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POPS Bailout Is Not The Right Answer
This subprime lending was more than a minor relaxation of existing credit guidelines. This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle. Once housing prices declined and economic conditions worsened, defaults and delinquencies soared, leaving the industry holding large amounts of severely depreciated mortgage assets. The fact that government bears such a huge responsibility for the current mess means any response should eliminate the conditions that created this situation in the first place, not attempt to fix bad government with more government. The obvious alternative to a bailout is letting troubled financial institutions declare bankruptcy. Bankruptcy means that shareholders typically get wiped out and the creditors own the company. Bankruptcy does not mean the company disappears; it is just owned by someone new (as has occurred with several airline
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POPSFannie Mae & Freddie Mac not the cause of the subprime mortgage meltdown Between 2004 and 2006, when subprime lending was exploding, Fannie and Freddie went from holding a high of 48 percent of the subprime loans that were sold into the secondary market to holding about 24 percent, according to data from Inside Mortgage Finance, a specialty publication. One reason is that Fannie and Freddie were subject to tougher standards than many of the unregulated players in the private sector who weakened lending standards, most of whom have gone bankrupt or are now in deep trouble. During those same explosive three years, private investment banks — not Fannie and Freddie — dominated the mortgage loans that were packaged and sold into the secondary mortgage market. In 2005 and 2006, the private sector securitized almost two thirds of all U.S. mortgages, supplanting Fannie and Freddie, according to a number of specialty publications that track this data.
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POPSFannie/Freddie Trouble Seen 9 Yrs Ago
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black
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POPS This Bailout Was A Terrible Idea! Here's Why This lending was a wholesale abandonment of reasonable lending practices in which borrowers with poor credit characteristics got mortgages they were ill-equipped to handle. Talk of Armageddon, however, is ridiculous scare-mongering. If financial institutions cannot make productive loans, a profit opportunity exists for someone else. This might not happen instantly, but it will happen. The costs of the bailout, moreover, are almost certainly being understated. The administration's claim is that many mortgage assets are merely illiquid, not truly worthless, implying taxpayers will recoup much of their $700 billion. The bailout has more problems. The final legislation will probably include numerous side conditions and special dealings that reward Washington lobbyists and their clients. Anticipation of the bailout will engender strategic behavior by Wall Street institutions as they shuffle their assets and position their balance sheets to maximize their take.
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POPSTell me again how the Stimulus is going to work? And please, tell me again how sending more of our debt fueled "spending" to Chinese electronic manufacturers is going to save us? Can ANYONE see reality anymore? Or are we just going to keep playing out the tired old party lines as our once great nation falls? GLOBALIZATION did this to us. NOT subprime mortgages.
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POPSACORN Working on Behalf of the Prey The report also showed that predatory subprime lenders were targeting African American, Latino and low-income communities, selling them bad loans even when applicants had good credit and could have qualified for better loan products.
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POPSThe destruction of the black middle class More: Yet in the depths of this African American depression, some commentators, black as well as white, are still obsessing about the supposed cultural deficiencies of the black community. In a December op-ed in the Washington Post, Kay Hymowitz blamed black economic woes on the fact that 70 percent of black children are born to single mothers, not noticing that the white two-parent family has actually declined at a faster rate than the black two-parent family. The share of black children living in a single parent home increased by 155 percent between 1960 to 2006, while the share of white children living in single parent homes increased by a staggering 229 percent. Just last month on NPR, commentator Juan Williams dismissed the NAACP…The fact that there is an ongoing recession disproportionately affecting the African American middle class – and brought on by Wall Street greed rather than "ghetto" values – seems to have eluded him.
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POPSWhy you don't want AIG to fail Short answer: It might bankrupt your state treasury. It might bankrupt your local bank. It might put your local industries out of business. If the gov't acts quickly, it can break up and sell off the profitable parts of AIG, recovering the cash it has lent to cover AIG's unregulated Financial Products Division's inability to pay "insurance" benefits that it had sold to cover the risk inherent in mortgage-backed securities.
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POPS Ego And Mouth by Thomas Sowell . . . by those who have accomplished something, and give it to whomever he chooses in the name of "spreading the wealth," is the kind of casual arrogance that has led to many economic catastrophes in many countries. The equally casual ease with which Barack Obama has talked about appointing judges on the basis of their empathies with various segments of the population makes a mockery of the very concept of law. After this man has wrecked the economy and destroyed constitutional law with his judicial appointments, what can he do for an encore? He can cripple the military and gamble America's future on his ability to sit down with enemy nations and talk them out of causing trouble. Add to Obama and Biden House Speaker Nancy Pelosi and Senate Majority Leader Harry Reid, and you have all the ingredients for a historic meltdown. Let us not forget that the Roman Empire did decline and fall, blighting the lives of millions for centuries.
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POPSA Brewing Fraud Scandal at the Treasury Department? The federal government took over IndyMac in July, after the bank's stock price plummeted to just pennies a share when it was revealed the bank had financial troubles due to defaulted mortgages and subprime loans, costing taxpayers over $9 billion.
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POPSOusted? Or Relieved? That man made more money as chief of a looming disaster and now, as with Palin in politics, a figure is supposed to distract from the real issues. Masquerade. This and other issues related to the banking-mortgage-insurance industries are the cause, not the symptom of an ill and devastating approach to economics. More foxes to guard the hen-house, ha!
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POPS25 People to Blame for the Financial Crisis
Rebubbacans and Ayn Rand disciples abound. Kathleen Corbet Corbet ran the largest agency, Standard & Poor's, during much of this decade, though the other two major players, Moody's and Fitch, played by similar rules. By slapping AAA seals of approval on large portions of even the riskiest pools of loans, rating agencies helped lure investors into loading on collateralized debt obligations (CDOs) that are now unsellable. Dick Fuld steered Lehman deep into the business of subprime mortgages Lehman even made its own subprime loans. The firm took all those loans, whipped them into bonds and passed on to investors billions of dollars of what is now toxic debt. Marion and Herb Sandler In the early 1980s, became the first to sell a tricky home loan called the option ARM. And they pushed the mortgage, which offered several ways to back-load your loan and thereby reduce your early payments, over the next two decades. pocketed $2.3 billion when they sold their bank to Wac
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POPSMoveon.org-Soros Bets On U.S. Economic Collapse FEC records show $5,000 from Lasry to HILLPAC, Hillary’s political action committee, thousands more to Hillary’s senate campaign, and thousands more to Hillary’s presidential campaign. Since Soros is a major supporter of the secretive Democracy Alliance, a group backed by rich liberals who fund a network of liberal-left groups dedicated to electing Democrats to the White House and Congress, could the discussion have also been political in nature? The Wall Street Journal on Tuesday ran a fascinating front-page story about John A. Paulson, a Wall Street trader who has made billions of dollars betting that the housing market would collapse. The Journal says that Paulson personally made between $3 and $4 billion. John Edwards took some criticism when it became known that he had gone to work for a hedge fund. As noted by the Washington Post, “The hedge fund that employed John Edwards markedly expanded its subprime lending business while he worked there.
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POPSGoldman Sucks’ new role: Taking Your Homes The couple alleges that Goldman declined for three years to confirm their suspicions that it had bought their mortgages from a subprime lender, even after they wrote to Goldman’s then-Chief Executive Henry Paulson — later U.S. Treasury secretary — in 2003. Unable to identify a lender, the couple could neither capitalize on a mortgage hardship provision that would allow them to defer some payments, nor on a state law enabling them to offset their debt against separate, investment-related claims against Goldman. In July, the Beckers won a David-and-Goliath struggle when Goldman subsidiary MTGLQ Investors dropped its bid to seize their house. By then, the college-educated couple had been reduced to shopping for canned goods at flea markets and selling used ceramic glass. Theirs is an infrequent happy ending among the hundreds of cases...
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POPSThe Dirty Dozen Meet the bankers and brokers responsible for the financial crisis - and the official
The Maestro HENRY PAULSON WAS CEO of Goldman Sachs (1999-2006); Treasury secretary (2006-2009) WHAT HE DID Pushed for end to debt restrictions for banks like Goldman, then arranged big bailout for Goldman. WORST MOVE TARP proposal just three pages long; made his decisions "non-reviewable." NOW SAYS "I don't think we've made mistakes on the major decisions." The Big Loser DICK FULD WAS CEO of Lehman Brothers (1993-2008) WHAT HE DID Piloted Lehman to largest bankruptcy in U.S. history; earned $22 million the year firm went bust. WORST MOVE Tried to avoid lawsuits by selling his $13 million Florida home to his wife for $100. NOW SAYS Feels "horrible" about Lehman, but insists his management was "prudent and appropriate." Mr. Too Big KEN LEWIS IS CEO of Bank of America (2001-present) WHAT HE DID Created ultimate too-big-to-fail company, buying up Fleet, MBNA, Countrywide and Merrill Lynch. WORST MOVE Failed to catch a $15 billion loss at Merrill before buying the
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POPSBreaking: ACORN Bombshell #4 Due From BigGovernment Tomorrow ACORN and Obama at the Heart of the Mortgage Meltdown Starting in the nineties, a young attorney named Barack Obama began working with ACORN to promote mortgages for those who could not afford them. At the time, ACORN consisted of community agitators, who falsely accused banks of "redlining" (failing to offer mortgages to the urban poor). These groups would pack bank lobbies and harass customers in order to intimidate the institutions and force the government to lower underwriting standards. A former community agitator and ACORN attorney named Barack Obama sued Citibank in 1994, just one of hundreds of nuisance lawsuits filed by ACORN and its affiliates to loosen mortgage underwriting standards. The inevitable result is still unfolding. But this much is clear: ACORN, its attorneys and its sycophants in Congress unleashed a catastrophic meltdown on America. It used government power to to force financial institutions to underwrite completely unqualified applicants . .
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POPSThree Broadcast Networks Earned A Big Fat Zero Former Health and Human Services Secretary Donna Shalala and former U.N. ambassador and assistant Secretary of State Richard Holbrooke also benefited, as did one prominent Republican — former Secretary of Housing and Urban Development Alphonso Jackson. Shalala and Holbrooke had left public office when they got their deals. But it was reasonable for Mozilo to think they'd serve again in another Democratic administration. And what, many wonder, was the quid pro quo for all this? Just a month ago, in unusually harsh language, Dodd ripped into President Bush on the subprime mess and defended a $400 billion plan that would bail out the subprime lending industry — including Mozilo. The Democrats' initial response has been to stall. They hope the problem will disappear until after the election. They need to investigate it fully, immediately and without prejudice — or risk having it blow up in their faces.
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POPSThe Real Culprits - Part Two The Clinton-era corruption, combined with unprecedented catering to affordable-housing lobbyists, resulted in today's nationalization of both Fannie and Freddie, a move that is expected to cost taxpayers tens of billions of dollars.
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POPSJapan and China are selling US debt Hmm. I remember reading about this years ago, and the author used terms like "powder keg" and "catastrophic". How big an effect will this selloff have on our economy. Could we be headed for an economic war? I few more moves like this coupled with a true disruption to oil supply could send our economy into a tailspin.
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POPSMadoff’s conviction is no example of American justice More. Bernie should really become is a pin up criminal for incompetence, who was allowed to escape for decades by incompetent regulation: both of the traditional black letter legal type and self-regulation. Bernie fooled all the checks and balances and became head of NADAQ. His auditing firm was a small one and a half person operation in suburban New York: the auditing groups and other regulators let that one go
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POPSACORN foresaw the foreclosure crisis in 2001
More: Moreover, Oakland's law would have gone much farther than requiring that borrowers could afford loans. In 2001, ACORN officials already recognized that the driving force behind the subprime lending was the ability of brokers to chop up risky mortgages, repackage them with good loans as "securities," and sell them to other banks on a largely unregulated market. When homeowners who couldn't afford their loans later defaulted on them, these securities became widely known as "toxic assets" and were the primary cause of the world financial crisis… But if Oakland's law had been widely adopted, the bailout likely would have been unnecessary and the worst economic downturn since the Great Depression probably averted. Why? Because the city's ordinance not only would have held mortgage brokers liable for making bad loans, but also every other bank that later bought pieces of those bad loans after they were securitized. In short, the market for subprime loans would have dried up.
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POPSChina grows while the West continues it's descent Over the past ten years, under the radar and the "global economy" BS, they sent their suppliers jobs to China. Now, there customers are there. Which will work fine until the day the Chinese slam shut their borders-keeping our technology, investments and products. Wake up people. This mess is not "subprime mortgages". It is lack of family supporting JOBS. And I'm not talking about the whineass UAW workers jobs. Continue allowing the government to shove high tech and globalization down your throats. Harsh poverty is coming. This is going to make the "Great Depression" seem like a walk in the park.
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POPSBubble, Bubble, Toil and Trouble Warns "Friends of The Earth" A cap-and-trade plan would create a huge new market in emissions permits at a time when Wall Street and Washington have their hands full figuring out how to police existing markets. One key element in all the climate proposals floated so far is the use of “offsets,” or the ability to purchase emissions reductions made somewhere else. As Friends of the Earth says in a new report, “Subprime Carbon”: Given the lack of proven mechanisms to govern commodities, it is imprudent to so hastily create the largest derivatives market in the world and foist it upon a new and untested regulatory regime. One possible side effect of the financial-market fallout and concerns about more toxic assets? Growing support for a straight carbon tax, rather than a complicated cap-and-trade plan.
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