All posts in the topic Bailout (Short link)
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- There are 67 posts — by 32 authors — in this topic.
- Latest post made by George Dawson at Oct 07 13:14 UTC
| From | File | Date |
|---|---|---|
| Leslie Davis | Sep 28 21:17 UTC |
Does anyone have any thoughts about the $700,000,000 bailout of the Wall
Street? I get the felling I am being hustled by a high-class panhandler
in the parking lot of a grocery store. What does the failure have to do
with the $1,000,000,000,000 (thats a thousand trillion, yes, that big)
derivatives market that may go up in smoke?
I don't like being hustled by panhandlers, no matter what their size.
I don't like to CopyPaste Press Releases, but to make this somewhate MN
Centric, I thought Al Franken;s release today was not only spot on, but
issues dirven, and, frankly, Senatorial!!
Thoughts? I'm livid! The economy is slowly being nationalized. The nation should let AIG, Fannie and Fred, and the other corrupt, stupid banks rot, and be replaced by banks that do what they're *supposed* to; mind their portfolios and invest prudently. I'm also furious that, while there is plenty of political blame to go around, the media is softpedaling the fact that it was the *Democrats* who refused to impose regulations that might have prevented this abomination: http://hotair.com/archives/2008/09/22/whos-to-blame-for-the-financial-crisis-and-why-does-that-matter/ This, combined with local policies, is going to make it very, very difficult to buy or finance a house in the Twin Cities, sooner or later. All of you inner-city residents who were upset with "absentee landlords?" Get ready for the *real* joy of having blocks of vacant lots. Yep. I'm mad. Mitch Berg The Midway
Let me make revise the numbers:$700 billion is $700,000,000,000; $1,000 trillion is $1,000,000,000,000,000. I think that is correct. I am much more comfortable thinking in terms of a billion being 1 followed by 9 zeros and a trillion being 1 followed by 12 zeros. Mike Schoenberg St. Paul Mike Schoenberg wrote: > Does anyone have any thoughts about the $700,000,000 bailout of the Wall > Street? I get the felling I am being hustled by a high-class panhandler > in the parking lot of a grocery store. What does the failure have to do > with the $1,000,000,000,000 (thats a thousand trillion, yes, that big) > derivatives market that may go up in smoke? > > I don't like being hustled by panhandlers, no matter what their size. > > Mike Schoenberg > MacGroveland, St. Paul > Info about Mike Schoenberg: http://forums.e-democracy.org/p/mikeschoenberg > > This topic's messages may be viewed at: http://forums.e-democracy.org/r/topic/s4678sUBYwbv9BdZMyfVw
Mitch
Can you provide some backup evidence of this claim?
I'm willing to actually listen (read) what you say as long as you can
back this up with evidence.
I believe you will find that the Republicans are just as culpable (if
not more so IMHO) on this issue.
Again, facts and I will read you; hot air and I will delete you.
Ron Leurquin
Nokomis East
Mitch claims:
I'm also furious that, while there is plenty of political blame to go
around, the media is softpedaling the fact that it was the *Democrats*
who refused to impose regulations that might have prevented this
abomination:
On Tue, Sep 23, 2008 at 12:44 PM, Flash <anokaflash@gmail.com> wrote:
> 3. *No golden parachutes*. "In the public sector, there's no such thing as a
> golden parachute.
If the public sector shouldn't be run like the private sector,
something we hear over and over from the left when there are budget
battles in congress, then this comparison isn't valid. Can't have it
both ways.
Heard on CNBC that the chairman of AIG is not accepting some
$22million due to him from the company.
> 4. Bring back oversight. "We need to restore the regulatory framework
> dismantled with George W. Bush in the White House and Norm Coleman in the
> Senate so that this doesn't happen again."
Details? There was a push to increase regulations on Fannie and
Freddie that were blocked by chairman Barney Frank who is as close to
opposite of Bush and Norm Coleman as you can get.
> 5. Help homeowners. "The foreclosure crisis caused this problem, and we
> still haven't taken the steps I've been proposing for months to address it.
> We have to freeze foreclosures and allow bankruptcy judges to re-set
> mortgages on primary residences."
Many would argue that the push by Congress to make housing affordable
to those who clearly couldn't afford it helped cause this mess. What
will be done about that?
John Harris
mpls, mn
And, as is the case with those who would rather pick partisan fights then look at the facts, The Regulatory bill that is referred to would have gutted the Reporting requirements of the key failed institutions Freddie and Fannie, muting the actual regulations it implies. Regulations don't do much good if they wouldn't have been required to report on it or even keep records: = = = = S 190 --> http://thomas.loc.gov/cgi-bin/query/z?c109:S.190: *SEC. 205. EXCLUSION FROM CERTAIN SECURITIES REPORTING REQUIREMENTS. (a) IN GENERAL- The Federal Home Loan Banks shall be exempt from compliance with-- (1) sections 13(e), 14(a), 14(c), and 17A of the Securities Exchange Act of 1934, and related Commission regulations; and (2) section 15 of the Securities Exchange Act of 1934, and related Commission regulations, with respect to transactions in the capital stock of a Federal Home Loan Bank. (b) MEMBER EXEMPTION- The members of the Federal Home Loan Bank System shall be exempt from compliance with sections 13(d), 13(f), 13(g), 14(d), and 16 of the Securities Exchange Act of 1934, and related Commission regulations, with respect to ownership of or transactions in the capital stock of the Federal Home Loan Banks by such members. (c) EXEMPTED AND GOVERNMENT SECURITIES- (1) CAPITAL STOCK- The capital stock issued by each of the Federal Home Loan Banks under section 6 of the Federal Home Loan Bank Act are-- (A) `exempted securities', within the meaning of section 3(a)(2) of the Securities Act of 1933; and (B) `exempted securities', within the meaning of section 3(a)(12)(A) of the Securities Exchange Act of 1934. (2) OTHER OBLIGATIONS- The debentures, bonds, and other obligations issued under section 11 of the Federal Home Loan Bank Act are-- (A) `exempted securities', within the meaning of section 3(a)(2) of the Securities Act of 1933; (B) `government securities', within the meaning of section 3(a)(42) of the Securities Exchange Act of 1934; and (E) `government securities' within the meaning of section 2(a)(16) of the Investment Company Act of 1940. (3) BROKERS AND DEALERS- A person that effects transactions in the capital stock or other obligations of a Federal Home Loan Bank, for the account of others or for his own account, as applicable-- (A) is excluded from the definition of the term `government securities broker' under section 3(a)(43) of the Securities Exchange Act of 1934; and (B) is excluded from the definition of `government securities dealer' under section 3(a)(44) of the Securities Exchange Act of 1934. (d) EXEMPTION FROM REPORTING REQUIREMENTS- The Federal Home Loan Banks shall be exempt from periodic reporting requirements under the securities laws pertaining to-- (1) the disclosure of related party transactions that occur in the ordinary course of the business of the Banks with members; and (2) the disclosure of the unregistered sales of equity securities. (e) TENDER OFFERS- Commission rules relating to tender offers shall not apply in connection with transactions in the capital stock of the Federal Home Loan Banks. (f) REGULATIONS- (1) FINAL RULES- Not later than 1 year after the date of enactment of this Act, the Commission shall issue final rules to implement this section and the exemptions provided in this section. (2) CONSIDERATIONS- In issuing final regulations under this section, the Commission shall consider the distinctive characteristics of the Federal Home Loan Banks when evaluating the accounting treatment with respect to the payment to the Resolution Funding Corporation, the role of the combined financial statements of the Federal Home Loan Banks, the accounting classification of redeemable capital stock, and the accounting treatment related to the joint and several nature of the obligations of the Banks. (g) APPLICABILITY- The exemptions and exclusions provided for in this section shall apply in accordance with this section, notwithstanding any other provision of law, including any provision of the securities laws. (h) DEFINITIONS- As used in this section-- (1) the terms `Bank', `Federal Home Loan Bank', `member', and `Federal Home Loan Bank System' have the same meanings as in section 2 of the Federal Home Loan Bank Act (12 U.S.C. 1422); (2) the term `Commission' means the Securities and Exchange Commission'; and (3) the term `securities laws' has the same meaning as in section 3(a)(47) of the Securities Exchange Act of 1934. *= = = Again, I am not absolving The Dems, but don't try to pass of relatively benign regulation bill that may have exempted the very institution that got us in trouble. Come one, you are better than that. As for this: ""The nation should let AIG, Fannie and Fred, and the other corrupt, stupid banks rot, and be replaced by banks that do what they're *supposed* to; mind their portfolios and invest prudently."" I couldn't agree more. So now that we have found common ground, lets not try to pull wool over the eyes of those of us that understand KR 'Flash' Schiebel Hamline/Midway Centrisity.com On Tue, Sep 23, 2008 at 12:44 PM, Mitch Berg <mitchpberg@yahoo.com> wrote: > Thoughts? I'm livid! The economy is slowly being nationalized. The > nation should let AIG, Fannie and Fred, and the other corrupt, stupid banks > rot, and be replaced by banks that do what they're *supposed* to; mind their > portfolios and invest prudently. > > I'm also furious that, while there is plenty of political blame to go > around, the media is softpedaling the fact that it was the *Democrats* who > refused to impose regulations that might have prevented this abomination: > > > http://hotair.com/archives/2008/09/22/whos-to-blame-for-the-financial-crisis-and-why-does-that-matter/
This opinion article in Wall Street Journal pretty much sums it up. http://online.wsj.com/article/SB122212948811465427.html Blame Fannie Mae and Congress For the Credit Mess By CHARLES W. CALOMIRIS and PETER J. WALLISON Many monumental errors and misjudgments contributed to the acute financial turmoil in which we now find ourselves. Nevertheless, the vast accumulation of toxic mortgage debt that poisoned the global financial system was driven by the aggressive buying of subprime and Alt-A mortgages, and mortgage-backed securities, by Fannie Mae and Freddie Mac. The poor choices of these two government-sponsored enterprises (GSEs) -- and their sponsors in Washington -- are largely to blame for our current mess. How did we get here? Let's review: In order to curry congressional support after their accounting scandals in 2003 and 2004, Fannie Mae and Freddie Mac committed to increased financing of "affordable housing." They became the largest buyers of subprime and Alt-A mortgages between 2004 and 2007, with total GSE exposure eventually exceeding $1 trillion. In doing so, they stimulated the growth of the subpar mortgage market and substantially magnified the costs of its collapse. It is important to understand that, as GSEs, Fannie and Freddie were viewed in the capital markets as government-backed buyers (a belief that has now been reduced to fact). Thus they were able to borrow as much as they wanted for the purpose of buying mortgages and mortgage-backed securities. Their buying patterns and interests were followed closely in the markets. If Fannie and Freddie wanted subprime or Alt-A loans, the mortgage markets would produce them. By late 2004, Fannie and Freddie very much wanted subprime and Alt-A loans. Their accounting had just been revealed as fraudulent, and they were under pressure from Congress to demonstrate that they deserved their considerable privileges. Among other problems, economists at the Federal Reserve and Congressional Budget Office had begun to study them in detail, and found that -- despite their subsidized borrowing rates -- they did not significantly reduce mortgage interest rates. In the wake of Freddie's 2003 accounting scandal, Fed Chairman Alan Greenspan became a powerful opponent, and began to call for stricter regulation of the GSEs and limitations on the growth of their highly profitable, but risky, retained portfolios. If they were not making mortgages cheaper and were creating risks for the taxpayers and the economy, what value were they providing? The answer was their affordable-housing mission. So it was that, beginning in 2004, their portfolios of subprime and Alt-A loans and securities began to grow. Subprime and Alt-A originations in the U.S. rose from less than 8% of all mortgages in 2003 to over 20% in 2006. During this period the quality of subprime loans also declined, going from fixed rate, long-term amortizing loans to loans with low down payments and low (but adjustable) initial rates, indicating that originators were scraping the bottom of the barrel to find product for buyers like the GSEs. The strategy of presenting themselves to Congress as the champions of affordable housing appears to have worked. Fannie and Freddie retained the support of many in Congress, particularly Democrats, and they were allowed to continue unrestrained. Rep. Barney Frank (D., Mass), for example, now the chair of the House Financial Services Committee, openly described the "arrangement" with the GSEs at a committee hearing on GSE reform in 2003: "Fannie Mae and Freddie Mac have played a very useful role in helping to make housing more affordable . . . a mission that this Congress has given them in return for some of the arrangements which are of some benefit to them to focus on affordable housing." The hint to Fannie and Freddie was obvious: Concentrate on affordable housing and, despite your problems, your congressional support is secure. In light of the collapse of Fannie and Freddie, both John McCain and Barack Obama now criticize the risk-tolerant regulatory regime that produced the current crisis. But Sen. McCain's criticisms are at least credible, since he has been pointing to systemic risks in the mortgage market and trying to do something about them for years. In contrast, Sen. Obama's conversion as a financial reformer marks a reversal from his actions in previous years, when he did nothing to disturb the status quo. The first head of Mr. Obama's vice-presidential search committee, Jim Johnson, a former chairman of Fannie Mae, was the one who announced Fannie's original affordable-housing program in 1991 -- just as Congress was taking up the first GSE regulatory legislation. In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill, introduced by Republican Sens. Elizabeth Dole, John Sununu and Chuck Hagel, and supported by then chairman Richard Shelby. The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Democrats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Democrats, remained silent. Now the Democrats are blaming the financial crisis on "deregulation." This is a canard. There has indeed been deregulation in our economy -- in long-distance telephone rates, airline fares, securities brokerage and trucking, to name just a few -- and this has produced much innovation and lower consumer prices. But the primary "deregulation" in the financial world in the last 30 years permitted banks to diversify their risks geographically and across different products, which is one of the things that has kept banks relatively stable in this storm. As a result, U.S. commercial banks have been able to attract more than $100 billion of new capital in the past year to replace most of their subprime-related write-downs. Deregulation of branching restrictions and limitations on bank product offerings also made possible bank acquisition of Bear Stearns and Merrill Lynch, saving billions in likely resolution costs for taxpayers. If the Democrats had let the 2005 legislation come to a vote, the huge growth in the subprime and Alt-A loan portfolios of Fannie and Freddie could not have occurred, and the scale of the financial meltdown would have been substantially less. The same politicians who today decry the lack of intervention to stop excess risk taking in 2005-2006 were the ones who blocked the only legislative effort that could have stopped it. Mr. Calomiris is a professor of finance and economics at Columbia Business School and a scholar at the American Enterprise Institute. Mr. Wallison, a senior fellow at the American Enterprise Institute, was general counsel of the Treasury Department in the Reagan administration.
Well, it all depends on what the $700,000,000,000 buys. If what the Fed's are doing is actually buying the mortgages on a lot of foreclosed properties at a discounted price, then we (all of us tax payers) are in the real estate investment game and we own a bunch of property (including Minnesota...to keep this MN focused). If HUD actually buys them at a decent discount then this has a potential to be a good deal for taxpayers. Let's say that the Fed's buy ten million mortgages at an average price of $70,000. Believe me there are all sorts of bank owned property that is on the market today at less then half of that $70,000 figure and there are plenty of houses that are being foreclosed that are well above that. For those that are in the redemption process the potential exists to then renegotiate the mortgages with the homeowners based on current market value, which might be more than what the Fed bought the paper for but much less than what the owners had in debt. For those that have gone vacant the potential exists for the Fed's to develop a program where local HRA's or municipal governments could work with the Fed to determine which properties could be repaired and put back on the market and what should be demo'ed. So, its only a "bailout" if the Fed buys nothing or doesn't get a deep enough discount on the paper. If the Fed gets the paper cheep enough it might be in the position that over time it only loses a few billion rather than the 700 billion it appears to be losing when people talk about bailouts. Just My Opinion Not Those Of My Employers Past Present Or Future Chuck Repke Saint Paul In a message dated 9/23/2008 12:39:26 P.M. Central Daylight Time, <email obscured> writes: Does anyone have any thoughts about the $700,000,000 bailout of the Wall Street? I get the felling I am being hustled by a high-class panhandler in the parking lot of a grocery store. What does the failure have to do with the $1,000,000,000,000 (thats a thousand trillion, yes, that big) derivatives market that may go up in smoke? I don't like being hustled by panhandlers, no matter what their size. Mike Schoenberg MacGroveland, St. Paul Info about Mike Schoenberg: http://forums.e-democracy.org/p/mikeschoenberg This topic's messages may be viewed at: http://forums.e-democracy.org/r/topic/s4678sUBYwbv9BdZMyfVw
On Sep 23, 2008, at 12:44 PM, Mitch Berg wrote:
> Thoughts? I'm livid! The economy is slowly being nationalized.
> The nation should let AIG, Fannie and Fred, and the other corrupt,
> stupid banks rot, and be replaced by banks that do what they're
> *supposed* to; mind their portfolios and invest prudently.
>
> I'm also furious that, while there is plenty of political blame to
> go around, the media is softpedaling the fact that it was the
> *Democrats* who refused to impose regulations that might have
> prevented this abomination:
>
You're mad? The whole nation is rocking in response to the stunning
fact that the Republican administration from 2001 to the present has
refused to intercede in this disaster in the making. Mad is the least
of emotions.
I suppose blaming the *Democrats* is the feeble hand reaching out in
the place of reason. BUT----
There can be no doubt where regulation arises from. It is the
administrative side of the tri powers of our Republic. The
legislative side has to be informed of the need. It can open hearings
to bring responders before committees to tell the truth. But the
administration who hires these people has the onus. Bill Clinton
turned off the lights with a clean slate in 2000. In comes George
Bush and the spending spree began. Deregulation was the only
preference in the belief that a so called free market would find the
way to a better country. Well, it did not happen. Now the blame
begins and like Louie XVI Bush is surprised by the events of the day.
It is true that in 1999 Congress passed the law that ended the forced
separation of commercial and investment banks and Clinton signed it.
However, short selling was not an issue in that. It was
insurmountable greed in the market.
Now Congress is expected to shaft the American Payers because the
administration has looked into the abyss. The trembling Bush and
Paulson came out into the light and delivered the very, very, very,
bad news.
Congress has to keep the greed from just popping up again. It has to
put some brakes on the stupidity and me first behavior. If there is
to be a free market it has to have honest players. They will be
playing with my money and if so I want to put some rules on the game.
That's the deal.
Here is a short summary:
What is the latest bailout plan, which was announced late afternoon
of Thursday, September 18, 2008?
A comprehensive, not a case by case plan. The US government (not the
Fed) will set up an institution just like the one that was used to
take possession of the sick savings and loans in the late 1980s,
called the Resolution Trust Corporation (RTC).
Let us call the new one, just for symmetry, Resolution Mortgage
Corporation (RMC). The RMC will use the taxpayers' money to buy up
all the bad mortgages from the private financial institutions. This
will immediately make the financial institutions more profitable and
their stock values will go up. They will be able to raise fresh
capital, issue new credit, and the private market financial markets
which are basically at a standstill, will start functioning again.
At the same time, let us be sure that the US government will be left
with all the lemons while the private companies will keep all the
peaches. No doubt this will bail out the private financial
institutions, but how much will it cost the taxpayers?
RTC and the rescue of the savings and loans had cost the US
government $120 billion in the late 1980s. The initial cost estimates
for the RMC led rescue plan reported in the media range from $500
billion to $1 trillion. Very soon it will start costing the taxpayers
real money! The Bush administration has already asked Congress for
$700 billion in bailout money.
The author is a professor of economics at Georgetown University,
School of Foreign Service in Qatar.
Laura
Minneapolis
Southeast/Como
Laura Waterman Wittstock
President and CEO
Wittstock & Associates
913 19th Ave SE
Minneapolis, MN 55414
612-387-4915
www.laurawatermanwittstock.com
The New York Times quotes Senator Mike Enzi, R. Wyoming comment to the banking
panel that "$700 Billion equals $2,300 per American citizen". I guess we need
to send our George W. Bush $600 economic stimulus check back in to the
Treasury, and then another, and another, and another.
I'm quite irritated, or rather, downright hopping mad about the mess and the
"recovery plan". I'm not buying it; nor would I buy into it even if there were
promises of a sure plan. Feeling hustled is a legitimate feeling; I'm feeling
railroaded! Grrrrrr!!!
Ken Johnson
Highland Park
At lunch today, the owner of the diner and I decided to set up a
Minnesota Small Business Debt Securitization Fund. We figure we can
pool our debt, maybe even augment it by his selling lunches for $1 and
we could sell servers for $10. Then we could get Paulson to buy the debt.
What do you think our chances are?
Ron, Mitch refers to an article being spread around the conservative blogosphere, originating on bloomberg.com, and written by Kevin Hasset. It basically says that a finance reform bill to fix Fannie and Freddie died in the Senate, and that some of the senators who blocked it (naming Dodd, Obama, and Clinton) received "mind-boggling levels of financial support" from Fannie and Freddie. The truth is that the bill died because the Senate and House versions were never reconciled. The Senate Banking Committee killed it and at the time the committee, as well as the Senate as a whole, were GOP majority. This is all meticulously researched and linked here: http://jrittenhouse.livejournal.com/1047010.html?#cutid1 In short, Mitch is wrong. Karen. [and to put a MN spin on it: everybody heard Norm Coleman's quote about how the government can make a lot of money off this bailout?]
When I ran for MN governor in 2006 the Lt. Gov. candidate
was purple heart vet. Gregory Soderberg. A primary issue of our
campaign was how to bring sound money into circulation. Greg is
proposing an alternative solution to the recent money debacle.
Please read ANOTHER SOLUTION TO THE BAILOUT below.
Leslie Davis
www.LeslieDavis.org
www.EarthProtector.org
ANOTHER SOLUTION TO ‘THE BAILOUT’
By Gregory K. Soderberg, Austin, MN.
The other solution to the financial crises that will immediately and
directly help the people and the banking industry is to stop lending all new
money into circulation and start ‘spending’ it into circulation as payment
for labor and materials provided in the building and maintenance of public
roads and bridges, a benefit to all society and critical for commerce. This
simple principle change in how we increase the money supply will provide the
desperately needed increase in money without an increase in indebtedness or
inflation as the money supply increases with productivity gains, greater
employment, high-paying jobs and a list of benefits too long to note here.
'Monetizing' public roads and bridges as a wealth brings debt-free money
into circulation in lieu of more taxes and more borrowing. Wealth money is
the only way the interest debt can be paid out of our economy. Because the
interest debt is compounding so fast, ‘producing’ our way out of debt must
be accompanied by forms of debt repudiation that do not harm citizens.
Secondly, consider all primary home residence mortgages paid. This will
lower the total indebtedness allowing people to live in their homes while
having money to consume other goods and services creating a real economic
stimulus. When mortgages are cancelled, the bank loses the mortgage asset
and the loan liability simultaneously suffering no real loss of asset
because the only thing the bank actually loaned was an electronic number of
no substance whatsoever. Those numbers will remain in the economy available
for consumption of other economic production including payment of other
loans.
Loaning all new money into circulation and the resulting unpayable,
compounding debt it creates got us to where we are now. More borrowing will
only make our financial predicament more severe. One cannot pay debt with
debt and get rid of debt.
Please forward this solution to everyone you can think of!
Gregory K. Soderberg
Austin, MN.
507-440-1015
On Tue, 23 Sep 2008 17:51:30 -0500, you wrote:
>At lunch today, the owner of the diner and I decided to set up a
>Minnesota Small Business Debt Securitization Fund. We figure we can
>pool our debt, maybe even augment it by his selling lunches for $1 and
>we could sell servers for $10.
About these servers you're selling -- Are they in good health and are
they hard workers? Are they available for inspection so we can look
at their teeth? Actually, I thought this sort of thing was forbidden
by one of the Constitutional Amendments, but under this
administration, who knows? It's hard to keep up.
As a gut reaction, I'm inclined to agree with Jordan Kushner that there should
not be any legislation to bail out Wall Street. All the taxpayer is doing is
buying bad debt that no one else wants to buy so that the same imprudent
investors who got themselves into trouble can stay liquid. This is capitalism,
baby. The money is out there - maybe in sovereign wealth funds. If Wall Street
crashes, someone else will pick up the slack. Goldman Sachs' former CEO, Henry
Paulsen, is the last thing to being an honest broker to look after taxpayer
interests.
Well, it makes perfect sense that an Independence candidate for something would support the notion of a hands off approach to the market, but I don't know how many more people will lose their homes with that approach. Folks here's the deal. No one is talking about giving the banks or brokerages anything for nothing. What is being discussed is to have the Fed buy securities that are nothing more than packaged mortgages. These packaged mortgages are for sale right now and anyone could buy them, but no one wants to buy them. Why? Because the smart money says that many of the mortgages that are bundled are behind and in foreclosure and if they aren't now they will be soon. The smart money says that the housing market is so bad that the home owner won't be able to refinance when the balloon comes due or if the owner quits paying on the mortgage the property will not be able to be sold for what the old mortgage was for. So, the price of these securities are going down... and down... and down... and the stock value of the financial institutions that own this paper is going down... and down... and down. And those institutions have no cash to do other business. So nobody is loaning anybody any money. So, what does this mean to you? If you own your home and you are having a tough time making your payments and are thinking of refinancing to a longer term at a lower payment... GOOD LUCK! Many people are finding out that the $250,000 home that they bought five years ago is now a $200,000 home as far as the bank is concerned. So, good luck on that refi... Or, if you are a senior that is thinking about selling your home and retiring... sorry Charlie... you waited to long because you should have sold five years ago when the market was hot. Nobody is buying. Houses are sitting on the market endlessly, with buyers having to come up with a 20% down payment to get financing, the first time home buyer is disappearing. So, what happens if the Fed buys all of this paper? Potentially 10 million mortgages end up in the hands of the Fed that have the potential to be renegotiated or in distressed areas at least those properties have the potential of being maintained. It is easy to just dismiss this crisis as one of "Bailing out Wall Street" but that 70 Billion Dollars represents somewhere near TEN MILLION pieces of property scattered throughout the country and ten million houses in ten million neighborhoods. If even half of them represent houses still occupied but in trouble, it might be 5 million families in crisis. So, we can all bitch and moan about how this is going to help the fat cats, but we have a couple of thousand vacant houses in Saint Paul right now and I have no idea how many more we are going to have if we do nothing. JMONTOMEPPOF Chuck Repke Saint Paul In a message dated 9/24/2008 10:09:20 A.M. Central Daylight Time, <email obscured> writes: As a gut reaction, I'm inclined to agree with Jordan Kushner that there should not be any legislation to bail out Wall Street. All the taxpayer is doing is buying bad debt that no one else wants to buy so that the same imprudent investors who got themselves into trouble can stay liquid. This is capitalism, baby. The money is out there - maybe in sovereign wealth funds. If Wall Street crashes, someone else will pick up the slack. Goldman Sachs' former CEO, Henry Paulsen, is the last thing to being an honest broker to look after taxpayer interests. William McGaughey Harrison, Minneapolis Info about Bill McGaughey: http://forums.e-democracy.org/p/williammcgaughey This topic's messages may be viewed at: http://forums.e-democracy.org/r/topic/1uEmwQGhR0hiUM5fPpqCq8
Chuck's scenario for helping homeowners facing foreclosure sounds wonderful,
but is it actually part of any current Wall Street bailout proposal? I
haven't read the actual proposals, but the Paulson does not make any
pretention that his proposal is designed to help homeowners. One would
expect that he would for obvious PR purposes if it was there. But he
explicitly argues against any provision to ensure help for homeowners. One
can only reasonably conclude that the Wall Street bailout is specifically
what it says -a Wall Street bailout. It is about humongous amounts of money
in the hands of a top government official who was the head of Goldman
Sachs, still owns a large stake in Goldman Sacks and probably other Wall
Street securities, and dole that money out to his buddies. The ostensible
purpose is to keep the large financial institutions above water. The real
purpose is to use taxpayer money to make sure that the big Wall Street
players keep accumalatling obscene amounts of wealth. Their previous scams
have now fallen apart. Now Paulson is orchestrating the ultimate scam: get
billions directly from the government.
Jordan S. Kushner
Golden Valley
On Wed, 24 Sep 2008 11:55:35 EDT, Chuck Repke wrote:
>Folks here's the deal. No one is talking about giving the banks or
>brokerages anything for nothing. What is being discussed is to have the Fed
buy
>securities that are nothing more than packaged mortgages. These packaged
>mortgages are for sale right now and anyone could buy them, but no one wants
to buy
>them. Why?
Because the asking price is more than the mortgages are believed to be
worth.
If it's not possible for the debt holders to provide evidence for what
the package is really worth, they could, of course, unbundle the
mortgages and sell (or keep) them individually. Unbundled, it would be
possible to make some sort of reasonable estimate on what they were
worth. Of course, this is a chore that *should* have been done by the
bankers already, but that they apparently didn't bother to do.
But the holders want to be paid more than the securities are worth. The
fact that the securities are not worth as much as the holders originally
thought demonstrates negligence, a lack of due diligence, on their part.
If we're going to nationalize the losses, we need to nationalize the
profits also. If the feds are going to buy mortgages for more than
their market value, the feds need to receive something extra. Maybe
equity interest in the firms selling the mortgages. Maybe a temporary
industry-wide tax (or surtax), to be levied until the receipts offset
the losses. (Yes, that may be a while.)
Pay attention to what Dave said about un-bundling these mortgages. Based on what I know these financial institutions not only bundled mortgages, they actually broke the individual mortgages apart and bundled parts of mortgages. It is not possible to know exactly what we are looking at until these financial instruments are unbundled and individual mortgage agreements are put back together. My question is why protect a corporation from failing? Why not create a federal agency to re-write mortgages that have these outrageous terms that were the real cause of so many defaults? As much as I know that something needs to be done, I find it incredible we are talking about putting money into publicly traded corporations that are facing failure because of their greed. Its not like the Chrysler bailout, these banks don't have any hard assets. Their assets are the paper these now unrecognizable mortgages are written on. Mike Fratto Payne Phalen Please help those who don't get enough to eat. http://oyh.org http://hungersolutions.org The future depends more on what we do between now and then Than what we did in the past.
3 problems with this kneejerk position: 1) if Wall Street crashes, tens of
millions of individuals' SEPs and IRAs go with it; 2) Government purchase
of these loans offers millions of homeowners a real opportunity to avoid
foreclosure through restructuring; 3) if the price paid for the debt
reflects the reasonable restructuring to avoid foreclosure (not necessarily
part of the current administration plan, but certainly part of any
alternative plan which could get through Congress), then the taxpayers are
out nothing and the investors are not being "bailed out" in the sense that
they're getting their investment back - they're being "bailed out" in the
sense that their losses are minimized to the extent compatible with
minimizing harm to the homeowner/borrowers.
I guess it takes the threat of another Great Depression in the morning to
stimulate some discussion in this moribund forum. I won't get into the
vagaries of who did what as the finger pointing intensifies to provide some
hope that one party will end up stinking less than the other. The President's
rhetoric was much more flowery that that:
We are after all:
"......a nation that tackles problems head on, where leaders come together to
meet great tests, and where people of every background can work hard, develop
their talents, and realize their dreams."
Blah, Blah, Blah .....
There is nobody in either party that tackles these problems head on. Our
system is a highly evolved system of denial that allows politicians to sell the
collective fantasy that we are entitled to a lot without having to pay for it.
And whether it is a war in Iraq or another Great Depression there are
absolutely two things that must never happen:
1. Tell the American people what is really going on. You know - the details
in common language instead of Bill Clinton last night on Letterman talking
about derivatives as "instruments" or Bush's folksy "Bad mortgages for Dummies"
tonight.
2. Systematically find out what went wrong and analyze both the ethics (as in
conflict of interest) and legal technicalities of it all. It is after all very
easy to look at the regulation of debt rating and figure out how junk is rated
as "triple-A". Just one of many things Bush left out tonight. Without even
getting into it - Washington (as in both parties) - has a nasty habit of
burying all of these details - at least until all of the politicians involved
are dead. Still wondering about what happened in the run up to the War in
Iraq? Someday your great grandchildren may be able to read about it.
Before the usual poetic waxing about the two party system - think about it.
The dynamics of any process that systematizes corruption and allows the People
to be sacrificed for political ambition is the problem here. There is no
clearer example than a financial system where much of what goes on has been
invented in Congress.
For the past 20 years - politicians on both sides of the isle have hid their
lack of initiative by uttering the words: "The full faith and credit of the US
government".
Today those words are on the verge of becoming worthless.
George Dawson
An hour or so ago, one of the cable networks reported that a deal could come
tomorrow morning. Bush has called a meeting of leaders on both sides, to which
Obama and McCain will come. I interpret this to be a way to let McCain off the
hook for making his wild and melodramatic announcement that he'd return to help
save the economy, even though he isn't a member of the Senate cmte responsible
for the negotiations. Obama looked calm, serious and unflappable while McCain
looked like a hysteric.
We do need prompt and decisive action. But why are we being blackmailed by the
stock market? All day people talked about having to have a plan "by Monday
morning." I say declare a holiday. We closed the stock market after 9/11,
other countries have closed exchanges for various reasons - why don't we just
suspend trading till the deal is done? I can't believe the way everyone's
going around like Chicken Little for fear some panicky millionaires might
destroy our economy. Rather than rush into something only only partially
baked and probably missing ingredients, Obama, McCain and Congresssional
leaders should insist that everyone breathe deeply. The country needs to
believe that we are in good hands. After little boy Bush's anxious address
tonight, I felt like burying the silver. Luckily, we don't have any.
Gail O'Hare
St. Paul
Ah yes - we all need to take a deep breath and inhale the fresh air from the
joint press release:
Joint Statement Of Senator John McCain And Senator Barack Obama
ARLINGTON, VA -- Today, U.S. Senators John McCain and Barack Obama issued the
following statement:
"The American people are facing a moment of economic crisis. No matter how this
began, we all have a responsibility to work through it and restore confidence
in our economy. The jobs, savings, and prosperity of the American people are at
stake.
"Now is a time to come together -- Democrats and Republicans -- in a spirit of
cooperation for the sake of the American people. The plan that has been
submitted to Congress by the Bush Administration is flawed, but the effort to
protect the American economy must not fail.
"This is a time to rise above politics for the good of the country. We cannot
risk an economic catastrophe. Now is our chance to come together to prove that
Washington is once again capable of leading this country."
They must be using Bush's speech writer.
Let's all come together and bury the past mistakes - so that taxpayers won't
find them for at least 50 years. Let's bury those mistakes in the spirit of
cooperation so that we all can stay in power. And the shared responsibility!
There is nothing I like more than wording for decades, paying taxes for
decades, and then enjoying the shared responsibility of reckless politicians
put my life savings at risk.
Because we all know - it is impossible for us to rise above politics.
I love the smell of corruption in the morning.
George Dawson
Mike I quoted you in the spirit of bi-partisanship. http://deltondigest.blogspot.com/2008/09/fannie-mae-freddie-mac-refute-your.html There is much confusion about public and private sector policy and GSEs. The first step in government seizure should be refutation of the old mission statement and adaptation of a new mission. In the case of Freddie Mac it might be "To unbundle each mortgage as needed and disperse the mortgages to the highest bidder, after which Freddie Mac is to be dissolved." Instead we see Paulson acting like a regular private CEO except he has bureaucratic powers, such as asking congress for money. Like any CEO he will naturally use any power at his disposal to preserve the company stock price. We see this repeatedly. Stop the bail-outs! Define the Treasury Secretary role as a custodial CEO. Recognize it is a temporary role. Being a custodial CEO for multiple companies is a conflict of interest. From my blog: Republicans feel the government role is to preserve liberty, curtail spending, and little else. Democrats feel government is needed to enforce the existence of classic virtues such as charity, through regulation and policy. Well this is not an opportunity for the latter. The coming days are a critical threat to the former. Jamie Delton Summit U www.DeltonDigest.com
On Sep 24, 2008, at 10:55 AM, <email obscured> wrote:
> The smart money says that the housing market is so bad that the home
> owner won't be able to refinance when the balloon comes due or if
> the owner
> quits paying on the mortgage the property will not be able to be
> sold for what
> the old mortgage was for.
>
The smart money (Warren Buffet) is on a stable future for the
financial institutions. He knows the re-combination of commercial and
investment banks is a big step toward greater regulation. We are
witnessing a major movement within Wall Street that will affect the
entire country in the way the markets do business.
The Great Depression was caused essentially in the same way this
crisis came upon Wall Street. Our belief in capitalism has been
shaken again, but the answer seems to be a return to it in different
pajamas, not a change of the guard.
The melding of investment banks with commercial banks into bank
holding companies rescues the former with deposits made by you and
me. Commercial banks weathered the storm with their continuous
support of deposits. Investment banks crumbled under the weight of
risky bets and mortgages that sapped them of money. Starved of money
with which to stay in business, the financial institutions collapsed.
When their wealthy clients pulled their money out, disaster struck.
Just as in the Great Depression, they played poker with our money and
lost.
Analysis of the Great Depression seems to say that we were wrong to
pull the banks apart. Now we are putting them back together again in
the hope of avoiding another depression.
What will be different is regulation. Capitalists believe in a hands
off free market. But left to their own devises, capitalists don't
seem to be able to avoid the temptation of greed. If they could have,
this would not have happened.
The quandary is leaving a free market that will surely collapse when
all bets are called or bringing in $700 billion of tax money to prop
up the institutions but with the money strings. Quite a question, I
think.
My guess is we will see a twisting and wresting of political stance
in the days ahead. We weren't there when FDR saved the country. Now
we will have a chance to see what happens in this crisis.
Where do you stand, I wonder?
I think Ann Coulter has it right here in the last paragraph of her latest article. "Political correctness had already ruined education, sports, science and entertainment. But it took a Democratic president with a Democratic Congress for political correctness to wreck the financial industry." http://www.wnd.com/index.php?fa=PAGE.view&pageId=76160 The gist of the article is that the federal government starting with Clinton forced banks into the high risk mortgage business by "extending affirmative action to the financial sector". Another quote from the article. "Meanwhile, economists were screaming from the rooftops that the Democrats were forcing mortgage lenders to issue loans that would fail the moment the housing market slowed and deadbeat borrowers couldn't get out of their loans by selling their houses." Lee Surma Maple Grove
On Thu, Sep 25, 2008 at 11:26 AM, Lee <lee@honeycomb.net> wrote: > I think Ann Coulter has it right here in the last > paragraph of her latest article. > > "Political correctness had already ruined education, > sports, science and entertainment. But it took a > Democratic president with a Democratic Congress for > political correctness to wreck the financial industry." > > http://www.wnd.com/index.php?fa=PAGE.view&pageId=76160 > > The gist of the article is that the federal government > starting with Clinton forced banks into the high risk > mortgage business by "extending affirmative action to the > financial sector". > > Another quote from the article. > "Meanwhile, economists were screaming from the rooftops > that the Democrats were forcing mortgage lenders to issue > loans that would fail the moment the housing market slowed > and deadbeat borrowers couldn't get out of their loans by > selling their houses." This idea is a joke and it is starting to bubble up among the right's reason for the turmoil we're in: find a way to blame government. Surely there are many reasons, and this could be a contributor, but nobody forced banks to offer high-risk loans to all those people. Nobody forced mortgage brokers and originators to lower their standards to allow them to turn more loans and as a result make more money. Nobody forced those lenders to then re-package those loans into securities as a way to unload those loans on someone else. There are a three now obvious side effects to that practice: 1) it gave the lenders more money to lend, 2) insulated the lenders from the risk, and 3) gave the securities buyers a false sense of the risk (they may have been mislead by the sellers). That last side effect is the really troubling one. The people who were re-packaging these securities were selling them as being very profitable and low risk. As we know, they may have been profitable in the short term, but they certainly weren't low risk and now the risk is an open question to the point that nobody really knows what those securities are really worth. In my opinion, this whole thing is a case of unfettered economic activity driven by a profit bubble. Lots of people were making lots of money. Lots of entities took on risk the