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Chris Whalen, Tangent Capital Partners senior managing director, on fixing the housing market and the Obama Administration's lack of response to this ...
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Ten billion dollars but is it just throwing good money after bad joining us now is financial analyst Chris Whalen is senior managing director of ten to capital.
Chris you've been all over this.
The president end in a speech earlier this week up following up on state of the union did that sort of on the -- The idea that federal government couldn't do at all in the -- I heard Ben Bernanke suggest that Federal Reserve couldn't do -- all.
Is it dirty little secret that there that none of them can fix the housing market that it really -- to run its course.
Well I think.
Chairman Bernanke's doing about all he can do in terms interest rates.
But the Obama administration's been ignoring the housing issue for years he saw during the state of the union message she appointed mr.
Schneider in the New York attorney general.
This -- of this working group.
The working groups been around since 2009.
But the White House ignored it they didn't -- -- head to it and frankly they didn't want to inconvenience to big banks but turn the dogs -- the Department of Justice.
So really -- -- -- in the State of New York -- the only game in town if we're gonna do this.
Tell us what you settle all along you've made a statement wants and recently in -- you said you cannot separate the U.
The GSE is a government.
Sponsored entered into prizes JPMorgan Chase Citigroup Wells Fargo and Bank of America the four horsemen.
That are exercising illegal cartel controlled -- really -- rat.
Well think of the whole market for home mortgages the bottom third of that market right now -- he walked out of -- finance.
So no matter how low the -- keeps interest rates.
Those households 3035 billion households are not getting any benefit they're not -- their mortgage costs reduce the -- in their credit -- products except for.
Why's this happening with a big banks don't want those lower income families to prepaid of Mosul mortgages.
They have higher coupons you can -- -- the data the average size of those old Fannie -- five and a half and six sponsor troubled mortgages and we're half the size occur production those -- poor people.
Mobile walked -- -- their homes and I think it's terrible because it is Washington it's Fannie Mae Freddie Mac.
The top four banks who were basically saying no we won't allow -- before -- finance even if they've been paying even if they've got jobs you know the whole.
The long Chris it seems that you think that Washington is missing the mark here -- -- how would you grade the dialogue that is taking place around the issue of housing and when needed and what needs to be added to that discussion to make it more relevant and an on topic.
What the White House has been hearing from a lot of people Glenn Hubbard Chris Meyer took Columbia -- for -- -- boys who used the wrong country wants.
Mortgage conduit they know what the problem it's.
The trouble is they don't want to disturb the big banks particularly is a problem what is it that they're missing that everybody knows well that its banks like bank Comerica -- him strong with litigation.
The bank is never gonna fight their way out of the swamp.
Until we have -- restructuring or bankruptcy to do is deal with that enforcer -- to come forward say I've gotta claim against the bank for some bad mortgage securities.
I want to be paid.
So are you predicting that Bank of America how could collapse under the weight when I don't know mortgage -- The banks.
Are fine Merrill Lynch's fine the problem is the parent company is facing tens of billions of dollars of legal claims that they can impact.
What are they gonna -- issue stock.
What we need is to bring order to this process so that we can in an orderly way the girl what the claims or get them paid.
Good -- stalk we're gonna -- banks I think I could IPO most of the banks inside BankAmerica today clean out of a restructuring.
And raise 200 billion dollars.
But they always a payoff all the claims and you give the Russell move borrowing.
Give back to a different aspect of this and that's the power that these happened as a whole unit unit you know -- thing.
We'll -- example if you're a little bank and you make alone in your community.
You can't go to Fannie Mae or Freddie American get a guarantee directly you don't have the people -- -- of the infrastructure.
You have to sell that loan to JPMorgan.
And give -- two thirds your profit.
That's the cartel oil pricing -- -- -- at its its comprehensive across the country BankAmerica.
Wells Fargo each have more than a third of the total mortgage market where does this make sense.
So Chris before we let you go that's gets me back to the original premise then that realistically do forget the rhetoric because the president knows what he's talking about won't make it through congress might help did boats.
The reality is is that this is this gonna run its course because this this this cartel is talking about seems impenetrable -- -- I don't parties benefit from.
Well the banks benefit from delay ironically but it's good to kill -- and we can't have much of an economic recovery were not -- lot of job growth if people can't move.
What if you have some auto workers -- -- in his home loan this house is underwater and he's got a job waiting for him and another state eventually is gonna move.
This could walk away from that morgue that affects year old picture of unemployment and -- labor mobility and it's all about labor mobility.
Chris -- -- capital you've been on top of this keep up the good work we thank you thank you --
