Sad and upsetting news this morning:
AP: "David Kellermann, the acting chief financial officer of Freddie Mac, was found dead at his home Wednesday morning in what broadcast reports said was an apparent [but unconfirmed] suicide.He was only 41. Prayers for his family.
. . .
Before taking that job, Kellerman served as senior vice president, corporate controller and principal accounting officer. He was with Freddie Mac for more than 16 years".
An odd coincidence -- "Confessions of a TARP wife" appeared yesterday:
"Here is the reality: TARP managers are scared to death. The executives of these companies are desperately trying to hold their businesses together while complying with a slew of damaging bills flooding out of Congress. My husband has battled the shutdown of the credit markets and a deteriorating business environment for two endless years without respite. He's exhausted, terrified of losing the company, and beaten down by the constant criticism hurled at him."Update: Another unusual circumstance:
From the Washington Post:From the NYT:
"Kellermann has figured in several recent controversies at Freddie Mac. He and a group of company lawyers tussled with the company's regulator in early March as the firm prepared to file its quarterly disclosure. The group insisted that Freddie Mac disclose the $30 billion cost to the company of carrying out the Obama administration's housing recovery plan, but the regulator urged the company not to do so.
Freddie Mac employees argued they had a legal obligation to disclose the information and would have to get the Securities and Exchange Commission, which oversees such disclosures, to sign off if they didn't. The regulator backed down."
"In addition to taking criticism over the bonuses, he was recently involved in tense conversations with the company’s federal regulator over its routine financial disclosures, according to people close to those discussions who also spoke on condition of anonymity. Freddie Mac executives wanted to emphasize to investors that they believed the company was being run to benefit the government, rather than shareholders. The company’s regulator, the Federal Housing Finance Authority, had pushed to play down that language. Freddie Mac reported to the Securities and Exchange Commission that changes it had made in practices to help the government “have increased our expenses or caused us to forgo revenue opportunities.”
55 comments:
I guess I shouldn't be shocked or even surprised by some of the comments posted on the earlier thread.
It is a terrible and sad event. I, too, think that there must have been an underlying depression, but, for God's sake how anyone can post such flippant remarks is beyond me.
"Meanwhile, I'm off to the tailors to get some clothes altered"
This sentence is from the last paragraph of the TARP wife article.
I'm afraid she gets no sympathy from me.
When she can no longer afford to get her clothes professionally Tailored, let me know.
Sorry you can't go to the Opera as much or fly on the Company Lear anymore Princess..maybe you can get a job!!
No sympathy from me.
Some of us work for a living in careers that make the world a better place. No sympathy for Princess from me.
TARP bankers/GSEs are in an impossible situation, because congress wants them to accomplish two goals that are mutually exclusive. Heal the financial system and lend freely to boost the economy. The first means banks have to take more profits from new business while winding down old business, the second requires making dodgier loans to everyone. Since they can't choose both, and congress refuses to set a priority, banks are in an impossible situation. That they took money from congress without fighting hard, shows their shortsightedness.
Spunky, it's not going to be long until every employee with talent has moved on to something else, fixing the problems won't be cheap and will require lots of good folks (many of whom will need to have experience in finance).
Also, alterations are a pretty cheap way to make clothes useful. Most of my suits were acquired for $50 on ebay and alter them for another $30 and have a very nice suit. I doubt Staffords at Penny's (a pretty well priced suit) can be had for that price. Alterations just mean you bought quality the first time.
Mostly I think it's just extremely premature to speculate on the significance of this. Too many possibilities.
As flippant as the TARP wife article was, there's no doubt that the pressure being applied, and the 180 degree change in atmosphere is going to induce a lot of life-changing stress that will effect different people differently.
Cara,
I was not referring to The Tarp Wife article, but the flippant remarks concerning this man's suicide. This should be very apparent.
One of the threads here VA? I don't see any flippant remarks...
Adam,
I am fully aware about alterations (I can do my own)and the fact that the TARP wife has good clothing.
My lack of symapathy is for her laundry list of cutbacks to their jet-set lifestyle.
I am sure these TARP folks have plenty of $$ stashed in their Bank accounts in the Caymans to ride out these rough times
...the rich usually remain rich
Va_investor. Everyone doesn't have to speak to your comments directly just because they were the first ones on the thread. In fact, the two after you may have been in mid-composition before yours was even posted.
Furthermore, the rest of us can talk about both things that were posted by Harriet if we want to. Hence why my second statement was in a new paragraph. In fact, talking about the TARP wife thing exclusively is one way of _not_ saying anything offensive about the real-life tragedy.
I think Va Investor should have posted his statement on the actual thread he was referring to ?
.. which was not this one
They're going to remain rich because we're going to have dire need of banker's services for a long, long time.
This chart shows our national debt (government corporate, and private) compared with GDP for the last century. Short of something that takes the world back to the dark ages financially, we're not going to be able to reduce that anytime soon and lots and lots of bankers will be required to float all that debt to the rest of the world while we pay it down.
Blaming the bankers for the problem is akin to an addict blaming his current drug dealer for his life. We collectively made the choices to take out that debt and the bankers made a good living finding ways to for us to float new debt, so unless you have no debt and your income isn't derived from people taking out new debt you don't get a pass on being part of the group.
Politicians can't make that point, because it was their voters who created the problem, so they blame the bankers who brought together foreign savers and domestic borrowers. It's foolish however to be sending those middlemen away just when you're about to start needing them most (the hard part isn't creating the debt when you're thought to be rich, it's rolling it long after everyone knows you're not).
Here's the link's address shortened so it won't spill out of the column:
http://tinyurl.com/9udcrd
Sorry the link doesn't seem to be working, i'm not sure how I borked it.
This is the TARP-wife thread, not the suicide thread.
Well I referred to the earier thread and thought my comments were relevant to this thread since news of the suicide was re-posted.
If you all think that some of the comments on prior thread were anything but vile, then I guess we disagree.
Is there some rule about posting that I am unaware of? I'd like to see how spunky, et all would think (or react) to the suicide of a relative or friend - no matter what the circumstances.
Novawatcher,
If you want to ignore the first half of this post, fine.
Va-
My comments about the suicide on the previous thread were just a question: Was rumour about Freddie/Fannie going under/out of Business maybe related to this man's suicide?
Think it though a bit - would the stress of that possiblity have made this man kill himself?
Help me out..? How is this "vile" in any way?
va_investor
did you dissappear from the other thread before seeing the great find that I posted there?? I totally think it could rent for enough to cover carrying costs and as a SFH near the VRE it's got great upside-potential if another bubble inflates to make people ignore it's main-drag location.
Cara,
No. I working on three deals right now and am unfamiliar with that area.
va_investor,
Fair enough. Report back if any of them close, please?
Cara,
Since December I've bought 3 and I currently have 3 offers in.
va_investor,
well, when you get a chance, more details on any or all would be nice. If they're in VA I think Frankly can now post them post-sale such that we can check out the listings, and you can give us details like the current rents, how long it took to get tenants, what the costs were to get them up and ready to rent.
when you get the chance. Details like that might actually encourage others to follow your lead. But it would be an investment of time on your part.
"As flippant as the TARP wife article was, there's no doubt that the pressure being applied, and the 180 degree change in atmosphere is going to induce a lot of life-changing stress that will effect different people differently."
A friend of mine works at a company that gets TARP funds. Since he knew I followed that program, he tried to recruit me to go in house with them and help manage their way out of the morass.
It would have been an interesting project, and I really think I could have helped. Ultimately, I turned him down. The reasons were many but one minor part of it was I did not want to become part of the reviled TARP recipients club.
Does make you wonder how many others like have shied away from these companies just for this reason.
Cara,
I'd be happy to give Frank the addresses if I wouldn't be identified.
In the alternative, I can provide details.
Did someone buy in Blooms Crossing or is someone looking? I have a lead on a house that's coming on the market.
Va_Investor said...
Did someone buy in Blooms Crossing or is someone looking? I have a lead on a house that's coming on the market.
We are buying in Blooms Crossing - 48 days 'til closing!
I honestly dont think its that sad of an event.
Why is this guys life worth more than the hundreds of others who committed suicide today?
Why should we feel worse for him than our kids, dying over in Iraq fighting for our freedom today? Kids that will never have the chance to fall in love and have kids, much less live the life of luxury that this guy has.
I certainly dont - lets face it - he played a big part in ruining the lives of a lot of people.
I think his choice was an attempt to regain some honor, which in my mind, was somewhat successful.
va_investor,
if we had the addresses then we'd be able to look up the tax records to find your name. if we don't have the addresses then your numbers will be less credible. It's a quandry. But I think some tangible examples of prices and costs and what judgement went into which purchases would still be interesting reading. On the other hand it could be unecessarily opening yourself up for micro-managing from random outsiders, so that's a risk.
Personally, I think it's tragic when any 5 year old has to grow up fatherless, regardless of whether they lost their parent to war, accident or suicide like David Kellerman's daughter now has. Even if he was single-handedly responsible for the economy's crash (which he certainly was not), this is a sad outcome all the way around.
As for TARP wife, while I am certainly not going to lose any sleep over the fact she has to shop her own (presumably well-stocked) closet this year, it's all a matter of perspective, isn't it? I mean, go talk to someone living in a shack in the Appalachains or in a third-world mud hut with no running water or access to education, and they are apt to find our hand-wringing over THs vs SFHs, Arlington vs FFX Cty, Robinson vs Edison, etc., rather comical. I once met a young man from South Africa on his first visit to the US, and he was blown away by our "supersizing" of everything -- from homes to French fries to soft drinks. The 7-11 Big Gulp positively blew his mind. So while TARP wife's inability to fly private jet anymore is not going to gain my sympathy or that of anyone else on here, I think we all need to remember that in the eyes of most of the world, we are all pretty darn fortunate.
Well said GIGI...Va_Investor..I agree with you on the comments previuosly made..maybe we are just a bunch of old plugs? I know I have a 20 year old that I'm still "raising"...words and opinions really say more about the person making them than the person they are making them about.
TBW -- I think he was actually rather horrified by the supersizing of everything and found it all rather excessive, kind of like how we find TARP wife's lifestyle, I suppose.
va_investor,
We are browsing Blooms Crossing, but only properties at the $250K - $270K range. Anything more loses its appeal for us as it's far from work in Fairfax City.
MJC,
I've looked briefly into building in Fairfax County; I spoke with one realtor who suggested I put in an offer with a 90-day investigation contingency for the purposes of surveying, home design, initial permitting, etc. Haven't pursued it because my price range would require splitting a lot. However, friends of mine bought a tear-down in Vienna and built with Stanley Martin, which built their home for under quoted cost and took care of the site work, permitting, etc. for about $70K. Their one loan included the entire amount (land, home construction, and site costs + contingency) and payment was postponed until home completion (though interest accrued). I think they also may have gotten a tax write-off for donating the original building to the fire department to burn down.
bryson - the "tax write-off for donating the original building to the fire department to burn down" is an urban myth. the IRS doesn't allow it.
My apologies for spreading an urban myth. That will teach me to give information that I have not personally investigated...
"Contrarian said...
Apparently, Doug, when they day came to hand out a conscience, you played hooky."
Contrarian, far be it from me to defend Doug, but I find it humorous you are taking the moral high road here while this AM you were continuing to defend the credibility of your source for the leaked Stress Test results -- the one who says Ameros are secretly being shipped to China in exchange for dollars, and this is somehow connected to the "filthy tribe of Zionists who are responsible for this most massive theft in the History of the Earth" and "Must be hunted to extinction".
http://halturnershow.blogspot.com/2008/10/i-have-obtained-actual-amero-from.html
Personally, I might want to distance myself a bit from this morally bankrupt source before I start taking the moral high road against Doug regarding his not having a conscience.
"Bryson said...
My apologies for spreading an urban myth. That will teach me to give information that I have not personally investigated..."
No problem Bryson. I only wish others could apologize for spreading information from highly questionable sources.
Since we're on the topic:
http://tinyurl.com/cmmgo3
******
QUESTION: DONATION OF HOUSE FOR FIRE DEPARTMENT TRAINING
I donated my house to the city fire department to practice their skills before the house was demolished. I was told I can write off the donations as part of the charitable contribution. But what should I base the contribution amount on? Is that the replacemnt value, insurable value or structure value? Is the Fire Dept. considered a public charity or private charity?
--KEN, Virginia Beach, VA
ANSWER
Oh, my, you've really raised a complicated issue...and one for which I'm afraid I can't find a definitive answer.
Back in 1973, a Tax Court case (TC Memo 1973-265) allowed a taxpayer to claim a charitable contribution deduction, over IRS objections, for allowing a fire department to turn down a house as a training exercise. And, the deduction was based on the fair market value of the house before its destruction. However, the IRS is fighting a similar deduction in court now, so it's clear the government position is still to oppose such a write-off. Some observers believe the homeowner actually gets a benefit from allowing the fire department to burn down the house, reducing costs of removing the property so he/she can rebuild, for example, or reducing the volume of materials that must be disposed of.
I believe some tax advisors would be willing to recommend such a deduction and be willing to fight the IRS if the return were audited; others would steer clear of the deduction. I'm afraid I can't weigh in one way or another on that point.
--Kevin McCormally
Editorial Director
Kiplinger Washington Editors
******
I guess the proper answer is that you can take a deduction, just be prepared to spend a lot of money on legal bills defending it and hope you don't lose the case.
Question:
I've got an old theater that I'm donating to the fire department to burn down for training.
If they decide they want to burn it down, but I still have an audience inside watching the final show (Ron Howard's "Backdraft"), then is it:
a) morally required
a) morally okay
or
b) morally wrong
of me to run out onto the stage and yell:
"FREE TAX REBATES AVAILABLE RIGHT OUTSIDE THE FRONT DOOR!!"
Sorry--couldn't resist...
RE: Tax deduction for burning.
I specifically recall a Wash. Post Article a number of years back citing a couple getting a charitable deduction for the value of the structure.
I am not a CPA, but I am under the impression that this is a valid deduction. I almost did it a few years ago. I had the OK from the fire dept. and my CPA. I think liabilty coverage was an issue - something I would have to purchase. I even got an appraisal on the structure.
The house was too close to the neighbors for burning, but the fire chief assured me that they could totally wreck it working with smoke bombs, axes, etc.
Well, it is our vacation home and we decided to renovate rather than take on a new mortgage (there is something very comforting about having property paid off!). Plus, at the time (2004) builders were charging outrageous amounts. Our bid went from 240K to 360K in one year!
I'd get an opinion letter from a CPA and go for the write-off.
Obviously, things may have changed since then. Court decision or opinion letter. It's worth investigating. I was only going to get a 70K deduction; but, hey, that's better than nothing.
"Novawatcher,
If you want to ignore the first half of this post, fine."
---
Is this a recursive riddle? Like GNU ("GNU's not Unix")?
Hey Contrarian, your source is now saying that Mr. Kellerman didnt commit suicide - he was "lynched", he "got what he deserved" and your source is happy because he used his blog "for the purpose of inciting violence against those who caused the financial mess". Also, his posters are quick to remind us Mr. Kellerman is a "filthy jewbag" and a "mentally deranged Kike".
My what a wonderful, credible source you found! Im sure his words on the stress test are right on the money!
You still so sure you want to defend the credibility of his postings?
Tax professionals on this site debated it for 28 months. Some said yes, some said no. A Fire Commissioner weighed in and said it isn't a donation, it's a service they provide.
http://tiny.cc/Fgtes
Two or 3 accountants were in audits with clients over the issue.
There's no definitive answer among professionals here, despite case law cited, IRS publications cited, and waiting on the outcome of a more recent court case than the one in 1973 or a subsequent one. (There are 3 different threads on the issue--dating back to 2005.)
Most recent discussion is 2008.
I don't have to worry about it. The Fire Dept. in my county doesn't do it anymore, period. I called and asked about a year ago.
I'll add my 2cents. Been busy to not post but been keeping up on the threads.
Going back to an earlier thread about the 90% drop in prices.
My opinion is that housing is still overvalued, just like stocks are still overvalued. That doesn't mean that stocks or houses can't increase in price. Price and value are not the same thing.
If stocks go to 16,0000 but everything else goes up 300% in price then that is the same as if stocks dropped to 4000 and everything stayed the same price.
In that case, compared to everything else stocks are overvalued. I believe this is the case as with housing as well.
Whether or not housing drops 90% in price, is something I'm not sure about (inflation/deflation game).
Value wise, I honestly believe we will end up being absolutely amazed in 5-10-15 years at how "cheap" housing will be.
If you look at history, I am unaware of ANY bubble in history in which the asset involved in the bubble did not absolutely languish in value for a LONG period afterwards.
One of the reason being is simply supply/demand. In the crack-up boom the overstimulated demand caused an overstimulated supply. On the way up so much was supplied beyond normal conditions, when the bubble bursts the massive amount of overhang of supply prevents any substantial rise in value for a long period of time. I just read an article (sorry no link) in which an economist said it would be good to offer foreigners citizenship so they would buy up the oversupply of housing!
Look at charts for stocks 1929, south sea bubble, tulips, nasdaq 2000, Japan's housing bubble in the 80s, the Niekki, commodities bubble 79-80. In REAL terms, regardless of inflation/deflation none of those bubbles came back within a generation! (well, naz is still working out).
It's my theory that the same will happen with stocks 07 and housing 06. In REAL terms, it will not come back for a generation.
So how we get from here to there is immaterial in my mind, the bottom line is that there will be better places to put you're money besides stocks and housing.
Now having said that, if you can have positive cash flow (rental) OR you are buying a house to live in vs. as an investment then okay. When I buy, I will be looking at housing as I WILL LOSE money on it in REAL terms. Just like I lose money on a car . . . the question on housing is whether the difference on the amount of money I lose is more or less vs. renting.
va investor said: "I am not a CPA, but I am under the impression that this is a valid deduction."
Let me again quote from the article:
"However, the IRS is fighting a similar deduction in court now, so it's clear the government position is still to oppose such a write-off."
I believe you are asking for guaranteed audits for the next 20 years if you take an aggressive tax position knowing that the IRS doesn't approve of it. Add to that the certain legal fees you'll face in fighting the IRS for 20 years, and it doesn't seem like a smart strategy.
I wondered today if people with integrity would be more likely to feel depressed.
From the Post:
"Kellermann has figured in several recent controversies at Freddie Mac. He and a group of company lawyers tussled with the company's regulator in early March as the firm prepared to file its quarterly disclosure. The group insisted that Freddie Mac disclose the $30 billion cost to the company of carrying out the Obama administration's housing recovery plan, but the regulator urged the company not to do so.
Freddie Mac employees argued they had a legal obligation to disclose the information and would have to get the Securities and Exchange Commission, which oversees such disclosures, to sign off if they didn't. The regulator backed down."
How very . . . odd.
Mortgage industry changes throw new hurdles in borrowers' way
Reporting from Washington -- Mortgage rates and house prices are down -- which sounds great for buyers and refinancers. But mortgage industry underwriting and appraisal changes taking effect this month are putting new hurdles in the way of borrowers and loan officers.
Take Fannie Mae's and Freddie Mac's add-on fees for loans purchased after April 1. In some cases, applicants are being hit with extra fees of 3% to 5% because of the type of property they want to buy or refinance, their credit scores or the size of their down payment.
Some major lenders who sell loans to Fannie and Freddie are going further -- tightening underwriting rules beyond what either corporation requires. For example, as of April 6, Wells Fargo, one of the country's largest mortgage originators, imposed a new minimum FICO credit score of 720 -- up from the previous 620 -- on all conventional loans purchased through its wholesale system that have less than a 20% down payment. It also began requiring a total debt-to-income ratio maximum of 41% -- down from the previous 45%.
Fannie Mae now has a mandatory fee of three-quarters of a percentage point on all condominium loans, no matter how high the applicant's credit score. For a once-popular interest-only condo loan with a 20% down payment and a borrower credit score of 690, Fannie imposes the following ratcheted sequence of add-ons: one-quarter of a percentage point as an "adverse market" fee; 1.5% for the below-optimal credit score; three-quarters of a percentage point for the interest-only payment feature; and the same because the property is a condo. The total comes to 3.25% extra, which can be paid upfront or rolled into the loan.
On top of these extra fees, borrowers are now starting to get hit with two sets of cost-raising appraisal rule changes. Fannie and Freddie have begun requiring all appraisers to complete an extra "market condition" report that includes detailed statistical analyses of local sales and pricing trends -- above and beyond the regular appraisal data. Many appraisers are charging an extra $45 to $50 for the time required to complete the form. Home buyers and refinancers can expect to pay the higher fees.
On top of that, beginning May 1, Fannie and Freddie are refusing to fund loans with appraisals that do not follow a set of new rules known as the Home Valuation Code of Conduct. Among the procedural changes: Mortgage brokers no longer can order appraisals directly, but instead must allow lenders or investors to use third-party "appraisal management companies" to assign the job to appraisers in their networks.
How does that affect the consumer? Consider the notification one Connecticut brokerage firm recently received from a major lending partner: Starting April 15, all good faith estimates provided to applicants must indicate a flat $455 charge for appraisals arranged through the appraisal management company. The broker previously charged $325. Consumers will now have to pay the appraisal fee upfront -- before any inspection or valuation is completed -- using a credit card, debit card or electronic fund transfer.
What happens if the appraisal comes in low and the applicants can't qualify for the refi or purchase program they sought? Tough luck: They'll have just two choices: Pay another $455 for a second appraisal -- with no assurance that it will solve the problem -- or cancel the application.
Jeff Lipes, president of Family Choice Mortgage Corp., which serves the Hartford, Conn., area, said the net effect of the underwriting, credit score and pricing changes was to "squeeze some people who are creditworthy by any reasonable standard out of the market."
For instance, as a result of the restrictions on condos, Lipes says "whenever we hear the word 'condo' [from an applicant], we shiver" because the deck is stacked against them. Even for prime borrowers with 800 FICO scores and 50% down payments, Lipes said, "I can't tell them that we're certain we can get you a mortgage."
A welter of recent rule changes from Fannie Mae has made some condo units in projects with commercial tenants or high percentages of investor units almost impossible to refinance.
In Naples, Fla., John Calabria, president of Bancmortgage Corp., said, "It has become such a nightmare to lend money" because of the layers of add-on fees, higher mandatory down payments and FICO scores. One high-income client sought to put down 25% ($200,000) to buy an $800,000 condo as a second home but couldn't because the minimum down payment on such a unit is now 30%.
"That's ridiculous," Calabria said. "Some of this just doesn't make sense."http://tinyurl.com/dl7dh6
"Contrarian said...
There are many times in life where bad people provide good information. That does not make the information they provide any less credible."
Was he telling the truth when he said the US Government (with the help of the Jews) was secretly shipping the Amero to the Chinese in a dastardly plan to devalue the dollar?
"The information provided in the instant case has been proven to be correct. That is all that matters."
The info in the instant case is far from correct. He refuses to publish what he has, and the few bloggers who have bolstered his claim have a very poor understanding of what constitutes facts. I would love to impeach this guys testimony -- he looks like an out an out fraud.
Contrarian--
There are many times in life where bad people provide good information. That does not make the information they provide any less credible.Um, actually, sorry, YES IT DOES!
People with a shrill perspective (including me, sometimes, I suppose!) who also have very little to lose, and something to gain, from prevarication, omission, misdirection, obfuscation, or outright fabrication, absolutely ARE to be regarded as less credible.
The main reason simply being, there are lots of OTHER sources out there that can be turned to, that are more respected, with a better track record, and a neutral and objective or at least earnestly well-meaning viewpoint, who, and this is the key point, KNOW THEY HAVE SOMETHING TANGIBLE TO LOSE IF EVER FOUND TO HAVE INTENTIONAL DECEIT, MALICE OR INCOMPETENCE.
What does The Economist magazine say about the stress test? IBD? WSJ?
Post a Comment