Breaking The Piggy Bank And Throwing It Away
It’s Friday desk clearing time for this blogger. “A group of B.C. condo owners say they were unfairly pressured by a national developer into paying much more than their condos are worth, while the developer secretly gave their neighbours big discounts. Jagdish Lal and several other buyers had agreed to pay developer Amacon a premium for the condos in 2007, when the B.C. market was hot. The condos had not yet been built. ‘This is the first developer I know who has done this — and I’m disgusted by it,’ said Jagdish Lal, who paid full price for his two-bedroom condo last year.”
“The 240-unit Surrey complex, called The Morgan, dropped significantly in market value before the units were completed early in 2009. Several owners then found their banks were no longer willing to grant mortgages for the initial price. ‘I asked Amacon for a discount,’ said Lal. ‘I said ‘I am having trouble completing.’ They said ‘no — you will be sued.’”
“‘We never thought of holding out, because it’s never been an issue for us,’ said owner John Miller, who also paid full price. ‘You sign a piece of paper, you honour your contract.’ His wife Mary said doing the right thing cost them dearly. ‘Sucker you. Too bad for you — snooze you lose. That’s the way the developer played the game,’ she said.”
“The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale—known as a short sale—or agree to turn over the deed of the property to the lender. It’s designed for homeowners who are in financial trouble but don’t qualify for the administration’s $75 billion mortgage modification program.”
“A short sale appears to be the only way out for Brandee Chambers of Las Vegas. She got into trouble during the housing boom by taking out a risky loan against her home and using the money to buy two investment properties in Phoenix. She later lost those two properties to foreclosure, and now she is trying to sell the home she lives in for $209,000, but the mortgage balance is $350,000.”
“Chambers, who owns two hair salons, says she would rather stay in her home, where she lives with her 14-year old son. But she had no luck getting help with her loan. She said she’s resigned to scaling back her lifestyle and renting out an apartment. ‘I’ve had to accept a lot in the last year,’ she says.”
“As the Treasury Department released the updated March figures this week, a congressional oversight group panned the $50 billion plan, saying it’s not keeping up with the pace of the housing crisis and that so called ‘permanent’ modifications, which are really only good for five years, are just delaying the inevitable; more mortgage defaults. ‘The redefaults signal the worst form of failure of the program: billions of taxpayer dollars will have been spent to delay rather than prevent foreclosures,’ the Congressional Oversight Panel report stated.”
“One problem in Florida, which is noted in the congressional report, is the high number of homes where the borrower owes more on the loan than the home is worth. That’s the situation for Margate resident Wayne Henthorn, who bought his home in 2007 and is now about $120,000 underwater. Henthorn, requested a loan modification in July 2009 after the birth of his second child. Even with both he and his wife working they struggled to pay for day care and the mortgage.”
“The couple was awarded a trial modification that saves them $350 a month. Nearly a year later, they still don’t know if they’ll get a final approval. ‘Earlier this week, my wife called and they said we weren’t approved, then we got a letter Wednesday saying it had been sent to an underwriter and was in the final stages of approval,’ Henthorn said. ‘It’s so aggravating.’”
“Some homeowners are choosing to miss monthly payments rather than pour more money into homes that have lost 30 percent in value. ‘People who have prime jumbo loans, people with good jobs, with assets and nice cars are talking a hard look at this investment and making a decision, a conscious decision, to strategically default on their loans.’ explained Bankruptcy attorney Chip Parker in his Jacksonville, Florida office. ‘These are professionals making business decisions about their homes. Subprime is over — these are Alt-a and option arms loans….people with 700 and above credit scores. They are treating their homes like a business deal.’”
“85-year-old Joe Lerner had hoped that the home he built on Harborview with his wife June would be their nest egg. But a slowdown in his business and plummeting property values in the neighborhood are forcing the couple into an unthinkable decision. ‘We are faced with either selling the house at a very low price or going into foreclosure’, said Lerner. They have missed the last three mortgage payments. ‘Not only does it not make sense to pay it - it’s gotten to the point where we don’t have it. This was our nest egg that we invested here. This would be our retirement and as it has worked out the exact opposite has come about. We are in a pickle right now.’”
“‘We just adore it. It has just about anything anybody would ever want in it…but at the same time nobody can afford to buy it right now,’ says Joe’s wife June. ‘Today nothing is normal. Everything is upside down. We are just riding it out with along with a lot of other people and there are a lot of houses out in the harbor that are for sale that you would never expect.’”
“The economy improved, both in the nation and in the mid-Atlantic region, the Federal Reserve system’s latest Beige Book economic snapshot reported yesterday. The services and finance sectors saw mixed conditions, with a North Carolina property management executive reporting ‘the repo man is busy,’ the Richmond Fed said.”
“Demand for commercial and industrial loans was weak, bankers told the Fed. Housing sales improved, but prices were flat in Richmond and down in Fredericksburg, where a real estate agent reported that ‘banks seem to be willing to take anything within reason to reduce their holdings of foreclosed properties.’”
“Bank of America, the nation’s largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar. The bank said the increased activity was a natural consequence of borrowers running out of options.”
“‘My Bank of America asset manager told me we’d really start to get hit with inventory in mid-May to June,’ said Teri Garcia, a real estate agent based in Escondido who sells Bank of America foreclosures.”
“Garcia said the local supply of foreclosed homes has been low all through the winter. She was thrilled to hear that more homes might be coming onto the market this summer. ‘Let’s get them on the market, get them sold, and get through all this,’ she said.”
“Carlton Boujai, treasurer of the Maryland Association of Realtors, and a former president of the local Realtors organization, said federal tax credit program, offering $8,000 for first-time buyers and $6,500 for other eligible buyers, has not been as large a factor in the market as expected. ‘Only 29 percent (nationally) of buyers said they purchased a home because of the tax credit,’ he said.”
“Sasha Scaun, sales manager with Wormald Cos., said people are looking to capitalize on the tax credit, but many are under the false assumption that it will be extended. There is no plan to lobby or fight for the extension on Capitol Hill, ‘as they know it is futile,’ Scaun said. ‘There were thousands of fraudulent cases and the government is going to spend time investigating those cases before they revisit extending the credit.’”
“Scaun said the market needs to recover on its own and let things play out. ‘People are pricing their homes as aggressively as they can, but there is a limit to what they can reduce to,’ she said.”
“Bankruptcy filings in the Tampa/Fort Myers division jumped nearly 21 percent in the first quarter, a pace that would smash last year’s record. On the personal bankruptcy side, industry players say the single-biggest driver is the ailing housing market. Chapter 13 can help homeowners avoid being forced to pay off second mortgages or home equity loans. That, at least in part, could help explain the rise in popularity of Chapter 13 filings, especially given Florida’s current housing crises.”
“‘Some of those people have used their homes as a piggy bank for a number of years,’ said Smith, the bankruptcy trustee in Tampa who specializes in Chapter 13 filings. ‘Now they’re breaking the piggy bank and throwing it away.’”
“The bankrupt Lake Las Vegas development is seeking court permission to hire a high-powered Dallas law firm to file fraud lawsuits against former investors in Lake Las Vegas, including four Texas billionaires. Conditions at the community aren’t likely to improve soon, Lake Las Vegas says.”
“‘During 2009, 42 new homes have sold at prices that are up to 70 percent less than previous closing prices for the same type of home,’ attorneys for Lake Las Vegas said in an April 2 court filing. ‘Conversely, while foreclosures were at a record high within the community, record levels of resales also occurred. For calendar year 2009, 294 resales have been consummated at prices up to 80 percent below their original purchase prices (some of which were purchased less than two years ago).’”
“Just after lunch Friday, in a nearly empty courthouse foyer, a pillar of Chester Trabucco’s once-great estate crumbled. It’s neither the first nor the last to go. Records show creditors are closing in from all sides on Trabucco’s assets in Astoria. Trabucco said his fall from grace mirrors that of other commercial real estate developers: Ill-timed investments in riverfront condominiums sealed his fate. ‘It’s a far cry from ‘It’s a Wonderful Life’ where everybody chips in to help a guy out,’ Trabucco said. ‘You can’t really blame them.’”
“Four years ago, the Ocean Club, a 242-unit condo project that promised buyers Miami beach style in the shadow of Kelly’s Roast Beef. The market’s frothy peak brought in deposits on obscenely priced units, and the crash that followed shortly thereafter relegated the project to a scrap heap overflowing with speculative projects long on ambition and short on cash.”
“The project’s developer, Steven Fustolo, didn’t quit when the banks told him they’d suddenly decided to stop pushing luxury condos into an already overcrowded pipeline. The luxury bubble popped, croaked the Ocean Club, and left Fustolo with little more than some nice architectural drawings and a few acres of undeveloped land on the beach, according to the bankruptcy filing. It also stuck him with a $13.6 million pre-development loan he had no way of paying off, and $2.4 million in unpaid legal costs, architecture fees, and consulting bills. The project went from being appraised at $82 million, to $3 million, in less than two years, according to appraisals filed with bankruptcy court.”
“Real estate investors across the country are now walking away from failed bets they made during the boom. They’re tossing back the keys to properties now worth far less than the mortgages on them. Not Steve Fustolo. The Burlington accountant personally guaranteed much of the Ocean Club’s debt, according to filings in the Suffolk court case. It’s likely that a judge will soon order the Ocean Club site sold at auction, and it will sell for pennies, possibly leaving Fustolo on the hook for more than $20 million.”
“Number-crunching economic analyst Jonathan Schechter finds that real estate prices in Jackson Hole have bottomed out at prices below those of 2001. ‘… the crash has been so great that, corrected for information, it wiped out nine years’ worth of gains in mean prices,’ he writes in the Jackson Hole News & Guide.”
“The Bay Area Economic Club featured Jan Hopkins, president of the New York Economic Club, and former CNN anchor and correspondent gave an uplifting presentation. Reflecting on the financial crisis, Hopkins discussed how media frenzy and the surge in consumer spending were major causes of the problem. She also discussed what changes will need to be made to prevent it from happening again, regulation on Wall Street being one of them. ‘Wall Street is a small community where nearly everyone does what the guy next door is doing, except for some smart hedge fund managers who do the opposite and make a lot of money,’ said Hopkins.”
“Hopkins asserted that group-think is what led to the .com bust in the ’90s, the housing ‘bubble’ in the millennium, and what may become a bubble in the Asian market. It will continue to create bubbles that will eventually burst, if this behavior isn’t changed, she said. ‘Wall Street keeps score solely by adding up how much money is made,’ she said. ‘No one asks, what’s enough. There are other bubbles probably forming now, but we don’t really know where until the bubble bursts. If you see everybody rushing to get on a bandwagon it might be a good idea to go towards the exit. Being a contrarian often works well.’”
“You will be hearing a lot about the nation’s economy between now and November. Politicians hoping to keep their seats in the halls of power, or take one away from an incumbent, will tell you who’s to blame for this recession. Republicans will capitalize on the Obama administration’s struggling recovery effort and try to pin the tail on the donkeys, as in Democrats. Democrats are just as certain to point to eight years of benign neglect by the Bush administration.”
“Both sides are correct. It is the other guy’s fault — the fault of so many guys, in fact, that it’s difficult to know where to begin. There’s Alan Greenspan, former Federal Reserve chairman, who was a firm believer in Reagan’s deregulation approach. Greenspan was in Washington a few days ago, pleading his case, after accusations that he was asleep at the wheel as Fed chairman, missing obvious signs of the approaching collapse.”
“The aforementioned President Bush II contributed to the mess by promoting home ownership but with less mortgage industry regulation, laying the foundation for the housing bubble that ended with the pop heard around the world.”
“President Clinton signed laws that tore down the wall of regulatory separation between commercial and investment banking — laws that had been in force since the Great Depression — contributing directly to the growth of mortgage derivatives, which was the sharp point that burst the housing bubble.”
“Congressman Barney Frank joined the Bush team briefly in encouraging Americans to buy homes — no matter what the cost — through federal subsidies to Fannie Mae. Sen. Chris Dodd fought efforts in Congress to have better controls on mortgage titans Fannie Mae and Freddie Mac, adding to the problems those entities would later encounter.”
“We could mention the names and transgressions of dozens of CEOs who steered their companies into insolvency while pulling down tens of millions a year in salary and bonuses. But we’re drawing to the end of our space here, and we need to name the chief culprit in the great economic meltdown of the early 21st century.”
“It’s us. As in we, the people. Americans too willing to buy now and pay later, running up mountains of debt, without any reasonable means of paying the inevitable bills. People too eager to buy into the notion that, if we don’t have the money to pay for a new car or a flat-screen TV, we can just charge it.”
“In the end, it all comes back to personal responsibility on everyone’s part. Now, let’s figure out how to fix this mess.”
Dang, I hope the Short Sale that I have an Contract on goes thru & doesn’t go on to Foreclosure…
Well, I’ve seen a lot of listings for short sale fall into forclosure. Months and months later they come back as a REO at a much cheaper price. Unfortunately by then the FBs have trashed them out of frustration.
Think of the upside: At least your scenario enables banks to delay recognizing losses on the asset side of their balance sheets.
http://www.huffingtonpost.com/2010/04/15/gop-warms-to-breaking-up_n_539412.html
Anybody who is supporting the GOP in the mistaken belief that they will stand against the fiscal insanity of the past two administrations should think again. Mitch McConnell and the entire GOP leadership are sleazebags who despite their attempts at populist rhetoric, are whores for Wall Street and its K Street bagmen. The beginning of wisdom is to understand that BOTH parties are equally corrupt and beholden to the corporate conglomerates and financial elites who are this country’s true masters.
Hohum - The old “both parties are equally corrupt” argument.
Tell me - then why do trial lawyers, private labor unions, public labor unions, reparation seeking minorities, environmental marxists and big banks (GS) consistently vote and give 99% of their money to democats?
And why is it that the only party producing ANY believable fiscal conservatives (and still way too few) is the Republican party?
And why is it that the only party that historically has had a significant (but again way too few) and consistent “small government” component is the Republicans?
So my request to you democrats who post on this blog: why don’t you just stop trying to deflect the blame that you deserve by constantly pointing the finger at the republican party whenever the depravity of the democrat party manifests itself.
Right on!!!!!!!!
“He who joyfully marches to music in rank and file has already earned my contempt. He has been given a large brain by mistake, since for him the spinal cord would surely suffice.”
-Albert Einstein
Oh puhleeeze! The republicans are every bit as slimy, moronic, and mendacious as the democrats. Put down your rah rah pennant and open your eyes.
Russ-
Do a google search on Sammy Schadenfreude, bung hole, and hairy ass cheeks.
I think you’ll find that Sammy holds both the republicans and democrats in an equal measure of contempt.
Sammy - I hope I captured that accurately. I don’t want to put words in anyone’s mouth.
Obunghole Obamo…..there we go….that’s kenyan for hairy ass cheeks.
Ol’ Bubba,
Yes, you captured my sentiments correctly. There are individuals in both parties who are decent and honorable, but both parties are way too beholden to corporate and special interests. That’s why the occasional partisan bickering in here is misdirected. Both parties suck.
Oh puhleeeze! The republicans are every bit as slimy, moronic, and mendacious as the democrats. Put down your rah rah pennant and open your eyes.
There is a difference.
The Republicans are ruthless and the Democrats are clueless.
But this applies equally to democrats in office.
FIGHT ORGANIZED CRIME — VOTE FOR NO ONE
I have 3 options when voting. Vote for the party that thinks govt is the answer to all problems and no tax is ever low enough, vote for the sort of capitalist party that thinks a tax cut is the answer to all problems or waste my vote on a 3rd party.
I’ll take option #2 each time.
And how do you feel after your taxes are cut without a corresponding cut in spending?
We’ll let you know when we find that.
We’ll let you know when we find that.
Hint: Check out the Reagan, Bush 1, and Bush 2 administrations.
Exactly which party is #2?
vote for the sort of capitalist party that thinks a tax cut is the answer to all problems or waste my vote
But the “free-market”, globalistic, crony-capitalistic, preditorial, monopolistic Republican Party has done more to destroy American capitalism than the Democrats. Why?
Because THEY could get away with it.
People still believe Republicans are capitalistic because they are ignorant to what they have accomplished in the name of the richest few in America.
The Republican Party is not capitalistic, it is crony-capitalistic and corporatist.
RioInBrasil, are you for real?
RioInBrasil, are you for real?
Yes Ki, I am real.
Are you real or are you a figment of your party’s imagination?
Yes, Rio is exactly right.
or don’t vote. voting makes it legit
Sadly Cassandra, after 37 years of voting I’m starting to agree with you.
Me too, but I’ve been voting longer than you. Have given it up for good.
(but again way too few) ??
And there-in the fricken problem !!!
Aligned myself with the “few” but still need to holds hands with the rest (i.e. Palin,Limpy & Southern Confederates)….No fricken Thanks…
Well, at leqast do your homework. The confederates were the party of the democrats. The party of slavery was the democrat party. The party of JIm Crow laws the the democrat party. The party that filibustered the civil rights laws was the democrat poart.
And I could go on.
Why do you call it the democrat party? I’ve never understood this. I’m being sincere.
Why do you call it the democrat party? I’ve never understood this. I’m being sincere.
Poor grammar is hip within GOP circles — they think it makes them sound populist.
Way to few (as in the republicans) is better than NONE (as in the democrats).
Go ahead - name me a “shrink government and shrink spending” democrat senator. Democrat Congressperson? How about dog catcher?
Go ahead - name me a “shrink government and shrink spending” democrat senator. Democrat Congressperson? How about dog catcher?
How about the 300,000 federal jobs eliminated as part of Clinton-Gore’s “Reinventing Government” [PDF] initiatives?
Of course, neither of them were senators at the time…
How about the 300,000 federal jobs eliminated as part of Clinton-Gore’s “Reinventing Government” [PDF] initiatives?
BAHAHAHAHAHAHAHA!!!!
They were all from the military. You know, the military Clinton cut by 40% during his term.
The rest of the federal government grew and grew.
You liberals are so funny.
Explain this chart then, dittoheads. (Warning, prepare for possibly fatal cognitive dissonance as everything rush and glenn have taught you is shown to be false. Chew gum so your little heads don’t explode.)
zfacts.com/p/318.html
Make it easier:
http://zfacts.com/p/318.html
The fricken confederates that talking about are the Angry, White, Male Bigots…Thanks for the history lesson though…
Well, at least do your homework. The confederates were the party of the democrats.
And the Republicans were the party that violently put down state’s rights (that they now champion) in favor of the federal government. Ironic, isn’t it, how opposing parties switch sides over time.
Alpha is 1000 percent correct. What party advanced the cause of civil rights? And voting rights for women?
Hint: It wasn’t the corporatist republicans.
Riiiiiight, I totally forgot about those massive spending cuts and deficit control enacted under Bush and the completely Republican controlled House and Senate from 2001-2006.
Oh, wait…
There are real differences between the parties, and different interest groups control each. Neither is interested in anything resembling fiscal discipline.
I don’t try to deflect blame. I agree with what Sammy wrote. By global standards, party differences over economic policy in the United States are small. And if you go looking for depravity, there always will be plenty of it to be found, because depravity has a much stronger relationship with power and money than it does with ideology.
A classic “our rats are better than your rats” argument.
You need to ask yourself “Overall, whose policies have been most destructive over the past 20-30 years”
The Democrats have been the party of the “free lunch”
The Republicans are the party that has compromised the integrity of the country’s major institutions.
So which is more destructive? The prototypical Republican stereotype “welfare queen” who may or may not be getting a few hundred bucks a month that she shouldn’t be?
Or the Republicans, who have basically supported policies that have turned the US into a Wall Street led Banana Republic?
I know a little dog named- Bingo!
And never forget that when you give poor people money, it ends up in richer people’s pockets- minus taxes- in a day or two. It doesn’t seem to trickle down from the uberwealthy nearly as quickly- they can always invest in Chindia or something.
Good post, GSfixer.
Sammy,
Most everyone here should know how I feel towards politicos. I share the same sentiments as you when it comes to the two major political parties. In time even those that rode in the really short buses to school will have figured it out.
This story warmed my heart.
http://www.washingtonexaminer.com/politics/Hating-the-government-finally-goes-mainstream-90852389.html
The ‘K’ street bribers have spent over $100 mil with the Dems to get Dodd and company to pass the bill. The RINOs Collins and Snow plus a couple other RINOs also voted for the bill. Nothing is different.They should have spread some more of the money to the Republicans and Mitch wouldn’t have peeped out.
What about democrat sleazebags?
forgot the important part - Bank of America Short Sale…duh-need my coffee
Bank of America to Increase Foreclosure Rate by 600% in 2010
“Bank of America, the nation’s largest mortgage lender, ramped up its foreclosure activity in March, sending hundreds of letters warning delinquent borrowers in the region that it could sell their homes at auction in as little as three weeks, according to North County Times analysis of data from ForeclosureRadar. The bank said the increased activity was a natural consequence of borrowers running out of options.”
I propose a class action lawsuit by all home owners who are facing foreclosure actions by Wall Street Megabanks (e.g. Bank of America, Wells Fargo, J P Morgan Chase, Shittibank, etc) which received TARP funds and which were supposed to participate in the HAMP program but aren’t. Why should the nation’s largest banks get summarily made whole by Uncle Sam while Main Street American home owners are shown the street?
Why should the nation’s largest banks get summarily made whole by Uncle Sam while Main Street American home owners are shown the street?
—————————————————————————–
Because George Soros said so.
I guess it is safe to assume that Soros had lots of money riding on a recovery of said banks before he started offering Uncle Sam his helpful advice?
Well, he’s managed to only make about 2-3 billion dollars so far this year..
Get real. Soros sold the dollar short.
Because the home buyers took the loans and bought the property?
Some home buyers were reckless? Yes. Many however were not but greed of real estate, mortgage brokers, banks all were after the fast money. Underwater, “run , don’t walk” from a loan that will take over 50 years or more to pay back on houses Still going down another 10-40% in many locations.
Can anyone who believes houses will no longer fall further there is a tooth fairy who will leave money under your pillow soon!
How about a class action lawsuit by renters and responsible owners with affordable/paid off/no mortgages to get them to quit giving money to ANY of the clowns involved, banks OR homedebtors?
+1
Personal responsibility, folks. Personal responsibility. You can spread the blame as much as you want but in the end … its personal responsibility.
Just because you were dumb enough to believe the realtors that prices will always go up, does not absolve you from blame. The realtors were dumb enough to believe themselves.
“Greenspan was in Washington a few days ago, pleading his case, after accusations that he was asleep at the wheel as Fed chairman, missing obvious signs of the approaching collapse.”
The problems with giving geriatric drivers free reign to steer tanker ships ought to be obvious by now.
Wait until you see the US Supreme Court guys…..
I may be coming to Boise next fall. Will you be around? Maybe we could get together for a beer and some bubble talk…
I’m not going anywhere…..I’m a N-FB.
Greenspan plowed his fogeyboat right into the farmers market of our economy.
Then tottered across the street to Country Kitchen to coffee with his super low rate FedCred card.
I dunno. Volcker still sounds pretty sharp.
Greenspan was “missing” signs because he was blinded by his love for Ayn Rand.
“Hopkins asserted that group-think is what led to the .com bust in the ’90s, the housing ‘bubble’ in the millennium, and what may become a bubble in the Asian market.”
Does the rate at which central banks run the money press have no role in the bubble creation process according to Hopkins?
the masses were just organisms reacting to stimuli. amoebas even do that.
Year over year March 2010 house prices up 20% in Toronto area. No bubble here.
I am lmao listening to how banks such as jpmorgan and bofa are all of a sudden making big money again.The bad loans on their books would make greenspan proud.
Do any of you know how to short the housing market in china via the us stock market?
I am astonished at how borrowing from the Federal Reserve at 0%, and investing that money in Treasuries paying 4%, gets passed off as business acumen justifying a large bonus.
Hey, people who use leverage in their favor are brilliant. My co-worker who bought a one bedroom condo in northern Virginia and has been renting it out at a $700 a month loss for the past few years told me so.
He did claim last week that he may never have to pay capital gains taxes again for the rest of his life, so I think he may be planning to sell.
“He did claim last week that he may never have to pay capital gains taxes again for the rest of his life, so I think he may be planning to sell.”
That guy is willing to go a long way to find the silver lining!
Wisconsin bankruptcy filings rise more than 20%
By Paul Gores of the Journal Sentinel
Posted: April 15, 2010
Lingering unemployment continued to take a toll on consumers and small businesses in the first quarter of the year, as bankruptcy filings in Wisconsin rose more than 20%…
http://tinyurl.com/y3zxr2s
Bank Mutual profit drops 71%
By Paul Gores of the Journal Sentinel
Posted: April 15, 2010
Profits fell almost 71% in the first quarter for Bank Mutual Corp. as interest income declined and the bank continued to have higher-than-normal loan delinquencies.
The Brown Deer-based parent company of Bank Mutual banks posted net income of $2.1 million in the quarter ended March 31, compared with almost $7.2 million in the first quarter of 2009.
“The interest rate environment continues to challenge our performance as we structure our balance sheet for what we believe will be higher interest rates in the future,” said Michael T. Crowley Jr., chairman, president and chief executive. “In addition, some of our borrowers continue to experience financial difficulty due to the lag effects of the recession.”
http://tinyurl.com/y5ph4n4
Michael Crowley runs the 5th largest bank in Wisconsin and his claim to local fame was ” conservative banking principles and careful lending” with a history of low rates of return to savers even before the war on savers began.
As for the remaining four largest Wisconsin banks, well, Crowley’s Bank Mutual may soon be the 4th largest bank if the Gov’t guys in suits walk into Madison’s largest bank, Anchor Bank, some Friday afternoon to say…
“Hi, I’m from the government and guess what…You’re gonna Cease and Desist”
Yup…Wisconsin may not be a big time FIRE player like the coasts, AZ and NV, but we’re in some serious financial bubble trouble here too due to house speculation, lousey banking practices and the unemployment situation.
…and it’s only just begun.
Loonie at par, interest rates going up, HST, what’s to worry?
I’ve heard Canadians have been seen cherry picking the housing ruin here in Arizona for investment properties. Neighborhoods here have really morphed from quiet and peaceful to loud and chaotic. Ex-neighbor here bought for $245K, went to foreclosure and bank sold late March for $134K. Likely buyer will do what many have, rent it out to a big family with loud barking dogs and too many vehicles. Love this trick: renter sublets a room to someone not on lease. Ten-to-one that revenue is never reported to the landlord or IRS. Trust me on this one: Noise-canceling headphones are the salvation between toleration and insanity. God I hate AZ. If only I could sell without losing more than 25%!
Bothered by barking dogs? You’re not alone.
Join with the rest of us as we create a Quiet Homes movement. We hang out at the Yahoogroup associated with the BarkingDogs.net website.
We have dogs.
When they bark, I grab my shotgun.
The way my neighbors dogs carry on, they must have a shotgun in hand at all times.
“Whenever I hear the word ‘culture’, the first thing I do is reach for my revolver.”
Befriend the dog…He will stop barking…I am more bothered by “barking people” (tea-party).
They are the ones that need the muzzle !!
Thanks, but I’d rather have human friends. What the barking dog needs is an owner that pays attention to it, rather than dumping it out in the yard for all the neighbors to hear. And, if that’s too much to handle, then get rid of the dog.
Well behaved dogs always seem to have
responsible owners, I wonder why?
I agree…Many people should not be allowed to own a dog…One visit to the Humane Society will show you that…
In Switzerland, all potential dog owners are required to pass a 10-week course that outlines their responsibilities as caretakers. This is before they’re even issued a dog license. And, even better, they (meaning the people) are required to pay for the course.
“In Switzerland, all potential dog owners are required to pass a 10-week course that outlines their responsibilities as caretakers. This is before they’re even issued a dog license. And, even better, they (meaning the people) are required to pay for the course.”
Now that’s a government program I can embrace
I’m fond of subsonic .22 for such urban disturbances. An expensive pellet gun also works, and you get less time if you get caught.
A group of B.C. condo owners say they were unfairly pressured by a national developer into paying much more than their condos are worth, while the developer secretly gave their neighbours big discounts.
As ten-month old Mini-Chile would say, “pfffftttftftftftft”.
If you don’t think something is worth what you’re about to pay for it, learn to negotiate. Sometimes that means walking away. If you don’t have the guts to walk away, guess what, it means you’re willing to pay more.
Who are they kidding, they loved the price. Who wants to bet they celebrated their signing by taking the wife out to dinner and noisely bragging about the great deal they just snagged to every other diner within earshot?
I love to listen in on conversations like that. Gives me something to chuckle about after I’ve left the restaurant.
Ditto for eavesdropping on cell phone calls. I’ve heard things like a guy placing a phone order — in the middle of a public library — and loudly reciting his credit card number for all to hear.
….eavesdropping…
There’s no end to the number of complaints you can find about loud mouthed cell phone asshats.
My solution is to carry a little Sony voice recorder. When I pointedly aim it at the asshat (don’t even bother to switch it on)
he or she pipes down 90% of the time.
I wish there were a well known website where I could upload some of what I -have- recorded….
I pick up my cell and dial my daughter and start repeating their conversations. “You won’t believe what I just heard…now she’s saying…” Do these morons think they become invisible when they put a cell phone to their ears?
A group of B.C. condo owners say they were unfairly pressured by a national developer into paying much more than their condos are worth, while the developer secretly gave their neighbours big discounts.
And, as has been pointed out numerous times before, do you think these “investors” would have shared their gains with the developer if the properties had appreciated as expected?
Real Estate Could Beat Stocks, Bonds: Bill Gross
http://www.cnbc.com/id/36565848
I always assume Gross’s comments are intended to lure the unsuspecting into taking the other side of the bet that PimpCo is making.
His political influence has indeed been remarkable. That’s probably the single best reason to invest in any PIMCO bond fund.
What if DC “unexpectedly” repudiates political influence by financial firms that stand to profit if their “helpful” advice is heeded? Would that change your reasons to invest in PimpCo?
“Scaun said the market needs to recover on its own and let things play out. ‘People are pricing their homes as aggressively as they can, but there is a limit to what they can reduce to,’ she said.”
————————————————————————-
So we went from “I’m not going to give it away” in 2008 to “but there is a limite to what they can reduce to” today.
Tomorrow anyone?
Gee, I wonder what that “limit” would be. Heheheh.
Probably one cup of coffee if they throw in a buck. (Or five, if they want starbucks coffee)
foreclosure/short sale/jingle mail
Any others?
Another cause for the spike in Chapter 13 filings that the article does not mention is likely due to greater numbers of debtors whose income exceeds the amount that would qualify for a chapter 7. One of the more onerous aspects of the 2005 act from a debtors’ perspective is the presumption of abuse that has to be rebutted when a debtor files a chapter 7 and has income above the state median.
This tells me that more people with higher incomes are filing. In nearly every case I’ve come across, someone who qualifies for a 7 will file that in preference to a 13, even with the cramdown provisions that a 13 provides.
“even with the cramdown provisions that a 13 provides”
What are these provisions? We aren’t talking about mortgage cramdowns, are we?
In a small nutshell, cramdown means that in a chapter 13, the debtor only pays back what the collateral is worth when the chapter 13 payment plan is proposed. It is most commonly seen in cases in which the debtor owes more on the loan than the value of the underlying collateral. Cars are a good example in which it is common for a debtor to owe more than a car is worth. Another term for this is “lien stripping” because the amount owed in excess of the car’s worth is simply removed once the plan is approved.
Cramdown does not apply to residential mortgages — yet. Why it doesn’t makes a good question. My guess is that the drafters of the bankruptcty code assumed that a homeowner would never be underwater, and hence the problem would not arise. The last major overhauls of the bankruotcy code occurred in 1978 and 2005, so they predate the current situation of declining home vaules. Remember, houses only go up, right? Cars, on the other hand, depreciate rather quickly.
“85-year-old Joe Lerner had hoped that the home he built… would be their nest egg. But a slowdown in his business and plummeting property values in the neighborhood are forcing the couple into an unthinkable decision. ‘We are faced with either selling the house at a very low price or going into foreclosure’, said Lerner. They have missed the last three mortgage payments.”
Nest egg? He’s 85!!! The bank gave an 85 year old a mortgage! And it will be completely “unexpected” when the lender ends up with the real estate.
‘And it will be completely “unexpected” when the lender ends up with the real estate.’
This gets straight to the point of why many debt men walking would do best by sending jingle mail today rather than participating in any kind of forbearance exercise. If the bank is going to eventually take back the home anyway, continuing to make payments amounts to just giving away money to the bank.
make payments amounts to just giving away money to the bank ??
From the article;
“People who have prime jumbo loans, people with good jobs, with assets and nice cars are talking a hard look at this investment and making a decision, a conscious decision, to strategically default on their loans”
Just a tiny little problem here…If its in California and its a non-purchase money loan (Refi), there is deficiency judgement exposure…Thats why the group above will not do the “Jingle Mail Walk”….
Jingle mail boogie has more of a ring to it.
It is a common misconception about recourse loans that they are recourse by default.
These loans are recourse only in case of judicial foreclosure. That means banks have to go to court to prove their loss and then with courts permission they can go after the assets of the borrower.
if it is a non juducial foreclosure they cannot go after the loans if it is held againt the asset.
that is my understnading
Yes but the point is if you have assets, what Judge would not award the Deficiency ??
LOL! He might not be alive anymore by the time the mortgage is foreclosed!
He is the perfect individual for stopping payments and claiming squatters rights. For good measure, he should notify the local newspaper that Megabank of America is cruelly trying to kick an 85-year-old out of his home.
An eighty-something friend of mine did get foreclosed on.
85 years old??????!!!!!
You should be living in a one story small rancher that was paid off 30 years ago with the rest of your money in t-bills, bonds and CDs…
Agree. Of course, that was back when you could buy a house when you were 25 and actually hope to pay it off.
When I buy, it’s gonna have to be a 15 or straight-up cash, because I’m getting to an age where I do have to consider that may not have 30 years..
Joe’s wife June says she relying on prayer to get her through the stress of losing her home.
Good thing they have a plan.
The couple’s age (June is 78) make it nearly impossible for them to get a loan modification for their 5,200 square foot home that was once worth over $2 million.
I’d sure hate to have to maintain a house that big when I’m 85.
A bank cannot legally deny someone a mortgage based on the fact he’s 85.
One more example of extreme political correctness turning into stupidity.
It’s not PC to disallow discrimination.
I think it is generally PC to disallow discrimination.
But there really isn’t anything wrong with giving a mortgage to someone who is 85, if you’ve done proper underwriting. With reasonable downpayments, there is nothing for the bank to lose.
This is sad. It’s possible that both Joe and his wife are suffering from dementia. Wonder what their kids, if they have any, think of the parents’ “investment”.
Kinda makes my own 89 year old father’s desire to buy a car look paltry in comparison. It’s been 8 months, and he still mourns over giving it to my sister. The road to elderhood can be bumpy. Or like falling off a cliff.
Don’t worry. This problem will be fixed as obamacare goes in full gear….
I think the old man has been covered by “socialized medicine” for decades now.
Probably so.
And look at what being able to absolve oneself of personal responsibility has done to this elder’s decision-making ability.
He made stupid decisions because the state is there to cover his heiney. Socialize the risks - he knew about it and took advantage. Still is.
Why was an 85 year old building a 5,200 sq foot house? I’m supposed to feel sorry for these people?
“Wall Street is a small community where nearly everyone does what the guy next door is doing.”
And for this they expect to get paid like uniquely important geniuses.
“Except for some smart hedge fund managers who do the opposite and make a lot of money.”
That doesn’t include most hedge fund managers, whose “smarts” consist of doing whatever everyone else is doing AND leveraging the bet.
And this is why making sure than none of the banks are “too big to fail” is not nearly enough. Letting a hundred of them do the same thing is just as risky to “the system” as letting 10 of them do the same thing.
I don’t think all of the antibailout crew understand this. The powers that be would bail out the smaller entities eventually because once enough of them went under the risk to lending would still be there.
We need restrictions on behavior (leverage, risk with no reserves against them, off book debt, etc.) Oh, and if you want to trade on your own portfolio? No Fed discount window for you. And if you want to sell stuff to your customers? You can’t bet against them even if there is a “Chinese wall” between the two departments.
Right. That’s Geithner’s point about increased capital requirements being more important.
It is, however, offensive that the highest paid people in the U.S. do nothing more than what they hear each other are doing on the golf course.
Did Geitner do his taxes ‘this year’ with Turbo Tax? Has he sold his house ? Inquiring minds want to know.
How about eliminating all discriminatory federal government treatment of households and firms with respect to financial standing, period? Putting some entities in a special “to be rescued when necessary” category and leaving others out seems like a great recipe for long-term destruction of America’s middle class, aka, the goose which used to lay golden eggs. By now, it may already be far too late to undo the damage.
“She got into trouble during the housing boom by taking out a risky loan against her home and using the money to buy two investment properties in Phoenix. She later lost those two properties to foreclosure, and now she is trying to sell the home she lives in for $209,000, but the mortgage balance is $350,000. . . Chambers, who owns two hair salons. . . said she’s resigned to scaling back her lifestyle and renting out an apartment. ‘I’ve had to accept a lot in the last year,’ she says.”
It’s stories like this that keep me up at night. I find the struggles she endured heartbreaking, and it keeps me up at night as I sit in my modest one bedroom apartment. She has to live like scum like me and work for money. Horrible.
Oh, the allure of something for nothing. Its the “Miracle-Grow” of every bubble.
God forbid she has to rent!!
No problem..Bernokio can print $350K in an Obama tele.
I feel your pain.
‘I’ve had to accept a lot in the last year,’ she says.”
Yeah, and we’ve had to listen to FBs like you bitch for several years, lady. The world’s smallest violin will soon be playing you a fugue in D minor.
D minor.
The saddest key…
People weep instantly when they hear it, and I don’t know why.
There’s a limerick, that I can repeat some of here:
A woman from South Carolina
Placed organ pipes in her ——
With the proper sized —–
What was sex became Bach’s
Tocatta and Fugue in D Minor
I think most Americans don’t even know what work is anymore. Other than a couple of coffee breaks when you see me on the HBB, I’m booked from 6:00->9:00PM with meetings and obligations 5 days a week, and often on Sundays.
Between a professional bookkeeper, CPA, and tax attorney, I probably spend around $7000/year just on tax compliance! Basically, I have to spend $7K a year just to figure out the rules so I can send 50% of my money (burden of all taxes combined) to the Government and stay out of jail.
Do you like songs in D minor too?
That’s a very interesting question!
He prefers the blues…. any key, pentatonic scale.
The blues scale has an additional note from the pentatonic scale: a #5/b5 (from minor pentatonic). But it can be played in any key
Is anyone in the mood today for some plunge protection bungee jumping?
Dow Jones Industrial Average
P.S. Way back in the early days of this blog, circa summer 2005, I was watching the hope builder stocks do exactly the same thing as the DJIA did at the opening bell this morning — that is to say, on a regular basis, the day would start off with a big drop in share prices, followed by a quick bounce back to opening bell level. Not sure what explains this curious phenomena, but I do note that within a couple of years, the hopebuilder share prices collapsed. I also cannot say whether the same is likely to recur with the DJIA over the next couple of years…
“85-year-old Joe Lerner had hoped that the home he built on Harborview with his wife June would be their nest egg. But a slowdown in his business and plummeting property values in the neighborhood are forcing the couple into an unthinkable decision.
If I even start to rant on this two things will happen:
1. My keyboard will melt
-and-
2. Ben will ban me for using excess bandwidth.
Isn’t 85 years enough time to learn not to be stupid?
Rant on, dude.
Maybe he isn’t stupid just senile.
This has happened to several relatives. One of the warning signs is making careless expenditures.
My 89 year old father wants to buy a car. A new Chevy Malibu. He is mourning the loss of his wheels, having given his car to my sister when he & Mom moved to be near me. Unfortunately there is a car dealer within easy walking distance of his apt. building…..fortunately, the inertia factor may prevent him from making good on his threat.
My father is 85 and is mighty in many ways, such as in having all of his possessions are fully paid off. However, he’s starting to exhaust himself in extremely ambitious projects such as rewiring one of his boats so that he can install a motorized winch to haul his anchor up. That sounds cool on one level, but he works 5-6 hours straight in the hot sun and doesn’t seem to have the judgement of when to stop and rest. It’s as if once he gets on the treadmill of an activity, he can’t get off. I am saddened and worried by this trend. He still understands his finances, politics, etc. quite well. Hopefully, he won’t kill himself over an “effing” winch installation in the meantime. He could afford to have the thing installed 100 times over. I can’t insult him by telling him overdoing it, because he would take it wrong, but I did tell him that he sounded “mighty tuckered out” when he answered the phone, and he was not able to talk for long. Dyspnea.
Your father sounds as stubborn as mine, Silverback.
It will get worse, at least that’s what my wife
thinks.
IMHO, I admire the guy. This is the man’s last freedom, his equivalent of shaking his fist at the gods. He will overcome the mythic beast. From the standpoint of character, this speaks volumes. As I see it, the man deserves admiration: he is exercising his human capacity to triumph, and is smart enough to do it in a protected arena, within the confines of winch installation.
He is NOT going out buying $500K houses on credit.
He has NOT taken on a 20-something Russian bride.
He has NOT bought a red Ferrari.
He is flexing his muscles in an arena where he can feel the pleasure of mastery.
It’s sort of like Hemingway’s novella. The Old Man and the Sea. Sing his praises, for heaven’s sake!
“‘The redefaults signal the worst form of failure of the program: billions of taxpayer dollars will have been spent to delay rather than prevent foreclosures,’ the Congressional Oversight Panel report stated.”
This is the part where millions of Americans who did their best to steer clear of the housing mania get put on the hook to cover the cost of Wall Street’s collapsed mortgage securitization scheme.
Goldman busted! What happened? Did Obama turn on them?
YES!!! This has been so long in coming. Remember, when you see one cockroach there are lots more in the shadows. I hope BAC, C, JPM all get reamed. If Obama pushed this then maybe we will see a lot more regulation. Add this to the crack down on mining and maybe the tide in turning.
blue horse-shoe loves bluestar.
“Remember, when you see one cockroach there are lots more in the shadows.”
This is why I believe it is necessary to conduct an independent, free-ranging investigation of Wall Street not involving the Fed, the Treasury, the FDIC, the SEC or any other government agency under control of the President’s Working Group on Financial Markets. How else will you get to the bottom of all the fraud which may be hidden under Megabank, Inc’s wall of secrecy?
I think this goldman thing is another excuse for the govt to have a reason to baliout the homeowners who were duped.It will become wall streets fault and then everyone will feel good about bailing everyone out.
Those poor duped house buyers that were bragging and the worst examples of “new rich.” So proud to have sucked fake money out of their houses and able to spend and do. Now that they have to pay back the loan they took against their perceived equity, they’re screaming like stuck pigs and trying to blame everyone else. They want a bailout from that socialist government, and don’t even get the irony.
or just tent the house
Does this mean someone will actually go to jail? …And it might be a Goldman guy? When’s the party!!!
-Gotta go take my donkeys accross the street to the foreclosure.
I wonder who drew the short straw for going to camp Wall Street, the luxury jail don’t you know.
they likely gave him a $10m bonus, stashed in an offshore account, to take the blame.
Does any one know if this is an actual criminal fraud case or is it a civil fraud one?
Civil fraud.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aUpzxecxkNUU
“The Securities and Exchange Commission announced Friday civil fraud charges against Goldman Sachs and one of its vice presidents. The agency alleges that the company marketed complex subprime mortgage securities and failed to disclose to investors that a major hedge fund had bet against the securities.”
The banksters want to shift their donations to the Republicans in exchange for opposing financial reform? Well, this is perhaps the response.
Are you familiar with the penalties in civil fraud? Assuming they lose, do they have to give up all the profits they made? Reimburse the purchasers they bet against for their losses? Some combo of both? Oh and here is the big one - if they have to give up the profits they made, is it the profits on just *that* transaction, or can they mush it together with other transactions (claiming the transaction was a hedge against something else making them part of one larger transaction) so they don’t have to actually fess up to the profit.
This will be very interesting. My old colleagues will be burning the midnight oil for sure.
I noticed Gollum lost no time in letting go of the director who was immediately involved in the Galleon case. It is too early to tell whether the entire malignant tumor has been removed or if, more hopefully, the cancer has metastasized and the patient is terminally ill.
“got rid of”
Any news as to how much his golden parachute payment was?
I am just hoping that the next “town meeting” with Warren Buffet and Hank Paulson takes place in San Quentin through two inches of plexiglass.
Is hedge fund manager John Paulson, named in the article, related to Hank Paulson?
Is Turbo Tax Timmy Geithner an “unindicted co-conspirator”?
Pressboard,
Hate to break it to you, but no one goes to jail because of civil fraud. Monetary penalty only.
We will see how this unfolds.
the guilty already got their run letters. The gulfs were fully fueled and are gone, were I to bet
friends (the pols) don’t let friends (the banksters) go to jail
Are you familiar with the penalties in civil fraud?
no but this ROCKS anyway! .
I think if goldmen Sachks is proved guilty they can get a fine of like a MILLION dollars! .
Why do I picture Mike Meyers saying that
One Million Dollars!!
they are saying civil but how is this level of deception not criminal?
Criminal fraud is very, very hard to prove, especially since the standard is beyond a reasonable doubt. The civil suit allows them additional discovery beyond what they already had in SEC filings, etc. If they find enough to bring it to criminal during that time, I think they can bring additional charges - a civil penalty case should not preclude criminal charges. But we will have to see. I’m not familiar enough with SEC procedures to give a firm answer.
Keep in mind that the SEC (which can only bring civil charges) and the DOJ appear to work closer than ever and share information, so criminal cases can always be ‘in the works’ in the background. Haven’t looked at the facts close enough in this case to wager a bet though.
Obama received more money from GS than ALL the other financial companies combined donated to the republicans. Let that sink in…
We’ve been over that again and again here. But with a little bit of good luck, this Gollum fraud investigation will prove to be the melting tip of the iceberg which eventually morphs into all-out global warming and melting of the polar ice caps. Perhaps if all Americans say a prayer in their hearts, the lid will get blown off the Wall Street racket before this episode in financial history is over…
Correction, The Obama “Campaign” took in all that money. They spent a lot of it before the election. Wouldn’t it shock everyone if Obama was a real hard-ass on the banksters. I really don’t care, I’m just thrilled something is happening.
Remember this guy:
http://www.portfolio.com/views/blogs/daily-brief/2008/10/17/hedge-fund-manager-goodbye-and-f-you
That’s a good read.
I also bailed while the getting was good. After burning myself out for 30 years in the “Silicon Valley lifestyle”, I quit my job and sold my house in May 2006 as preparation for getting out of Dodge. However, I didn’t send any FU letters. Life is too short to burn bridges.
You mean too long!
LOL, that’s what I was thinking WT. If it was too short, you might just escape without needing their help.
Someone at the SEC must have been reading Matt Taibbi’s ongoing take down of Goldman Sachs in Rolling Stone, haven’t seen such colorful writing since Spy Magazine days, when The Donald was described as a short-fingered vulgarian.
“The Donald was described as a short-fingered vulgarian”
Dang, I’m laughing so hard I can barely breathe right now. Truly awesome. I just love a good turn of phrase.
There are several explanations of the timing:
The simpliest is they just finished collecting the evidence.
The political is that the Obama Administration was willing to let bygones be bygones in exchange for better behavior going forward, and is retaliating against the attempt to kill financial reform. But not too much, which is why it is civil not criminal.
The economic is that they were waiting until the financial markets rebounded somewhat before hitting them with this, because they are too big to fail.
“But not too much, which is why it is civil not criminal.”
Excellent analysis. The criminal investigations can come later if Megabank, Inc keeps trying to block financial reform.
For the moment, I feel good again about voting for Obama…
PB voted for Obama? I feel like somebody just kicked me in the balls.
For the moment, I feel good again about voting for Obama…
For the moment, I do too.
But I’d still like to see some real reform of the health care, er, illness treatment, industry.
I still feel good about voting for Ron Paul. Haven’t felt bad once.
I sleep well every night having written in Ron Paul on my ballot. Maybe I threw my vote away, but I feel good about it for not selling out.
+1 on RP.
I am thinking Obama is furious. Along with every other orchestrator in the huge ponzi-mess and the even more corrupt handing of the aftermath. Somebody somewhere decided to DO something! They went against their superiors and said “Enough!” and somehow blew the whistle. This was not planned in any way by the scamsters. Good job and thank you whoever you are that took action damn the consequences. Thank you.
I’d just like to point out that the SEC is a quasi independent agency. The timing is unlikely to be correlated to any direct request from anywhere else. Sometimes things like this just happen at what looks like a good time.
I think that Obama and his politicos are very smart operators. I’m hoping that this time it will work against Wall Street. They’re trying to pass the financial reform bill, and the Repubs started vocal opposition this week. They’ve been sitting on a lot of Goldman dirt for a long time, waiting for the chance to expose fraud. This is perfect timing. How likely is it that all 40 Republican senators will vote against financial reform with new evidence of Wall Street fraud emerging and the stock market tanking, reigniting anti-Wall Street anger?
The political is that the Obama Administration was willing to let bygones be bygones in exchange for better behavior going forward, and is retaliating against the attempt to kill financial reform. But not too much, which is why it is civil not criminal.
I think it’s simpler than that — it’s much easier to pursue and win a civil fraud conviction rather than a criminal one. A civil case has a much greater possibility of success, and in politics a win is a win.
It’s amazing the market reacts the way it does to this to one company. TBTF? Then again, this reaction could be aversion to a sentiment that more regulation is coming in general.
Read the snippets of it. Don’t get excited. The gov’s case is very weak.
May be a political grandstanding at this point. We shall see.
I read the Washington Post article. Doesn’t sound that weak to me. GS told purchasers of the CDOs that the loans included in the secured pool were chosen by an independent consultant when they were really chosen by a hedge fund that was looking to put together a pool that was a guaranteed loser so they could short it. SEC says you have to disclose relevant information to investors. They didn’t. It is certainly more complicated than that, but this looks promising. One problem is that Goldman might be able to recover any penalty from their lawyers - the one who gave them the opinion that the deal was OK and the disclosure sufficient.
The hedge fund, which didn’t sell the securities to anyone, has no responsibility at all and is not accused of wrongdoing.
I’m waiting to see if it gets simpler than that. Pensions fail, no one likes paper work. Joe six pack can’t win anyway. Waiting to see if it doesn’t end with sharp sticks and torches.
A party hosted by Vyacheslav Molotov. Borrow a couple bucks for a cocktail.
I’m keeping my head down.
Looks like someone was too busy doing God’s work and didn’t pay their dues to the man (Obama). I am sure however that GS didn’t do anything wrong that a generous campaign donation couldn’t fix.
Don’t you guys worry, there will be no jail time for anybody. Just a friendly reminder to keep those campaign contributions coming.
Maybe this is just the big fish turning on each other as teh little fish have no money.
JPM and GS benefited from letting Lehmen crash.
maybe JPM now wants GS out of the way.
So much speculation in the market still. I love how gold and oil also dropped like a rock once the Goldman news hit.
Housing Starts Rise To Highest Rate In Well Over A Year
4/16/2010 9:07 AM ET
TOP MARKET NEWS
(RTTNews) - New residential construction saw a modest increase in the month of March, according to a report released by the Commerce Department on Friday, with the report also showing a substantial upward revision to the data for the month of February.
The report showed that housing starts rose by 1.6 percent to an annual rate of 626,000 in March from the revised February estimate of 616,000. With the increase, housing starts rose to their highest level since November of 2008.
Economists had been expected housing starts to rise to 610,000 from the 575,000 originally reported for the previous month.
The increase was due to a jump in multi-family starts, which surged up by 39.7 percent to an annual rate 88,000, more than offsetting a 0.9 percent drop in single-family starts to an annual rate of 531,000.
Additionally, the Commerce Department said that building permits, an indicator of future housing demand, surged up by 7.5 percent to an annual rate of 685,000 in March from the upwardly revised February rate of 637,000.
Building permits came in well above economist estimates for an annual rate of 625,000, rising to their highest level since October 2008.
The jump in building permits reflected increases in permits for both single-family and multi-family buildings, which rose by 5.6 percent and 13.2 percent, respectively.
…
Too bad the credit markets collapsed. Wonder how the builders will float all those mortgage when they try to close the deal?
I’ll be watching that ABX index tonight. Any bets they won’t announce any bank closures tonight? The markets are in a nasty mood.
I think the permits are the ‘trailing indicator’ of our dead cat bounce in late 2009. With the huge swing up in foreclosure activity, in about 3-6 months we’ll see the new starts crater once again as the second leg down gets into full swing.
I have no idea why the optimism of house builders is a good indicator of anything. You wouldn’t care if a dead hampster was feeling optimistic, would you? Well, I don’t care if these guys are optimistic. We already have more houses than we need to keep the population under a roof. It may not be ideally distributed, but that doesn’t mean we need a lot more houses to be built.
Hey PB,
My post yesterday was pointed at Green Shoots, our newest mouse for all the cats to play with, not you.
I think Green Shoots might actually be PB.
Thanks for clarifying.
Fast Eddy is baaaack!
Who is Fast Eddy?
The guy that had your job before you. Did he leave any instructions or manuals or anything laying around that you can use to get oriented?
“A group of B.C. condo owners say they were unfairly pressured by a national developer into paying much more than their condos are worth, while the developer secretly gave their neighbours big discounts.”
See the Canadians can learn from the US after all. They have learned to point fingers at others and not take responsibility for their own actions.
Consumer mood unexpectedly worse in early April
April 16, 2010
NEW YORK (Reuters) - U.S. consumer sentiment took a surprise negative turn in early April due to a persistently grim outlook on income and jobs, a private survey released on Friday showed.
A slip in economic expectations to its lowest in a year likely stemmed from consumers hearing negative information on government programs and a perception that the recovery is too slow, according to Thomson Reuters/University of Michigan’s Surveys of Consumers.
“While consumers think the overall economy will continue to improve, they still hold quite negative views on their own income and job prospects,” Richard Curtin, director of the surveys, said in a statement.
Consumer sentiment is seen as a proxy for consumer spending, which fuels about 70 percent of the U.S. economy.
If they hold a negative view of their own circumstances, yet also think that the economy will recover anyway - doesn’t that amount to a tacit admission that they believe Uncle Sugar will make everything right?
No matter how many times I hear them, the words “Uncle Sugar” never fail to make me chuckle.
How can anyone deny the strength of the housing recovery any more? The bubble is history, and only blue skies await going forward.
———————————————————————————-Page last updated at 15:19 GMT, Friday, 16 April 2010 16:19 UK
US housebuilding at 16-month high as repossessions rise
The number of houses being built in the US rose faster in March than expected, taking the construction rate to its highest level in 16 months.
But the figures from the US Commerce Department also showed that the building of single-family homes fell 0.9% to 531,000 new builds a year.
The data is a key indicator of economic activity, but single-family building is the most closely-watched segment.
Overall, 626,000 new houses were built in the last 12 months.
This was higher than the 610,000 forecast by some economists.
The Commerce Department also said that applications for building permits, another barometer of activity, rose by a better-than-expected 7.5% to 685,000.
…
Hmmmm…
Unemployment rises in 24 states
By Ben Rooney, staff reporterApril 16, 2010: 12:27 PM ET
NEW YORK (CNNMoney dot com) — Nearly half of all U.S. states reported rising unemployment rates in March, the government said Friday, with rates above the national average in 11 states and the District of Columbia.
A total of 24 states suffered jobless rate increases in March, according to the Labor Department’s monthly report. But rates declined last month in 17 states and the District of Columbia.
On an annual basis, jobless rates increased in 44 states and D.C. in March. That’s down from a total of 46 states in February.
The Labor Department said earlier this month that the nation’s economy gained 162,000 jobs in March. But the national unemployment rate held steady at 9.7% for the third month in a row.
Many economists and policymakers expect the nationwide jobless rate to remain elevated for some time to come, even as job growth slowly resumes.
…
That’s OK. ObamaCare will create bazillions of new jobs. Nancy Pelosi told me so.
Are you being sarcastic Green Shoots or are you a troll?
They are the same guy. Jeez.
What I like about Green Shoots is that his trolling is so sincere that it’s unintentionally funny.
Whatever happened to Eddie or Vinnie the troll back a few months ago? Did you guys at least dispose of the body on the Jersey side of the river?
we used to store them under floor in the server room. no one goes in there and it’s refrigerated.
Used to say “sleeps with servers”
Just trying to shine a few rays of sunshine through the dark clouds of gloom which perpetually keep this blog in the dark. Do you guys have a problem with that?
Usually. The purpose of this blog is to promote realism, not happy pretty fairy princess rainbow pony feelings. That’s what Disney World does. Not the HBB. That’s my take on it. I’m sure you’ll be informed in various more sarcastic ways as the day progresses
Bring it on; I am way too optimistic about the future outlook to let personal attacks get me down.
OK, now I’m worried PBear/Green Shoots = Jeckyll and Hyde. I’m pulling for Jeckyll.
“…you’ll be informed in various more sarcastic ways as the day progresses”
Green Shoots = Pushing up Daisy’s / “TrueHaskell™” = “But, but, but…”
No problem, Professor Bear.
What about the crushing mountains of debt? It hasn’t gone away, you know.
That mountain of debt will turn into a fading memory once the economic recovery gains strength — just like every other so-called ‘mountain of debt’ in U.S. history did before the current one.
You gotta stop, you’re killing me. Just let me catch my breath…
I hope you have full body armor Green Shoots…
The Recovery[TM] is Real[TM], PB - …I mean Green Shoots.
So… we don’t need income to buy these magic, happy houses at ever-increasing prices?
Let me know how that works out for yah!
How did income look in the period from 2000-2006, when we had a tech stock crash followed by a terrorist attack followed by a recession
followed by the best housing runup ever? Apparently income is not all that necessary for housing prices to rally.
Apparently income is not all that necessary for housing prices to rally.
EZ credit will do that. Along with a bucketfull of stupidity. These days the former is in very short supply. NINJA loans have gone the way of the dinosaurs.
Regarding EZ credit: “I’m not debt yet.”
————————————————————–
Freddie Mac Grants Reprieve to Rules on Florida Condos
Published on April 5, 2010 by Robert Hyder under Condominium
Freddie Mac Grants Reprieve to Rules on Florida Condos
Freddie Mac, one of the nation’s two largest government-sponsored enterprises (GSE), revealed last week that they will loosen specific guidelines that have made it increasingly difficult for borrowers to obtain a mortgage loan on a condominium in Florida. The modification will undoubtedly make it easier for many Florida condo owners to refinance or sell their units.
When Freddie Mac and sister company Fannie Mae tightened the guidelines on condos last year, condo owners were left in a vulnerable position, even if they or a potential buyer had impeccable credit. As financing options were reduced, additional restrictions were increased. For example, condo complexes with a high concentration of non-owner occupied condo units were eliminated from consideration for mortgage loans. Additionally, if a number of other condo owners were delinquent on their association dues, the other owners within the complex – regardless of credit – were penalized.
Due to a large number of complaints by professionals in the housing industry, Freddie Mac announced they will grant a reprieve for some of more stringent rules for a year, but only for condo owners who already possess a mortgage loan backed by Freddie Mac. It is the widespread belief within the housing industry that the lending rules associated with condos have put an unfair disadvantage on condo owners, making it increasingly difficult to find qualified borrowers. The latest move will not add further risk to Freddie Mac’s portfolio as they will simply be trading one mortgage loan for another in their holdings.
Previously, Fannie Mae had announced it would allow exceptions to its stringent condo rules on a case-by-case basis, provided the condo complex met certain, specific lending criteria. Although Freddie Mac’s move is more user-friendly for condo owners, it is much more of a bold move than Fannie Mae’s announcement in January.
Robert Hyder
Oh boy…This is going to get ugly…
One man’s ugliness is another man’s beautiful shoots of green.
Paging FPSS……….
I long for the olden days when Oly would jump in with one of her merrily written posts. Perhaps a description of she wore her tiara while kayaking. Or something about cutting her lovely tresses after she’d had a drink or two.
A little levity amongst the food fights, that’s what I miss.
Overall, 626,000 new houses were built in the last 12 months.
This was higher than the 610,000 forecast by some economists.
Ooooh! They built 2.6% more houses than expected. Break out the champagne!
I wonder how many will actually sell?
And as others have been saying on this blog for years, with new lower costs builders will continue to undercut resale prices, submerging even more homeowers in the process.
The Commerce Department also said that applications for building permits, another barometer of activity, rose by a better-than-expected 7.5% to 685,000.
Pft! In out home town permit applications rose 500% in March! From 5 to 25! Of course just 5 years ago it would have been 150 permits, but who’s counting?
“85-year-old Joe Lerner had hoped that the home he built on Harborview with his wife June would be their nest egg. But a slowdown in his business and plummeting property values in the neighborhood are forcing the couple into an unthinkable decision. ‘We are faced with either selling the house at a very low price or going into foreclosure’, said Lerner. They have missed the last three mortgage payments. ‘Not only does it not make sense to pay it - it’s gotten to the point where we don’t have it. This was our nest egg that we invested here. This would be our retirement and as it has worked out the exact opposite has come about. We are in a pickle right now.’”
- What financial planner ever told people that real estate is a retirement plan? The couple are the Bob Hope generation and lived during the GD when houses were a dime a dozen! They should have been primarily into treasuries the last 20 years! I have no sympathy for them. Some seniors did not plan to live longer than 80 I suppose.
They are not of the Bob Hope generation. Bob Hope would be 20 years older than these folks if he were still alive.
People of your generation are those in an age range - anywhere from 11.5 years younger to 11.5 years older than you.
A generation is 23 years long.
I just love vegas. from the lake las vegas article:
“Encumbered by $753 million in debt and facing another $228 million in bankruptcy court claims, the development company estimates its raw land holdings and other assets at Lake Las Vegas are now worth just $83.9 million.”
In my best McLaughling voice, “Buh-bye!”
Long term, if you are into that type of thing, it could be a good place to buy a second pad. IF they have strong CC&R’s and the HOA’s do not go bankrupt, you at leat keep the riff raff out until the area stabilizes. If, and I mean if our economy starts to normalize you could see that area remain a nice resort destination.
Developments like that in Phoenix metro were hist hard in the late 80’s and early 90’s, some of the golf courses and entire developments went backrupt. Most of those communities are still very disirable and did well from the last half of the 90’s to present.
LLV could be a good contrarian move if you had the cash.
Promising development…
Footnote to banksters: If you guys did not have too-big-to-fail insurance that puts sovereign governments at risk, there might be less reason to need to reign in your high risk derivatives gambles. With “heads-we-win, tails-you’re-screwed” financial gambles in play, taxpayers need protection.
Senate bill takes tough line on banks, swaps
Roberta Rampton and Christopher Doering
WASHINGTON
Fri Apr 16, 2010 2:39pm EDT
* Factbox: Comments on derivatives bill, SEC Goldman suit
2:39pm EDT
WASHINGTON (Reuters) - Senator Blanche Lincoln on Friday unveiled a long-awaited draft bill to regulate the $450 trillion over-the-counter derivatives market, taking a tougher tack against big banks than the Senate Banking Committee or House bills on the issue.
The bill, which would require banks to spin off swaps desks if they are protected by federal deposit insurance or access the Federal Reserve discount window, came on the same day the government leveled a major fraud charge against U.S. swaps dealer Goldman Sachs Group Inc.
“This is another example of how risky Wall Street behavior puts our nation’s financial system in peril and further illustrates the need for the strong reform that my legislation provides,” Lincoln, chairman of the Senate Agriculture Committee, said of the fraud charges filed against Goldman Sachs in a statement provided to Reuters.
Last month Lincoln had outlined what observers predicted would be a lighter approach than other bills proposed by the Senate Banking Committee and passed by the U.S. House. Her committee has jurisdiction over futures markets.
But she surprised the market with a crackdown. Derivatives players were closely watching for the detailed language in the bill to gauge its impact and chances for success.
“My legislation reigns in this risky behavior by ending the days of backroom deals, providing 100 percent transparency to the derivatives market, putting an end to ‘too big to fail’ and preventing future bailouts,” Lincoln said.
…
Market closed, and apparently Goldman lost $ten billion in market cap today. I wonder if they’ll increase their bonus pool. More likely, they already decided on the bonuses for next year. Oh well, back to work.
I wonder if a breakup of Gollum would result in improved affordability in the gold and oil markets? Just a conjecture which will hopefully soon be tested.
First Take
Why is gold falling so much today?
There very well may be a rational explanation for why today’s fraud charges against Goldman Sachs Group Inc. should cause gold to fall, writes Mark Hulbert. But it’s not obvious what that would be
There very well may be a rational explanation for why today’s fraud charges against Goldman Sachs Group Inc. should cause gold to fall, writes Mark Hulbert. But it’s not obvious what that would be
I know! I know! (I think) Because every once in a while gold really freaks out and scares a lot of speculators really badly. It’s kind of funny.
Gold has advance about 15% a year the past 10 years but it’s up over 30% the past year. Time to put the freak on…
Obviously now is a good time to buy the dip.
Paulson is the reason for gold prices to fall. Remember he pushed for gold to go higher. And Paulson is mixed up with GS.
But China’s worship of gold dwarfs Paulson’s effect on the price.
$10 bn down, $90 bn to go.
SEC accuses Goldman Sachs of fraud in subprime mortgage meltdown
The civil charges relate to Goldman Sach’s creation of collateralized debt obligations — a exotic mortgage-backed security — before the financial crisis. Goldman denies any wrongdoing.
By Nathaniel Popper
April 17, 2010
Reporting from New York
Wall Street’s preeminent investment bank, Goldman Sachs, was charged Friday by the government with fraud in marketing exotic mortgage-backed securities before the financial crisis.
The Securities and Exchange Commission brought the civil charges in federal court in Manhattan with a lawsuit against Goldman and one of the bank’s vice presidents.
The charges relate to so-called collateralized debt obligations — complex securities tied to the performance of subprime mortgages — that Goldman created in 2007 near the end of the housing boom.
The value of the securities plunged in the mortgage meltdown that began later that year, helping to set off the global financial crisis.
The SEC’s lawsuit alleges that Goldman did not tell investors in the securities that they were based on a portfolio of mortgage bonds selected by a hedge fund. The investment bank subsequently helped the hedge fund, Paulson & Co., place bets against the same bond portfolio, the suit says.
Paulson, which made a number of such bets, made billions of dollars as the subprime home-loan market collapsed in a wave of borrower defaults.
“The product was new and complex but the deception and conflicts are old and simple,” Robert Khuzami, the SEC’s director of enforcement, said in a statement.
Goldman denied any wrongdoing.
“The SEC’s charges are completely unfounded in law and fact, and we will vigorously contest them and defend the firm and its reputation,” the firm said in a statement.
…
“we will vigorously contest them and defend the firm and its reputation,”
I love that “vigorously” legalese response from defendants, it always cracks me up, I get a mental picture of someone furiously scrubbing away at a spot on a piece of clothing. As to defending the firm and its “reputation”, what “reputation” are they talking about defending? The reputation they have as a bunch of scumsuckers? Won’t take much to defend that, most people know it by now if they’ve been paying attention.
Not to worry they’ve been selling stock and shorting their own company for months now, right?
Here is some more evidence of the robust recovery underway: Bank of America posted better than expected results today. Wall Street is unduly pessimistic now.
============================================================
April 16, 2010, 1:53 p.m. EDT
Bank of America reports 25% profit drop
By Sam Mamudi & Alistair Barr, MarketWatch
NEW YORK (MarketWatch) — Bank of America Corp. reported a fall in its first-quarter profit Friday, in part due to lower mortgage-banking activity — but its results handily beat Wall Street expectations.
First-quarter net income was $3.2 billion, or 28 cents a share, versus $4.2 billion, or 44 cents a share, a year earlier, Bank of America said.
Revenue at the bank fell 11% year-on-year to $32 billion, driven by what it said were the absence of credit-related gains on Merrill Lynch-structured notes that it had enjoyed last year, as well lower mortgage-banking volume and income.
First-quarter provision for credit losses was $9.8 billion, down from $13.4 billion in the first quarter of 2009.
But despite the drop, the results outpaced analyst estimates. Bank of America was expected to make 9 cents a share, according to the average estimate of analysts surveyed by FactSet Research. Estimates ranged from a profit of 23 cents a share to a loss of 15 cents a share.
Give me an unlimited amount of 0% money from the Fed which I can lend at 29% via credit cards and I’m pretty sure I could make a few billion profit too.
Question - there are no potential tax consequences if you just walk away, but there are if you do a short sale? Anyone know?
The Securities and Exchange Commission knew since 1997 that R. Allen Stanford likely was operating a Ponzi scheme and an agency enforcement official who helped quash investigations of his business later represented the billionaire, according to a new report by the SEC inspector general.
The SEC didn’t bring charges against Stanford until February 2009, when it alleged a $7 billion fraud. The SEC inspector general also said in a report released Friday that “institutional influence” in the enforcement division was a factor in the agency’s repeated decisions not to conduct a full investigation.
Complex cases like Stanford’s that couldn’t be quickly resolved were discouraged by enforcement higher-ups, the IG’s report said.
The report by Inspector General David Kotz said his office’s examination didn’t find that the reluctance of the SEC’s Fort Worth enforcement attorneys to investigate Stanford was tied to “any improper professional, social or financial relationship on the part of any former or current SEC employee.”
The IG’s office did find evidence, however, that “institutional influence” within the enforcement division contributed to the repeated decisions not to conduct a thorough investigation of Stanford, the report says. Senior agency officials in the Fort Worth office believed they were being judged on the number of cases they brought, and told their enforcement staff that novel or complex cases — as opposed to “quick-hit” cases — were discouraged, the IG’s inquiry found.
The SEC’s Fort Worth office in 1997 began conducting examinations of sales of certificates of deposit by Antigua-based Stanford International Bank, which promised outsized returns, the inquiry found. It said the examiners made numerous efforts after each exam to convince the Fort Worth enforcement officials to open a full investigation of Stanford, but “no meaningful effort” was made until late 2005.
Kotz’s investigation also found that a former head of enforcement in the Fort Worth office played “a significant role in multiple decisions over the years to quash investigations of Stanford.”
The former official, who wasn’t named, sought to legally represent Stanford on three occasions after the official left the agency and went into private law practice. The official did represent Stanford briefly in 2006, the report says.
I think I heard a while back that Stanford was one of the guys that was into inflating real estate and than getting loans against that fake value .
Frankly ,I just don’t know why the MBS Pushers are getting away with mis-rating that junk paper to begin with ,than of course than betting against that junk after they arranged those securities ,or being connected to hedge funds that were doing it .It just seems like a whole entire scheme to me .Further, since the SEC was investigating AIG in
2005 ,one has to ask why does this firm get the 150 billion on a Tarp Bailout ,which pays off all these late in the game Hedge Funds and
places like Goldmans ? And all of a sudden ,Hank Paulson (Ex VIP at Goldmans )becomes the Treasury Sec., right at a time where
Bail Outs on credit default Swaps (AIG) would help Goldmans . The Bail Outs were corrupt ,the MBS’s were corrupt ,the whole Ponzi Scheme was corrupt and a violation of fiduciary duty . The whole darn World should sue Goldman Sacks ,but second best remedy is just boycotting them and not do business with them . I hope their so-called reputation goes to hell .
“The Obama administration will give $3,000 for moving expenses to homeowners who complete such a sale—known as a short sale—or agree to turn over the deed of the property to the lender. It’s designed for homeowners who are in financial trouble but don’t qualify for the administration’s $75 billion mortgage modification program.”
Reading things like this make me want to cry. This person already won big-time by essentially having debt forgiven, without having to pay income tax on it.
Having Obama reach into my pocket and confiscate $3,000 more to lavish these deadbeats is very upsetting.
$3K per vote. The Chicago way.
3k/vote? sounds fair. I’ll take it at least I get something
“The couple’s age (June is 78) make it nearly impossible for them to get a loan modification for their 5,200 square foot home that was once worth over $2 million. Their most recent offer from an interested buyer was half that.
“All the buyers that have come here have done it with the idea of low balling. It’s really kind of pathetic because we have become attached to the house and now we know we can’t live here..so it’s very debilitating.”
Joe’s wife June says she relying on prayer to get her through the stress of losing her home.”
I’ll just shut up now…
Whenever I say the word “pray” to myself, I finish the sentence by saying, “for God to clip the cosmic cables to your ears and jump-start your brain!”
I don’t recall where I first read this advice, I think it may have been in some sort of business book, but the point is to use your God-given brain to start thinking, then, after that, to take the best course of action.
Another one of my favorite expressions is, “Pray to God, but continue to row to shore.”
any lawyers out there? Isn’t a “prayer” sometimes used as the last part of a civil filing? “prayer for relief”?
Wearing my Richard Dawkins shirt and drinking red wine, …now to the next post…
The Financial Times
Aura of invincibility weakens
By Megan Murphy and Francesco Guerrera
Published: April 16 2010 19:47 | Last updated: April 16 2010 19:47
For Goldman Sachs, the hits keep coming.
The civil fraud case filed against the US investment bank on Friday by the US Securities and Exchange Commission is the latest in a series of blows to an institution whose success and profitability once made it appear invincible.
Eighteen months on from the credit crunch, having been linked with a litany of crises from the near-implosion of AIG to Greece’s lingering debt woes, Goldman has morphed into such a symbol of greed and excess that it was notoriously dubbed “a great vampire squid wrapped around the face of humanity” by Rolling Stone magazine.
The questions now being asked on Wall Street are whether Lloyd Blankfein, Goldman’s chief executive, can survive this latest assault on the firm’s integrity, and whether its clients will simply choose to walk away.
Goldman shares plunged by more than 10 per cent after the SEC accused the bank of defrauding investors by misleading them about potential conflicts of interest in subprime mortgage products sold by the bank in 2007.
Investors in the complex mortgage securities, known as synthetic collateralised debt obligations, lost more than $1bn on the portfolio as the subprime market collapsed, the SEC alleges.
“The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, director of the SEC’s division of enforcement.
…
EDITOR’S CHOICE
Goldman accused of subprime fraud - Apr-16
SEC complaint in full - Apr-16
Editorial Comment: SEC takes off gloves on Goldman - Apr-16
The Goldman email trail - Apr-16
Gapper blog: Light over Goldman Sachs - Apr-16
In depth: Goldman Sachs - Apr-16
“The product was new and complex but the deception and conflicts are old and simple,” said Robert Khuzami, director of the SEC’s division of enforcement.”
The Great Khuzami. Attaboy, get ‘em!
ClawBACK, clawBACK, clawBACK!
…
I hope Investors walk away from that firm because they deserve it .
Apparently AIG was involved in Credit default swaps on 7 of the deals with various Hedge Funds ,but only one Fund is under the suit so far . Why not include all of them which total over 10 billion ?
Giant squid makes good eatin’
Happy FDIC Friday to All!
Regulators shut 5 banks in Fla., Mass., Mich.
(AP) – 31 minutes ago
NEW YORK — Regulators shut down five banks Friday — three in Florida, and one each in Massachusetts and Michigan — putting the number of U.S. bank failures this year at 47.
The Federal Deposit Insurance Corp. said it took over Riverside National Bank of Florida in Fort Pierce, Fla. The bank has 58 branches and assets of $3.4 billion.
The government also took over First Federal Bank of North Florida in Palatka, Fla. It has eight branches and assets of $393.3 million.
The third bank the FDIC closed in the state was AmericanFirst Bank in Clermont, Fla. Its assets total $90.5 million. It has three branches.
The FDIC said TD Bank Financial Group’s TD Bank division acquired the operations, deposits and nearly all the assets of the three Florida banks.
Meanwhile, regulators also took over Butler Bank in Lowell, Mass. That bank has assets of $268 million. People’s United Bank in Bridgeport, Conn., agreed to assume all the deposits of Butler Bank.
The government also took over Lakeside Community Bank in Sterling Heights, Mich. It had assets of $53 million.
…
The count’s up to 8 now!
We’re to 50 for the year!
Happy BFF to all!
We just completed week 15 of a 52 week year; the projected number of BFs by year end is thus roughly:
(52/15)*50 = 173.
Why would a giant bloodsucking vampire squid on the face of humanity need to worry about protecting its reputation?
April 16, 2010, 7:31 p.m. EDT
Goldman moves quickly to protect its reputation
Firm picks at SEC suit amid concern it plays clients off against each other
By Alistair Barr, MarketWatch
SAN FRANCISCO (MarketWatch) — Goldman Sachs Group Inc. moved quickly Friday to protect its reputation in the wake of civil-fraud charges filed against it by the Securities and Exchange Commission.
The SEC alleged Goldman (GS 160.70, -23.57, -12.79%) didn’t tell investors in a collateralized debt obligation that hedge-fund giant Paulson & Co. helped structure the deal while also betting against it. Read about the charges.
Goldman charged with civil fraud
Goldman initially put out a short statement saying the SEC’s charges were “completely unfounded in law and fact.”
“We will vigorously contest them and defend the firm and its reputation,” it added.
…
what I don’t understand is……if GS has done forked everybody (banker) and his brother then how in the h*ll do they stay in business? if it’s common knowledge that they are crooks and will bet against you on the inside knowledge they have obtained from you…their customer.
Too bad not everyone can get ZIRP monies from the Fed.
* THE WALL STREET JOURNAL
* THE MONEY HUNT
* APRIL 15, 2010
Real-Estate Bust Hurts Lending for Little Guys
… even those that were ineligible for a traditional bank loan could often draw capital from home values by writing loans against home equity. Unlike traditional loans, home equity loans and lines of credit are determined by the appraised value of the home, minus the mortgage, and are not issued on the basis of credit history or credit scores.
Experts such as Mr. Dennis say it will be a long time before real estate becomes a dependable borrowing mechanism again. Part of the problem, he says, is the inability to define what is normal, given the surge in property values that happened for years leading up to the meltdown. In August 2007, the Discover Small Business Watch survey showed that 30% of respondents tapped home loans for funding. Returning to those levels, he says, is doubtful.
Probably 10% “of those who historically qualified to use homes to gain capital could qualify for a similar loan today,” says Rob Grosser, president of Luxury Mortgage Corp., a residential mortgage banking firm in Stamford, Conn.
Those owners who can tap into home equity find the amount to be far less than before. Kristian Traylor, president and founder of Sanvean LLC, bought his home in 2004 and—based on an old appraisal—thought he could get a home equity line of credit between $50,000 and $75,000 for his Atlanta-based start-up. He planned to use about $60,000 to revamp his Web site and accelerate promotional activities for the Golf Genie Guide—an instructional golf booklet and the company’s flagship product. After checking with five banks, the highest offer he got was $8,000, which he declined. “It was a little big of ignorance,” admits Mr. Traylor, who is bootstrapping the marketing efforts. “I thought we were immune because we were in a hot area.”
Business owners expecting to offer personal and business properties as collateral for bank loans are also hitting walls. Nearly 30% of business owners with a line of credit said their financial institution changed conditions last year, including requiring more collateral, according to a survey published earlier this year by the NFIB. The stiffer terms are “hugely tied” to falling real-estate values, NFIB’s Mr. Dennis says.
Even though “cash flow is the number-one reason for getting declined,” according to Kathie Sowa, a commercial banking executive at Bank of America, “the value of the commercial building and the home—the combined net worth of the business and the owner—has been reduced, so collateral becomes more important in order to make sure that it’s in line with the loan.”
…
I am no legal expert, but I am still puzzled over why the Fed’s massive discount window lending to banks that are actually bankrupt did not constitute illegal lending discrimination by officials a high level quasi-government agency.
Why did Wall Street banks summarily get made whole while Main Street American households got the bottom of the bus?
I will keep posing this question from time to time until I see a satisfactory answer in the MSM.