Thug Hank Paulson is back to warn that lack of private home mortgage market is leading to another financial crisis

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Paulson sold the US to his elite pals but now says they should give some of it back to the people.

2/4/14, "Henry Paulson, ‘Mr. Bailout,’ fears a new finance crisis is brewing," Washington Times, Patrice Hill. "Sees few lessons learned from 2008"

"Henry M. Paulson Jr., the financial firefighter stationed at the epicenter of the biggest financial crisis since the Great Depression, worries that the nation is headed for another crisis because political leaders failed to learn critical lessons from the last one in 2008.

In an exclusive interview with The Washington Times, Mr. Paulson, former President George W. Bush’s last secretary of the Treasury, said the most serious lapse may be Congress’ failure to reform mortgage giants Fannie Mae and Freddie Mac in a way that would revive the private market for mortgages, which has all but disappeared since the crisis.

He insisted that vigorous, bipartisan action is needed to ensure that housing never again turns from the American dream into an American nightmare for middle-class homeowners.

“We don’t want to have to replay this movie. We need to learn from our mistakes and clean up our messes,” he said, emphasizing that worries about Washington’s failure to reform Fannie and Freddie are what prompted him to make a documentary being released in theaters this week that chronicles his central role in the government response to the monumental financial collapse.

He points out that the mortgage giants owned or guaranteed about half of the nation’s mortgages before the crisis but have dramatically increased their dominance ever since. Along with the Federal Housing Administration, they guarantee nearly every new mortgage in the U.S., which enables the government to essentially dictate the price and terms of home financing and suffocate any hope that the market will return to normal, he said.

“That’s ultimately a recipe for disaster,” he said, adding that reforming the mortgage guarantors — which remain in a government custodianship that he engineered in September 2008 — will be much harder now that they are profitable again and their profits are being transferred to the Treasury each quarter to help pay down bloated U.S. budget deficits.

Mr. Paulson is also concerned that the nation’s biggest Wall Street firms and megabanks remain “too big to fail” and could cause another financial disaster, although he said Congress and regulators have made progress reining them in with measures enacted in the Dodd-Frank banking reform law.

‘Mr. Bailout’

A figure reviled in some circles, Mr. Paulson acknowledges his own role in making those banks bigger by arranging during the height of the financial crisis the merger of such giants as J.P. Morgan and Bear Stearns, Bank of America and Merrill Lynch, all in a desperate effort to prevent the kind of nosedive into financial chaos that ultimately happened anyway with the spectacular failure and bankruptcy of Lehman Brothers in September 2008....

He fears that many of those banks, which have grown even larger since the crisis, with the top five owning nearly half of all U.S. banking assets, remain “too big to fail,” threatening to drag the nation and taxpayers into future bailouts if their failures threaten to bring down the financial system....

“It’s obviously unacceptable for any bank to be too big to fail,” he said. Regulators still need to reform the shadowy “repo” market where big banks get much of their funding, and ensure in laying out procedures for liquidating large banks in the future that the banks are not allowed to continue operating in the same form that led them to the brink of collapse....

“It perplexes me that nothing has been done” and both parties seem content to just allow the housing market to drift through yet another era of government dependence and dominance that potentially is creating even bigger market distortions, he said. “Every financial crisis has its roots in flawed government policies that lead to excesses in the markets that build up and build up, and then you get a bubble and it bursts.”

As with so much of Washington, gridlock and powerful vested interests in the housing industry have frozen housing policy, he said.

Deep disagreements over the role Fannie and Freddie played in the crisis seems to prevent any compromise over their future role....

The blame within the government rests not just with the fair-housing mandates given to Fannie and Freddie, but also with government policies in place since World War II that include generous tax deductions for homeowners and low down-payment lending programs for farmers and veterans, all of which have encouraged homeownership at almost any cost and heavily favor borrowing over saving, he said."...

[Ed. note: Most of the political class is eager to eliminate the "generous tax deduction for homeowners." They see it as their money.]

(continuing): "“It doesn’t make sense for everybody to own a home,” he said. “These policies encouraged Americans to put everything in their homes” and get over their heads in debt, yet they succeeded only in nudging up the homeownership rate from around 64 percent before the housing bubble to 69 percent when it peaked, he said.

Congress and the administration need to find a compromise that realistically addresses the role Fannie and Freddie played in the crisis and prevents them from making the same mistakes in the future, while paring back their role in the market to allow private lending to re-emerge, he said.

Bipartisan legislation drafted by Sen. Bob Corker, Tennessee Republican, and Sen. Mark R. Warner, Virginia Democrat, which preserves a residual role for the government providing a last-resort backstop in the mortgage market, would be a good starting point, he said.

“I have no doubt that if you do this properly, you’ll have a private market” for mortgages again, he said." via Lucianne

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Comment: It's a joke to suggest the fed. gov. or congress would ever let the people have their country back. Paulson should be in jail as should his boss George Bush but the media loves big time criminals.

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