Cleaning Up A Mess Called ‘Hurricane Greed’
Some housing bubble news from Wall Street and Washington. Bloomberg, “Builders in the U.S. broke ground in May on the fewest houses in 17 years. Housing starts fell 3.3 percent to a 975,000 pace from a revised 1.008 million in April, the Commerce Department said today in Washington. The reading was the lowest since March 1991. The five largest homebuilders have reported a combined $3.4 billion in losses in their most recent quarters as new-home sales fell.”
The Independent from the UK. “The number of new homes built in 2008 will be the lowest in any year since the end of the Second World War, the construction industry said yesterday.”
“‘The impact on the new-build housing market has been more severe than any of us anticipated,’ said Michael Ankers, the Construction Products Association’s chief executive.”
“Mr Ankers also warned that without immediate support for the industry, production cuts would leave most builders without the ability to increase quickly construction once the economic environment improves.”
“‘Unless something is done urgently to address this problem, the capacity in the industry will be cut to a level which will take a long time to build up and it will not be able to meet the inevitable pent-up demand,’ he said.”
From This Is Money UK. “Debt-laden housebuilder Barratt has been telling suppliers it will not be paying some bills in June. Analyst Chris Millington said: ‘I would be surprised if they are not trying to hold onto cash. It is a perfectly sensible business practice, but obviously the knock-on effects for others are not good. I don’t think Barratt will be the only ones doing it. It’s a sharing of the pain if you like.’”
The Pioneer Press. “One of the state’s largest home builders has filed for Chapter 11 bankruptcy reorganization, citing declining home sales and tight credit markets.”
“Lakeville-based MW Johnson Construction Inc. and its Florida operation both will remain open but require immediate financing to cover operating expenses and payroll while they restructure, according to documents filed Friday in U.S. Bankruptcy Court in St. Paul.”
“The two companies reported combined liabilities of between $60 million and $150 million. The filing indicates assets in the same range.”
“Owner Bill Johnson…said the company is ‘deeply saddened by this outcome.’ ‘Our lenders have recently made it very clear that Chapter 11 is the only option they will accept at this point,’ he said.”
From Marketplace. “From Chicago Public Radio, Ashley Gross reports: ‘Justin VanVooren is showing me a dusty field in a village called Sugar Grove, about 45 miles west of Chicago.’”
“Gross: ‘So we’re standing on corn husks here. What have you been hoping for this area to be?’ Justin VanVooren, Sugar Grove’s finance director: ‘The intent is to have a new downtown in this area, stores close to the street…’ Instead, the site is still just a dried-up cornfield. The developer pulled out last year.”
“The village more than doubled in size over the last eight years as Chicagoans moved to the suburbs. But about two years ago, that growth ground to a halt. The development was supposed to have 2,500 homes built around its own town square, but after two years, only about 130 homes have been built. The developer, Kimball Hill, filed for bankruptcy in April.”
“Mike Cohoon is shoveling dirt for a fence he’s building around his house in this new residential community in Sugar Grove. Cohoon: ‘You have major builders that are completely gone off the map right now that three years ago, they were rocking and rolling with building houses, turning houses as fast as they can. We don’t have a town, but we have a house, so can’t complain, right?’”
The Buffalo News. “M&T Bank Corp. sued German banking giant Deutsche Bank AG Monday evening, accusing the global investment banking powerhouse of knowingly selling M&T unsafe mortgage investments.”
“The complex layered securities were ultimately backed by ’subprime mortgages.’ But the investments were highly rated by two of the nation’s major debt-ratings agencies, Standard & Poor’s and Moody’s Corp., giving the bank some comfort.”
“In its lawsuit, M&T claims Deutsche Bank deceived M&T by claiming the two securities it sold were ’safe, secure, and nearly risk-free’ - even safer than corporate debt and nearly as safe as Treasury bills.”
“In fact, the suit says, Deutsche Bank knew that its underwriting standards and due diligence had deteriorated, and bank officials were already experiencing problems with subprime loans and collateral ‘under their control’ in 2006 and early 2007.”
“Also, M&T claims the ratings from Moody’s and S&P were also ‘fraudulent and false’ because Deutsche Bank allegedly withheld information from the ratings firms, including about fraud with some of the loans and the refusal by the loan originators to stand behind them.”
“In the end, M&T cut the value of all three investments from $132 million to just $4.4 million less than a year after buying them.”
“‘If M&T had been aware of the true facts . . . M&T would not have purchased the notes,’ the bank said in the 51-page suit.”
The Plain Dealer. “The foreclosure crisis in Cuyahoga County and other urban communities is now largely a matter of cleaning up a mess that one Cleveland official called ‘Hurricane Greed’ during a congressional field hearing Monday at Cleveland State University.”
“‘We are trying to recover from devastation . . . devastation from unchecked predatory lending practices,’ said Chris Warren, chief of regional development for the city of Cleveland. ‘This has been a murderous, unnatural disaster. One that has wiped out decades of patient, community development work.’”
“During the session, members of Ohio’s congressional delegation listened to and echoed calls for investigations and prosecutions of mortgage fraud.”
“The hearing was part of the subcommittee on housing and community opportunity, which is chaired by Rep. Maxine Waters, a California Democrat. Waters was joined at Monday’s hearing by Reps. Stephanie Tubbs Jones, Dennis Kucinich, Betty Sutton, Marcy Kaptur and Charles Wilson, all Ohio Democrats.”
“Kaptur, who represents the Toledo area, called the subprime lending model a ‘Ponzi-like scheme.’”
“‘I believe it incumbent that Congress authorize a full independent investigation of the roots of this crisis that traces back to the unstable period following the savings-and-loan crisis in the late 1980s,’ she said.”
“High-risk, subprime mortgage lending has existed since the mid-1990s. The subprime lending boom began in 2002 as interest rates dropped to historic lows, leaving mortgage companies and Wall Street with excess billions to spend and invest. That boom went bust in 2007 as real estate prices plummeted, leaving people owing more than their homes were worth.”
“Subprime lending peaked in Cuyahoga County in 2005, federal mortgage data show. Nearly $1.6 billion in subprime loans were originated that year in the county. The number dropped to $1.4 billion in 2006. Today, few subprime programs remain.”
“In poorer cities like Cleveland, abandonment of homes is accelerated by foreclosures. The city has an estimated 10,000 vacant or abandoned properties. Cleveland Councilman Tony Brancatelli, who represents the hard-hit Slavic Village neighborhood, calls those properties: ‘10,000 points of blight.’”
“A better place to host a congressional hearing on foreclosures Wednesday might have been East 144th Street. On this boarded-up and overgrown half-mile block of Cleveland, there have been foreclosure filings against at least 37 homes since 2006.”
“Retired factory worker Lloyd Allen has taken it upon himself to tidy up the house next door to him, another foreclosed property. When thieves broke out the third-floor window and left the glass on the lawn below, he cleaned it up.”
“‘When I moved here, it was beautiful,’ said Allen, a 50-year resident of the street. ‘The homeowners were older people. Now they’ve passed away, the kids took over the property and started renting to anybody.’”
“He, like other neighbors, complained about the crime the empty houses breed. ‘I bet there’s not an abandoned house on this street that has any copper in it.’”
“He cuts the grass on the front yard of the empty home next door ‘because it looks good for my property.’ Anne Spires owes him a thank you, although she doesn’t know him. The South Carolina woman bought the home next to Allen through a bank sale, with a partner.”
“She has never seen it. When contacted by a reporter, she said: ‘I’m looking for someone to rent it.’”
The Associated Press. “U.S. Rep. Maxine Waters, who chairs the subcommittee on Housing and Community Opportunity, told an audience at Cleveland State University that she hopes the House can negotiate a foreclosure rescue package with the Senate that will reach President Bush’s desk by July 4.”
“In January, Cleveland sued 21 of the nation’s biggest mortgage leaders, seeking to win hundreds of millions of dollars that it wants to use to rebuild neighborhoods devastated by the subprime lending crisis.”
“The defendants include both sides of a pending $4.1 billion takeover — Bank of America and Countrywide Financial, which will be bought by BofA. The acquisition will make Charlotte-based Bank of America Corp. the nation’s biggest mortgage lender and loan servicer.”
“Michael Gross, a managing director for Countrywide, told the panel that the company has refused to join other Ohio lenders in a compact to curb foreclosures because it services nine million loans across the nation and must maintain consistent loan standards in every state.”
“‘Countrywide can’t get off just with the sale to Bank of America,’ Waters told Gross. ‘You have become a poster child for what is wrong.’”
“Questions linger about the sweetheart loans Senator Christopher Dodd got in 2003 from Angelo Mozilo. At the time, Mr. Mozilo was chairman and CEO of Countrywide, which would become a leading player in the subprime-mortgage crisis and would benefit greatly if Congress passes Sen. Dodd’s lending-industry bailout bill.”
“Does anyone believe Sen. Dodd when he says he and his wife did not ‘anticipate any special treatment’ from Countrywide and were unaware they got it? As ranking member of the Banking Committee (he’s now its chairman), he was keenly aware of mortgage rates in 2003.”
“Yet he implausibly suggests Countrywide issued him and his wife two subprime loans totaling $781,000 and charged them below-market rates, waived $10,000 in fees and points, and ultimately saved them $75,000 simply because they ’shopped around.’”
“What’s the difference between accepting sweetheart mortgages and unsolicited bribes? Was Sen. Dodd’s bailout bill that would shift $300 billion in non-performing mortgages - Countrywide alone holds $6 billion - from reckless lenders to taxpayers the quid pro quo payoff?”
“Did Sen. Dodd illegally accept special loans offered solely because of his position? Did he violate Senate rules that bar members from receiving gifts worth $100 or more a year from companies that have registered lobbyists?”
“When will Sen. Dodd come clean? When can Americans expect the criminal and ethics investigations to begin?”
“Mr Ankers also warned that without immediate support for the industry, production cuts would leave most builders without the ability to increase quickly construction once the economic environment improves.”
“‘Unless something is done urgently to address this problem, the capacity in the industry will be cut to a level which will take a long time to build up and it will not be able to meet the inevitable pent-up demand,’ he said.”
Free enterprise at its best. The government has to support my industry or else.
If there is so much “pent-up demand”, why have sales gone down?
Want to sell more houses? Drop the prices.
Yep, The cry for a Gubmint/taxpayer bailout is world wide. Next we’ll hear it takes a “global village” to save the over extended speculating fliptards. The dominoes are staring to fall at a faster clip now.
We’ll more likely hear “read my lips” from the deficit spenders channeling tax breaks to the war and job outsourcing crowd.
Home building isn’t like the Apollo program for crying out loud, just round up the next gang of illegals and start building you crybabies.
Crossing the RubiCON, past the point of no return of your money.
go Maxine, go!
Oh, dang i forgot she is one of those left-wing liberals we all despise…
I suppose we can count on her to rake Dodd over the coals for taking bribes from this ‘poster child of what’s wrong’?
Dunno… how high can you count?
Not in a million years!
He’s more than likely being wrongly accused by some vast conspiracy, besides he didn’t know what he was doing.
I couldn’t believe it yesterday when I heard it on the radio: Dodds is falling back on the No sé defense.
How offensive.
Yeah, the head of senate finance commitee does not know the current mortgage rates….when was the last time one of these SOB’s saw the inside of a jail….why are all the liberal bloggers silent about this?
Why the rush to view this through the partisan lens? This isn’t a Democratic problem, this is a Washington problem. There have been high ranking republican administration figures implicated too, including the head of HUD. From Greenspan and Bernanke, to Dodd and Shalala, there is plenty of blame to go around in this sordid, wretched affair called the housing bubble.
Or is that all that anyone cares about anymore? Scoring petty political points while the country suffers? So play along everyone — the PTB want to get all the sheep to the stadium to root for their team so no one’s home when they break in and steal all your belongings.
Great post, End. You said everything I wanted to say. As far as I am concerned, Washington is all one party, with opposite sides of the same crappy coin. The Dems like to give it to ya with a little vaseline, is all, while the Reps favor the old high hard one.
Divide and conquer…
Good call catspit.
Dodd’s problem is that he is no longer a Democrat but an Independent, so Maxine can criticize him as if he were a Republican.
Lieberman is the (now) independent senator from CT.
Dodd’s a full fledged Democrat
Maxine is claiming all of her HELOCed out constiuients are victims.
Not exactally my kind of hero in all this.
Of course she will probably be helping bring suit against banks that have lending standards in the future; calling them discriminatory.
Holy Smokes! Check out this cast of kooks! Probably the there in an effort to save taxpayer dollars. I wonder if Dennis Kucinich flew in by ‘flying saucer’ to reduce his carbon foot print?
“The hearing was part of the subcommittee on housing and community opportunity, which is chaired by Rep. Maxine Waters, a California Democrat. Waters was joined at Monday’s hearing by Reps. Stephanie Tubbs Jones, Dennis Kucinich, Betty Sutton, Marcy Kaptur and Charles Wilson, all Ohio Democrats.”
Say what you want about Kucinich, but he’s one of the few in Washington with a pair, IMO, and willing to issue some badly needed articles of impeachment. I may not agree with him in many areas, but he won my respect, unlike Conyers who caved in to Pelosi and backed down.
I like Kucinich. I like Ron Paul. They’re both marginalized as nutbags. At least they care, which is more than I can say for most of the Washington crew.
Maxine, give the poor, inner-city people more loans Waters?
“What’s the difference between accepting sweetheart mortgages and unsolicited bribes?
A: About 20 years.
Was Sen. Dodd’s bailout bill that would shift $300 billion in non-performing mortgages - Countrywide alone holds $6 billion - from reckless lenders to taxpayers the quid pro quo payoff?”
A: Obviously, quid pro quo was a big factor here, but… until proveable, it’s also worthless.
“Did Sen. Dodd illegally accept special loans offered solely because of his position?
A: No. And Santa Claus and the Tooth Fairy are real. Unfortunately, this type of VIP favoritism –like legislative intent– is very hard to prove, no matter how blatant it is.
Did he violate Senate rules that bar members from receiving gifts worth $100 or more a year from companies that have registered lobbyists?”
A: Depends upon how you define “gift” and precisely how that Senate rule is worded. Oh, and the Senate can –and frequently does– change the ‘rules’ to its liking.
“When will Sen. Dodd come clean? When can Americans expect the criminal and ethics investigations to begin?”
Better question: When will Hell freeze over?
“when will Hell freeze over.” No joke. These people have learned that they can get away with stonewalling. Americans have not learned that if all they did was vote out incumbents, every one of them we would be better off. “Aginners” to that idea cite the potential loss of their experience. Oh, yeah? The situation we’re in is *due* to their experience, not in spite of it. We need less of their experience, IMO, and we should have absolutely zero career elected politicians. Term limits can begin only in the voting booth.
“You can’t solve current problems with current thinking. Current problems are the result of current thinking.”
Albert Einstein
With all due respect, this quote is stupid.
An awful lot of “current” problems arise from ignoring things that worked quite well in the past….for example; would the “current problem” of foreclosures be anything significant had lenders followed the “old” mortgage lending guidelines?
Einstein was a genius in some ways but not everything he uttered was genius (any more than any other “genius”).
Today’s problems are certainly due to current behaviors or choices. But they don’t necessarily mean the choices are novel to the period. Were the “bubble” behaviors of the dotcom era substantially different in nature than the housing bubble, the South Seas bubble or the Tulip bulb bubble?
Hardly. Greed is a kind of universal, consistent, human drive. Its about the same now as it was a couple of thousand years ago…hardly “current”, no? So does it take some genius to see the “answer” going forward?
Hardly.
“It all depends upon what your definition of ‘is’, is…”
Harm…I was just saying yesterday that I thought it was odd that Congress/Senate was willing to spent billions of taxpayers funds without a neutral formal investigation of the causes of the housing crash . Not only would it be inept to risk billions of taxpayers obligations without a investigation ,it would be a act of collusion to let the Investment firms/Lenders pass off their fraudulent loans to taxpayers in a attempt to avoid proper Justice for the “evildoers .”
It is rather odd that the Politicians are going full speed ahead without these needed investigations ,that would no doubt conclude that the main reason behind the housing crash was because it was a fraudulent Ponzi-scheme for most part .The real estate and loan industry ,as well as the borrowers ,sought to use the easy flow money from Wall Street to fund this fraudulent scheme by liar loans and cash back fraud, in which Wall Street closed their eyes to make a mint . How many taxpayers really want to bail out borrowers who were involved in a greed scheme verses a party just buying a home that was in the range of what they could afford . If the industry itself engaged borrowers to buy into the Ponzi- scheme ,by using fraudulent liar loans (which there is a lot of evidence of this ),this is a civil/criminal matter .Bail-outs would be a Obstruction of Justice to say the least IMHO .
I’m not saying that systems won’t need to be bailed out on some level in the long run ,but the way that the Politicians are going about this is in a cover-up way( a obstruction of Justice way) that will not purge the system of the wrong-doers and create some Justice and set up better regulations based on the true flaws in the system . IMHO
“( which there is a lot of evidence of this ), this is a civil/criminal matter”
Certainly is. That’s why so many of us were shocked to hear cries for all kinds of bail-outs, before we even had a corpse? And all that without so much as lip-service about getting to the bottom of things?
Mr. Rogers: “Can you say ‘Knee-Jerk Reaction’? Sure you can.”
The first thing this douche bag should do is resign. If for no other reason than he is obviously to stupid to chair the banking committee. I mean if he had no idea what type of mortgage ‘deal’ he was getting/signing… It’s only money right.
“When will Sen. Dodd come clean? When can Americans expect the criminal and ethics investigations to begin?”
Please include the ever slimey Alphonse Jackson in your roundup…I want to hear the former head of Housing and Urban Development explain that he didn’t understand his mortgage terms. And the repellent Donna Shalala,head of Health and Human Services, who’s been annoying New Yorkers and milking government paychecks for decades.
I am disappointed that Schumer isn’t a friend of Angelo…I’d love to see Chuckie do the perp walk with Dodd.
That is one of the many problems, there are so many of these turds floating around in D.C. you can never get to the bottom of it. They’ll be covering their butts and their buddies butt and on and on. It’s one hell of a mess, I don’t trust either side to do the right thing. The blame game goes on and that’s just how they want it.
wmbz,
agreed. But the problem is compounded with a Justice Dept.that was trashed by Gonzales,and now has a zombie as its’ nominal head. Yo, Attorney General, either get off the dime and do your job, or resign.
Where are the subpeonas for a grand jury??
By the way, does anyone know if any of the Supremes are friends of Angelo?
Just a added thought ……We the people cannot conclude that the recent Congressional hearings ,in which Senators like Dodds and his elk threw soft-ball questions to potential defendant who grandstanded .constitutes a neutral investigation of the housing crash and massive foreclosure hurricane.
“When will Sen. Dodd come clean? When can Americans expect the criminal and ethics investigations to begin?”
The correct answer is……….never.
I expect Deusche Bank’s claim to be true shortly, that the securities were nearly as safe a T-Bills, once the fan has been shat on…
“In its lawsuit, M&T claims Deutsche Bank deceived M&T by claiming the two securities it sold were ’safe, secure, and nearly risk-free’ - even safer than corporate debt and nearly as safe as Treasury bills.”
Note to self; stay away from M&T.
No sh!t!!!
If a bank can’t even analyze whether something is “almost as safe” as US treasuries, they are in deep doo-doo.
Major investor in M&T Bank….Warren Buffett. No joke.
He’s only got 6%. It’s a few Irish boys that own most of that bank.
I just wonder how far this “We didn’t know what we were buying.” excuse is going to stretch.
I can see how the regular J6P (and I include myself among them) would have a tough time figuring out if somebody or some company was massaging the numbers, especially if some financial wizard is detirmined to make their financial statements as obscure as possible.
But M&T is using the same excuse; the last time I checked, banks should have people on the payroll that are checking these numbers..
Oh damn……there’s that “Should” again……..
Major investor in Moodys too.
No kidding….planning where to put that cash as we speak.
“In the end, M&T cut the value of all three investments from $132 million to just $4.4 million less than a year after buying them.” “‘If M&T had been aware of the true facts . . . M&T would not have purchased the notes,’ the bank said in the 51-page suit.
Well hmff, don’t let a little footwork on your part get in the way. You think you would have done a small bit of due diligence before they bought?…but let’s see…hmm , yes the CEO,and higher ups still got their full pay, and bonuses..right? Of course…..
Note to Mom and Pop’s get out quick
http://finance.yahoo.com/q/bc?s=MTB&t=3m&l=on&z=m&q=l&c=
Referencing the discussion we had this morning in Bits regarding politicos who are up to thier necks in housing bubble trouble:
Why doesn’t each bubble blogger look up thier respective hacks on zabasearch.com, and we can make a master list of properties owned by all the indistinguished gentlemen and ladies. Ben could do it as a weekend topic. We can leave street numbers off the address so as to protect the unlikely innocent. We could also just work off the list of those who voted for the various bailots.
Any takers? The tools are at our fingertips.
“Questions linger about the sweetheart loans Senator Christopher Dodd got in 2003 from Angelo Mozilo…’
This Dodd thing is really pleasing to me. I don’t think there’s going to be any real bailout–this thing is just waaaaaaaay too big–and our politicians are just mouthing sweet phrases whilst packing their panties with a stinky. But still, even though I don’t really fear a massive attempt at FB bailouts, this Dodd idjit has been one of the most prominent blabberers, yammering on and on about saving poor homeowners, making political pretty pictures, advancing himself. It makes me grouchy. Now that there’s evidence that he did partake of the festering feast of corruption maybe, please yes, maybe he’ll shut UP.
“…please yes, maybe he’ll shut UP.”
I don’t have my hopes up. I think it is more likely that he will ignore the stink cloud surrounding himself and hope that it will soon dissipate.
Well, you know you have to look at the other side of the coin. Senator Dodd is actually on a fixed income so to speak (just like the folks drawing social security) and only gets a very small cost of living (COLA) pay increase each year. So, of course he has to look out for the best deal he can find for himself and his family.
He’s doing the best he can with the limited resources he has available. I mean $170k a year (excluding other off-the-table business deals he may be involved in) only goes so far these days. What more can you expect of him?
“whilst packing their panties with a stinky”
OK, you owe me a new keyboard.
They’ll never shut up. No matter which side they’re on, they can always count on their tribe of parterns in crime, and their associated sycophants across the media and the blogosphere, to circle the wagons and start shooting.
No ,don’t think so . I really think the powers plan on letting Investment firms and Lenders pass off those fraudulent junk loans to the taxpayers and spend 300 to 500 billion in loss on defaults .
As I see it, the powers plan to have the lenders pay 1/3 of the cost ,the borrowers and loan investors pay 1/3 of the loss (which includes inflationary costs ),and the rest of the loss goes to the taxpayers . My theory has always been that no one entity can afford the total loss ,so it will be broken up .Serious Obstruction of Justice .
Why do you think the politicians had to get the loan limits raised . So many of the defaulting bad loans are going to take place in California where the loan amounts are high . There was no logical reason to raise the loan amount limits in a declining market other than to have the ability to take the high loan amount junk from California off the hands of places like CountryWide Funding .
As I predicted ,a long time ago ,the powers have already changed the underwriting standards on government backed loans down to anything goes . The moves they make were for the purpose of taking over existing loans ,not making new loans to solve a tight credit market, however they will do that to .
My theory is that the Lenders will keep the best loans and the ones that they really can alter to save ,and the high default risk ones and the ones already in default will be passed on to the taxpayers to pay for . Each lender ,depending on its size of junk loans ,will be allowed x amount of loans to be passed on, or specific lenders under risk of BK will be allowed more junk loan off-loading .
If you think my theory is absurd ,just wait and see .
‘As I predicted ,a long time ago’
Yes, you’ve been saying all kinds of impossible stuff is just around the corner for a long time. At some point, I’d think you’d be embarrassed to bring it up.
Ben ,I know you don’t agree that the government will be able to pull off these sneaky bail-outs that I speak of ,but part of my theory of the plan is based on what I have observed the gov. do many years ago .So, no I’m not embarrassed at all .
Being controversial here, but I agree with Wiz.
I don’t think anyone is claiming it will keep prices propped up indefinitely, but they sure are anxious to throw hundreds of billions of taxpayers’ money at the lenders/banks/financial institutions — and this is only the beginning.
Unfortunately, we don’t have many options for a president who would stand up to these leeches.
Housing Wizard,
Well exactly, that was the only reason they lobbied and lobbied hard to have loan limits raised. Judging by the rates for new Jumbo Loans and the number of actual closings in that price range I doubt few if any new purchases were done under the new, higher limits.
Stictly for existing loans and your basic 3 Card Monte. The frustrating part is that ( with or without omniscience ) “most” people objected! It was just that transparent. What more could we have done?
Yes DinOR ,why do I keep objecting . It’s just such a waste what they are doing because there are better ways of addressing the problems that the housing bubble caused . It’s not even open for debate because they made the choice on how they were going to handle it ,and I don’t think people understand what their objective was.
As far as I’m concerned ,currently the powers don’t even need to pass the bail-out bills because they already got the biggest thing they wanted ,which was the loan limits raised so they could off-load bad existing paper .
‘ American International Group Inc., the world’s largest insurer by assets, said its Wilmington Finance Inc. unit will stop originating mortgages through brokers and reduce the number of loans it makes directly to homebuyers.’
‘Wilmington will eliminate 335 jobs by year-end, the unit said today in a statement. ‘The current climate is unlikely to improve significantly in the foreseeable future’ in the mortgage market, the company said in the filing.’
POOF! Fewer loans to buy the glut. Into thin air.
From the original post:
“Retired factory worker Lloyd Allen has taken it upon himself to tidy up the house next door to him, another foreclosed property. When thieves broke out the third-floor window and left the glass on the lawn below, he cleaned it up.”
“‘When I moved here, it was beautiful,’ said Allen, a 50-year resident of the street. ‘The homeowners were older people. Now they’ve passed away, the kids took over the property and started renting to anybody.’”
“He, like other neighbors, complained about the crime the empty houses breed. ‘I bet there’s not an abandoned house on this street that has any copper in it.’”
“He cuts the grass on the front yard of the empty home next door ‘because it looks good for my property.’ Anne Spires owes him a thank you, although she doesn’t know him. The South Carolina woman bought the home next to Allen through a bank sale, with a partner.”
“She has never seen it. When contacted by a reporter, she said: ‘I’m looking for someone to rent it.’”
To which I say, I’ll bet that out of state “investor” is just knocking herself on the finding a tenant project.
Yeah, really. Seems likely that she’s either an oblivious FB knife-catcher, or an oblivious FB straw-buyer fraudster.
This just in from the Warren Commission…
It was loan gunmen that did in the precedence
“‘We are trying to recover from devastation . . . devastation from unchecked predatory lending practices,’ said Chris Warren, chief of regional development for the city of Cleveland. ‘This has been a murderous, unnatural disaster. One that has wiped out decades of patient, community development work.’”
One could make the case that, instead of wiping out “decades of patient, community development work”, the housing/credit bubble just delayed the inevitable for Toledo (or Detroit, or whatever Midwest Industrial town that you care to name).
If this is a possibility, what did the local politicos do with the extra time and tax revenue they were getting?
I read in the blog that Dodd received 2 subprime loans. I wonder what the average credit score is on a US Senetor? 500? 600?
I don’t know what Dodds is, but I do know that our August group of D.C. ‘lawmakers’ is packed full people with criminal records, low IQ’s, bad credit records and contempt for the lowly taxpayer.
And those are their positive attributes.
You got that right! What a wonderful bunch… They don’t even have the balls to vote for their yearly raise during the day light hours. Contemptible Lot!
And of course,my personal favorite,they exempted themselves from Social Security in favor of something far more lucrative, while also giving themselves the best health care plan going.
Wouldn’t it be easy to go back in the records and see what a regular borrower would of got on that loan application request with CountyWide by Dodds ,based on his credit scores ,income ,etc. ?
To be fair, at the time anybody could have gotten a loan. Loans from 2001 to 2006 were written against the property itself, *not the borrower so it may not have mattered?
What a lot of people don’t know is that Trans-Union and Equifax etc. all have a “kid gloves” list of celebrities and high profile people that have access to the media. You had best believe that there are no errors on their credit file. If you think this is a tinfoil theory when was the last time you heard a celeb use their bully pulpit to b!tch about their FICO ( however well deserved ) ?
Still I’m sure these senators were given terms NONE of us could have gotten.
“In the end, M&T cut the value of all three investments from $132 million to just $4.4 million less than a year after buying them.”
Hey, keep yer chin up M&T! We’ve all been there.
I know I’ve made some bad investments in the past, but damn! Going from 132 million to 4.4 is really sad, for pros. You would think they would have a stop or alarm bells or a hammer that popped out of the computer and smacked you in the head.
i like the hammer that pops out a lot. you should patent that.
Put them in Chuck E Cheese……….call it “Whack an A-hole”
Isn’t this where somebody should quote Warren Buffett on his insistence on only investing in companies with a competent and honest management group?
He owns stock in both those companies.
Sorry combo,
my sarcasm wasn’t clear enough.
“My sarcasm wasn’t clear enough.”
Nor was mine. My reference to owning stock in both companies was implying there were only two companies in existence that had competent and honest management.
Hey,
They may have been stupid, but they are pretty honest as far as things go - what other bank do you know that have marked down their assets to what is very likely to be true asset value?
Now, the competent part…
Good point, Jeremy.
I must shamefully admit to having a CD with M&T.
Will let you all know if something comes up, and how the FDIC handles it.
The Independent from the UK. “The number of new homes built in 2008 will be the lowest in any year since the end of the Second World War, the construction industry said yesterday.”
…“Mr Ankers also warned that without immediate support for the industry, production cuts would leave most builders without the ability to increase quickly construction once the economic environment improves.”
“‘Unless something is done urgently to address this problem, the capacity in the industry will be cut to a level which will take a long time to build up and it will not be able to meet the inevitable pent-up demand,’ he said.”
Just when you thought American bailouts and moral hazards were about as bad as they can be, here come the Brits to outdo us. This has to be the single most idiotic subsidy proposal I’ve seen yet.
Builders went on an unprecedented tear, cannibalizing years of future demand by building millions of homes that will sit idle for years, get torn down, or be ravaged by criminals for parts/materials, squatters, etc. So now that production is falling to levels sustainable by actual non-speculative housing *demand*, the sensible thing to do is… subsidize home builders at bubble-peak employment levels.
While they’re hard at work on this “problem”, perhaps Parliament could also put all of our former Enron/Worldcom/Lucent/Webwan/Pets.com employees on Her Majesty’s dole too?
buy the dollar, the euro sissies will outdo us in any bailout
“Housing starts fell 3.3 percent to a 975,000 pace from a revised 1.008 million in April,…”
Am I wrong or is this the most “revised” statistic around. How hard is it in today’s era of computers to count houses?
The 1.008 million was down from 1.032 million or about 2.3%. I can’t wait to see next months revision of the 975K number.
Never mind, I figured out what’s going on:
Encouraging home sales statistics for New Jersey that were released by the National Association of Realtors looked too good to be true.
Now the association says that’s exactly what they were.
The association admitted Friday that it was mistaken when it said New Jersey home sales were up four percent in the first quarter of 2008.
That would have made the state one of only three in the nation with an increase.
Instead, New Jersey home sales actually fell 30 percent.
http://www.cnbc.com/id/25160675/for/cnbc/
Pretty sad when the truth about this oil BS is coming out of…Iran.
The market is full of oil and the rising price trend is “fake and imposed,” Iran’s president said on Tuesday, partly blaming a weak U.S. dollar which he said was being pushed lower on purpose.
“At a time when the growth of consumption is lower than the growth of production and the market is full of oil, prices are rising and this trend is completely fake and imposed,” President Mahmoud Ahmadinejad said in a televised speech.
“It is very clear that visible and invisible hands are controlling prices in a fake way with political and economic aims,” he said when opening a meeting of the OPEC Fund for International Development in the central Iranian city of Isfahan.
Of course the guy is 100% correct.
Sad. Just sad.
“Of course the guy is 100% correct.”
Let’s keep some perspective. This is a man that sincerely believes there are no gay people in Iran.
“In January, Cleveland sued 21 of the nation’s biggest mortgage leaders, seeking to win hundreds of millions of dollars that it wants to use to rebuild neighborhoods devastated by the subprime lending crisis.”
If this succeeds, you and I can kiss goodbye to any decent loan rate going forward. Better save up and pay cash.
Imagine how affordable houses would be then!!!
“When will Sen. Dodd come clean? When can Americans expect the criminal and ethics investigations to begin?”
I say we should just investigate the honest ones, would be lots easier, not too many of em.
Sen. Dodd Says He Was Unaware of Loan Program’s Fee Waiver
By Paul Kane
Washington Post Staff Writer
Tuesday, June 17, 2008; 7:26 PM
Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) said today that he knew he was part of a “VIP” mortgage program offered by Countrywide Financial Corp. but said he was not aware that the plan included waiving fees that regular customers pay to obtain lower interest rates.
That being the case why would there even be a “VIP” mortgage program at Countrywide given that their lending standards at that time were non-existent?
Also ,why would a Senator think that a loan Company would not charge fees on a loan? How could a loan company stay in business if they never charged fees to customers . Did Dodds think that CountyWide just made no fee loans out of a generous gesture to their fellow man ? I think the question should be ,”Would a reasonable man know that a no-fee loan at a 4.25 fixed rate was likely something that your regular borrower would not get .” Also Dodds would be very aware of these rules about gifts because Congress and the Senate are debating these gift laws all the time . Recently (2007) the politicians were debating implied gifts with airplane tickets ,and they argue all the time about accepting a meal from a lobbyist .
The Federal laws states in essence that a Senator can not take a gift of over 100 dollar in any calendar year ,and the laws also states that Senators can’t take a loan gift that would be under what the public would be charged .
The problem with Senators taking gifts is that they are now subject to black-mail ,and it really looks like a bribe . Just like the good Governor from New York that was stupid enough to go to a hooker .
My father had to go through a security clearance every year because of his job and he told me one time that the main reason was to make sure he wasn’t blackmailable .
UPDATE: Sens Murray, Bond Worried About Fannie, Freddie Bill
By: iStockAnalyst Tuesday, June 17, 2008 1:01 PM
By Michael R. Crittenden Of DOW JONES NEWSWIRES
WASHINGTON -(Dow Jones)- Two more U.S. Senators have raised concerns about the Senate version of a broad package of housing legislation that would, in part, overhaul regulation of Fannie Mae (NYSE:FNM) (FNM) and Freddie Mac (NYSE:FRE) (FRE).
Those concerns, which come on the heels of another complaint made by a Senate Republican last week, could potentially complicate efforts to bring the legislation up for a Senate vote this week or next. It could also give House lawmakers leverage over their Senate counterparts in negotiations over what measure will be sent to U.S. President George W. Bush.
Sen. Patty Murray, D-Wash., and Sen. Christopher Bond, R-Mo., said in a jointly-signed letter sent Monday to the top two members of the Senate Banking Committee that they were concerned with provisions in the legislation passed by the committee last month that would create a new regulator for Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) .
Investigate the Chris Dodd Bailout
Yesterday Rep. Jeb Hensarling (R-Tex.) became the first member of Congress to call for an investigation into the relationship between Sen. Chris Dodd’s (D-Conn.) $300 billion bailout of Wall Street lenders like Countrywide Financial, and the below-market rate loans Dodd received from Countrywide.
Senate Panel to Review Conrad’s Home Loans
By JAMES R. HAGERTY and MICHAEL R. CRITTENDEN
June 18, 2008; Page A11
Sen. Kent Conrad, a Democrat from North Dakota, said the Senate Ethics Committee will look into mortgage loans he received from Countrywide Financial Corp.
Senator Viewed Mortgage Treatment as a ‘Courtesy’
By DAVID M. HERSZENHORN
Published: June 18, 2008
WASHINGTON — Senator Christopher J. Dodd of Connecticut said Tuesday that he was aware that Countrywide Financial Corporation had assigned him to a V.I.P. program in 2003 when he refinanced mortgages on his homes in Connecticut and Washington but that he and his wife “assumed” that “it was more of a courtesy thing.”
A proposal to expose lenders to potential lawsuits sounds great to me. Maybe they will clean up their fly-by-night scam behavior with a little bit of legal risk thrown into their decision criteria.
Mortgage groups blast parts of Senate housing bill
By ALAN ZIBEL
Mortgage industry and business groups are urging lawmakers to drop pieces of a housing bill they say would be too restrictive on lenders.
Six trade groups on Tuesday told lawmakers shepherding a comprehensive package of housing legislation through Congress that the bill would impose too-strict standards on lenders, requiring them to determine what kind of loan is best for each borrower.
That standard will expose lenders to potential lawsuits, and force them “to reduce the number and type of products to consumers,” according to a letter written by the Mortgage Bankers Association, U.S. Chamber of Commerce and other groups to Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., the two senior members of the Senate Banking Committee.
“what kind of loan is best for each borrower” = one that the borrower can pay off without having to refinance and without having to rely on windfall inheritance or lottery winnings.
Might be a good start.