good faith argument for extension of the law (as there is no good faith argument that the credit raters owed a fiduciary obligation to the bond buyers), the FRCP provides for sanctions against the party and its attorneys putting forward the argument–>plaintiffs could end up paying defense costs.
There’s probably a reasonably winnable fraud suit for some bond purchasers, but it hasn’t happened yet, so I’m a bit dubious of the actual legal merits.
The only necessary “regulation” is elimating Freddie, Fannie and the FHA. Banks would be more careful when loaning out their deposits.