They are so serious, they're discarding paper files with all of your details into dumpsters. And the FTC, what are they doing about protecting Americans since there are laws against this? Well, they have been busy with one slap-on-the-wrist case. For the rest, tough luck for you. Go find a public dumpster and hope you get lucky.
Just like the FAA. Just like the FDA. Just like the USDA. Just like the EPA. Just like wildlife preservation. Just like the, fill in the next blank. The Republicans have consistently strangled budgets for any and all regulation and then placed their hacks in a position to cozy up to industry. The next step is of course to then scream "see, the government is a failure at everything so let's shut them group down and let business self regulate." Good business, when you can get it.
Ooops. The banks got themselves into this, let them pull themselves out of it, without a bailout.
Wall Street banks are facing a "systemic margin call" that may deplete banks of $325 billion of capital due to deteriorating subprime U.S. mortgages, JPMorgan Chase & Co , said in a report late on Friday.
JPMorgan, which sent a default notice to Thornburg Mortgage Inc. after the lender missed a $28 million margin call, said more default notices and margin calls were likely. The Carlyle Group's mortgage fund also failed to meet $37 million in margin calls this week.
Another day, another record low. How long before the GOP spins yet another terrible number as somehow unimportant?
Homeowners' portion of equity slipped to downwardly revised 49.6 percent in the second quarter of 2007, the central bank reported in its quarterly U.S. Flow of Funds Accounts, and declined further to 47.9 percent in the fourth quarter — the third straight quarter it was under 50 percent.
That marks the first time homeowners' debt on their houses exceeds their equity since the Fed started tracking the data in 1945.
The total value of equity also fell for the third straight quarter to $9.65 trillion from a downwardly revised $9.93 trillion in the third quarter.
Who would have ever guessed? When bubble buyers stopped buying into the bubble, the bubble money going to bubble developers and bubble construction businesses might be at risk of the bubble bursting. Gosh, it almost seems unimaginable. Almost as unimaginable as the never ending real estate bubble bursting, that is. Do we actually pay people at the Fed to monitor this or do they just go to meetings with Wall Street to chat about what Wall Street wants? How do "experts" accept any theory that revolves around the good times never ending?
As commercial and residential real-estate prices decline, banks of all sizes face a growing number of loan defaults from builders unable to sell houses, and from developers whose malls and other properties turned out to be less desirable than anticipated.
Of course more bailouts of homeowners will reward speculators and I don't like it, but c'mon, what does he think Wall Street has been doing? Just as there is no reason to bail out John Q. Public who speculated on a $500,000+ house, Wall Street speculated with billions, more likely trillions so to listen to this pompous ass howl about bailouts for individuals is laughable. When the Federal Reserve started auctioning off tens of billions to Wall Street banks and discount rates (that have not been transferred to customers) I somehow did not hear Paulson making a fuss. Fed policy today is all about bailing out Wall Street and as discussed, Wall Street is sending hordes of lobbyists to DC to get even more bailout money.
The trashing of the US economy by GOP policy makes my blood boil and listening to Paulson slam other bailouts is just too much. This situation is so far beyond what a taxpayer bailout can even afford but let's not kid ourselves into thinking we haven't already been bailing out Wall Street because we have and Bernanke will continue to do so. Let's not kid ourselves into thinking there is only one bailout plan or for one particular group.
But remember, they are the professionals. Just because they are unable to locate the documents for 20% of the mortgages they theoretically own doesn't mean they should be held accountable, according to the banks. They argue that it's all the fault of the homeowners who are calling them out who are the problem. They are the ones preventing others from receiving new loans.
It's no wonder the Qatar Sovereign Wealth Fund ($60 billion in assets) is avoiding investments in US banks. They know it's going to get worse because the banks ignored common sense and have fallen into a hole. Keep in mind as well that McCain's "economic brain" Phil Gramm helped set up the financial industry for this fall by forcing through the bankers dream legislation, Gramm-Leach-Bliley Act in 1999. Banking regulations were thrown out the window because of course, banks can self-regulate. Just look at how well they've done. In a McCain administration we could expect more of the same in banking as well as health care. Just imagine the possibilities...
Surely you wouldn't expect banks to pay for their mistakes, would you? They won't hesitate to ruin your life but they never fail to pass on their problems to everyone else. When Bush and Congress talk about a bailout plan for Wall Street - and no matter what they say, it's a bailout - remember that the banks are going to squeeze every penny from both taxpayers and mortgage holders to recoup their losses. With analysts now predicting a total real estate decline of 20% from its peak, banks are looking everywhere for extra easy money.
But don't call it a bailout. John McCain can claim economic ignorance (and he's right) but it was the GOP who ushered in this era of laissez faire economics. This is precisely what he wants to do to the US health care system, as if this would somehow help. Now that the banks have lost billions, guess who is running to Congress, asking for help? Wall Street is sending hordes of lobbyists to set up a tax payer bailout to the industry. Wall Street got themselves into this problem, let them dig themselves out of it on their own dollar. Unless they want a loan at very advantageous rates to taxpayers they can go to hell. We can consider this a subprime loan and charge the banks accordingly. Even so, it's all just too risky.
A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.
The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.
To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.
“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.
Thanks to AMERICAblog readers John W. and Meredith H. for sending this over. It's a long slide show and parts are NSFW due to language but this is an excellent summary of everything that's wrong about the subprime fiasco. There were obvious conflicts of interest at each and every step along the way and people heard what they wanted to hear. Deep commissions helped pave the way and our traditional oversight and regulations were MIA, because they didn't want to get in the way of the money train.
Think about that as we see Bernanke and the Fed recklessly throw more money at the banks at the expense of everyone else. It's shocking that Democrats had stood by and not challenged these actions. Unless everyone is happy with windfall profits (and then losses followed by bailouts) on Wall Street, we need a radical change in oversight policies. The Federal Reserve in it's current form has failed and continues to fail the American public.
It's hard to imagine this pile of rubbish was worse than expected, but it was. McCain's health care plan, with another "let the market decide" approach, will look much like this if he gets his way.
For months, we've fretted about the Armageddon that will hit when subprime adjustable rate mortgages start resetting to much higher interest rates.
What's happening is even worse: Many of these loans are defaulting well before their rates increase.
Defaults for subprime loans issued in 2007 - none of which have reset yet - hit 11.2 percent in November. That represents perhaps 300,000 households, and is twice the default rate that 2006 loans had 10 months after being issued, according to Friedman, Billings Ramsey analyst Michael Youngblood.
Defaults are spiking well before resets come into play thanks to the lax lending environment of the past few years. Many borrowers were approved for mortgages that they had little chance of affording, even at the low-interest teaser rates.
If the banks are preparing for the fallout, this may be getting more serious. I wondered where people found the money for the McMansions across the US but that too seems to be made up as well.
There are also signs some lenders are warily eyeing "prime" borrowers. Tom Kelly, spokesman for Chase Home Lending, a unit of JPMorgan Chase & Co, said the company raised its reserves for possible home equity loan loss for subprime and prime borrowers by $635 million in the second and third quarters last year.
"The concern is people who have borrowed a large percentage of the equity (in their homes)," Kelly said. "Now the value of their homes is falling and they can't refinance."
The GOP economic record lowers the post yet again. It's not even possible to keep up with the stunning number of record lows they have hit with the US economy. How could they ruin such a previously great economy, so quickly? We used to be a country that welcomed competition, but that all changed with the GOP who thought it made more sense to eliminate anything resembling competition. Now everyone in the US and the world will pay the price for there absolute incompetence.
“I think this housing downturn will be unprecedented in terms of its breadth across the country and in its severity,” Zandi said. “I don’t think we have seen anything like this, certainly since the Great Depression, and back then housing was much less of a factor in terms of the overall economy because fewer people owned their own homes.”
From the penthouse to the outhouse. So much for the previously high flying $4 billion property fund. The real estate crash continues to takes its toll.
Scottish Equitable said yesterday that 129,000 small investors in its £2bn property fund will not be able to access their money for up to a year, although payments relating to regular income already being paid, retirements and death claims will not be affected.
It said the fund, invested in London office blocks and shopping centres across Britain, no longer had sufficient cash reserves to meet demands from investors wanting to withdraw their money. Its "buffer fund" was down to 1% of its total assets, instead of the usual 10-15%.
The impact of rising gasoline prices “is just profound on middle- and lower-income families,” said Mr. Kohut of the Pew center. “Our surveys are showing one of the lowest levels of satisfaction with national conditions in any recent presidential election year. You have to go back to 1992 to get a lower number of people saying the national economy is excellent or good.”
Will Bush II cause Bush I-like problems for the presidential elections? Americans are still buying as much gas as ever (gas needs to go much higher for that to change) but they are buying less of most other goods. High end and low end retails are seeing less business complementing signs of cutbacks in personal spending spreading, the first possible decline since 1991. The economy has stayed afloat thanks to the American consumer but the run appears to be over. Americans love to spend, so someone is going to pay the price at the polls for this inconvenience. Dick Cheney, wrong again.
If it wasn't so serious, it might just be funny how many times Dick Cheney has been wrong. What will he use as an excuse for being so wrong, this time? The hard truth is that high oil prices have negatively impacted the US economy. December sales with US retailers took a beating because of the a combination of the housing bubble crash and high gas prices. I know neither issue impacts Bush or Cheney, but for everyone, it matters.
The Fed will again have to balance their desire to lower interest rates to help promote buying against the global pressure on the dollar. Realistically the US can't have it both ways but this won't stop Bernanke from trying to please everyone. The lower the rates, the lower the return from investors who will also view cuts as a lack of faith in the economy. Lower faith in the economy leads to investors searching for better markets which leads to a softening dollar. The softening dollar is linked to oil prices heading north and higher energy prices pushes up inflation concerns. (The dollar index against six leading global currencies hit a 34 year low.) In short, our options all stink.
The Bush administration, Mr Bubble and Wall Street Big Finance didn't create this deep and tangled economic problem overnight and it's not going to be solved overnight. When you hear two of the richest, most successful American investors (Buffet and Soros) talk about the problems with the US economy (and put their money where their mouth is) there is good reason to be concerned. Now is not the time to listen to Bush and the GOP talk about how superior they are with fiscal responsibility. Now is the time to shove this collection of problems back in their face and tell them to step aside. It's quite simple...they trashed the US economy.
Crikey! No wonder Wall Street has started giving the boot to employees. Considering the depth of the troubles, how can Mr. Bubble honestly say that this could have happened to anyone? A few billion, ehhh, maybe, but hundreds of billions down the drain? Keep watching Paulson, a former Wall Street guy, to see if his tone changes on the government reaching out to help his old pals.
Every time economists and Wall Street executives think they have acknowledged the full extent of the losses from the meltdown in real estate mortgages, more bad news turns up.
Merrill Lynch said yesterday that it would take a charge for mortgage-related securities on its books that is $3 billion more than the $5 billion it expected just two weeks ago. And a report from the National Association of Realtors showed that sales of existing homes in September fell twice as much as economists had expected, to their lowest level in nearly 10 years.
Stocks fell sharply early yesterday on the news, with the Standard & Poor’s 500-stock index falling 1.8 percent before recovering in the afternoon. Investors also bid up Treasuries as they sought the safety of government-backed debt.
At this juncture, economists say the troubles in the mortgage market could, all told, cost financial firms and investors up to $400 billion.
How many more expensive failures will Bush leave after his eight years? What a costly experiment with Republican control in Washington.
How did CNBC manage to let this guy on their show? Usually the blow hards over there like to prop up the GOP economy no matter how ugly the truth may be. Easy money only made things worse and delayed the tough times.
But the economist fears that the Fed's "throwing money at the system" will not help improve the fundamentals of the real economy. Instead, he believes, excessive monetary growth has merely driven excessive consumption in the U.S., with consumers living beyond their means and speculators "piling one bubble, housing, on top of the Nasdaq [tech] bubble" that popped in 2001-2001.
"The easy money, the easy credit -- you can't solve your problems with what caused them in the first place," Faber declares.
He posits that a fully-realized recession at the turn of the millenium might have been for the best, restabilizing the world credit markets. "The longer you postpone the hour of truth, the worse it will be," he augurs. "We will reach 'zero hour,' when more debt doesn't help."
What a CYA from the man who was asleep at the wheel and ignored all of the warning signs. How many bubbles does one get a pass on in his mind?
"The financial crisis that erupted on August 9 was an accident waiting to happen," Greenspan said in a speech on the sidelines of the International Monetary Fund and World Bank meetings. "Credit spreads across all global asset classes had become suppressed to clearly unsustainable levels."
"Something had to give," he said.
"If the crisis had not been triggered by a mispricing of securitized U.S. subprime mortgages, it would eventually have erupted in some other sector or market," Greenspan said.
What a list of quotes. I still remember hearing the GOP brag about how home ownership under their watch was one of their great accomplishments but much like flying the "Mission Accomplished" banner, those claims were just a bit premature.
2004 "American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage."
—• then Federal Reserve Chairman Alan Greenspan, Feb. 23
2005
"The United States has the broadest, deepest, most successful housing markets in the world, supported by an interdependent financial services infrastructure."
• — then Treasury Secretary John Snow, April 7
2006
"I strongly believe that the market's success in making these non-traditional products available is a positive development, not cause for alarm."
• — Robert Broeksmit, Mortgage Bankers Association, Sept. 20
2007
"Some of the credit issues are there, but they're largely contained."
— • Treasury Secretary Henry Paulson, March 6
"The ongoing housing correction is not ending as quickly as it might have appeared late last year. And now it looks like it will continue to adversely impact our economy, our capital markets and many homeowners for some time yet."
