Wednesday, May 27, 2009


In this FOX News article, we learn about William Frey, an incredibly shallow and tone deaf market player who wants the courts to guarantee his money by forcing banks to turn away home owners looking to renegotiate home loan terms.

What Frey doesn't seem to understand is that housing markets are crumbling and many of the banks that hold or service mortgage contracts that he's trying to maintain are only solvent because of massive government intervention.

Let me make this clear before I outline how incredibly ignorant and tone deaf this egg-head is: the only reason Mr. Frey has contracts of value to complain about is because the federal government is using taxpayer money so that the entire market does not collapse due to the greed and stupidity of people like him.

Here's the article again.

In it William Frey, who is the president of a company that puts together mortgage-backed securities, recently told the New York Times that he had been contacting banks and threatening to sue them if they renegotiate mortgages for homeowners facing foreclosure. According to Frey, providing better terms for homeowners would mean reducing the value of the mortgage-backed securities held by people like himself. Once the value of the contracts are reduced he stands to lose money.

Here's a couple things Mr. Frey needs to think about:

* If you put your money into markets that are inflated that's your problem.

* If you put your money into markets that were handing out NINJA (No Income, No Job, No Assets) loans like they were candy that's your problem.
In a few words, Mr. Frey needs to realize that he was participating in an inflated and bubble market, like everyone else. Take your lumps.

Later in the article Mr. Frey claims that private hedge funds were to blame for creating the riskiest subprime mortgages. This may be true (but not entirely). Still, Mr. Frey sure wasn't complaining when hedge funds were investing in the real estate market in the process driving up the price of the product that he was putting together and profitting from for years.

As well, Mr. Frey complained about the "strong arm" tactics used by the government to help facilitate the bailout of floundering financial firms (like Citigroup, AIG and Merrill Lynch). He's miffed because some institutions were "strong-armed" into merging with other institutions and taking government money. What Mr. Freey ignores is that the problem the financial sector created with their stupidity and greed is so big that the industry can't unwind many of the complex instruments that people like him helped create.

The toxic garbage has spread throughout the industry like an STD and require forced measures.

There's more. But Mr. Frey needs to keep a couple of things in mind. People are not only losing their jobs but they can do little to nothing as the value (and equity) of their homes collapse. Mr. Frey also needs to keep in mind that at least 1 million Americans will go bankrupt this year while many more see their credit wrecked for years to come. If Mr. Frey wants his "investment" guaranteed he should also be pushing to have the credit and value of each home owner's house guaranteed too. But he doesn't want this. All Mr. Frey is focused on is making sure that his money is guaranteed.

What a standup guy.

At the end of the day Mr. Freey needs to grow up, and learn one thing: there are no guarantees in life. He's not the only one affected by the mess people like him created.

- Mark

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