The Warm And Fuzzy Glow Has Worn Off
Some housing bubble news from Wall Street and Washington. Reuters, “Home builder Standard Pacific Corp reported sharply higher losses amid a downturn in the U.S. housing market and said conditions will likely worsen. Fourth-quarter home-building revenue fell 20 percent from a year earlier as new home deliveries fell 23 percent. Net new orders for the quarter fell 11 percent to 1,002 new homes. Prospective buyers canceled their orders at a rate of 37 percent, down from 44 percent in the year-ago quarter.”
“‘As we enter 2008, we anticipate that housing market conditions will continue to weaken, resulting in a decrease in companywide deliveries,’ CEO Stephen Scarborough said in a statement.”
The Associated Press. “The latest quarter included $433.5 million in charges to write down the value of inventory and land deposits. If Standard Pacific does not improve its net worth, the lenders could declare the company in default and force the early repayment of debt.”
“Standard Pacific plans to build fewer homes and acquire less land in 2008 as it sells existing inventory.”
The Review Journal. “Focus Property Group, one of the largest developers in Southern Nevada, has stopped making interest payments on $500 million in loans secured by 4,800 acres in the Las Vegas Valley, Pahrump and Victorville, Calif., company executives said.”
“The company said 2,100 acres of the land involved is in metropolitan Las Vegas, 1,700 acres in Pahrump and 1,000 in Victorville. The company started notifying lenders late last week that it would not make its February interest payments.”
“Chairman and CEO John Ritter’s company developed the land for home builders and, to a lesser extent, shopping center developers. ‘We haven’t sold a piece of single-family residential (land) since early 2005,’ Focus Chief Operating Officer Tom DeVore said.”
“Ritter believes his company owns more raw land than any other entity in the Las Vegas area except The Howard Hughes Corp. Ritter has made news in recent years by buying large chunks of land from the Bureau of Land Management at auctions.”
“Ritter had been flying under the development radar until November 2002 when he outbid Olympia Group at a Bureau of Land Management auction, paying $160 million for nearly 1,000 acres…in the southwestern Las Vegas Valley.”
“He bought 485 acres of BLM land for Providence in the northwestern valley for $113 million in 2003 and raised the bar for land prices in 2004 when he paid $557 million for 1,940 acres in Henderson.”
“Ritter called the current real estate market conditions the worst he has seen in 26 years in the business. ‘In almost all categories of real estate, liquidity has dried up,’ Ritter said.”
From Bloomberg. “GMAC LLC, the auto and mortgage lending company 49 percent owned by General Motors Corp., posted a fourth-quarter loss as bad loans in the U.S. rose to a record. GMAC is talking to buyers for parts of the Residential Capital mortgage unit, which had a $921 million loss. The unit lost $4.3 billion for the full year.”
“ResCap’s loss stemmed from a higher provision for bad loans, fewer new mortgages and markdowns on the value of securities and loans held for sale.”
“GMAC bought $740 million of ResCap debt during the quarter to bolster the unit’s capital. Moody’s downgraded ResCap’s senior debt today. The ratings company’s statement cited lower liquidity, the risk that ResCap’s net worth could fall below its minimum net worth covenant if GMAC doesn’t provide more support, and ‘Moody’s belief that ResCap’s franchise is impaired.’”
“GMAC said it may still sell all or part of ResCap, after reducing riskier lending and announcing 5,000 job cuts. ‘We’ve taken painful and appropriate impairments and reserves throughout the year to set things right,’ Chief Financial Officer Robert Hull said on a conference call. ‘We know (2008) will be another challenging year for us, and may call for further aggressive tactics.’”
“ResCap is the second-largest independent U.S. mortgage lender after Countrywide Financial Corp, and the nation’s eighth-largest mortgage lender overall, according to the newsletter Inside Mortgage Finance.”
“Fourth-quarter mortgage volume at ResCap fell 58 percent to $20.8 billion, including declines of 83 percent in high-quality U.S. home-equity loans and 99 percent in U.S. subprime loans.”
From AFP News. “Industrial and Commercial Bank of China has set aside six times more than previously for a potential write-down of its subprime-related assets, state media reported Monday.”
“ICBC has set aside around 360 million dollars, more than six times the 429 million yuan (58.8 million) disclosed in its financial results for the third quarter ending September, analysts said.”
“‘They have done this out of caution and to reflect the decrease in market valuation (of these assets),’ said Zhang Xi, Beijing-based analyst with Galaxy Securities.”
“Fitch Ratings may downgrade all of the $220 billion of collateralized debt obligations it assesses that are based on corporate securities because of rising losses.”
“The company may lower the notes by as much as five levels after failing to accurately assess the risk of debt that packages other assets, according to guidelines proposed by Fitch today. Ratings firms are responding to criticism that they failed to react quickly enough as increasing defaults on subprime mortgages in the U.S. caused a plunge in the value of CDOs.”
“Buying and selling of collateralized debt obligations based on mortgage bonds, high-yield loans or preferred shares has ground to a near-halt, traders said at the securitization industry’s largest conference.”
“‘We’re definitely in a period of very low liquidity at the moment, which has actually been dropping precipitously in the last few weeks,’ Ross Heller, an executive director at JPMorgan Securities Inc., said yesterday during a panel discussion at the American Securitization Forum’s annual conference in Las Vegas. ‘It’s a challenging time.’”
“Merrill Lynch & Co., the New York-based securities firm with a record loss last year amid writedowns on the most-senior AAA pieces of mortgage CDOs it underwrote, ‘has been actively talking to people’ about purchasing its super-seniors, said Brian Carosielli, a managing director.”
“Investors with experience with residential-mortgage assets have been buyers, paying in the ‘mid-teens to low 30′ cents on the dollar for the senior-most, or super-senior, classes of CDOs comprised of low-rated asset-backed bonds, he said.”
From MarketWatch. “Banks are raising their credit standards for mortgages, consumer loans and commercial real estate loans at a pace never seen in the 17-year history of the Fed’s quarterly survey of senior bank loan officers, the Federal Reserve reported Monday.”
“Banks are requiring more disclosures, more collateral and a higher interest rate before approving loans, the survey said. Demand is plunging for many types of loans, especially for residential mortgages and commercial real estate loans.”
“More than 80% of banks - the largest percentage ever — said they had tightened lending standards for commercial real estate loans in response to a weaker economy. Nearly 60% of the banks reported falling demand for commercial real estate loans, and 87% expect the quality of such loans already made to worsen.”
“More than half of the banks tightened their standards for prime mortgages, by far the highest percentage in the 17-year history of the survey. Seventy percent expected the quality of prime mortgages to worsen.”
“More than 80% of the banks tightened their standards for nontraditional loans, including jumbo loans and other loans that do not conform to standards set by Fannie Mae and Freddie Mac. A similar percentage expected more delinquencies.”
“For subprime mortgages, about 70% of banks that offer such loans had tightened their lending standards, but more than 90% of the banks responding to the survey said they do not offer any subprime loans.”
The New York Post. “Perhaps the greatest scandal of the mort gage crisis is that it is a direct result of an intentional loosening of underwriting standards - done in the name of ending discrimination, despite warnings that it could lead to wide-scale defaults.”
“From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and “progressive” political forces.”
“In the 1980s, groups such as the activists at ACORN began pushing charges of ‘redlining’ - claims that banks discriminated against minorities in mortgage lending. In fact, minority mortgage applications were rejected more frequently than other applications - but the overwhelming reason wasn’t racial discrimination, but simply that minorities tend to have weaker finances.”
“Yet a ‘landmark’ 1992 study from the Boston Fed concluded that mortgage-lending discrimination was systemic.” “That study was tremendously flawed - a colleague and I later showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates. Our study found no evidence of discrimination.”
“Yet the political agenda triumphed - with the president of the Boston Fed saying no new studies were needed, and the US comptroller of the currency seconding the motion.”
“No sooner had the ink dried on its discrimination study than the Boston Fed, clearly speaking for the entire Fed, produced a manual for mortgage lenders stating that: ‘discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria that effectively disqualify many urban or lower-income minority applicants.’”
“Some of these ‘outdated’ criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification.” “Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant’s ability to manage debt.”
“Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find Community Reinvestment Act loans available via ACORN with ‘100 percent financing . . . no credit scores . . . undocumented income . . . even if you don’t report it on your tax returns.’”
“Credit counseling is required, of course.”
“Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed ‘the most flexible underwriting criteria permitted.’”
“That lender’s $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003. Who was that virtuous lender? Why - Countrywide, the nation’s largest mortgage lender.”
“This damage was quite predictable: ‘After the warm and fuzzy glow of ‘flexible underwriting standards’ has worn off, we may discover that they are nothing more than standards that lead to bad loans. . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes.’ I wrote that, with Ted Day, in a 1998 academic article.”
“Sadly, we were spitting into the wind. These days, everyone claims to favor strong lending standards. What about all those self-righteous newspapers, politicians and regulators who were intent on loosening lending standards?”
“What is past is prologue.”
William Shakespeare
I agree with you Ben that we are entering a new financial era. I would be excited for a discussion of this topic at some point as you suggested a little while ago.
I could use some of Flag’s prickly pear vodka.
how about this topic:
“Flexible lending programs expanded even though they had higher default rates than loans with traditional standards. On the Web, you can still find Community Reinvestment Act loans available via ACORN with ‘100 percent financing . . . no credit scores . . . undocumented income . . . even if you don’t report it on your tax returns.’”
so the socialists were at the root cause of this bubble, crying about discrimination to get the lending standards loosen, but then the capitalists got so greedy that they just went along.
The capitalists did not just “go along”. They dumped off most of the risk on the pension funds (both US and international.)
Wait till the real news starts coming out. The bank bailout is going to look like a pleasant memory.
They dumped off most of the risk on the pension funds (both US and international.).
That would affect teachers, firemen, cops, and government employees, for example. But don’t forget all the municipalities and states that bought into the “enhanced” yield of AAA rated MBS, Florida comes to mind. Couple that with falling local prop. tax revenues, and it will be well, unpleasant.
But Red, we know that BofA’s analyst just upgraded home builder’s stocks and it has been clear for many years they are not making any more land in Las Vegas….
Standard Pacific “…“‘As we enter 2008, we anticipate that housing market conditions will continue to weaken, resulting in a decrease in companywide deliveries,’ CEO Stephen Scarborough said in a statement.”
Las Vegas …“Focus Property Group, one of the largest developers in Southern Nevada, has stopped making interest payments on $500 million in loans secured by 4,800 acres in the Las Vegas Valley, Pahrump and Victorville, Calif., company executives said.”
What seems to be the problem here….???
What was Bank of America’s rationale for the HB upgrades anyway? Were they impressed by all the undercutting the HBs are about unleash with their new vintages of downsized houses?
Prices are falling, therefore demand is about to pick up. Profits are sure to follow.
Seriously… demand is only minutes away.
Of course, NO MENTION that prices are still WAY above historic norm. That most buyers have to be sellers first, and that is unlikley to happen. No mention that their cost of land is so high that they can’t truely be profitable at the lower prices….
Just, “prices are falling so demand is coming soon”.
BOA=DOA
Debt Or Alive?
So when all else fails they break out an old ECON 101 book, write up their forecast, and call it a day? Great jobs those are!
Yeah, of course we all know falling product prices are great for any business. Especially when most of the “value” of the business is locked up in inventory. Also, make sure you wait until the stock price is up 80% from a recent low before you upgrade.
What does this B of A analcyst deserve? A joshua trout stuffed in his mouth? (I’m still learning the HBB punishment system, go easy on me.)
So why is so easy all of a sudden to tighten lending standards ? Once losses exceeded the juicy fees the banks have no problem ignoring the lending “guidelines”
“A banker is a fellow who lends you his umbrella when the sun is shining and wants it back when it starts to rain.”
– Mark Twain –
“I don’t want my body to be a distraction from my talent or my brain.”
–Shania Twain
“What a terrible thing to have lost one’s mind. Or not to have a mind at all. How true that is.”
Former Vice President Dan Quayle
‘did someone say subliminable..heheheh?’
g.w. bush
I miss Quayle. At least he was harmless, unlike the Decider.
Maybe a few lenders are having troubles sleeping at night, perhaps a little guilt fealings on big bonus, fees, etc. these last years.On second thought, No. The money was just to good and easy.
No, this is not it. The securitization train has stopped cold in its tracks so they cannot offload the cr*p. Naturally, they have no intention of keeping this on their books.
Ergo, credit crunch, and in a debt-based fiat system, deflation.
From today’s New York Times:
“For the 34 million households who took money out of their homes over the last four years by refinancing or borrowing against their equity — roughly one-third of the nation — the savings rate was running at a negative 13 percent in the middle of 2006, according to Moody’s Economy.com. That means they were borrowing heavily against their assets to finance their day-to-day lives.
“By late last year, the savings rate for this group had improved, but just to negative 7 percent and mostly because tightened standards made loans harder to get.
“’For them, that game is over,’ said Mark Zandi, chief economist at Economy.com. ‘They have been spending well beyond their incomes, and now they are seeing the limits of credit.’”
http://tinyurl.com/ywm488
34 MILLION Aemrican households refinanced to take cash out (not simply to lower interest rates)? It would take many trillions of dollars to prop up this crashing bubble, which is potentially WAY bigger than the subprime mess. So why isn’t the Press in general all over this looming disaster?
This is not a credit crisis its a derivatives crisis. Its hard to writeoff losses when you don’t know how much you need to writeoff because there is no secondary market for MBS-based CDOs. The Fed won’t be able to run the printing presses quickly enough to solve this crisis.
You have quite clearly never run a derivatives book, have you?
Recession is here - economists
February 5 2008: 12:47 PM EST
Recession is the least of our worries. The days of the American empire might be at an end, Fortune’s Andy Serwer argues.
NEW YORK (CNNMoney.com) — A growing number of top economists believe that the U.S. economy has now toppled into recession.
Economist Bob Brusca of FAO Economics said he doubted that the U.S. was in recession a week ago, but now he believes there’s about a 75% chance that a recession began in January.
“That’s what recessions do. They come upon you all of a sudden,” he said. “When you look back at history, you’re struck by how even-keel it is until the bottom just falls out.”
WTF?? All of a sudden?? Yeah sure, everything has been even keel until a week ago and then the bottom fell out.
It is a known fact that most economists predict recessions after they have started. Their forecasts are rooted in the present.
The hyper-consumer economy is largely dependent on the myth of an economy that’s too big to fail. The fact that economists proportedly have such a difficult time seeing the future helps feed this myth. Sure, a lot here saw this coming - but did anyone here make a dime off of saying so? There’s big bucks in facilitating denial.
Remember that when approaching these scenarios from the “perceived” negative angle that posters on the blog have, that the impetus is not to make a dime, but to keep the dime you already have.
(raising hand emphatically)
I did! I did In fact, I believe the number on this blog who have made millions of dimes off this downturn and stand to make millions more are not few.
Yes. Many of us are not against buying stocks or real estate, but just prefer to do so when the price is right. Right now is not right. Actually I’m usually quite bearish and belive about 80% of the time its a good time to buy such things. I havent felt that way for several years however. I look forward to getting into the game again. There is money to be made taking advantgage of the short term volatility, but you have to be very careful and know what you are doing, or you can lose everything. In about 1-3 years for stocks, and 2-4 years for housing, we will be so low, you dont have to be an expert to win. Just have to have cash.
Allow a clarification, I meant to say: made a dime off of telling others where this is headed. There are indeed opportunities in this, even my amatuerish experiments with the likes of SRS and SKF have proven pleasantly rewarding.
The correct strategy during a recession (Depression?). It is to find security, and not to gamble your life. (make sure you have a job that pays!!!)
Is it a smart bet to risk every dime you have with the chance to double your money? Even when the odds are 80% you will win, I would not take that bet. The pain of losing everything is too big to risk, no matter how good your chance of winning is.
“It is a known fact that most economists predict recessions after they have started.”
That’s kind: the last two weren’t even “discovered” until they were over.
We could already be in the fifth month of R, if 0.6% gets adjusted downward, as it likely will (low numbers tend to get revised down, high ones up). Plus, that’s already slower growth than population, so per capita the economy is definitely contracting.
I’m thinking something like 7 of 10 quarters below 1% growth from Q4 2007 to Q1 2010. A couple of blips of growth but a general downtrend for some time.
When you walk around with your eyes closed, you tend to smack into walls “all of a sudden” as well!
Our populace aspires to have the brain power of Ralph Wiggum.
“Then, the doctor told me that BOTH my eyes were lazy! And that’s why it was the best summer ever.”
Once again, could this guy be that stupid or is he lying for some reason? The myth (which he seemingly believes) that our economy, the value of a stock, etc. turn on a dime based on some new piece of info is classic shill fare. If those on this board could read the tea leaves and make correct calls a large majority of the time, why are all of these economists being struck dumb by the shift in economic climate?
“Everything was fine, even after hitting the iceberg. Once at the bottom of ocean it was noticed that we were rapidly taking on water.”
RE: The days of the American empire might be at an end, Fortune’s Andy Serwer argues.
Do ya think?
$415 bil for ‘08 military spending + $200 bil for Iraq…
All the while infrastructure, both material and moral, fades and rots-and 80 million taxed and Ponzi schemed to death boomers move on up the age scale.
It’s the perfect demographic storm.
There’s no way out of this one.
Who here thinks we’re getting the truth from the Chinese banks about their write-downs?
They are trying to save face, bigtime.
Or else they must fall on the sword!
IMHO, the Chinese banks are giving the absolute truth.
Private Aladin Sane is correct about attempting to save face.
The debate in China is “What should happen to the foreign currencies?”
This is creating a large problem for China’s leadership. The unofficial position is “no comment”. There is a risk of serious riots occurring should there occur another Blackstone fiasco.
Blackstone set the table, for disappointing Chinese investments in the USA.
I’m imagining it’s going to be a dim sum in toto, when all the cards are revealed…
Saving face is a cultural imperative in China (had a fellow airline passenger who had lived there as an American foreign national explain this to me once…)
In the USA, if you screw up bigtime and are high up enough, they’ll throw $50 Million at you to make you go away.
In China, if you screw up bigtime and are high up enough, they’ll throw a high velocity bullet your way.
“In China, if you screw up bigtime and are high up enough, they’ll throw a high velocity bullet your way.”
They certainly have an interesting methodology, which includes a public parade while wearing a sandwich board describing their crimes. Does it really work?
Back when the media repeated over and over that the Asians were holding the bulk of the MBSs, I tried to point out that everything showed they were not. Sure enough, as a group they have the least exposure. It was the Europeans, GSEs, US corps and hedge funds.
As well as municipalites and public pension funds I imagine? I was afraid of that.
Ya couldn’t properly call them ‘hedge’ funds if they had no plan about where to dump their toxic financial waste.
P’Bear,
A whole lot of level 3’s going on lately!
Shake it baby!
Leigh
The level 3’s will be on going for the next 12 quarters.
This will be America’s decade of the writedown
Gentleman Hoz,
12 quarters! I believe you are the winner of the MLEC.
For they transfer to Level 3 - is this not equal to a SIV?
Yes, my friend, it is equivalent.
Technically, we both win (lose).
Best Always,
Leigh
P.S. Cow…just when it seems so clear that is over now.
Do you ever answer your email?
I shall have to come and release hubby!
You won, fairly squarely.
Level 3 is a 3rd derivative of reality. If the MLEC had been done the pressure to the banks for the next few years might have been shortened by a year or so.
Beware of a financial Heimlich maneuver…
It was exactly one year ago, right before that first late February tremor, that I posted how the Chicago Teacher’s Pension fund dumped a cool Billion into hedge funds - it was front page headline news at the time.
Nice. So it looks like the ulimate bagholders will be the Europeans thru Deutsche Bank, HSBC, UBS, et al. and any American who works for living, be it public or private.
The oft quoted Pogo, “We have seen the enemy and he is us.”
Bingo Ben!
FWIW, all the Paulson trips to China were for naught!
WE were trying to save face IMO, and that’s working well.
Leigh
I don’t remember which article it was, but I clicked through to one from this blog over the weekend. I can only conclude that when people acquire degrees in economics, a large number of them have their brains disconnected. The economist’s argument was this: people in far flung exurban developments who bought during the bubble are likely to become single earner households. Why? Because the increased commuting costs from the middle of nowhere to an actual job will reduce the “take home” amount the job pays after costs.
Now, he is, in fact correct that there is less incentive to take a job if your take home pay after commuting (and possibly child care) costs is very low, but did it not occur to him that the people who bought mcmansions in these far flung developments wouldn’t be able to eat if they didn’t have that extra pay? It was like he assumed that all couples who buy real estate make sure they can easily pay for all their household expenses on one person’s salary. Has he been living in the US for the last 5 years?
It almost sounded like an attempt to “sell” the idea that job loss was a natural outgrowth of sprawl rather than the result of a contracting economy. Oh, no, people just don’t want jobs because of where they live, so its all good. This economy still scares me. Amtrak is running a buy 3 get one free on roundtrips on the Acela. I’m still taking the bus to New York this weekend.
I was able to switch jobs closer to home. I took a $6K/year paycut, but I’m saving more than that in gas, maintenance, and added auto insurance. And that doesn’t include the nearly 3 hours a day I was spending in the car. You don’t realize how the drive is effecting your body and life until you stop doing it.
3 hours? damn what was your commute?
I drive 42 miles each way out here in the Bay Area, SF. The problem is that rents in the South Bay are literally double what they are in the East Bay. I get up at 5:30AM, beat morning traffic, and leave at 4:00 beating afternoon traffic. My truck gets 30MPG. But… it is now 13 years old with 230,000 miles. Eventually, it is going to wear out. I’ll try to keep er’ going for another two years.
RE: it is now 13 years old with 230,000 miles.
Good show…I always try to get a quarter million miles out of an auto.
I figure the extra 5/6 years of outright ownership is good for $30k in savings.
Thank you Mobil 1 and Armour-All.
lol get a diesel.. 21 years old S-class with 412k mi and change.. and 28mpg for a limo-scale car..
Hoping to make it to 500k before it costs too much to maintain, but so far so good..
Jetson, buy a rebuilt engine.
ATCrazy,
Great work out plan! Less valium to ingest! (j/k)
Best,
Leigh
Ah, the bus to NYC. I used to take the Chinatown, DC to Chinatown, NY bus all the time. $31 round trip. I learned quickly to always have the iPod with Etymotic ear canal plugs and a bit of wintergreen gel under my nose for the occasional stinky travelers. Close your eyes and you could be anywhere. Then wake up in NYC. On the way back, I usually smelled just as bad, so no biggie.
Then one bus caught fire. Yes, I kept riding. I can be pennywise to a fault, I’ll admit.
Washington Deluxe started running one from Maryland a few days a week which is wonderful - work from home until 2:30 and run out to catch it. However, the one I wanted to take was cancelled so I have to take one of the DC ones. Umm…Mr. Bus Company Manager…the bus is not an airplane. You don’t make your reservations 4 weeks in advance. If you are going to cancel the bus if there aren’t enough reservations by a week in advance, you have to TELL your customers to make the advance reservation. Otherwise, they won’t know to do it early.
My niece is turning one. There will be a small family party. Thank goodness my brother and sister-in-law aren’t doing a stupid “my child deserves the best so I’m going to spend thousands on a party for a child who doesn’t know what a birthday is and won’t remember it the next day” party.
I don’t know if these monstrous wastes of money will disappear completely in NYC, but they should calm down a bit. I think party planners are going to be hurting big time in this recession - maybe not as much as realtors, but in line with boat and motorcycle dealers.
Agreed. I saw an invitation for my niece’s first that was as nice as my “save the date” (which was too nice itself and not even applicable after the wedding was off). The party planners are going to hurt. Just go to http://www.cliffcards.com to send postcards with a picture of you and your beloved. Shameless plug for my roomie’s new business.
Incidentally, I told my brother to have his daughter’s b-day a day before the actual date so that he and I could go to the Raiders game. “She’ll never know!” Rebuttal: “Clearly, you’ll never have kids.” Result: He’s still right a year later!
But I was right that he should have sold in Sonoma in ‘05. Prices are crumbling up there (just anecdotal from my brother, no figs.)
MrBubble
Incidentally, I told my brother to have his daughter’s b-day a day before the actual date so that he and I could go to the Raiders game. “She’ll never know!”
You are completely correct. I did that with our kids all the time! They have no idea till they’re old enough to read a calendar, and they don’t care anyway as long as they get a horrid Chuck-E-Cheese party (which I refuse to torment my friends with) or at least a bunch of presents and friends over.
Speaking of which, anyone notice CEC (Chuck-E-Cheese’s parent company) stock in the last year? It could just as well be a homebuilder given its miserable chart. I like how one adviser put it: “…struggling in the current business environment… because the firm’s top line is quite vulnerable to changes in discretionary spending levels.”
If you have to cut back, these parties really seem like the first and easiest things to slash.
All the people losing their homes should be given a phone number for ACORN so they can call and thank them for making it possible for them to live like the wealthy and enjoy bankruptcy too !
Ditto for well-meaning non-profit organizations dedicated to the mission of helping low-income families financially hang albatrosses around their own necks by joining the myriad ranks of homeowners who cannot afford to repay the loans they purchased.
Actually I am on the board for the affordable housing NGO in my county. At the last meeting we spent a lot of time talking about the foreclosures. Even had the director of the sister-program in the neighboring county at the meeting so we could co-ordinate efforts. Now when the board is composed of small-town local bankers, retired lawyers (and I also was an economist), retired business people and others who can afford to live in a coounty where the median price is 11 times median income, you are not talking about a bunch of wild-eyed, economically-illiterate radicals. I would say that the group is pretty damn fiscally conservative. The meeting is peppered with phrases like DTI, MEW, rent::price ratio and all those other old fashioned ideas.
The questions were (1) can we do anything to help moderate to low income families stave off foreclosure and (2) how much should we do.
We do have some funds that can be used to help households catch up on payments for rent or mortgages that are in default. Our position and policy is that we will only either loan the funds or make a grant of the funds IF the reason for the default is due to something like job loss or illness or family emergency or huge heating bills or car repairs - basically a one time event or something that is not likely to be repeated. We will NOT provide assistance if it is a case they can not afford the house - think an FB with an out-of-control mortgage that they can not refinance.
At this point, less than 3 out of every 40 applicants for assistance can be helped. The other 37 are upside-down and have loans that are NOT affordable. Giving them money would be throwing good money after bad. We do help them find a rental they can afford and transistional housing if they are evicted.
We do build housing (townhouses and single family) where the costs are subsidized. The buyers have to be below a certain level of income ($50,000 for household of 4, $45,000 household of 3 etc.) They have to live in the house - no rentals, no speculation. They have to come up with 3% of the price which is usually about 50% of what it would sell for on the open market. They have to do live in-person financial counseling. They have to fully document income and assets. They have to get a fixed loan for 20-30 years (no 40s allowed) through one of the local banks - all very very conservative and who steered their customers away from even conventional ARMs. The deed restricts the future sale of the property to buyers who meet the criteria of the NGO and thus the NGO still retains an interest in it (which makes the banks happy since they know the NGO will step in if the buyer defaults, pay off the loan and take back the property.)
In this program we have had ZERO defaults. Not one. Zip, zero, nada. And the program has been operating for over 10 years and has done 25-40 homes a year (a huge number for a county of 13,000.) I would say we have a MUCH better rate of success than the big lenders.
I volunteer for Habitat for Humanity Tucson, which was founded back in 1981. In fact, it’s the first Habitat affiliate west of the Mississippi River. In Habitat Tucson’s 27-year history, it has experienced exactly two mortgage defaults.
Moral of the story: Screen your prospective homeowners carefully. Habitat Tucson sure does.
The insanity continues. I know of a refinance deal where the borrower will lie on the loan about his income. His problem is that his income is too high to qualify for a loan that requires a lower income. He can save 0.375% interest if he qualifies for a low income real estate loan.
You cannot force the risk/reward balance and not expect bad things to happen.
their man kucinich is out- next ?
This article in the Post was not accurate. The Post has a right-wing agenda and it’s articles cannot be trusted.
The fact is that the same predatory lending practices that were visited on minorities spread during the bubble to the mainstream - people were put in adjustable loans at higher interest rates when they actually qualified for lower interest loans.
ACORN has been a consistent critic of the banks’ practices during the bubble.
Fool.
Because she’s speaking truth to power? There’s a consistent meme trying to blame the depression on lending to lower income people. Blaming the CRA falls right in line with this canard.
So ACORN didn’t want minorities to get adjustable rates? ACORN wanted them to get traditional financing while everyone else got 0 down loans? I doublt that, and I will bet ACORN was screaming that minorities needed creative financing to avoid being ‘priced out forever’. So your left-wing agenda at least balances the Post.
“The Post has a right-wing agenda and it’s articles cannot be trusted.”
That was my suspicion.
Without being for or against Acorn or the Post — this article is about positioning blame. If you blame the victims [sic], the criminals get to stay in business and figure out another scam. After the end users, we’re seeing a lot of mortgage broker and real estate agent scapegoating — but remember, they couldn’t have sold the product if it wasn’t available. It’s going to be difficult to keep the responsibility focused on where it belongs — the gov’t/wall st./bank agents that created the mechanisms for all the millions of welfare queens to take a’vantage. I mean, there’s just so many colorful stories you can tell about white shoes slurping champagne out of a transvestite hookers’ …
Can you imagine Neil Cavuto, or any other pro-biz Waldo out there saying that it was the greedy bankers’ fault and we need more regulation?
No, it’s easier to blame it on the users and the junkies, as opposed to the Pablo Escobars of the financial world — and their government enablers.
Were you born yesterday, Dani??
ACORN spent years whining about discrimination in lending, even when it didn’t exist. So their constituents got their loans, now it turns out many of them were as irresponsible as the rest of the population, and then ACORN whines about foreclosures.
Sure, trust ACORN to do the right thing. As someone said, truly a bunch of nuts.
When was this? I spent a lot of time analyzing lending data for discrimination at the beginning of the millenium, but I hadn’t heard discrimination had ended.
Yay!
Oct 14/2004
1/ACORN opposes proposed regulations by the FDIC to weaken the CRA by eliminating the investment and service requirements for all banks with under $1 billion in assets, resulting in significantly fewer home loans to underserved communities. ACORN is submitting comments opposing these regulations and calling on consumers to do the same at http://www.acorn.org http://www.allbusiness.com/banking-finance/banking-lending-credit-services-mortgage/5556516-1.html
2/Our federal banking agencies should view “It’s a Wonderful Life” a few more times because they have forgotten how CRA improves the life chances and economic vitality of towns. Indeed, mayors will be hard pressed to make up for bank services and investments in economically challenged neighborhoods in cities if the regulators proceed with their CRA weakening proposals.
Passed in 1977, CRA mandates that banks and thrifts have an affirmative and continuing obligation to serve the needs of communities, including low–and moderate-income ones, in which they are chartered and from which they take deposits.
http://goliath.ecnext.com/coms2/gi_0199-3613059/It-s-a-Wonderful-Life.html
3/ACORN President Maude Hurd said the proposal “could really undermine the hard won successes of the Community Reinvestment Act over the past years.”
“Federal bank regulators should do their jobs and continue to foster home ownership opportunities, especially since this study shows that many Americans are increasingly more likely to be turned down for home mortgage loans,” she said.
The ACORN report, which looks at lending disparities in 120 cities, also found that:
African-American applicants are currently being rejected at the same level as in 1993. But as a group, they are now 1.8 times more likely than whites to be denied now than they were in 1998.
African-Americans received only 5.9 percent of the purchase loans originated by conventional lenders, yet they comprise 11.8 percent of the population. Latinos are 13.5 percent of the population but received just 9.9 percent of the loans.
Published: October 20, 2004
http://realtytimes.com/rtpages/20041020_savecra.htm
A fool and his money are soon partying.
“This article in the Post was not accurate. The Post has a right-wing agenda and it’s articles cannot be trusted.”
As opposed to a “left-wing” agenda like the NY Times or most other major newspapers? Typically emotive and has never met a “victim” they don’t like. Kind of like the stories we read here everyday on all the “victims” of the real estate debacle. Enough blame to go around and this story of giving loans based mainly on skin color is indicative of the stupidity of race relations in this country. They also typically ignore the vast number of poor whites who are also effected by the same problems and make it a race issue.
“Because she’s speaking truth to power? ”
You’re kidding me right? I dare say they have balls to address the facts which is a very rare thing in the MSM.
“There’s a consistent meme trying to blame the depression on lending to lower income people.”
BS. Nobody is blaming just loaning to lower income people but it was and is a factor.
MO,
ACORN Housing’s mortgage delinquency counselors are here and ready to review your situation to find out if you would be suitable for a resolution. Contact our toll free HELP line today at 888-409-3557 or download our intake form and fax it to 312-235-4995.
Perhaps we can print a flyer for all the FBs!
grrr…
Leigh
“‘They have done this out of caution and to reflect the decrease in market valuation (of these assets),’ said Zhang Xi, Beijing-based analyst with Galaxy Securities.”
I hope the Chinese limited their ill-advised investments, to just this particular galaxy.
“‘We’re definitely in a period of very low liquidity at the moment, which has actually been dropping precipitously in the last few weeks,’ Ross Heller, an executive director at JPMorgan Securities Inc., said yesterday during a panel discussion at the American Securitization Forum’s annual conference in Las Vegas. ‘It’s a challenging time.’”
Cash is king and “patience is the key”.
Yes, blame it on minorities, because the mortgage brokers who gave them the loans were forced to take those fat bonuses that comes with originating those loans. If the Fed only had told them that it is okay to red line an entire zip code then they would have gladly given up all that commission money!
Scuze me, who ‘blamed it on minorities?’ Blaming discriminatory minority housing policy that made it of easiest of all for low income minority households to hang themselves, financially speaking? Yes. But this is different than directly blaming the minorities.
The truly sad thing is that the data used in the Boston Fed study provided fairly convincing evidence of mortgage lending discrimination. Instead of responding by level-headed measures to level the playing field, the lending industry and their regulators collectively came up with the subprime solution to the problem. Now I expect that some commentators will mischaracterize the fallout as a consequence of eliminating mortgage lending discrimination, rather than a result of throwing time-tested prudent underwriting guidelines out the window.
My point exactly. Fair Lending is not responsible for the rise of NINJA loans during the past 2-3 years, for the NY Post to even suggest that is just silly.
Blaming this nonexisting “discriminatory” policy for the current housing mess is like blaming a drunk sailor for sinking the Titanic because he was peeing on the deck.
How is a Fed study TWENTY YEARS AGO responsible for something today?
So the minorities were victims? Those big, bad mortgage brokers tricked them and made them take the loans, made them buy those houses?
That may be what they’re trying to say - but you know how much you can trust what you read, right?
Are you suggesting that lenders should treat minorities differently because they are inherently incompetent?
Are you suggesting that minorities are “inherently incompetent”?
No. Lenders reduced their lending standards to the point of almost non-existence. Since banks treated everyone the same way in this regard to bring up race seems to imply that lenders should have treated minorities differently because they are too dumb to make their own borrowing decisions or are more easily fooled. Brought to you by the same people that used to whine that minorities couldnt get loans a few years earlier. The race card is easy for a sound bite, but does not work in situations in which financial interests clearly outweigh one’s personal beliefs. Financial institutions make money off of performing loans. If you have good credit you can get a loan. Bringing up race is a cop out unless you really feel minorities needed to be treated with kid gloves because they are lesser beings. I feel the same way about affirmative action. Equal means equal. Racism is racism. It is irrelevant whether the motive is to push them up or keep them down.
“Equal means equal. Racism is racism. It is irrelevant whether the motive is to push them up or keep them down.”
You said it.
Redlining also referred to banks’ refusing to fund mortgages to buyers of homes in deteriorating neighborhoods. And with good reason…efforts at gentrifying can quickly unwind, and the banks find their mortgage loans are under water.
This was another ill-advised financial scheme with a social agenda…if tenants in bad neighborhoods owned their own homes, they would improve said homes and stabilize lousy hoods. Didn’t work out so well. People with lousy credit have it for a reason…they can’t handle their finances.
Financial criteria are color-blind. Either you’ve got the downpayment, the reserves and the income to service the loan, or you don’t. And you can produce a history of financial responsiblity in handling previous loans, or credit.
Not hard, not racist, and comes without a social agenda.
“Some of these ‘outdated’ criteria included the size of the mortgage payment relative to income, credit history, savings history and income verification.” “Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant’s ability to manage debt.”
This idea that lending standards were loosened to open up home “ownership” to more people seems to be convenient rewriting of history. Wasn’t the real reason to generate more income, risk be damned? The fact they dispensed with even the most basic of recommended safeguards points to their real motives.
During the bubble, seemingly the only requirement to get a mortgage was to have a pulse. Was there anyone with a pulse that had to take a credit counseling program to get a mortgage?
“Instead, the Boston Fed ruled that participation in a credit-counseling program should be taken as evidence of an applicant’s ability to manage debt.”
Just like forced participation in a DUI class should be taken as evidence a person won’t drink and drive again, eh?
“…seemingly the only requirement to get a mortgage was to have a pulse.”
You cannot accuse such underwriting standards as being discriminatory.
Poppycock!! Dead people deserve the opportunity to get foreclosed on too.
I agree….they still get to vote in places like Chicago, so why not lose a house too??
And with early voting this year, it’s actually legal!
Actually…in our aldermanic election last year all the incumbent’s challengers were disqualified on technicalities. These candidates were solid family guys too. So we had only one candidate - the incumbent - to vote for, that’s the Chicago way.
IIRC even Fidel and Saddam ran against “opponents”. (BTW, that’s gallows humor - so no one get upset)
Nonsense!! Dead people deserve the opportunity to be foreclosed on just like everyone else.
Hell, I bet I could’ve forged a POA and got a NINJNP loan for my uncle Bernie (RIP) during the go-go times.
“Banks are raising their credit standards for mortgages, consumer loans and commercial real estate loans at a pace never seen in the 17-year history of the Fed’s quarterly survey of senior bank loan officers, the Federal Reserve reported Monday.”
Yes the percentage increase is great, but the base is low.
“In fact, it was the regulators who relaxed these standards - at the behest of community groups and ‘progressive” political forces.’”
The blame game has reached absurd levels. To prove a crime, you have to have a motive. Who actually made money out of this mess?
Guys at Acorn made out, they got “grants” to oversee the programs they advocated. Basically, they extorted the banks and Feds to do what they claimed was “right”.
I’m not going to claim there wasn’t discriminatory lending that went on but the studies I remember didn’t conclude that discrimination was the reason loans were denied as much as the overall financial capacity of the minorities surveyed just didn’t match up to conventional lending criteria.
Cry all you want but Acorn did contribute to this mess. The standards were dropped. Did this spread into other types of mortgage lending? Who can say. But to imagine this effort, to get loans into the hands of historically bad risks, damn the consequences (to the borrower as well as everyone else) is pretty naive.
Who made money? Many of those being foreclosed pocketed thousands in cash back and helloc.
“Merrill Lynch & Co., the New York-based securities firm with a record loss last year amid writedowns on the most-senior AAA pieces of mortgage CDOs it underwrote, ‘has been actively talking to people’ about purchasing its super-seniors, said Brian Carosielli, a managing director.”
As far as I am concerned, the collapse of derivatives is the real risk to our economy, the one that could bring banks (worldwide) to their knees. If the bond insurers loose their AAA credit rating, which they received from the likes of S&P, Moodys, etc, then the bonds that they insure will also lose their ratings, or will be downgraded. If this happens then the banks will have to take bigger loses than they already have and lots of other investors will have to sell bonds that they are holding under the rules that allow them to only hold triple A bonds, thus depressing the market further.
I don’t see how the effort underway (that is being led by the NY State Insurance Commissioner’s office) will help the insurer’s raise capital. The banks that will suffer are the ones that are being lined up to put up the money to keep the insurer’s from losing their ratings (BIG conflict here). The problem is that most of these banks (Citi, UBS, etc) have already posted HUGE losses and have had to raise capital to meet their margin requirements already. So the question is, where are they going to get the new money for the investment into the insurers?
Meanwhile the rating agencies have said that they are holding off on the downgrades for a couple of weeks to see if the insurers can raise the needed capital. The numbers I’ve heard is that the amount of capital required is in $2 to $10 billion. However, last week (on CNBC) Sean Egan (from Egan Jones, an independent credit/bond rating firm) said that he believes the number to be in the range of $200 billion. It would seem that the only entity that is capable of putting up this type of capital is the fed (I don’t think China or the Saudis will come to the rescue on this one).
The effort to keep the insurers in business looks a lot like the SIV superfund that failed to materialize and was subsequently abandoned. I guess we will know in a couple of weeks if they can pull it off, or if financial Armageddon is upon us.
“…they are holding off on the downgrades for a couple of weeks…”
Now the ratings agencies decide to be pragmatic? Confidence game indeed. I wonder where they hid their AAA rubber stamps?
“Meanwhile the rating agencies have said that they are holding off on the downgrades for a couple of weeks to see if the insurers can raise the needed capital.”
Is it really in their interest to do this? Don’t they have reputations to protect?
Not anymore.
There is not much reputation to protect anymore.
Mr. W. Ross (the one that had it shoved up his rear a week ago By Mr. W. Buffett was on CNBC today. (looking for a bailout from the public.)
Oh Wilbur, eat your losses! (Apologies to Mr. Ed)
http://tinyurl.com/yttktv
“Trickle-down theory - the less than elegant metaphor that if one feeds the horse enough oats, some will pass through to the road for the sparrows.”
John Kenneth Galbraith
I saw that interview.
Basically, his argument was….
If the bond insurers lose their AAA ratings, then it all comes crashing down. It will not all come crashing down. Therefore, the bond insurers will not lose thier AAA rating.
Simple A then B. Not B, therefore A.
It is logically correct, but to prove it cogent you would have to prove Not B.
I think A is the more likely. As the flapping heads on CNBC have repeatedly put it, how can they be AAA if they need a bailout.
S&P and Moodys seem to be operating on the logic, they are going to get a bailout…. therefore they are AAA.
What??? When has a company ever been “super safe” and imune from loss simply because they are so important that a bailout can be assumed.
“Ironically, an enthusiastic Fannie Mae Foundation report singled out one paragon of nondiscriminatory lending, which worked with community activists and followed ‘the most flexible underwriting criteria permitted.’”
“That lender’s $1 billion commitment to low-income loans in 1992 had grown to $80 billion by 1999 and $600 billion by early 2003. Who was that virtuous lender? Why - Countrywide, the nation’s largest mortgage lender.”
“This damage was quite predictable: ‘After the warm and fuzzy glow of ‘flexible underwriting standards’ has worn off, we may discover that they are nothing more than standards that lead to bad loans. . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes.’ I wrote that, with Ted Day, in a 1998 academic article.”
To housing market activists, I have a simple platitude to offer: Watch out what you wish for!
Whatever the subprime debacle was, it was not discriminatory redlining.
Actually I am on the board for the affordable housing NGO in my county. At the last meeting we spent a lot of time talking about the foreclosures. Even had the director of the sister-program in the neighboring county at the meeting so we could co-ordinate efforts. Now when the board is composed of small-town local bankers, retired lawyers (and I also was an economist), retired business people and others who can afford to live in a coounty where the median price is 11 times median income, you are not talking about a bunch of wild-eyed, economically-illiterate radicals. I would say that the group is pretty damn fiscally conservative. The meeting is peppered with phrases like DTI, MEW, rent::price ratio and all those other old fashioned ideas.
The questions were (1) can we do anything to help moderate to low income families stave off foreclosure and (2) how much should we do.
We do have some funds that can be used to help households catch up on payments for rent or mortgages that are in default. Our position and policy is that we will only either loan the funds or make a grant of the funds IF the reason for the default is due to something like job loss or illness or family emergency or huge heating bills or car repairs - basically a one time event or something that is not likely to be repeated. We will NOT provide assistance if it is a case they can not afford the house - think an FB with an out-of-control mortgage that they can not refinance.
At this point, less than 3 out of every 40 applicants for assistance can be helped. The other 37 are upside-down and have loans that are NOT affordable. Giving them money would be throwing good money after bad. We do help them find a rental they can afford and transistional housing if they are evicted.
We do build housing (townhouses and single family) where the costs are subsidized. The buyers have to be below a certain level of income ($50,000 for household of 4, $45,000 household of 3 etc.) They have to live in the house - no rentals, no speculation. They have to come up with 3% of the price which is usually about 50% of what it would sell for on the open market. They have to do live in-person financial counseling. They have to fully document income and assets. They have to get a fixed loan for 20-30 years (no 40s allowed) through one of the local banks - all very very conservative and who steered their customers away from even conventional ARMs. The deed restricts the future sale of the property to buyers who meet the criteria of the NGO and thus the NGO still retains an interest in it (which makes the banks happy since they know the NGO will step in if the buyer defaults, pay off the loan and take back the property.)
In this program we have had ZERO defaults. Not one. Zip, zero, nada.
“…where the median price is 11 times median income…”
Why would you want to encourage low income households to live in such an unaffordable part of the world?
RE: Why would you want to encourage low income households to live in such an unaffordable part of the world?
It assuages their liberal guilt complexes.
Pisani just said financials are down due to “perceived credit risk”. What a friggin’ relief, the risk is merely perceived, not real. What an idiot.
What’s the old saying, “perception defines reality”?
My sales manager at the radio station I worked for used to say that all the time. My eyes are wide open to the media’s control on society. It’s truly frightening.
That guy is an effing weasel.
“Ritter called the current real estate market conditions the worst he has seen in 26 years in the business. ‘In almost all categories of real estate, liquidity has dried up,’ Ritter said.”
I liked John Ritter in ‘Three’s company’ but he should have stayed out of real estate land speculation. I wonder if Elvis was buying also?
I hear Crissy and Janet made a killing as Realtors.
Catching up with Larry at the Regal Beagle later, so I’ll ask him.
How about Furley . . . he had the look of a used house salesperson.
Actually, it was Mr. Furley who was the speculator. He got caught in a down market and had to rent to Jack etc.
Ah yes, and the Ropers cashed in a tidy profit on their flip job so they could afford a pool boy for Helen.
Actually Mr. Furley was the apartment manager. The speculators were the Ropers.
“discrimination may be observed when a lender’s underwriting policies contain arbitrary or outdated criteria”
Arbitrary and outdated criteria such as having enough money in savings for a 20% down payment? Being able to verify your “stated” yearly income? Actually occupying a house that is financed as “owner occupied”?
I can see how these criteria would be considered “arbitrary”, as they obviously have no relation to how well the buyers will keep making payments.
“From the current hand-wringing, you’d think that the banks came up with the idea of looser underwriting standards on their own, with regulators just asleep on the job. In fact, it was the regulators who relaxed these standards - at the behest of community groups and “progressive” political forces.”
Mark this day on your calendars, folks. It is the first time in the history of the internet that the word “looser” was used properly.
LOL! Yeah, you know that could just be true. I don’t think there’s anything wrong with wanting to increase minority ownership. The focus should have been on “sustainable ownership”. Actually the Center For Responsible Lending has been advocating this almost as long as we’ve been calling The Boom (a bubble). So there are good organizations out there I just wish the right ones had been more vocal?
“Fitch Ratings may downgrade all of the $220 billion of collateralized debt obligations it assesses that are based on corporate securities because of rising losses.”
“The company may lower the notes by as much as five levels…”
That will really blow a hole in the Titanic. In related news, Citi is down 7% today.
Grab yourself a deck chair and sit a spell…
http://www.youtube.com/watch?v=LfIMOx0OqtI&feature=related
Catchy lyrics. Let me get this straight… it was sad?
GS is down 10%
10pts, duh -
On Fast Money and Cramer they will say “buy the banks on the dips because the FED has your backs. Don’t fight the FED!”
Fade Mr. Cramer
I prefer Rogers’ take: investment banks always get killed in recessions. Cramer’s experience unfortunately doesn’t include the 1970s or early 80s. I think he started in that magical year of 1982, conveniently missing 10 years of bloodshed, when stocks were considered rich at 10X and bonds were affectionately referred to as “fixed income securities designed to go down in price.”
Son of a Fitch!
“That study was tremendously flawed - a colleague and I later showed that the data it had used contained thousands of egregious typos, such as loans with negative interest rates. Our study found no evidence of discrimination.”
As I recall, the data was cleaned up and the study was later published in the American Economic Review. And so far as I am aware, the cleaned up data set still provides rather solid residual evidence that discrimination was occurring in Boston lending in the early 1990s, even after conditioning out factors which are legally permitted as considerations in making a loan. I thought this whole debate was settled, but apparently that is not the case, according to this NY Post article.
Pressure groups like ACORN want it both ways. If minorities don’t get loans they call it discrimination. If minorities do get loans which go bad ACORN and their ilk claim they were ‘tricked’ and ‘victimized’. It appears that everyone who took these loans were greedy and stupid, regardless of skin color.
I blame the white man’s greed and the black man’s greed. I think greed is colorblind.
It was all equal-opportunity victimization.
A while back I was called to jury duty on a landmark mortgage case in Galveston county. I wasn’t selected, but it turned out the little old lady (minority) who was losing her house due to some shady mortgage practices won oodles of money. I’ve never seen so many lawyers in one place at one time in my life…
In Rightwing Limbaugh world, when someone make money it is because they are entrepreneurs, when someone loses money because they can’t be bothered to do some simple due dilegence, they blame it on those “liberals” and those dastardly “regulations”.
You see, self-serving proclmation of victimhood is wrong, unless is rightwing Republicans living out their persecution complex.
Apparently playing the victim card is wrong, unless it’s done by the rightwing Republicans.
How is a 1992 Fed study responsible for all those loose underwriting in 2006? Did Bush all of a sudden decided to impose this imaginary “let’s give money away to minorites” regulation that even Clinton himself didn’t impose?
Please stop slapping the snot out of the resident screetch monkees.
they are calling for cramers head on nyx yahoo board down $10 today lmao -check it out
http://messages.finance.yahoo.com/mb/NYX
GRMN was saying the same thing. So was GS. RIMM and AAPL. GOOG. They all want to sue Cramer.
Seriously, the guy is a buffoon and “CRAMER KNOWS NOTHING!”
He tries to pick on Bernanke and Bill Pool but seriously, I have no clue why people treat a lunatic that has underperformed the market for the last 7 years like a stock market God.
Cramer thinks the FED can solve everything with interest rate cuts and that you should buy buy buy.
How come no one calls him out on it on his show? Because they screen the calls and quickly cut off dissenters.
Add Kuntlow, Pisani and Dennis Neal to above.
and laffer too.
I cannot stand Dennis Neal. On one side of his mouth he says the economy is fine. On the other side he says he wants rate cuts. Why cut rates if the economy is fine?
Neal was arguing that the huge service sector drop today was great news.
The entire bear argument is gone. Bears were arguing that stocks would fall because a recession was coming. Since the recession in here, it is no longer coming, so stocks won’t fall further.
Now that we are officially in the recession, we can stop arguing if there will be one and just focus on being at the bottom of the stock market correction.
Okay, bears were right, but that proves they are wrong…..
Get the logic there?
My forecast is that Laffer and Kudlow will see a jail cell in the next 15 years.
Cramer contradicts himself constantly! Seriously, he’s either ADD, bi-polar or on meth or crack or something. Nobody acts like that! And people take financial advice from him? He needs to be put on lithium.
“First it was VMW, then GOOG and now NYX. You all would not believe how much money i’ve lost in the last month. I have to keep this all hidden from my wife because she would be devestated. I was telling her at the beginning of the year how great things were in the market and how i had set us up financially to retire early. I’m honestly in really bad financial shape.”
found this on the message board from the link above. are these cramers picks? if so, i wonder how many other people he is leading into a hole!
Yep.. he said buy VMW too. If you go look at all those boards from the symbols I cited above, you will find people ripping into Cramer on every page.
In 20/20 hindsight, where was the Focus?
“Focus Property Group, one of the largest developers in Southern Nevada, has stopped making interest payments on $500 million in loans secured by 4,800 acres in the Las Vegas Valley, Pahrump and Victorville, Calif., company executives said.”
Yeah, Pahrump. Did they even think about that? Pahrump. Out in the middle of NOwhere and I’d seen LOTS going for 2/300K on Craigslist! You guys sure you thought this through? Add Pahrump to the list of Nevada Ghost Towns to visit. Sheesh. Pahrump.
Wow! I had no idea that people wanted that much for lots in Pahrump. That’s just plain crazy! I drove through there on my way to Vegas once as I was going the back way through Panamint and Death Valley.
Talk about a WTF moment! Weird little town just springs out of the desert in front of me. Then it was gone.
I know a guy who lived and Vegas but worked in Pahrump. He said there are only four types of people who live in Pahrump:
1. The sick
2. The lame
3. The ugly, and
4. Those on the run from the law.
Plus the hookers in the brothels (I’ll save those stories for another time).
Pahrump always sounded more like a drum roll, to me.
With a town name like Pahrump, why am I not surprised?
I’ve been to Pahrump a few times and there is no there, there.
is there a here there?
Pahrump –Is that a place or a porno movie ????
“Ritter had been flying under the development radar until November 2002 when he outbid Olympia Group at a Bureau of Land Management auction, paying $160 million for nearly 1,000 acres…in the southwestern Las Vegas Valley. He bought 485 acres of BLM land for Providence in the northwestern valley for $113 million in 2003 and raised the bar for land prices in 2004 when he paid $557 million for 1,940 acres in Henderson.”
I question the sanity of a developer who would pay more per acre for land to build houses on than retail developers pay for land to build a Wal-Mart on.
Merrill Lynch: Still Bullsh*tting America
“Merrill Lynch & Co., the New York-based securities firm with a record loss last year amid writedowns on the most-senior AAA pieces of mortgage CDOs it underwrote, ‘has been actively talking to people’ about purchasing its super-seniors, said Brian Carosielli, a managing director.”
Poppycock!! Dead people deserve the opportunity to get foreclosed on too.
I believe the dead have been foreclosed on. We had the story awhile back about the dead, homeless dude in FL who ‘owned’ 5 houses.
“Ritter…. .paid $557 million for 1,940 acres in Henderson.”
I really cannot comprehend this: $300,000 per acre. I have an image of the road to Hoover Dam, rock and sand, arid. I can’t reconcile $3,000 per acre of beautiful farmland and woods, green and full of speings and streams in my own neighborhood. Of course we don’t have any showgirls (not in costume anyway). I feel sometimes like I am reading about a different planet!
no ideas what a “speing” is, meant “spring”
With only 10 months left in Office, Chrissy Cox has to get as much money back into the hands of their… “foolish children” O.K., which “families” names get put at the top of the list…or do they choose by ZIP Code?
SEC forms office to pay back wronged investors
http://www.reuters.com/article/ousiv/idUSN0543785220080205
I got a check in the mail a few years back for $1K, representing my portion of a class action settlement in some stock case.
I held that stock for 10 minutes one day in 1999.
I’ve got a few class actions dividends coming at me, soon.
Can you say Free Money?
Merrill Lynch: Super-Senior on America
“Merrill Lynch & Co., the New York-based securities firm with a record loss last year amid writedowns on the most-senior AAA pieces of mortgage CDOs it underwrote, ‘has been actively talking to people’ about purchasing its super-seniors, said Brian Carosielli, a managing director.”
“Investors with experience with residential-mortgage assets have been buyers, paying in the ‘mid-teens to low 30′ cents on the dollar for the senior-most, or super-senior, classes of CDOs comprised of low-rated asset-backed bonds, he said.”
Bush says the economy is fine. I just saw a job add at Burger King in Detroit requiring a Masters degree.
“So what, you mah masta now?!”
- Chris Rock
Seriously though, I remember back in the summer of ‘92 when I was trying to find a full-time summer vacation job in Buffalo.. Was in a room at a Radio Shack waiting to be interviewed for a floor sales position, and in the room were certified EEs and post-grads, for the same position.
Hey -
Anyone see the irony in the fact that the CDO conference (see Bloomberg story about buying and selling of CDO’s) is being held in Las Vegas - one of the epicenters of the housing bust? The traders can simply walk outside their hotel rooms and see why no one will buy their crappy bonds.
The whole world is a casino.
Yup, good old Vegas. Even NPR is clued in now:
http://www.npr.org/templates/story/story.php?storyId=18689639
“The traders can simply walk outside their hotel rooms …”
Or alternatively, they can walk out onto the balcony of their 20th floor hotel room and marvel at the residential overbuilding that stretches as far as the eye can see across the valley floor.
The Warm & Fuzzy have been yanked by the Short & Curlies…
“This damage was quite predictable: ‘After the warm and fuzzy glow of ‘flexible underwriting standards’ has worn off, we may discover that they are nothing more than standards that lead to bad loans. . . these policies will have done a disservice to their putative beneficiaries if . . . they are dispossessed from their homes.’ I wrote that, with Ted Day, in a 1998 academic article.”
And he had to wait 10 years to be proven right. It is left as an exercise to the reader to predict the eventual fate of a society where doing the right thing is punished, whereas stupidity, arrogance and greed carry immediate rewards.
“Investors with experience with residential-mortgage assets have been buyers, paying in the ‘mid-teens to low 30′ cents on the dollar for the senior-most, or super-senior, classes of CDOs comprised of low-rated asset-backed bonds, he said.”
So what are the lower tranches of low-rated asset-backed bonds worth?
Bupkis?
ask the question again in say..oh 2011.