FANNIE MAE’S FORMER CEO Raines Says Company’s Woes Not of His Making – Zachary A. Goldfarb – … In an interview, Raines says he is sorry about the harm done by accounting errors while he was chief executive, but he continues to reject the view of federal regulators that Fannie manipulated earnings to boost profits and bonuses.  … -   Washington Post
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The Fairness Issue, How to Cope with the Flood of Foreclosures – from knowledge@wharton – Despite soaring foreclosure rates, President Bush and other Republicans have not made this a top priority, and Treasury Secretary Henry Paulson has refused to draw on the $700 billion rescue fund to help homeowners … “The financial sector weaknesses all originate in the housing market,” says Jack M. Guttentag, professor of finance emeritus at Wharton. “If we don’t solve the housing problem, then the weaknesses in the financial sector are going to continue to multiply.” – riskcenter.com 

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Paul Volcker is back, and he warns of tough times ahead – Volcker has been chosen by President-elect Barack Obama as a special economic advisor. His ‘no pain, no gain’ fiscal strategy worked in the ’80s, and there’s no sign he’s softened that philosophy.- By Ralph Vartabedian – LA Times

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“New Wave” Credit Crisis Lawsuit with Subprime Overtones – Kevin LaCroix -  In a recent post, I described the “new wave” of credit crisis lawsuits, in which the companies involved were damaged by their exposures to other companies experiencing credit crisis losses. The latest of these new wave lawsuits to be filed involves the Federal Agricultural Mortgage Corporation, or “Farmer Mac” as it is more familiarly known. – D&O Diary 

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METRO ATLANTA FORECLOSURES – Real estate investors decry four-loan limit – New rule restricts number of loans backed by Fannie Mae, Freddie Mac – By D.L. BENNETT – The Atlanta Journal-Constitution 

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Needed: A Large Drop of Helicopter Money – a proposal … To achieve the quickest and most direct money transfer to the consumer, here’s what our government should do:  Beginning during the first half of 2009, write checks to every household filing a tax return, in the amount of, say, $10,000 per dependent (taxpayer, spouse, children, other household members), which is an order of magnitude larger than the consumer stimulus in early 2008. – more … – Lloyd’s Investment Blog   

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Bernanke’s Daring Experiment – By Robert Samuelson – … the financial magazine Barron’s — hardly a socialist bastion — suggested the Fed should balloon its credit to an astounding $6 trillion. But too much money and credit might someday boomerang as higher inflation. Considering the consequences of being wrong, Bernanke faces an enormous intellectual challenge and no less an agonizing personal burden. … – Real Clear Politics

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Buy Cadillacs At Chevy Prices – Steve Forbes – Veteran mutual fund manager talks about finding value in the bear market and the real financial weapon of mass destruction: mark-to-market accounting. … – Forbes

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Redefaults a Problem, OCC’s Dugan Says – By PAUL JACKSON – As if you couldn’t see this one coming a mile away: more than half of the loans modified in the first quarter of 2008 had redefaulted within six months of modification, according to statistics released Monday by the Office of the Comptroller of the Currency. “After three months, nearly 36 percent of the borrowers had re-defaulted by being more than 30 days past due,”  Comptroller John Dugan said in a statement. “After six months, the rate was nearly 53 percent, and after eight…   – housingwire  

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Jon Laing’s mortgage-relief plan, in Barron’s this week, make a whole lot of sense. It makes even more sense with the additions we’ve suggested. Tom Brown explains at bankstocks.com 

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Warnings saw loan problems at Freddie, Fannie: report – Documents show that top executives at Fannie Mae and Freddie Mac were warned years ago that the firms were offering mortgages that could pose a long-term danger to the companies, borrowers and the industry, The Washington Post reported on Tuesday. In documents obtained by the newspaper, Fannie and Freddie pushed into new, risky markets despite debates within the companies about whether the moves were prudent. – Reuters

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The Realities Of Starting Up An FHA Division – By Steve Jacobson and Dan Cutaia  – MortgageOrb

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NestWorth Emerges With A New Reverse Mortgage Alternative Product – John Yedinak – In Home Equity Niche Freezes, American Banker Journalist Maria Aspan writes about how shaky capital markets have hurt the growth of equity release products from EquityKey and Rex & Co.  The products, which are often sold as an alternative to reverse mortgages, allow homeowners to receive cash in exchange for a share of their home’s future appreciation. -   Reverse Mortgage Daily

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Better bailouts across pond? - Fear of nationalization compromised U.S. in the Citi deal, observers say – Dan Jamieson – …  Consider this: The British government now owns 57.9% of Edinburgh, Scotland-based The Royal Bank of Scotland Group PLC … By contrast, the U.S. government got only a 4% stake in Citigroup Inc. of New York last month in return for a new $20 billion capital infusion … – Investment News  – thanks Ira Artman