Every Scandal Needs A Scalp; More Scalps Needed
Some housing bubble news from Wall Street and Washington. MarketWatch, “Sales of new U.S. single-family homes tumbled 2.5% in May to a seasonally adjusted annual rate of 512,000 as sales in the West fell to a 26-year low, the Commerce Department estimated Wednesday. New-home sales were down 40.3% compared with a year earlier. The median sales price in May was $231,000, down 5.7% from a year earlier.”
“In all of 2007, 776,000 new homes were sold, down from 1.05 million in 2006.”
“The figures likely overstate the number of sales, because they don’t account for canceled sales. The report is based on contracts signed, not sales closed. Inventories are likely understated because of cancellations.”
From Bloomberg. “Purchases of new houses reached an almost 17-year low of 501,000 at an annual pace in March. The last time they were lower was in September 1991.”
“‘Housing still occupies a major place in this ongoing, rather unique and rather strange economic slowdown,’ David Seiders, chief economist at the builders’ group, said in a conference call last week. ‘I do expect the sales volume to erode somewhat further in the months ahead.’”
The Charlotte Observer. “Average Charlotte-area home prices have fallen for the first time over a 12-month period since 1991, figures released Tuesday show. Meredith Baker of Indian Trail has had to reduce the price of her three-bedroom house, which has been on the market since last July, she said. It’s listed for $173,500, about $10,000 less than originally priced.”
“The economy has made it difficult for would-be buyers to get loans, she said. The house was under contract at one point, but that fell through in late April, Baker said. Now her family, which is building a house nearby, is living with her mother and might have to move back into the old house if it doesn’t sell soon, she said.”
“‘Whatever has happened with the market, that has brought us to this stumbling block,’ Baker said. ‘We’d like to have this (new) home, but we’re over and done.’”
The Baltimore Sun. “Caruso Homes Inc., a homebuilder operating in Maryland and other Mid-Atlantic states, has filed for bankruptcy protection, blaming what it called the ‘double whammy’ of the credit crunch and falling home prices. The company said it has had to reduce home prices as a result of the nationwide housing slump, and couldn’t continue to pay its debt on land it owns as a result.”
“‘The recovery is slower than we expected, and just looking into the future it doesn’t look like the rebound in the market will be something we can withstand with the current pricing in the market,’ said Chris Block, VP of operations for Caruso.”
The Press Enterprise. “In a recent interview, Mike Van Daele, the CEO of Riverside-based Van Daele Development, said because he is one of the few remaining privately owned builders, he was free to go at a slower pace than the giant public companies who grew with abandon to please their shareholders and got caught with excess land holdings that have plummeted in value.”
“Q: So you are building houses rather than waiting to clear standing inventory?”
“A: We don’t have standing inventory because we are pricing our homes to where 30 to 40 percent of households can afford to buy them. It ultimately required about a 50 percent drop from our peak prices in December of 2005.”
The New York Times. “The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure.”
“‘People were put into loans they did not understand, could not afford and could not get out of,’ said attorney general, Lisa Madigan. ‘This mounting disaster has had an impact on individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo.’”
“Madigan also asked that Mr. Mozilo contribute personally to the damages.”
“Former employees told Illinois investigators that Countrywide’s pay structure encouraged them to make as many loans as they could; some reduced-documentation loans took as little as 30 minutes to underwrite, the complaint said.”
“Even more surprising, Ms. Madigan said, was her office’s discovery of e-mail messages automatically sent by Countrywide to its borrowers offering complimentary loan reviews one year after they obtained their mortgages from the company.”
“‘Happy Anniversary!’ the e-mail messages stated. ‘Many home values skyrocketed over the past year. That means that you may have thousands of dollars of home equity to borrow from at rates much lower than most credit cards.’”
Final Call News. “Looking to capitalize off of someone else’s misfortune with a foreclosure sale? Don’t look in Philadelphia because Sheriff John Green has stayed the foreclosure sales and instead is offering help and hope to beleaguered homeowners.”
“‘More of our neighbors, our families and our friends are falling behind on their mortgages and losing their homes to sheriff’s sale. My staff and I watch the suffering every day and witness the heart-wrenching scenes as families lose their primary means of wealth-building and face eviction,’ wrote Sheriff Green. ‘In Philadelphia, the number of sheriff’s sale properties has increased from an average of 300 to 400 per month to more than 1,000.”
The Star Ledger. “Most home foreclosures being processed in New Jersey are illegal, a growing group of attorneys contends, because lending institutions cannot prove they own the debt they are trying to collect.”
“Judges in at least four New Jersey counties already have halted foreclosures, using a federal court ruling in Ohio as precedent.”
“‘This is starting to creep up all over the state and all over the country as people start to realize these banks don’t really know who owns the (promissory) note,’ said Peggy Jurow, a senior attorney at Legal Services of New Jersey.”
“There were 34,457 foreclosures filed in New Jersey in 2007. The vast majority, 96 percent, were processed by the State Office of Foreclosure with no answer from the defendants.”
“‘These lawyers are trying to grasp on the smallest legal issue, and they’re losing sight of the justice involved,’ said Ralph Casale, a Denville-based attorney who has represented lenders in foreclosure for more than 30 years. ‘It comes down to this: Were you given the loan? Have you paid it? If you haven’t paid it, doesn’t the person who loaned you the money have the right to collect?’”
“Every scandal needs a scalp. The subprime mortgage crisis, which has been elevated to prime and is still going strong, finally has a name and a face: Ralph Cioffi and Matthew Tannin, former hedge fund managers at Bear Stearns Cos. The duo was indicted last week.”
“‘The defendants and others led investors to believe that the High Grade Fund was only slightly riskier than a money market fund,’ according to the indictment.”
“‘What’s the difference between what Cioffi and Tannin are accused of and what a CEO or CFO might say’ suggesting the worst of the crisis is behind us? wrote Joan McCullough, macro strategist at a brokerage in Hauppauge, New York, in her June 20 daily commentary.”
“This isn’t hypothetical. Some Wall Street CEOs made rosy comments just weeks before they reported huge losses and headed to the market (sometimes more than once) for more capital.”
“‘The bigger issue to make securities fraud stick is the mispricing of assets,’ said Janet Tavakoli, president of Tavakoli Structured Finance in Chicago. In late May, early June, the hedge funds’ creditors (Wall Street investment banks) ‘challenged the April prices and asked for more margin,’ she said. ‘Yet they failed to mark down their own books that quarter.’”
“Instead, Wall Street’s finest continued to bring CDOs to market backed by the same distressed and depressed collateral. ‘They basically lied,’ Tavakoli said. ‘They knew or should have known’ the CDOs they were packaging were ‘over-rated and overpriced. They were obliged to disclose’ that to investors.”
“If she’s right, Cioffi and Tannin will turn out to be the tip of the iceberg, with more investigations and indictments to come. The bigger the carnage, the more scalps needed as a suitable sacrifice.”
From Fox 6 San Diego. “A Chula Vista resident sought by federal law enforcement agencies as part of a nationwide crackdown on mortgage fraud crimes turned himself in Tuesday at the FBI office in Kearny Mesa, authorities reported.”
“Angel Armendariz, 27, was among six people indicted in San Diego last week as part of a multi-agency probe dubbed ‘Operation Malicious Mortgage.’”
“In the early afternoon, agents acting on a tip tracked down another indicted Southern Californian, Rafael Santiago, 39, of Riverside, the FBI reported. Three other suspects in the case — Abner Betech, 27, Aviva Betech, 29, and Said Betech, 32, all of San Diego — were arraigned on Tuesday.”
“The sixth person indicted locally in the case — 25-year-old Chula Vista resident Lucette Montane — remains at large, according to the FBI.”
“The defendants allegedly failed to fund loans as promised, but nonetheless received commissions and other payments from lenders, sellers and buyers when the borrowing agreements closed.”
“The complaint further alleges that Creative Financial Solutions Inc., a mortgage brokering company…obtained mortgage loans for unqualified or ‘unknowing’ borrowers by, among other things: concealing true purchase prices of homes by submitting false purchase contracts; submitting bogus loan applications; concealing the fair market value of homes; using misleading appraisals; and submitting false bank statements and income documentation.’”
National Mortgage News. “As Congress winds toward its summer recess, the mortgage lending and finance problems linger. With rising fuel costs, hints of inflation, record levels of both foreclosures and mortgage fraud - Washington lawmakers are considering a number of bills designed to shore up the sagging housing market.”
“As you recall from my last article, the New York Attorney General, Andrew Cuomo, has pursued an agreement with Fannie Mae and Freddie Mac relative to appraiser independence. However, as of this writing, the amendment has not been considered.”
“While Congress is poised to act, the question is how and when. With 90% of appraisers in a recent survey indicating that they had been inappropriately pressured, many in the industry see a clear correlation between the worsening mortgage crisis and the compromise of appraiser independence.”
“Lately, many are asking a simple question that continues to go unanswered: How much higher do foreclosure rates need to rise and mortgage fraud cases increase before Congress and regulators realize that appraiser independence is a real problem that affects the safety and soundness of our entire banking system?”
Every Scandal Needs A Scalp; More Scalps Needed
Orange you glad Angelo is such a CONvenient fallguy?
I am getting a splitting headache imagining the Great Pumpkin doing the perp walk in an orange jumpsuit. In my mind’s eye it is the visual equivalent of snow blindness.
LOL! I picture an orange lizard with its tongue flicking in and out while cleaning trash by the roadway.
Ouch…you’re right, add the orange jumpsuit and it does hurt the eyes.
21st century House of Orange
are dodd and richardson going w him ?
BUSH BAD BUSH BAD ALERT
he better veto this bill or everyone on this bb will have a mortgage
keep in mind 50% of taxpayers pay zip fed income taxes
Will B of A inherit CFC’s legal liability with the purchase?
Will B of A inherit CFC’s legal liability with the purchase?
——————————————————————-
IMO, NO. dodd and frank will ensure that CFC’s liabilities are politicized and the perps will walk. America has this nasty problem sweeping all it’s problems under ther rug ala the Texas S&L disaster about 20 years ago with the bushbots involved. Privatize profits and socialize costs is what both stripes (as in skunks) is what the pols are about. this housing disaster and the govt’s intervention is starting to stink to high heaven. myself, I am for the free market forces being allowed to work their handiwork.
“The subprime mortgage crisis, which has been elevated to prime and is still going strong, finally has a name and a face: Ralph Cioffi and Matthew Tannin, former hedge fund managers at Bear Stearns Cos. The duo was indicted last week.”
I expect them to sing like canaries, these future jailbirds…
The most disturbing thing is that Cioffi and Tannin could not have gotten away with this for as long as they did without help from higher up.
And they really couldn’t have gotten away with it if those investing did their own homework with respect to what the funds were investing in.
If you can’t understand it, don’t invest, or risk losing all. Especially if it is highly leveraged.
Nobody is completely innocent…there are just some who are clearly guilty.
Agreed, but I don’t see too many higher ups than them doing perp walks at this point. Not that they shouldn’t.
“‘Happy Anniversary!’ the e-mail messages stated. ‘Many home values skyrocketed over the past year. That means that you may have thousands of dollars of home equity to borrow from at rates much lower than most credit cards.’”
Sheesh…They could put on Cher’s “Believe” CD and almost Feel the Love with that e-mail
I was wathcing Larry King’s segment last night titled “Foreclosure Mess” and was expecting some illuminating insight. Unfortunately his panel of real estate shills and financial hucksters gave me a case of disgust!
Barbara Corcoran
Jorge Perez
Robert Kiyosaki
….and of course the definitive expert on all things Real Estate: Donald Trump.
Talk about a circle jerk!
Hey, watch it. You just insulted circles.
Why not go pick on squares instead? Or trapezoids. They deserve abuse just for having a funny name.
The best part was when someone sent an email asking what someone who has lost their home to foreclosure should do now. According to Trump: buy another house. Seriously.
Maire Antoinette would be proud of him….
Let them eat mistake.
Nice one.
Trump gave the same answer I would have given….
If you thought you’d get-rich-quick at 2005 property prices, then obviously(!) you’d get-rich even quicker at today’s prices!
To NOT buy means you KNEW you were part of a big shady Ponzi scheme, but you thought you could get out while there were still greater fools.
didn’t komiokazi and trump put out a book in 06 saying it’s cool to buy ?
“Why we want you to be rich” or something to that effect.
California, Illinois File Lawsuits Over Countrywide’s Practices
By Ruth Simon and Donna Kardos
Word Count: 442 | Companies Featured in This Article: Countrywide Financial, Bank of America
The California Attorney General has filed a civil lawsuit alleging that Countrywide Financial Corp. engaged in deceptive advertising and unfair competition by pushing borrowers into risky loans. The 46-page complaint also names Countrywide Chairman and Chief Executive Angelo Mozilo and President David Sambol.
“Countrywide exploited the American dream of homeownership and then sold its mortgages for huge profits on the secondary market,” California Attorney General Edmund G. Brown said in a statement.
One wonders if Bank of America is experiencing any buyer’s remorse.
“Happy Anniversary!”
Nah, they had a plan and so far it’s looking pretty good. I think they just might pull it off. They are getting Countrywide on the cheap and limiting their losses by pawning those bad loans on the taxpayers.
The government passed non-recourse statutes and openly encouraged the use of subprime loans, and decided not to enact regulations setting forth appropriate affordability tests or down payment requirements. I guess if prices still went up they would have continued to do nothing, but because the market eventually turned they want some deep pockets to sue. I can understand to the extent there is real fraud and abuse, but to the extent there were greedy and lying borrowers involved, I see this nothing is an extortion attempt. It bothers me that the government thinks it can sit by and do nothing until a problem gets out of control, and then sue civily for damages if and when it hits the fan.
Mortgage VIPs
June 25, 2008; Page A14
Do all Washington politicians get their loans directly from CEOs in the mortgage industry? Readers might be wondering after learning about Countrywide Financial and its VIP treatment for Senators Christopher Dodd (D., Conn.) and Kent Conrad (D., N.D.).
…
Meanwhile, Politico.com has contacted all 100 members to see how they received their mortgages, on what terms and from whom. Politico’s Eamon Javers tells us that he has met with surprising resistance, with many Senate press secretaries claiming that such details are private. And in fact such details are private, due to a loophole in Congressional financial disclosure rules.
Senators John Cornyn and Barbara Boxer have offered an amendment to the current housing bill to require such disclosure, and in the meantime most lawmakers are reluctantly sharing the details. Still, as we went to press, Mr. Javers reported that 15 members of the Senate were still refusing to tell the stories behind their mortgages.
Couldn’t these details be teased out of county recorders’ records? Or does that require too much work for today’s generation of journalists?
This generation of what passes for journalists is of the Cliff-Notes persuasion, no depth.
Cliff Note Diverse
I knew someone who was a federal prosecutor and had some loophole to be allowed to not have her name and address listed on the public records. Don’t know if that would apply to congress.
The loophole which says “I prosecute dangerous mafia killers who might want to do what they do to cops & prosecutors in Tijuana so I don’t want to tell the world where I live.”
I sure hope our congressdroids don’t try that trick.
Or put the property into a trust. Name the trust 27a3d076 or some other random hexadecimal number.
My friend has that. He was an AUSA years ago, but all of his personal information is still confidential.
My friend wasn’t a big-time criminal prosecutor or anything — he worked in the antitrust division and only did drug cases for about six months — but all of his personal information is still secret.
The incentive for such teasing lies with their political opponents.
After all, this is an election year; pit the bastards against each other.
Except for the fact that they’re all in it together.
The interesting stuff may not be in the county records…like interest rate, or rate reset terms.
“Do all Washington politicians get their loans directly from CEOs in the mortgage industry?”
Great question for an e-mail to our two Senators. Thanks! –> Congress.org
You seriously didn’t believe that there were just 6 out of 520 odd members of Congress/Senate with their hand in the cookie jar, receiving Orange-Aid?
Doggone it, when are you going to learn? In this country, everyone is equal but some are more equal than others.
Don’t forget Pillosi’s son who borrowed over $1,000,000 from Countrywide. They were known as ‘Friends of Angelos’.
“While Congress is poised to act, the question is how and when. With 90% of appraisers in a recent survey indicating that they had been inappropriately pressured, many in the industry see a clear correlation between the worsening mortgage crisis and the compromise of appraiser independence.”
The action Congress is poised to take is to have the government take over delinquent mortgages at 85% of a home’s value. Once again I ask, who determine’s a home’s value in this market?
I’ll bet lots of appraisers are starved for money to feed their families and avoid being foreclosed on themselves. Guess which ones will be hired by banks to decide how much the government gives them?
I posted this in the Bits Bucket, but it is worth stating again:
If the appraisal value is the actual market value, then why would ANY lender take 85% of the market value? They could simply authorize a short sale and take 100% of current market value.
This whole scheme is dependent upon fraudulent appraisals.
I guess the argument is they’d absorb less in transaction costs. But will there be no transaction costs with the new government mortgages? Who pays for those?
These were NOT fraudulent appraisals!
We were just following Orders. I hear nothing. I see nothing. I know nothing!
“A: We don’t have standing inventory because we are pricing our homes to where 30 to 40 percent of households can afford to buy them. It ultimately required about a 50 percent drop from our peak prices in December of 2005.”
And it will require a 75 percent drop from peak prices in December of 2005 for 60 percent of households to afford to buy them.
Keep the popcorn popping,
Red Baron
“Even more surprising, Ms. Madigan said, was her office’s discovery of e-mail messages automatically sent by Countrywide to its borrowers offering complimentary loan reviews one year after they obtained their mortgages from the company.”
“‘Happy Anniversary!’ the e-mail messages stated. ‘Many home values skyrocketed over the past year. That means that you may have thousands of dollars of home equity to borrow from at rates much lower than most credit cards.’”
______________________________________________________________
Kool-Aid drinkers & HELOC raisers…
“‘People were put into loans they did not understand, could not afford and could not get out of,’ said attorney general, Lisa Madigan. ‘This mounting disaster has had an impact on individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo.’”
Maybe I’m an elitist, but why should one have sympathy for ppl that elected to chose loan products they couldnt understand? Also why is the greed all placed on the broker? What if the borrower wanted the home at any cost, and this is all they could qualify for? I think there is plenty of blame to go around. Clearly, if there was broker fraud, the broker should be accountable, but if ppl elected products they dont understand, and didnt take the time to understand, because they saw dollar signs in the future on the sale of the home before the resets hit and this is the only product they qualified for, I cant manage any sympathy at all.
From the non-elite, I bring you the following tale:
In 2004, I took an all-day course for first-time homebuyers. It was offered, free of charge, by a nonprofit organization here in Tucson.
Since the class was geared toward those of us who don’t have millions in the bank, the instructors were adamant about our not getting into loans that would later come back to bite us. In fact, they urged us to contact the organization if anything, and I do mean anything, in our mortgage paperwork was hard to understand. They had people on staff whose job was to sit down with us and review our contracts.
They also made it quite clear that there was no such thing as a stupid question. It was better for us to ask ‘em than it was to remain silent.
Tim,
I agree but this is why the “Spizter-ettes” are going after Angelo personally. The way the lending industry was structured anyone currently enrolled in a GED program and not ‘currently’ facing a murder 1 rap could become a MB.
If they stiffed borrowers to the point where they generated complaints, all they had to do was go across the street or down the block for “new employment”. These guys are scattered to the 4 winds and anyone still in the biz feelin’ the heat has only to quit to escape most prosecution.
Lawyers v Mortgage Lenders is somewhere on the list near “crips v bloods”.
Let ‘m kill eachother, and pass the popcorn
Lawyers are immoral, monsters.
- Lawyer Boy, as named by CrackerJim
Well agreed, but it’s a good sign. During Harvey Pitt’s brief and rocky tenure at the SEC there was more lawsuits than you could shake a stick at. Hopefully it’s a sign of healing.
I’m no fan of lawyers but when they’re done I hope Angelo’s “retirement” consists of soc. sec. and a single-wide in a 55+ park in E.J Florida. Oh after he does his time. We got Dennis Kozlowski and we’ll get this/these clowns.
Yes, lawyers are all terrible…until you need one to protect yourself, or negotiate an agreement, or, God forbid, review some loan documents on your behalf.
In a system built on written laws, competent lawyers, and their appropriate use is critical for it all to work. Demonizing them only serves to rely on bigger government to protect the little guys who, because of the demonization of attorneys, refuse to hire one, and instead prefer to read the document themselves, or rely upon a professional who doesn’t have their interest in mind to tell them what a document says….like a mortgage broker.
And no, I’m not an attorney.
But I use attorneys all the time in business, and will be the first to admit that a bad attorney is a horrendous thing to experience. However, fortunately, the good ones in my experience far outnumber the bad ones.
Just think how many people wouldn’t have taken out a ridiculous Option ARM if they paid $300 for an attorney to review the document and advise them? I’m thinking lots…
RentalWatch,
Very ture. I think the other half of the problem was that the MB’s themselves really didn’t understand what they were peddling? You’d be surprised how many foaming-at-the-mouth MB’s approached me from ‘04-’07 claiming these toxic loans were the best thing since sliced bread!
I’m all about accountability but as far as I can see a lot of the lenders seem to be continually surprised by the black hole these “products” have left.
So you’re an attorney, how nice.
Smithers, Release the Hounds
And I have no sympathy for anybody in the mortgage industry. If they made loans to people who could not afford to pay them back, they deserve to go bankrupt and lose their companies. Anybody who was stupid enough to buy securitized sub-prime and ARM loan bundles deserve to lose their shirts as well.
Some of the people who were pressured into taking those loans may be the only ones who did not know what they were getting into. I have more sympathy for them than I do the hucksters running the show.
True. My only concern is that the concepts of ignorance and amorality are being used unevenhandly in the name of political correctness and to influence public opinion. I see ignorance and amorality on both sides of the table. When both parties have the same traits, such traits should not be used to make one party worthy of blame and the other a victim. How about a little consistency.
unevenhandedly
Tim, Tim, Tim, Tim, Tim, Tim: This is an election year. These poor soon-to-be-houseless people were *clearly* taken advantage of.
I don’t think anyone has ever been elected to office by calling Joe6P names like “greedy” or more appropriately, “outstandingly stupid.”
Are you saying my platform to (i) charge all ppl that lose their homes a $50k nondischargeable fee to help clean up the mess they created, and (ii) welcome declining home prices with open arms as the path to affordability, will not get me elected?
“The figures likely overstate the number of sales, because they don’t account for canceled sales. The report is based on contracts signed, not sales closed. Inventories are likely understated because of cancellations.”
In other words, the figures are meaningless. Surely the reporter could have determined the average number of cancellations, and come up with a projected figure to balance out the fake one. Here in Tampa anything remotely resembling an agreement to purchase (I suspect the most causual of inquiries is now included) is broadcast far and wide as a sale, even if there is no chance in hell of the sale going through. Every lender buy-back of its own unwanted autioned junk is also ballyhooed as a sale, and the fantasy price not-paid is used to calculate local median numbers. Odd that for so many bragged about sales, no properties actually appear to be changing hands
As forecast, the Fed does nothing about the declining dollar. Full steam ahead, destination known only to BB and 12 Fed governors.
Well, to be fair, BB and 11 Fed Governors.
This American Life
355: The Giant Pool of Money
Download a transcript. (Caution: .pdf)
A special program about the housing crisis produced in a special collaboration with NPR News. We explain it all to you. What does the housing crisis have to do with the turmoil on Wall Street? Why did banks make half-million dollar loans to people without jobs or income? And why is everyone talking so much about the 1930s? It all comes back to the Giant Pool of Money.
If you aren’t inclined to read this transcript, you can hear it on KPBS San Diego (89.5 FM) this Friday morning at 10a.
http://www.kpbs.org/radio/schedule
I always want to go stick my head in the oven every time I have to listen to that pap on NPR. The announcer has the world’s most annoying voice. He should be doing play by play at funerals.
Anybody take the 129 + change trade on skf? That was as close to free money as it gets.
I finally put into words.. one word, in fact.. why I don’t like TAL: Everything about it screams “smugness”
The local NPR affiliate, which used to have some tasty-fine jazz programming, went to an “all talk during the day” format a few years ago. Jazz was relegated to a few hours during the evening.
It was at that time that I noticed that NPR irritated me more. I guess it was all the talk, because I can’t listen to it for more than an hour a day, if that.
Fortunately, the solution has been quite easy to implement. I just nudged the dial to the left and found KXCI. You name the musical genre, they probably play it.
NPR is a counterpoint to all the right wing bombast on the radio. Just one little problem: they get a govt handout.
Public goods require public funding or else they are underprovided. Learn a little economics then get back to us.
NPR is a counterpoint to all the right wing bombast on the radio. Just one little problem: they get a govt handout.
_________________________________________________
Point taken. But wall street gets the biggest govt handouts of all.
Agreed. How does whatever trickle of funding goes to NPR look compared to $29 bn of guarantees to JPM for help with digesting a Bear?
I drove from San Jose to Norfolk with a friend, and brought along a stack of This American Life shows. Some are better than others, but I like the show. It’s a break from the other stuff.
Ira Glass isn’t as annoying as some of the other readers, but overall I think it’s a cool show. There was a run on Showtime for a season of a television version, which is how I found it.
Now my friend’s friends have picked up on the radio show.
I’m not a huge PBS fan, I like some of their content but they are gov’t leaches. I remember trying to bid contracts and there is the local PBS affiliate bidding against me for business, with T3 data circuits paid for by the taxpayers.
This is a must read (or listen). I hope at least a few folks in high financial posts around the globe take the time to read and seriously ponder this masterpiece of journalism, as it reads like a blueprint of how not to run a banking system. Without proper reform of the system in place (and I don’t mean creating a bigger, meaner Fed), we can expect to repeat this experience within a few years’ time.
I thought it was a well-produced piece as well.
The transcript is well worth the read.
A quote of note: “It was the triumph of data over common sense.”
Great Post Prof, thanks. Required Reading, even if you don’t like listening to NPR, their source of funding, or have other trivial problems.
Unfortunately, looks like the Dodd bailout may be on its way. 89-7 vote! What a bunch of pandering wusses.
Housing rescue plan passes Senate test
Can anyone tell me how this would directly affect homeowners in trouble? I understand the part about lender offloading their sludge to taxpayers at 85% of appraised value, but what exactly does this bill do to keep people in their houses? Are the loan terms modified? Thanks.
Here’s a quote from one of the seven with stones:
hopefully they will pay in November, along with their messiah
Frank-Dodd bailout $170,000,000,000.
Your family’s share: $2266
(arrived at dividing the cost by the 75,000,000 taxpayers who pay 97% of the taxes)
The next four years are going to be rough. Most honest businessmen will simply close shop (as I plan to if Obama gets elected), and the rest will move their companies and money overseas.
The senile senator that helped engineer the S&L bailout in the ’80s will now come our rescue by doing exactly the same thing his predecessor did: bleed the treasury dry with an unwinnable war and fall asleep at the wheel in the face of Wall Street and Enron-style corporate malfeasance?
“Insanity: the belief that one can get different results by doing the same thing repeatedly.” -Albert Einstein.
Jeebus says there are no HELOCs in heaven.
Where they’re all going, I don’t think they’ll need to worry about that.
excuse me but I thought there were more than 7 republicans in the senate?
With a few exceptions, the Reps gave up any claim to conservative principles some time ago, that’s why the base stayed home in droves election day 2006.
what Tango said:
What a bunch of pandering wusses.
It’s an election year, they don’t want to be perceived as Big Meanies by the electorate. OMG someone might get the idea Republicans are mean-spirited!
ha
True confession: I was raised by a couple of conservative Republicans. And, though it may be a shock to some, my parents were into to conservatism of all sorts, not just monetary and economic. They’re two of the biggest open space advocates I’ve ever known, and (gasp!) I guess that makes them into environmentalists.
Slim,
There’s just so many misconceptions about conservatives out there. There was a book, I think it was called Crunchy Cons that described - horror of horrors! - Birkenstock wearing conservatives who shopped at the local food co-op.
It’s just so much easier and requires less intellectual effort to believe in the standard issue Bible thumpin knuckledraggin stereotype.
right. I drove a Volvo until recently, am a vegetarian, support animal rights, and belong to the Sierra Club.
and am also a card carrying neocon according to some here
stereotypes are funny
… my parents were into to conservatism of all sorts, not just monetary and economic. They’re two of the biggest open space advocates I’ve ever known, and (gasp!) I guess that makes them into environmentalists.
I think you’ve hit on the issue many of us have — that conservatism as currently practiced is different than conservatism perhaps should be. (Kind of like most major religions, one might argue.)
Conservation of natural resources seems like it should be a fundamental part of conservatism, no? It was that way for Teddy Roosevelt and many other old-school conservatives.
I for one have made it clear that I have respect for conservatives of the Buckley, Eisenhower and Goldwater persuasions — even if we’d never agree on many things, they were thoughtful, reasonable people. Those breeds of conservative seem almost entirely absent from the halls of power these days, though.
The “standard issue Bible thumpin knuckledraggin stereotype” has gained currency for a reason. I’d argue that people like Dick Armey, Tom Delay, and Dubya pushed that stereotype over the last 15 years and tried to marginalize more moderate, thoughtful or in-any-way atypical conservatives right out of the mainstream.
You hit the nail on its head, a lot of people were happily vote republican if they were true conservatives. Otherwise might as well go democrat, atleast you know what you’re getting.
“excuse me but I thought there were more than 7 republicans in the senate?”
More than 7 call themselves Republicans, but most are just Democrat Lite.
It is supposed to make it easier for lenders to make loan mods by letting the gubmint assume the risk instead of the lenders. Of course, that is assuming that the biggest issue is the interest rate, and not the FB’s ability to pay (slowly getting squeezed by price increases and dollar devaluation, as well as wage stagnation).
It is just another form of bank bailout.
It won’t do anything in the long term except to delay the inevitable, but it will get them votes under the perception that they are “doing something” about the economy.
Sucks that this is an election year.
Hmmm… Why would Kay “fiscally conservative” Hutchinson(r) vote in favor of a bailout? Maybe Centex has something to do with it? Even Elizabeth “plastic surgery” Dole(r) is backpedalling from her supposed conservative fraudentuals.
give it a rest. you are full of crap
Oh my word…… 35 republicans voted for a bailout. Taxpayer funded. Gotta love those fiscally conservative fraudentials.
http://www.govtrack.us/congress/vote.xpd?vote=s2008-155
Hey, it’s not like the money will be going to poor people.
The republican acquiescence is disgusting. We can agree that every senator that voted for this should be thrown out of office, and replaced by someone of the opposite party, right?
“35 republicans voted for a bailout.”
See my comment above.
“35 republicans voted for a bailout.”
See my comment above. (if duplicate post, sorry)
you didn’t answer the question
Do As I Say, Not As I Do … or Who You Gonna Believe, Me Or Your Lyin’ Unpatriotic Terrorist Emboldenin’ Eyes?
show me the money, honey
he can’t
It’s all BS
Hmmm…..big increase in boob jobs last year. Was wondering if ME
W’s and boob jobs are directly proportional.
Tango,
My understanding has always been that your underwater loan has to be with a “participating lender”. ( Meaning CountryFried, BofA and a handful of others ) just to get the well deserved principal reduction and loan mod. Millions of borrowers from smaller institutions will get zilch-o.
Good ta’ see ya!
So Mr. Got-a-NINJA-I-couldn’t-afford-at-Countrywide gets his loan modified (i.e., more free money, but probably not enough) while Mr. Dressed-up-to-see-local-banker-and-got-a-sensible-loan gets to pay for it.
Wonderful.
I’m still not really clear on how it works.. this will take a lot more research. What exactly does this mean for J6P and his crippling payment? If anyone has good links, send them on.
Good to see you too dinOR! My local (or not so much) congress critters and their housing views will get a substantial place in my next video. Their offices will be hearing from me really soon. t - 3 months on the video, for real this time.
Tango,
Can’t wait to see it! The last one was really good and made things very tangible for even the least initiated. Please make sure you post the link here ( and elswhere ) just as soon as you’re ready!
simple - you’re going to have a 2nd mortgage-
paid to the treasury
I hope that having a home loan payable to the Treasury means that the same rules apply to such loan as apply to Student Loans!
This means they stick with you for life, are non-dischargeable in bankruptcy, subject to administrative garnishment if in default (no judgement required) etc.
“‘Housing still occupies a major place in this ongoing, rather unique and rather strange economic slowdown,’
It’s not just housing (it was a credit bubble), it wasn’t unique (think Japan), nor is it strange (bloggers like Ben and even some ivory tower types predicted this years ago).
Give me a break.
NoSingleOne,
It’s what we’ve come to expect from the head d!ckhead at NAHB.
It’s not just housing (it was a credit bubble)
It was a combination of the housing bubble, credit bubble asset bubble and the current commodities bubble. Three popped together leaving the commodities bubble to continue to grow in size before it pops.
Well here we go again… “Their primary means of wealth-building” That IS the pervasive belief nation wide and exactly why we have a very long way to go to the bottom. Bring on the ‘bailouts’ they won’t work and will ultimately cause more despair in the market place. Plus I am sure folks are lining up and getting ready to try and ‘game’ the bailout plan. Our Gubmint doing what they do best, throwing up road blocks on the road to a correction.
“My staff and I watch the suffering every day and witness the heart-wrenching scenes as families lose their primary means of wealth-building and face eviction,’ wrote Sheriff Green”.
I don’t know wtf they think “wealth” is. I wouldn’t call anyone “wealthy” unless they were worth $100M or more. And I don’t think anyone in that category made most of their money from their primary residence increasing in value.
I’m NOT wealthy, but I’m a frugal careful saver. I have a paid-up house. While I don’t believe in including any imagined value of one’s primary residence in any net worth calculation, but even the most generous estimate of my house’s worth isn’t the majority of the “wealth” I have accumulated.
My parents have lived in the same house for 42 years. They’re also extremely frugal. My father was in the Navy and then worked a civil service job for 30+ years. My mother was a full-time mother. They have more money in the bank than even the most optimistic valuation of their paid-up house is worth.
I can not believe that home ownership is the “primary means of wealth building.” At best, it keeps up with wage inflation, and if you pay it off–something that the latest generation of gurus argued against–you have some benefit from savings on rent….
“My staff and I watch the suffering every day and witness the heart-wrenching scenes as families lose their primary means of wealth-building and face eviction,’ wrote Sheriff Green”.
That one got my ire up also. What?
Homeownership WAS a means of FORCED SAVINGS, that allowed people to retire without a house payment, and some net worth.
The HELOC game of stripping out all the “equity” made the savings plan your “grandfather’s” means of saving for old age.
Wealth-building? I don’t think so. Try working and saving and investing.
Trying to sell your house, Congress plan will lower your price by 8000 dollars.
ABC has a news spot on Yahoo talking about the FED giving 8k to anyone buying a home in foreclosure. Thus the guy up the street selling his home will have to lower his price by 8k to compete with the banks. I didn’t hear ABC mention this fact. Nothing but sunshine and smiles.
Ohhh… surprise uppercut!
Government by panic… Great…
Got Popcorn?
Neil
Think of that $8K per foreclosure home as a funding source for future Congressional campaign contributions.
..and all part of the Foreclosure Prevention Act. Nice one. That’s gonna work out great when people try to sell their house to avoid foreclosure, but they can’t because the foreclosed property down the street has an $8k bonus. Congress has the lowest approval rating ever. I still think it’s too high.
Not that it will do a lick of good but I emailed my Senators and Congressman. I told them that if they just did the right thing we’d all pitch in a give them a discount on their home loan. We’ll see if that works.
I understand that e-mails are most filtered, and e-mail petitions completely ignored. These people don’t care what you think, unless you have a bag of money attached to your complaint.
Whenever I send a letter to Anna Eshoo (my congresswoman)–either electronic or a physical paper letter–it merely gets scanned for keywords and I get a form letter back.
I’ve sent letters that said in a few brief sentences that I oppose bailouts, and I get letters back saying “Anna Eshoo is working hard to keep your property values from falling, and to keep people in their homes.”
I think I could write a letter that said “Blah blah blah watermelon watermelon MORTGAGE the rain in Spain la-de-dah blah blah” and I’d get the same response. I should try it!
Most likely the price of foreclosed houses just went up $8,000. Either way, it’s not fair
“‘Housing still occupies a major place in this ongoing, rather unique and rather strange economic slowdown,’”
My interest in the housing bubble stems from the fact that I knew it would get us to the dance, and then we’d be left with a pumpkin, mice, rats and lizards of an economy…
Midnight Happens
“‘Housing still occupies a major place in this ongoing, rather unique and rather strange economic slowdown,’ David Seiders, chief economist at the builders’ group, said in a conference call last week. ‘I do expect the sales volume to erode somewhat further in the months ahead.’”
Yeah, I mean, like, Hoocoodanode? No one out there predicting this mess, like, say, 4-5 years ago, right? Yup, we *all* got blindsided by this “strange” new world where borrower creditworthiness suddenly matters again, NINJAs are growing scarce, and loaning $ millions to unemployed con-artists and dead homeless guys is considered a “bad” idea.
Yup… nobody out there was predicting anything like this could happen… no, sir!
Now, wait a minute. Too-easy credit is still available.
It wasn’t 24 hours ago that I got a robo-call from some lender saying that my small business was already approved for a loan of up to one million dollars. I didn’t stay on the line to hear the entire pitch but I can think of at least one catchy slogan:
If you can answer your ringing phone, you can get a loan.
Well, ok then. But at least they’ve raised the bar from the old “fog-a-mirror” days. Answering a phone requires a certain amount of hand-eye coordination.
You’ll no doubt be pleased to know that they gave me another call today. And it was a long distance call, all the way from Beaumont, Texas! Once again, I’m approved for a loan of up to $1M for Arizona Slim Industries! With no personal guarantee! Yippee!
But, alas, being the loather of paying interest that I am, I declined their generous offer.
“‘These lawyers are trying to grasp on the smallest legal issue, and they’re losing sight of the justice involved,’ said Ralph Casale, a Denville-based attorney who has represented lenders in foreclosure for more than 30 years. ‘It comes down to this: Were you given the loan? Have you paid it? If you haven’t paid it, doesn’t the person who loaned you the money have the right to collect?’”
Screw you if you represent the sleazier lenders that made loans that should never have been made. If you can’t prove who owns the house, you shouldn’t be able to foreclose. That’s not a “small” legal issue. This never was a problem for ethical lenders in the past. If this was about “justice”, CEO’s and a lot of other people with these lenders would be doing years of hard time.
You can’t rely on the laws that allow you to take a Deed of Trust to secure your loan if you don’t follow the rules to prove that you have a secured loan.
I applauded the judges in Ohio when this ruling first came out, and I applaud those using that ruling to their advantage now.
I think my favorite quote from the Ohio case was from one of the attorneys on the side of the bank (I think it was DB) who said something like “buy your honor, you don’t understand how this all works.”
Oh, no you didn’t just say that to the judge in his own courtroom, did you? Bad idea.
“The banks can get their i’s dotted and their t’s crossed,” Casale said. “The problem is, they can’t do it when that kind of issue is sprung on them at the last minute. The banks and their attorneys were caught shorthanded.”
This should have been done when the loans were made. What a lame excuse. That’s like being shocked about a final exam at the end of the semester and requesting more time to prepare. I wonder how many of the sleazier lenders will ever be able to come up with the necessary documentation. Is the lack of documentation shoddy record keeping or lack of record keeping to keep lenders out of jail?
It is all just whining.
Foreclosing attorney did not have his shit together. Case dismissed w/out prejudice. Go back and complete your file, dummy, and then refile the suit.
If your client can’t provide the docs that prove the loan, demand all fees up front from the lender, or tell them to find another lawyer.
Expensive education does not necessarily end with law school.
RE: Madigan also asked that Mr. Mozilo contribute personally to the damages.”
Maybe Mozillo’s buddy, Dodd(D) CT., will kick into the kitty.
Celtic Tiger limping along!
Irish national house prices fell 9.5% in year to May 2008
http://www.finfacts.ie/irishfinancenews/article_1014020.shtml
Irish construction industry employment fell 13.8% in year to April 2008 - a total of about 39,000 job losses
http://www.finfacts.ie/irishfinancenews/article_1013913.shtml
European report says Irish house prices should be left fall further; Real mortgage rates in Ireland were zero or negative between 1999 and 2005
http://www.finfacts.ie/irishfinancenews/article_1013888.shtml
Wathching Fox Financial there talking about the bail out bill having been crafted by Credit Suisse and Bank of America. They are saying the only ones put into the program have to have a chance of paying back the loan.They said the arcticle was in the buisness section of todays Washington post.
schweeeeet!