Rescue plan seeks $700B to buy bad mortgages

[azurnoir]

Source: Yahoo News/AP


WASHINGTON - The Bush administration is asking Congress to let the government buy $700 billion in toxic mortgages in the largest financial bailout since the Great Depression, according to a draft of the plan obtained Saturday by The Associated Press.

<snip>

Sen. Chuck Schumer, D-N.Y., called the proposal "a good foundation," but raised concerns it "includes no visible protection for taxpayers or homeowners."

Democrats are insisting the rescue include mortgage help to let struggling homeowners avoid foreclosures. They also are also considering attaching additional middle-class assistance to the legislation despite a request from Bush to avoid adding controversial items that could delay action. An expansion of jobless benefits was one possibility

Asked about the chances of adding such items, Bush sidestepped the question, saying only that now was not the time for political posturing. "The cleaner the better," he said about legislation he hopes Congress sends back to him at the White House.



Read more: http://news.yahoo.com/s/ap/20080920/ap_on_bi_ge/financial_meltdown

[Maven]

1. Ha! So now the "official" number's up to 700. Remember what they said the Iraq war would cost?

Keep that in mind.

[kirby]

9. The S&L bailout (1989) asked for $50B and cost $132 in the end.

I posted a link the other day to the GAO report about the S&L bailout. Basically, when Congress created the program in 1989, it allocated $50 billion dollars. The Resolution Trust Corporation came back to Congress needing more money several times. Over 6 years, they eventually got $110 billion. Table 3 of the GAO report (from 1996) says the total cost was $160.1 Billion. Of that $160.1 Billion, only $28B was from the private sector. The rest was from the Taxpayer!

(http://www.gao.gov/archive/1996/ai96123.pdf )

One of the bullshit talking points is that they 'made money on this'. I think someone is spinning the fact that the RTC did not use all their money and had $17B left over. Somehow that gets spun into a profit.

[mrJJ]

2. Elected Dems need to be steadfast in their negotiations

The Dems better not RUSH and give these A Holes a Blank Check! This $700 Billion is just the tip of the iceberg and the USA is the Titanic.

The Dems in Power better look out for the PEOPLES interest. I don't give a rats ass that its election time!!!!

Billions upon Billons have gone missing in Iraq alone. Short memories out there.

The Missing Money

http://solari.com/archive/missing_money

[Buenaventura]

7. "steadfast" politicians? dream on. they're only true to their f**king handlers.

[tridim]

3. Bad mortgage. Bad, bad mortgage!

Meanwhile I've never missed a mortgage payment, so I get the honor of having to bail out the bad ones. All of which will cause my home value to decline further. Awesome. :mad:

Maybe I should just abandon this money pit.

[azurnoir]

4. This is what could win the election for Obama

The GOP plan contains no help for Average Joe who may be on the verge of losing his/her home. Keep in mind that at this point many of the defaults and foreclosures have nada to do with shady mortgages but more with job loss, but apparently for the GOP "personal responsibility" is only for the little people or John Q, if you are powerful then it is John Q's responsibility to bail your arse out and you get to pick pocket him while he loses house.

[Purveyor]

5. If I understand this correctly, the US gov. is going to take title to these empty, foreclosed

properties and attempt to resale them 'when the housing market recovers'.

Question: Are they going to let these houses sit empty? If so then these properties will need to be maintained and secured. More cost to recover on top of the defaulted loan amount.

Even as it is now, the banks haven't been able to keep up adequate maintainence/security on the empty houses they hold. Thefts of copper pipes/wiring is commonly being reported and houses are being all but destroyed in the process of stripping out the copper.

[L. Coyote]

8. Leave a home empty, and the rat piss will ensure it has no value!

What is needed is a means to ensure families are not foreclosed on if they are willing to make payments to the USG. Let's take over ensuring that families stay in their homes. Investors are on their own, as always.

If the USA takes over mortgages of family homeowners, the Treasury collects the interest!! That's like selling bonds.

[hedgehog]

13. I agree wholeheartedly! My town is full of rentals because

elderly relatives pass on, the rest of the family has moved, and the jobs that are still around pay so little that the people living here can't afford to buy houses from the heirs. So the heirs become absentee landlords and they can't rent the houses for enough to pay for needed maintenance, so there is a downward spiral. We need some way to put people into existing housing AND ensuring they have the means to take care of the buildings.

[calmblueocean]

14. If only they WERE buying houses! They ain't buying no such thing.

They're buying mortgage-derived securities. Financial instruments based on mortgages, but with no equity stake in the homes.

We're just buying junk paper. If we were buying the houses, heck, real estate is always worth something!

[ozymandius]

16. Exactly!!! Troubled mortgages is just a symptom. The disease is far worse.

This plan only calls for some outward sign that something's being done. When in fact nothing is being done to address the main issue: paper sold against mortgages, then sliced repackaged and re-sold multiple times. Lehman did not fail because houses are sitting empty. Lehman failed because of leveraged bets on the future values and revenues. AIG failed because it insured these shitty bets.

This is a boondoggle of a plan that takes for granted the American public is uneducated - equally so its elected federal representatives.

[Waiting For Everyman]

18. Mortgage-backed securities need to die now, and this is the time

to do it. Convert them to fixed and only sell them (we have Fannie and Freddie now too) as they used to be sold - whole, and outlaw slicing them up in the future. It (derivatives) should be illegal on home loans. Let the bankers gamble on themselves if they want, but not with primary-residence homes.

[calmblueocean]

23. I think you're dead-on.

And someone should've realized this a long time ago.

[Zenlitened]

25. Exactly. We are actually paying CASH for... nothing, by and large.

All that imagined "wealth" that was conjured up by the finance industry, packaging and repackaging and selling and reselling "notes" based on debt...

It all disappeared in a puff of smoke.

And now we're buying the smoke.

[Pete2069]

19. Halliburton stole billions of our tax money and ran.....

Just as most other elitist and corporations have done.

We need to make our government become open and transparent to
the American citizens as it was suppose to be.

Bush/Cheney's administration has shown us what a corporate
controlled and "secret government" does to the
citizens of that country.

http://www.wakeupfromyourslumber.com/node/881

Halliburton moves headquarters to Dubai
After receiving countless billions from U.S. taxpayers in the
form of no-bid contracts, Halliburton will say goodbye to
America. 

The company is moving its headquarters and its CEO to Dubai
(United Arab Emirates). Dubai is home to the filthy rich, and
is a gigantic money-laundering center. The Carlyle Group has a
major office there. 

[Fire1]

22. Banks are the LAST ones to maintain and secure properties......

they sell and auction their properties 'at a loss' and 'AS IS.'

[daleo]

6. Bailing out the investor class is politcs

"Asked about the chances of adding such items, Bush sidestepped the question, saying only that now was not the time for political posturing."

It's politics, pure class politics.

[paparush]

10. In about 6 months...somebody's buddies are going to be buying some CHEAP real estate.

[Waiting For Everyman]

11. Is this commercial mortgages? Or homeowner mortgages?

Is this all corporate mortgages and debts we're talking about bailing out? It better not be - or it won't stop the problem.

[Miss Chybil]

12. They should just buy the paper, restructure the mortgages and allow people

to remain in their homes. That's pretty clean.

[hedgehog]

15. Amen to that! Everyone talks about how foolish people were to take out a

ARM mortgage with a balloon payment, but what about the banks that bought portfolios full of those mortgages?

[Waiting For Everyman]

17. Yes! And lots of people with fixed rates are in foreclosure too.

This 'subprime' label is another myth. Job loss, and the usual major life hardships are most of it (ARMs aren't hurting as much right now b/c rates are DOWN, right?). Exactly what you said could've been done and it would've stopped this last year - that's what Dems wanted to do, but Repubs always 'know better' and get their way for their clients, the banks.

The banks are refusing to do realistic workouts. FHA would. End of problem.

It doesn't need sweeping new powers to the president or the sec. of treasury. Nor a blank check with no oversight either.

I can't believe their nerve! To even suggest that at a time like this!

Didn't 'we' (the public) just learn about the dangers of no oversight this week??? That's way too short of an attention span!

[azurnoir]

21. Even FHA is not working

our "fixed rate" FHA mortgage has has gone up $100 a month in the past year because our repug governor has gutted city funding to funnel money back to wealthy suburbs that had surpluses in the first place, the cities answer raise property taxes.

[Miss Chybil]

28. That has nothing to do with FHA. That's your local government.

Sorry to hear about your payment hike, though.

[azurnoir]

30. I realise that it is not FHA

however perhaps a rewrite of present FHA rules could help prevent forecloser due to these kind of circumstances, at least as a temporary "fix" under certain conditions such as job loss.

[wellst0nev0ter]

20. I LOOOOVE This Part

If enacted, the plan would give the treasury secretary broad power to buy, manage and sell the mortgage-related investments without any additional involvement by lawmakers. It would, however, require that the congressional committees with oversight on budget, tax and financial services issues be briefed within three months of the government's first use of the rescue power, and every six months after that.

So we give Paulson a blank check that could be worth over a trillion with no possibility of oversight (and no, bi-annual perfunctory reports do not count as oversight) just so the corporate socialists on Wall Street could keep their third and fourth house and their hummers in the garage. No guarantees for penalties for the crooks, no quid pro quo for the ordinary taxpayers who will have to pay for these abuses, and now no oversight? Any congressperson who votes for this horseshit should be thrown in a hole for actual armed robbery, since anyone who refuses to pay their taxes to finance this farce will be seeing the business end of a gun courtesy of our runaway government.

[Zenlitened]

26. Check out the actual language of the Bushies' proposal.

The New York Times has the entire thing posted:
http://www.nytimes.com/2008/09/21/business/21draftcnd.html

Section 8, by itself, will make ya scream -- or simply faint dead away:

Sec. 8. Review.

Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

[wellst0nev0ter]

27. Like Mike Malloy Says, Let's Just Call It What It Is

Socialism - namely National Socialism. And maybe someone can translate that in German so that it sounds more masculine. I know those neocons sure do like that.

[Zhade]

24. "the largest financial bailout since the Great Depression" is a GOOD FOUNDATION?

WTF?

[fshrink]

29. Profits are privatized, losses are public.

Typical win-win deal. How many trillions before democrats call it and request accountability?