ILW.COM - the immigration portal Immigration Daily

Home Page


Immigration Daily

Archives

Processing times

Immigration forms

Discussion board

Resources

Blogs

Twitter feed

Immigrant Nation

Attorney2Attorney

CLE Workshops

Immigration books

Advertise on ILW

VIP Network

EB-5

移民日报

About ILW.COM

Connect to us

Make us Homepage

Questions/Comments


SUBSCRIBE

Immigration Daily


Chinese Immig. Daily




The leading
immigration law
publisher - over
50000 pages of
free information!
Copyright
1995-
ILW.COM,
American
Immigration LLC.

Page 1 of 26 12311 ... LastLast
Results 1 to 10 of 252

Thread: F

  1. #1

  2. #2
    http://www.cnn.com/2009/US/01/...explainer/index.html

    How a 'perfect storm' led to the economic crisis


    (CNN) -- The U.S. economy is clearly in terrible shape. What is less clear is how we got here.

    An index of home prices in 20 major metropolitan areas fell at a record annual pace in November of 2008, according to a recent report.

    Opinions vary on when and where to begin the story, but many experts trace the origins of the current economic situation to the housing bubble that came about earlier this decade.

    Housing prices jumped at a rate above 6 percent in 1999 and increased rapidly and steadily as the decade turned, according to a recent study by the Brookings Institution.

    "After the mid-1990s ... real house prices went on a sustained surge through 2005, making residential real estate not only a great investment, but it was also widely perceived as a very safe investment," the study said.

    The prices eventually moved "out of line with fundamentals like household income" and the bubble formed, the study said. Read the complete Brookings study

    There were two trends developing at that time that contributed to the housing bubble, experts said.

    The Federal Reserve Board, to combat the recession of 2000-01 and the economic effects of the September 11 terrorist attacks, began drastically slashing interest rates.

    Consequently, it was very easy to borrow money, especially if you wanted to buy a home.

    Meanwhile, global investors -- flush with cash from the worldwide economic boom of the 1990s and '00s -- were looking to the U.S. economy to make even more money.

    "You have a group of people growing richer by leaps and bounds," said Peter Rodriguez, an economist at the University of Virginia. "And they liked the idea of parking some cash in the biggest, safest economy in the world."

    Enter mortgage-backed securities

    Wall Street firms sought to connect the rich investors with the rapidly expanding housing market with the help of complicated financial instruments.

    These instruments -- such as mortgage-backed securities we've heard so much about -- made it easier to move the investors' funds into the housing market, which fed the extraordinary price sprial, Rodriguez said.

    "It began to really take on a life of its own when people saw how much money they could make in housing," he said. "Before long, everybody was pushing along the momentum of this train."

    So how do these mortgage-backed securities work and what role did they play?

    Let's say there are three prospective homebuyers in a neighborhood. A local bank makes mortgage loans to all three, then bundles up the mortgages and sells the bundle to a big Wall Street firm, like the now-bankrupt Lehman Brothers.

    The Wall Street firm takes its bundles of mortgages and offers them to investors. The investors make money off the interest payments from the original borrowers.

    These instruments helped minimize risk for the local bank because it was no longer responsible for the loans it made to the local homebuyers.


    It was an intoxicating era when you could make a lot of money quickly through the housing market, and you did it through the "basic idea of leverage," Rodriguez said.

    He provided an example: You take out a mortgage loan for $100,000 and make a 20 percent down payment, which would equal $20,000.

    If the price of the house goes up to $120,000, you've effectively doubled your money. If you sell at that price -- assuming there are no transaction costs -- you walk away with an extra $20,000.

    Leverage works the same way for banks. They borrow from other banks or other institutions so that they can hand out more loans and make more money.

    "This encourages all sorts of risky behavior by individuals looking to buy homes, and it encourages banks to lend because, in an environment where prices rise, they're making lots of money, too," Rodriguez said.

    The housing collapse

    Economists say not everyone can -- or should -- buy a home, but that didn't to stop many homebuyers, banks or Wall Street firms during the housing bubble, when the only way for prices and profits was up.

    Some banks and other institutions were even eager to lend money to prospective homebuyers with poor credit and a spotty financial history who would not typically qualify for loans.

    These transactions are known as "subprime" mortgage loans. They generally have interest rates that are above "prime" interest rates available to borrowers with good credit.

    On its face, there is nothing devious or illegal about a high interest "subprime" loan. Its simply a case of lender taking on a higher risk and receiving a higher interest rate in return.

    However, nearly half of the loans made in 2006 were of the subprime variety, which increased the risk of borrowers defaulting on many banks' balance sheets.

    "Prime mortgages dropped to 64 percent of the total in 2004, 56 percent in 2005 and 52 percent in 2006," the Brookings study notes.

    Even so, many banks and brokerage firms continued bundling the mortgages, many of them bad loans, and Wall Street kept buying them and selling them to investors. And the people who could have put a brake on the increasing amount of risk -- the agencies that regulate the U.S. financial sector -- weren't paying attention.

    "As long as everyone was paying their mortgage, that was fine," said Ali Velshi, CNN's chief business correspondent. "[But] we didn't take into account with these mortgages that people might lose their jobs, the interest rate might go up and the housing prices may go down.

    "Guess what? All three happened."

    Housing prices started trending downward, and by 2007 the bubble had burst.

    "You're a homeowner or a bank, and you're trying to sell your property, but everything else on the block is for sale, too," Velshi said. "Everything collapsed like we've never seen before."

    The credit crisis

    Knee-deep in bad loans, many banks and lending institutions panicked. Many of them were over-leveraged, experts say; simply put, they had borrowed beyond what was responsible and were now on the hook.

    Another way to understand it is that for every dollar a bank may have had in the vault, it had $10 to $25 floating in the market in loans, and a good bit of that money was tied up in bad loans.

    The banks sought to decrease that ratio by either getting rid of the bad loans or raising more money, Rodriguez said.

    The problem with dumping the loans on the market is that "it lowers the price, and anyone else who has them is suddenly in even worse shape," he said.

    It was a "death spiral of prices," and it spread like a virus across the financial sector, from legendary Wall Street firms like Bear Stearns and Lehman Brothers to local and regional banks and brokerage firms across the country, Rodriguez said.

    As stockholders found out about the bad loans these firms were carrying, they pulled their money out. The markets plummeted.

    Meanwhile, paralyzed by their bad assets and looking to hoard cash, banks stopped lending. It didn't matter if you were an individual with good credit, a healthy business or another bank.

    The American financial system was effectively frozen.

    "It was a perfect storm," Velshi said. "It was a lack of regulation, it was greed and creativity in the financial industry, and it was an American dream that got off track."

  3. #3
    This was bound to happen. Thanks to Dems for Community Reinvestment Act, suing Citi Corps etc. These filthy politicians are making millions and living peacefully, but it will be US - USA TAX PAYERS, who will ultimately pay the price of their dirty politics and selfishness.
    If Democrats Had Any Brains, They'd Be Republicans

    Democrats - Brave enough to KILL our unborn, just NOT our ENEMIES!

  4. #4
    Originally posted by davdah:
    You are now a renter


    WASHINGTON (Dow Jones)--Fannie Mae (FNM) and Freddie Mac (FRE) extended their freeze on evictions through the end of February and said they would begin granting month-to-month leases to tenants of foreclosed properties.

    Freddie Mac said it would go further and allow certain former homeowners to convert to renters under a new program. Freddie Mac also said it would explore whether former owners that were foreclosed upon might be able to hang onto their homes by reinstating their mortgage at modified terms.

    "In about half of foreclosure sales there is no conversation between the borrower and the mortgage servicer about workouts," Ingrid Beckles, Freddie's senior vice president of default asset management, said in a statement.

    The mortgage giants announced the moves in separate press releases Friday. Each company's moratorium on foreclosures for the loans it owns or guarantees was set to expire this coming Saturday.

    Fannie Mae said it would offer month-to-month leases only to tenants of single-family foreclosed properties. Freddie, meanwhile, did not say its policy would exclude multi-family properties.

    Freddie said tenants and former owners must demonstrate they have the income to pay the monthly rent. For tenants, the amount would be based on market rents or the amount the tenant was paying prior to foreclosure, whichever is lower. Former owner-occupants would be offered month-to-month leases based on market rates. -By Jessica Holzer, Dow Jones Newswires; 202-862-9228; jessica.holzer@dowjones.com


    Many of the owners of these foreclosed properties have been renting out to tenants and pocketing the money. Is this mont to month lease being offered to tenants living in the house or to the actual owners of the properties/ or both scenarios ?

    what a deal... eh.. First we took all your money in form of mortgage , foreclosed... when you defaulted.., but now you can stay by us reinstating your payment plan.. but this time you get no equity/ownership.

    The New american dream folks


    <span class="ev_code_RED">Oh sorry.. I read last paragraph that answered my question. Well in that case, listen to this scenario.. The homes will become section 8 qualified and then 90% of the rent will be paid from government to "new landlord" </span>

    Only in America

  5. #5
    I can easily see us printing $1 Trillion bill and it will be in circulation by the time Obama leaves office. Hey he did good and lived up to his word. He made all of us rich. Before we had $100s in our bank, now we have trillions.
    If Democrats Had Any Brains, They'd Be Republicans

    Democrats - Brave enough to KILL our unborn, just NOT our ENEMIES!

  6. #6
    I take it Davdah, you never heard of the options market. That is where the most common derivatives are used. Derivitives can be risky, just ask the former Orange County Treasurer in 1987 when Orange County defaulted. But they are used to help reduce risk from losses. Banks can have directives holding in commodities, real estate, monetary instruments, etc, as long as they do not market that same product to consumers directly through the bank.

    Again, banks are not lending because they are recouping the losses they incurred. The natural, capitalistic market response to these losses is to now have stricter lending for a while. That is the main reason why banks are not lending, whether the government helped or not. So I guess you will have to wait awhile too Davdah.
    "Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence." John Adams on Defense of the boston Massacre

  7. #7
    AP Investigation: Banks sought foreign workers


    By FRANK BASS and RITA BEAMISH, Associated Press Writers Frank Bass And Rita Beamish, Associated Press Writers 2 hrs 9 mins ago
    In this Sept. 26, 2007, file photo Sen. Charles Grassley, R-Iowa, talks to AP In this Sept. 26, 2007, file photo Sen. Charles Grassley, R-Iowa, talks to reporters in his Capitol Hill
    Related Quotes Symbol.

    SANTA CLARA, Calif. Banks collecting billions of dollars in federal bailout money sought government permission to bring thousands of foreign workers to the U.S. for high-paying jobs, according to an Associated Press review of visa applications.

    The dozen banks receiving the biggest rescue packages, totaling more than $150 billion, requested visas for more than 21,800 foreign workers over the past six years for positions that included senior vice presidents, corporate lawyers, junior investment analysts and human resources specialists. The average annual salary for those jobs was $90,721, nearly twice the median income for all American households.

    The figures are significant because they show that the bailed-out banks, being kept afloat with U.S. taxpayer money, actively sought to hire foreign workers instead of American workers. As the economic collapse worsened last year with huge numbers of bank employees laid off the numbers of visas sought by the dozen banks in AP's analysis increased by nearly one-third, from 3,258 in fiscal 2007 to 4,163 in fiscal 2008.

    The AP reviewed visa applications the banks filed with the Labor Department under the H-1B visa program, which allows temporary employment of foreign workers in specialized-skill and advanced-degree positions.

    It is unclear how many foreign workers the banks actually hired; the government does not release those details. The actual number is likely a fraction of the 21,800 foreign workers the banks sought to hire because the government limits the number of visas it grants to 85,000 each year among all U.S. employers.

    During the last three months of 2008, the largest banks that received taxpayer loans announced more than 100,000 layoffs. The number of foreign workers included among those laid off is unknown.

    Foreigners are attractive hires because companies have found ways to pay them less than American workers.
    USC and Legal, Honest 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 y

  8. #8
    Originally posted by davdah:
    <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content">Originally posted by Hudson:
    I take it Davdah, you never heard of the options market. That is where the most common derivatives are used. Derivitives can be risky, just ask the former Orange County Treasurer in 1987 when Orange County defaulted. But they are used to help reduce risk from losses. Banks can have directives holding in commodities, real estate, monetary instruments, etc, as long as they do not market that same product to consumers directly through the bank.

    Again, banks are not lending because they are recouping the losses they incurred. The natural, capitalistic market response to these losses is to now have stricter lending for a while. That is the main reason why banks are not lending, whether the government helped or not. So I guess you will have to wait awhile too Davdah.

    Although dialog is appreciated the arrogance should be muted a bit. Yes, I've heard of options and futures. And to to say 'Again'? Didn't I comment already concerning where much of the bailout money is going? See a few posts up in the 'credit default swap' post. Thankfully and perhaps because of my prudence I don't need to borrow.

    BTW, it's derivative, not directives. </div></BLOCKQUOTE>
    Davdah,
    Part of my response was a tongue in check to your response

    To be frank, your articles and your postings about what "truly caused" the fiasco has really nothing to do with it. Again, quoting from Larry Kudlow, even thought he is an economist, is not exactly what is happeining.

    The first bailout plan of $250B was necessary by almost every economist in the banking industry. Yet, I knew the banks would still come to restricted credits. Thus, your alluding that banks holding derivatives, the FBR report, and the article about Sen Dodd, has nothing to do with why banks are not lending. The FBR report is a lagging indicator in a bearish market. Any slight of hand, any hint of negativity, and stocks will drop. That is how Wall Street operates.

    But if you truly want to know the reasons why, read the New York Fed Report on banking reports. Here is something for you to read by the FDIC Chairman. Or you can look at this.

    In either case, neither are really toward the TARP or to "poor poeple" or to "minorities" which is what Larry Kudlow wants you to believe.
    "Facts are stubborn things; and whatever may be our wishes, our inclinations, or the dictates of our passion, they cannot alter the state of facts and evidence." John Adams on Defense of the boston Massacre

  9. #9
    http://www.cnn.com/2009/POLITI...s.worries/index.html

    updated 4:38 p.m. EST, Mon February 2, 2009

    What GOP Leaders deem wasteful in Senate stimulus bill

    (CNN) -- On Monday, House Republican leaders put out a list of what they call wasteful provisions in the Senate version of the nearly $900 billion stimulus bill that is being debated:

    The Senate is currently the nearly $900 billion economic stimulus bill.

    $2 billion earmark to re-start FutureGen, a near-zero emissions coal power plant in Illinois that the Department of Energy defunded last year because it said the project was inefficient.

    A $246 million tax break for Hollywood movie producers to buy motion picture film.

    $650 million for the digital television converter box coupon program.

    $88 million for the Coast Guard to design a new polar icebreaker (arctic ship).

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

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

    $600 million to buy hybrid vehicles for federal employees.

    $400 million for the Centers for Disease Control to screen and prevent STD's.

    $1.4 billion for rural waste disposal programs.

    $125 million for the Washington sewer system.

    $150 million for Smithsonian museum facilities.

    $1 billion for the 2010 Census, which has a projected cost overrun of $3 billion.

    $75 million for "smoking cessation activities."

    $200 million for public computer centers at community colleges.

    $75 million for salaries of employees at the FBI.

    $25 million for tribal alcohol and substance abuse reduction.

    $500 million for flood reduction projects on the Mississippi River.

    $10 million to inspect canals in urban areas.

    $6 billion to turn federal buildings into "green" buildings.

    $500 million for state and local fire stations.

    $650 million for wildland fire management on forest service lands.

    $1.2 billion for "youth activities," including youth summer job programs.

    $88 million for renovating the headquarters of the Public Health Service.

    $412 million for CDC buildings and property.

    $500 million for building and repairing National Institutes of Health facilities in Bethesda, Maryland.

    $160 million for "paid volunteers" at the Corporation for National and Community Service.

    $5.5 million for "energy efficiency initiatives" at the Department of Veterans Affairs National Cemetery Administration.

    $850 million for Amtrak.

    $100 million for reducing the hazard of lead-based paint.

    $75 million to construct a "security training" facility for State Department Security officers when they can be trained at existing facilities of other agencies.

    $110 million to the Farm Service Agency to upgrade computer systems.

    $200 million in funding for the lease of alternative energy vehicles for use on military installations.

  10. #10
    Originally posted by davdah:
    <BLOCKQUOTE class="ip-ubbcode-quote"><div class="ip-ubbcode-quote-title">quote:</div><div class="ip-ubbcode-quote-content"> $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. </div></BLOCKQUOTE>



    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!!!
    USC and Legal, Honest 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 y

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •  
Put Free Immigration Law Headlines On Your Website

Immigration Daily: the news source for legal professionals. Free! Join 35000+ readers Enter your email address here: