Discounted, not as before...free.


WASHINGTON (Dow Jones)--Senate Democrats would consider a Republican proposal to create a discounted mortgage rate subsidized by the federal government as part of the debate over the economic stimulus package, Majority Leader Harry Reid, D-Nev., said Tuesday.

He said that Democratic senators had discussed the proposal during their policy luncheon, and that leadership would look at the idea to determine its effectiveness in helping the ailing U.S. housing market.

The proposal would direct Fannie Mae (FNM) and Freddie Mac (FRE) to buy up new discounted loans offered by mortgage lenders in a bid to stimulate demand to clear the backlog of properties and assist owners struggling to keep up with payments.

The plan would create a temporary window during which a federally subsidized rate of between 4% and 4.5% would be available to all qualifying borrowers, and homeowners looking to refinance.

Its cost would be capped at $300 billion, Republicans said. A senior aide to Reid said that Democrats' main concern of the plan was its possible cost.

Sen. John Ensign, R-Nev., said the plan could help up to 40 million Americans either buy a home or refinance their existing mortgage.

Republicans said they will introduce the plan as an amendment to the economic stimulus plan, which they say does little to tackle the root cause of the troubled U.S. economy - the housing market.

Maybe somebody lied, LOL?

quote:

Originally posted by davdah:

quote:

• $448 million for constructing the Department of Homeland Security headquarters.

• $248 million for furniture at the new Homeland Security headquarters.

Uhh Ohh. Maybe Obama isn't so keen on the idea of amnesty after all.

Posted 02-03-2009 04:03 PM Hide Post
My guess is the true agenda may be hidden?

11 million illegals waiting and 289 million Americans also waiting! choices, choices?? get slammed by 11 million or thee alternative???

For Obama could be Lose lose situation.


USC and Immigrant Alike Must Fight Against Those That Deceive and Disrupt A Place Of Desirability! All Are Victims of Fraud, Both USC and Honest Immigrant Alike! The bad can and does make it more difficult for the good! Be careful who you blame!!!

quote:

Originally posted by davdah:
The foreclosure mess and derivative obligations have nothing to do with it? It has everything to do with it. Those bills have to be paid by the banks. They were given huge amounts of money by Bush and now Obama. What happened to it all? Was it lent out? No, they used to pay their own obligations.

Derivitives are a hedge fund to assist banks with unrealized losses. They are the result, not the cause. These mortgage derivatives have been around for a long time, since the 1980's I do believe, and the foreclosure problem has been a problem since the late 1990's. Banks have this type of financial security as a straddle against the loans, whether they are good or bad. The relationship between mortgages and the financial security is that the better the mortgages and risk factor, the less likely the financial instrument. if the derivative is ata positive fair value, then there is no problem. A a positive fair value can include some bad loans. Again, bankruptcies have broken records eight times since 1997, even through the mantra of tax cuts and deficit spending. Think about that Davdah.

quote:

Problem is. Those obligations are more enormous than any stimulus plan DC could possibly create.

You need to learn the balance sheet Davdah. The derivatives are an asset to the bank, not a liability. the main concern with the derivatives is their fair market value. To assist you, click here. From the site:

A financial asset at fair value through profit or loss is one that either

a) is classified as held for trading, which means that it is (i) acquired principally for the purpose of selling it in the near term Solution 80A.14 Definition of short-term; (ii) part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual pattern of short-term profit-taking; or (iii) a derivative (except for one that is designated and effecting hedging instrument); or

b) upon initial recognition it is designated as at fair value through profit or loss. An entity may use this designation when doing so results in more relevant information, because either (i) it eliminates or significantly reduces a measurement or recognition inconsistency (an 'accounting mismatch') that would otherwise arise from measuring assets or liabilities or recognizing the gains and losses on them on different bases; or (ii) a group of financial assets and/or financial liabilities is managed and its performance is evaluated on a fair value basis, in accordance with a documented risk management or investment strategy and information about the assets and/ or liabilities is provided internally to the entity's key management personnel (as defined in IAS 24).

An entity may also use this designation for a contract that contains one or more embedded derivatives, unless;

(a) that embedded derivative does not significantly modify the cash flows that otherwise would be required by the contract, or
(b) it is clear with little or no analysis that separation of the embedded derivative is prohibited.

quote:

I read through the article you posted. It said a 20% decrease in areas affected? Really! Try more like 50% or more. Couple that with the number of defaults wrapped into those mortgage bundles and the banks re-selling foreclosed properties at 100k below loan balance. And there are lots of those. CDS is what put a lot of the big wall street institutions under. Many banks are just as deeply buried in those.

It depends on all home sales not the ones you are just observing. Here where I live, home prices in the suburban area, particularly in established neighborhoods, have fell about 6% to 10%, but in the downtown revitalization area where there are luxury condos and penthouses, it has fell 30% to 50% on new home sales. The issue is that for every one luxury home, there are 10 suburban, residential homes. That is why you see an average, or weighted average on home prices. They tend to be more accurate on the whole, than relevance to a particular market area. I know California is one of the states hit hardest, but not my state Davdah. And according to this article time is all we need.

quote:

Looking at just the real estate fiasco alone for now. A real example. The bank carried a loan for 380k. The person defaulted with a 330k balance. The home is listed for sale. It sells for 112k. What happened to the difference? Did it just vanish? No, the bank eats the loss. It becomes and obligation carried against deposits. Which is why the deposit rates show a negative balance. Which is why they can't lend any money. Its been eaten up by the losses on foreclosed property.

the real estate fisco started to ear its ugly head in 2005-2006. The factors include:

# Mortgage rates rose almost one point
# Affordability conditions deteriorated
# Speculative investors pulled out
# Homebuyer confidence plunged
# Resort buyers went to sidelines
# Trade-up buyers to sidelines
# First-time buyers priced out of market

Look at the last item Davdah. The housing market is hinged on first time homebuyers, not established buyers. And because the market priced first time home buyers out of the market is a major contributing factor to the problem. The people who "invested" in these get rich scheme of flipping houses during the housing bubble is one of those factors Davdah. We did it ourselves, no one else.

And this article from investopedia does not coincide with your predictions or even Larry Kudlow.

quote:

Another clue. In the second article it said the banks don't have the money to lend. That is strange. Since savings has gone way up recently. Something the banks need in order to generate loans. Capital on hand. Based on that there should be plenty to go around at the current historic low rates. There isn't. What wasn't said is the banks are paying their own debts with tarp and covering other obligations with deposits. Which is why that one chart shows a negative balance. The banks now owe the people who deposited money in them. They spent that too. Thankfully the FDIC is around to cover it. Or are they? How much do they have to cover the potential losses. Not enough I'm afraid. All that is keeping a major bank run from occurring is people's confidence their money is safe. Truth is, it isn't.

Davdah,
On a banks balance sheet, a deport is not an asset, but a liabiltiy to the bank. As liabilities increase, assets, loans that banks can give, decrease. Not the other way around. This site will help you understand the balance sheet. Now look at the securities section of the balance sheet and the demand deposits, that is savings and checking accounts,

Now, banks have to be creative in managing the bank's balance sheet in a historically low rate environment.

You must have gone to the Geitner school of accounting, lol. I understand the concept of a balance sheet. Gotta do one now fyi, its tax time, oh what fun! The deposit is listed as a liability due to it belonging to the account holder. But what about that offsetting item on the other side called cash? Where did that come from? And just what limits the amounts a bank can borrow from the fed? Ratios and things like that.

If CDS and derivatives were as harmless as a puppy what drove Lehman Bros under? We'll save that for another day.

You mentioned the disparity of home value shifts within your area. That illustrates the point perfectly. If the market were correct there would be little change across a wide area in valuations as a percentage from one time to another. If your property went down by 2% then most of the property within a 10 mile radius should also have devalued by a similar amount. Didn't work that way.

The fact it didn't goes to show something is wrong. Here is what it is. Again, from first hand knowledge. The areas that were hit with numerous mortgage defaults caused the steep devaluation of values in all property in the surrounding area. The banks are not following past procedures when it comes to a foreclosure.

In the past it used to be the bank would sell it for the loan balance. Or at least start there and go up or down as market forces dictate. Currently they are not doing this. Instead, they are deeply discounting the property before it goes to market. Here in San Diego those discounts are typically in the range of 30% to 50% off the loan balance. This is having a cataclysmic affect in the immediate vicinity valuations. Which is what threw off the variations in value percentage wise between areas of higher defaults versus those with lower.

Now, instead of the foreclosures causing a downturn of 10% or so its gone as high as 70% in the neighborhood. With so many equity loans and other atm like uses of real estate the problem just became compounded. The home isn't worth enough to cover the obligations. All buyers went running for cover and owners were looking to get out. This was totally unnecessary. Even with a glut of inventory the prices should have only dipped a few points not 50. Why the banks panicked and sold everything like a blue light special should draw suspicion.

Along comes tarp to save the day. New loans were promised but never materialized. The banks are still underfunded even with an increase in deposits and that other thing called cash. Where did it go. A slight of hand with money shifted to offset loan losses. Did the banks know beforehand the gov would step in and cover those losses? Seems kind of strange they sold everything with such reckless disregard of that thing called a balance sheet.

ILW affects stimulus

WASHINGTON (Dow Jones)--The U.S. Senate voted to include a tax break for Americans buying a new car in 2009 Tuesday as debate over the Senate economic stimulus package continued.

The amendment would allow individuals buying a new car using financing to write down any interest payments they make during the year. It would also let people claim the state excise tax they pay on the purchase off their tax liabilities.

The bipartisan amendment was introduced by Sens. Barbara Mikulski, D-Md., and Sam Brownback, R-Kan.



In the A9 post for ideas on stimulus S12 asked for a tax break on car loans. Well, I guess someone was listening.

quote:

Originally posted by davdah:
ILW affects stimulus

WASHINGTON (Dow Jones)--The U.S. Senate voted to include a tax break for Americans buying a new car in 2009 Tuesday as debate over the Senate economic stimulus package continued.

The amendment would allow individuals buying a new car using financing to write down any interest payments they make during the year. It would also let people claim the state excise tax they pay on the purchase off their tax liabilities.

The bipartisan amendment was introduced by Sens. Barbara Mikulski, D-Md., and Sam Brownback, R-Kan.



In the A9 post for ideas on stimulus S12 asked for a tax break on car loans. Well, I guess someone was listening.

I hate to say this, but I believe they are doing this more for the auto makers than for the American car buyer. Another approach to help them out of the hole they are in.

[COLOR:RED]SEC ignored warnings about Madoff for 10 yrs!! He could have been shut down when it would have only been 3-7 billion. This is what happens when you have people in jobs that are not qualified because they lack expertise and do not understand/or some simply do not even know what they are doing. /COLOR]

Madoff tipster Harry Markopolos assails SEC.
AP –
Reuters – Harry Markopolos, a former financial executive, holds up a report by the Association of Certified Fraud … WASHINGTON – The man who waged a decade-long campaign to alert regulators to problems in the operations of fallen money manager Bernard Madoff told Congress Wednesday that he had feared for his physical safety.

Harry Markopolos also assailed the Securities and Exchange Commission in his first appearance before lawmakers. The SEC failed to act despite receiving credible allegations of fraud from Markopolos about Madoff's operations over a decade.

Because of the agency's inaction, "I became fearful for the safety of my family," Markopolos said.

He told a House subcommittee hearing that "the SEC is ... captive to the industry it regulates and is afraid" to bring big cases against prominent individuals. The agency "roars like a lion and bites like a flea," Markopolos said.

Madoff, a prominent Wall Street figure, was arrested in December after allegedly confessing to bilking investors of more than $50 billion in what the authorities say was a giant Ponzi scheme, possibly the largest ever. His repeated warnings to SEC staff that Madoff was running a massive pyramid scheme have cast Markopolos as an unheeded prophet in the scandal.

"The SEC was never capable of catching Mr. Madoff. He could have gone to $100 billion" without being discovered, Markopolos testified at the hearing. "It took me about five minutes to figure out he was a fraud."

Markopolos, a securities industry executive and fraud investigator, brought his allegations to the SEC about improprieties in Madoff's business starting in 2000. He fruitlessly pursued the quest through this decade with agency staff from Boston to New York to Washington, but the regulators never acted.

Now thousands of victims who lost money investing in Madoff's fund, which was separate from his securities brokerage business, have been identified. Among them are ordinary people and Hollywood celebrities — as well as big hedge funds, international banks and charities in the U.S., Europe and Asia. Life savings have evaporated, foundations have been wiped out and at least one investor apparently was pushed to commit suicide.

And the SEC has been sustaining volleys of criticism from lawmakers and investor advocates over its failure to discover Madoff's alleged fraud, which could be the biggest Ponzi scheme ever, despite the credible allegations brought to it over years.

Markopolos said he determined there was no way Madoff could have been making the consistent returns he claimed using the trading strategy he touted to prospective investors.

Madoff, who was at one point chairman of the Nasdaq Stock Market and sat on SEC advisory committees, was "one of the most powerful men on Wall Street and in a position to easily end our careers or worse," Markopolos said.

Calling the SEC "nonfunctional" and harmful to the recommended ways to revamp the agency, including replacing its senior staff and establishing a central office to receive complaints from whistleblowers.

Also due to testify before the House Financial Services subcommittee were five top SEC officials, including the agency's enforcement director Linda Thomsen, and the head of its inspections division Lori Richards.

In December, Christopher Cox, then the SEC chairman, pinned the blame on the agency's career staff for the failure over a decade to detect what Madoff was doing. He ordered the SEC's inspector general, H. David Kotz, to determine what went wrong. Kotz has expanded his inquiry to examine the operations of the divisions led by Thomsen, who has been the enforcement chief since mid-2005, and Richards, who has held that position since mid-1995.

Thomsen and Richards defended their actions at a Senate hearing last week over the SEC's failure to uncover Madoff's alleged fraud scheme. Members of the Senate Banking Committee were scarcely satisfied with explanations given by the two officials and by Stephen Luparello, the interim chief executive of the brokerage industry's self-policing organization.

That organization, the Financial Industry Regulatory Authority, was headed until December by Mary Schapiro, President Barack Obama's new SEC chief. Schapiro has said that because Madoff carried out the scheme through his investment business and FINRA was empowered to inspect only the brokerage operation, it wasn't possible for the organization to discover it

Could economic nationalism could hurt the US in the long term?

'Buy American' clause stirs up controversy

Taking into account how little we export what is the worst damage? A few less planes and bulldozers. That's it. We can afford to forcibly push the pendulum the other way without any significant backlash.

Not much to lose and a lot to gain. Once we're back on track we will have more in the way of manufacturing equality to compete in the world market. In the end its the price that matters. Not politics. As it stands now we've got no catalogs sitting on the buyers desk.

"In the end its the price that matters" which is the reason why we've been buying goods from China etc. China took on our debt and now we're gonna turn round and say F-you and default on loans?? Nice way to do business. Isn't it much like unilaterally going into Iraq "just because we could" and "who needs the UN anyway?" And the world wonders why we Americans appear arrogant??

quote:

Originally posted by Brit4064:
"In the end its the price that matters" which is the reason why we've been buying goods from China etc. China took on our debt and now we're gonna turn round and say F-you and default on loans?? Nice way to do business. Isn't it much like unilaterally going into Iraq "just because we could" and "who needs the UN anyway?" And the world wonders why we Americans appear arrogant??

What UN? It is a joke. Americans have high purchasing power and we can definitely dictate to entire world. I agree with Davdah, look at the trade deficit. If few plane orders are canceled it will only impact 10-20K jobs not in millions. But we start producing here, we will see increase in millions.

Welcome to the club. You said we.

What we can do in our go green campaign is obligate the chinese to the same standards imposed by OSHA and the EPA on our factories.

If we buy from them we should insure they are conducting business in a fair manner. That is what OSHA and the EPA are all about aren't they? To make sure the worker is paid a fair wage and the environment is not unnecessarily polluted.

As far as defaulting goes. I didn't take out the loans. BofA and Citi did. Let them pay it back with their own money.

quote:

As far as defaulting goes. I didn't take out the loans. BofA and Citi did. Let them pay it back with their own money.

Too late. We've already given them the money!

I suppose its time for the banks to start assuming their correct identity. Bank of America is now The Peoples Republic Bank of China. Citi Bank is now Beijing Bank.

Rates beginning to climb

Rates on fixed-rate mortgages rose this week, as economic reports were better than what forecasts had expected, Freddie Mac's chief economist said Thursday.

"The economy slowed by 3.8% in the fourth quarter of 2008, less than the market consensus, with inflationary pressures held at bay. Meanwhile, personal incomes fell by only half as much as some market forecasters predicted," said Frank Nothaft, Freddie Mac chief economist, in a news release.

The 30-year fixed-rate mortgage averaged 5.25% for the week ending Feb. 5, according to Freddie's weekly survey of conforming mortgage rates. The mortgage averaged 5.10% last week, but is still lower than a year ago, when it averaged 5.67%. Just three weeks ago, the loan averaged a little under 5%.

Fifteen-year fixed-rate mortgages, a popular choice for refinancing, averaged 4.92%, up from 4.80% last week. The mortgage averaged 5.15% a year ago.

One-year Treasury-indexed adjustable-rate mortgages averaged 4.92%, up slightly from last week's 4.90% average. The ARM averaged 5.03% a year ago...



Interest rates on the rise but inflation held in check. Now we're setting ourselves up for another disaster. If the gap grows and by all indications it is between income and inflation it will be the same situation. The gulf between inflation and housing prices is what sparked the current chaos. Now its being allowed to occur throughout the rest of the economy. Inflation must be allowed to rise to avert an even worse set of circumstances.

Bank of America is now BANK OF AMERICA


NEW YORK (Dow Jones)--Shares of Bank of America Corp. (BAC) pared some of their losses after falling to their lowest level since October 1984 on Thursday amid talk that the U.S. government's "bad bank" plan could leave the bank in poor condition and worries that its shares could be diluted.

The decline in its share price, the sixth-straight day in the red, also came as Moody's Investors Service published a report Thursday about the state of U.S. banks that highlights Bank of America's low tangible common equity ratio. Low tangible common equity ratios can be a sign to investors that a firm may soon need to raise more common equity, which at low stock prices dilutes existing shareholders.

Bank of America's shares were down 5.1% to $4.46 in heavy trading. Earlier they were down as much as 20% to $3.77, a 24-year low. The stock is now down 68% year-to-date and 89% below its level last February. As of 1 p.m. EST, about 450 million shares traded hands - about four-and-a-half times average trading over the last 52 weeks.

Ladenburg Thalmann analyst **** Bove said in a note to clients Thursday that the stock's valuation - with shares selling at 0.19 times stated book value and 0.5 times tangible book value - shows investors believe the bank will "be nationalized by the United States government. If they believed that it would continue as an operating entity, it is unlikely that the bank would be selling at such a low value."



Perhaps a retracing of history is in order here. There was a time when banks were nationalized for the good of the people. That the financial and large parts of the manufactoring base (Ford, GM, etc via stimulus obligations) were also nationalized. When and who did that?

Obama naming Czar






UPDATE:Obama Budget Czar Faces Fannie,Freddie Budget Decision

Feb 5, 2009 17:40:09 (ET)

(Updates with more details, adds quote from Orszag.)

WASHINGTON (Dow Jones)--The Obama Administration will soon decide whether to move Fannie Mae (FNM) and Freddie Mac (FRE) onto the federal budget, a reversal of Bush policy that could widen the federal deficit by hundreds of billions of dollars.

After the government seized the mortgage behemoths last September, the Bush Administration opted against incorporating their operations onto the federal books.

Peter Orszag, who was head of the Congressional Budget Office, or CBO, under President Bush, publicly argued the opposite view. He said the companies were now part of a "very tight nexus" with the federal government and ought to be reflected in the budget. Now, as the director of Obama's Office of Management and Budget, he will have the chance to put his money where his mouth is.

Moving the mortgage giants onto the federal books is hardly convenient for the new administration. It will swell the deficit and make it tougher for President Barack Obama to push his domestic agenda and put the country on a more sustainable fiscal path.

Already, the issue is causing headaches. The CBO last month estimated the takeover of Fannie and Freddie would cost the government $238 billion in 2009, pushing the U.S. deficit up to $1.2 trillion for this year. That has made Obama's economic stimulus plan a tougher sell on Capitol Hill, where Republicans are balking at its roughly $825 billion price tag.



The transition to Communism will be nearly transparent with the number of Czars we have.

Betting or Praying?

NEW YORK (Marke****ch) -- Financial stocks rose early Friday, led by a 10% gain in Bank of America shares, as investors are betting that a combination of an expected deal on a huge government stimulus package and a Monday announcement from the Treasury about a new bank bailout plan will be good for the sector.

"Next week could be one of the most important weeks for 2009," J.P. Morgan analysts said in a research note Friday, referring to the stimulus plan and the Treasury bank plan. "At a minimum, it will be easier for investors to more clearly differentiate financials whose outlook is healthy and unhealthy."..



Yes, stocks rose across the board led by gains in the financial sector. Hell, even Fannie and Freddie jumped a few cents. I'm betting on the minimum stance given. That bit by bit we are going to learn the truth as to how far down the river we have been sold by the likes of B of A. Next week prepare to hold your breath as the financial sinks yet again when the socialist agenda is made public

How Bad is it


Sat February 7. WASHINGTON (Dow Jones)--Treasury Secretary Timothy Geithner warned U.S. House Democrats on Saturday that the U.S. financial system remains "badly damaged," but that the Obama administration planned to act both quickly and aggressively to deal with the crisis, according to one lawmaker present....

"I don't think we know yet how bad the industry's insolvency problem is," Miller said. "If we had regulators go in and examine the books like we did at Fannie Mae and Freddie Mac a great number of our systemically important financial institutions could be insolvent."


Lets see. We the tax payer are going to give away trillions but no one bothered to check the books? Could be insolvent or ARE!

And republicans were being blamed for fiscal irresponsibility? Even your average crooked countrywide loan officer would ask for a tax return before signing off on a loan. A fool and their money are soon parted.

Here is a clue Geitner. BofA, Citi, JP Morgan are insolvent.