Posts Tagged ‘paulson’

The latest “good idea” to come out of DC regarding solving the housing crisis and credit crisis would be to allow a government fund to buy troubled mortgages from the banks.  Funding would be done jointly from Uncle Sam and Vulture/Hedge Funds.  Thus, rewarding those entities for taking the risk and effort to recover value and make fortunes on the backs of the troubled homeowners!!!!

No one is a bigger capitalist and supporter of the free markets than me, but the perversity of the ideas coming out of DC and celebrated by those still with cash is absurd.

A Wall Street Journal article this week indicated that these funds would by the mortgages at $0.05 to $0.20 on the dollar of “face value” thus putting a market value and theoretically some liquidity into a market that has had a dearth of players (folks willing to buy or sell at a mutually agreed upon price).  The thought is that by adding government dollars and some guarantees against loss to these vultures and speculators, that things would then get better for all!

This is inane!  Once again, the most aggressive investors/institutions will be treated as rolyalty and “protected” by those suffering under situations created to make money from them!

The best idea still and one that I have discussed in the past and will continue to support is the following:

Allow the borrowers to buy back their outstianding mortgages and outstanding credits at the same rate as Uncle Sam is proposing they be sold to Vultures.  Provide government financing and guarantees to allow the refinancing of the principal and accrued interest at “pennies on the dollar” to those suffering, with deferrals on payments until income levels have rebounded to facilitate repayment of the reduced amounts.

Why should the Government entice vultures to buy on the distress of the public, and then profit on their further distress?  Why not have the Government be the instrument for settlement of the sources of distress?  Why not have the individual families receive the benefit from their own recovery?  Reduce the levels of sources of profit to 3rd parties and institutions?  Foster a benevolent solution, rather than dumping the paper in the hands of vultures and collection agencies to further harass those facing hardship and eviction?

Enough raping of the populace by the Wall Street Titans and Banking Giants!!!  We have see that quarterly profits and earnings for shareholders rewarded by temporarily higher stock prices is a recipe for disaster!

A change is needed. A reason for hope!  Let us hope the new administration sees the light and makes positive things happen for our society!

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With credit lines continuing to be cut, banks not negotiating outstanding loans, and new loans only being extended to those who do not need the money, there is but ONE QUESTION: WHERE IS THE MONEY?

How can $340 billion have not have any impact? How can Paulson and Congress let the greed of the banks and institutions destroy whatever remaining confidence Americans had in the government?

As Dr. Michael Savage has said, the US has just witnessed the greatest legal theft of $340 billion in the history of the world. The only beneficiaries have been the creditors, shareholders and CEOs of those institutions receiving the $. Please show me examples of the Americans and Main Street who have benefited!!!!!!!!!!!!

Paulson, Bernacke, Bush and our favorites Pelosi, Reid, and VP Cheney are all to be blamed. The should be held accountable for the fraud they have perpetuated on the American Taxpayers. We have been duped.

Those without jobs, those who have lost and will lose their jobs and credit, will pay. Pelosi, Reid, Cheney, Bush, Bernacke and Paulson can continue to dance all day until the sun sets and beyond, while we all suffer from the Red Plague they have contributed in spreading!!!!!!!!!!!!!!!

Tell me your thoughts…………

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“Negative Redlining” – marketing disproportionately to minorities – is the accusation being made against two of three leading Wall Street “ratings agencies”.  Ratings agencies, like Moody’s, S&P, and Fitch, are hired by bond issuers to rate a bond, i.e. to quantify the likelihood of the bond not being repaid, and thus give it a letter grade.  Because ratings agencies are paid by the issuers to do the rating, they are absolutely not independent of the process.  They obtain the information they use from the issuer and the higher the rating, the greater the profit to all Wall Street parties involved in the issuance.

The National Community Reinvestment Coalition in their legal complaint alleges that Moody’s and Fitch knew that the mortgages were designed to fail, though the rating issued did not reflect this.  The complaint indicates that Moody’s and Fitch knew that the payment terms were unfair and that the borrowers’ income levels were too low to support the expected future payments.

In my humble opinion, there are many parties to blame.  The ratings agencies have the deepest pockets, so the attorneys have started there.  If my memory serves, mortgage brokers and their agencies are regulated at the respective state level.  Mortgage products, thus, are also regulated at the state level, either directly or indirectly.  Thus, where were the government agencies with the responsibility?   Those issuing the mortgages should have been at risk too, with their own capital on the line.  The underwriters, in agreeing to represent the sale of the securitizations, should have a legal responsibility also.  The list is a lot longer than this one paragraph……

Who is ultimately responsible in the world of Sir Paulson, Sagely Bernacke, and Mz Nancy Pelosi?  The American Citizens!!!!!!!!!!!!!!  You and me and my mother and our cousins, our elementary school teacher and our doctors, etc.  are responsible.  It is now our problem.  I forget if this is the definition of democracy???? It is definitely not the definition of capitalism………………………

Share your thoughts…. What happens tomorrow is always dependent on what happens today…

Share the word, share your knowledge.  Help save America for its citizens.

This past short week was remarkable. The Government, lead by General Paulson, promised to cover more than $300 billion of liabilities of Citigroup. Thus, once again, demonstrating that those controlling America’s money, are protected from their own stupidity and risky behavior. Those who had bought C stock last Friday almost doubled their money by betting on Paulson. After he screwed Lehman bondholders and the buyers of the Fannie and Freddie preferred shares, this guru is being smart by not trusting in the benevolence of irrational leadership!!!

General Paulson on Tuesday announced an $800 Billion plan to add capital to the consumer finance markets, student loans, auto loans and small businesses. Once again, it only benefits those finance companies that took risk during the economic expansion, who are looking for someone to buy assets they no longer wish to own!! Sir Paulson’s rational was that by selling these assets, these financiers will begin to lend again. Most others, including this humble writer, believe that they will behave like the banks under TARP. They will take the money, and not take any risks with it. They will hold it, or use it for bonuses, or to buy companies of friends, or buy Treasury bills and bonds, or FDIC guaranteed issuances from other financial institutions.

To assume they would use this money for lending, would be like the Sir Paulson’s team buying a home on the verge of foreclosure, and assuming that the seller would take the proceeds and use it to buy a new real estate investment.

President Elect Obama has promised new spending and infrastructure projects to jump start the economy. I do not know any bridge builders, airport construction workers , or road builders, so I do not know anyone who will benefit directly. Hopefully , those wearing ties to work, and those in the manufacturing sector will benefit as well.

In these times, with all the volatility, risks, threats and uncertainty, we must all stop and say THANKS for all the good we have, for our families and friends, for health and our prosperity, irregardless of how limited it may seem at the moment!!!!

Give Thanks, have faith, and strive to make the world better, without taking unneeded risks.

Have a great day!!!!

Currently, mortgages are traded between banks and financial institutions like (as) securities, generally in large bundles, but still traded.  The current market prices that these trades are taking place at is currently between $0.18 per $1.00 of face loan amount and $0.28 per $1.00.  But yet, if I or you wanted to pay off the mortgage, we would have to pay the face loan amount plus interest.

Here is the BETTER IDEA.  Let the mortgagees (the homeowners) buy back the mortgage at the current market price of the mortgage. Let them buy the mortgage at 18 to 28 cents per dollar of loan amount.  They can thus cancel the loan that the now owe to themselves and they can then refinance that amount with a full recourse loan, rather than a non-recourse loan, or maybe even a loan guaranteed by Uncle Sam.  This would keep people in their homes, allow a fair playing field, and help the banks monetize their balance sheets.

There are several countries that have programs like this (no I am not a genius) and none of them are facing the situation like the great US of A is facing today.  We must use the markets to solve the problem and this does exactly that!

Spread the word!!!  Let me know what you think….