Johnny gets sick at McDonald’s from a double cheeseburger tainted with ecoli. Results, a massive recall of all beef associated with the meat packaging facility and eventually the complete shut down of the company that sold the tainted beef to Johnny.
Meanwhile Johnny is OK now and still eating double cheeseburgers. The beef company is out of business. Kaput, el finished, sayonara, GOOD BYE.
One burger, one kid, an upset tummy, and our Government is there to save the day with the mighty nationwide beef recall. Maybe the reason these beef companies get shut down so quick is because they do not offer too many political campaign contributions to get the shaft from our government? Maybe they should play the Capital Hill game a bit more, take buckets of their “tainted cash” to Washington and take a clue form the CEO’s of lending institutions. Just a sick political thought! Seems like it works perfect for them…………..
Johnny’s dad kicked the cow and had to pick it up with a fork lift. He really was not nice to those cows because they did not move when he said move. So, he kicked them and was caught on video.
Results = 123 Million pounds of beef recalled in the largest recall of beef ever. No one got sick. No one died. Cows are OK now. Geez folks, that was a close one!
Oh wait, Johnny just got a toy made in China. Good thing Johnny’s mom is a scientist and checks for lead based paint. The results come back positive and every darn toy is recalled around the world. Toy company is shut down and the president does the honorable thing in China and kills himself. Yes, he killed himself.
Meanwhile in the glorious US of A, the people of our country have been forced into a recession (yes, we are!) by these lawless lenders and Wall Street brokerages that our government protects and shields (if you do not think that, then you need to wake up and smell the trillion pounds of toxic loans because it stinks!), over 1 million homes foreclosed on, murders, suicides, economic blithe, homelessness, lawsuits, joblessness, lay offs, scams, theft, deception, depression, sleeplessness and divorce.
All as a a result of “tainted and toxic loans!”
Yet our government does little to help the MILLIONS of victims as it pumps billions into Wall Street and the banking systems to “save” lending institutions and Wall Street. Meanwhile in the streets of America, the people continue to get sick and suffer in their homes. Silently, alone………….
In no way to I condone cruelty to animals and in no way do I condone cruelty to humans. The above examples are true and are done with a Moe spin to show how hideous this really is. Thanks to Peter Miller of Realty Times and FHALoanpros.com for giving me the fire to write this post.
The other argument made by lenders has been that they were social do-gooders, moral folks offering cheap loans so more families could own housing.
Now we know that the do-gooder argument doesn’t hold water. Figures from the latest Census Bureau survey show that homeownership in the last quarter of 2007 was down to the lowest level seen since 2002. You remember 2002 — that was before toxic loans were widely marketed.
The reason millions of people are facing foreclosure today is very simple: A lot of money was made originating, selling and packaging loans with terms that were unfair and unconscionable from day one. Like tainted food, defective cars or toys covered with lead, such flawed financial products should be recalled at no cost to the consumer. After all, isn’t that the moral thing to do?
let us start a protest: stop all mortgage payments, across the board, we will get quick response!!! I bet
Our Government is a fraud!!!
a revolution against wall street has begun and not a single shot has been fired…
It will never happen…too many hands are in the pot. Fed will rescue us…not!
“let us start a protest: stop all mortgage payments, across the board, we will get quick response!!! I bet”…..You bet.
42 of my friends and associates already stop their payments. They are forcing banks to re-structure their loan. Most of them also stop paying their cledit cards, which at one point they were using them to keep up with the high mortgage payments. Credit card companies are offering to settle for 20-30% in the dollar.
Why should we (the tax payers) be the ones forced out of our houses and our saving so that these crucks get richer!!!
The federal reserve is actually just bailing out itself because the men behind the fed’s curtain OWN these investment banks! That’s right, J.P. Morgan just stepped in and “stole” Bear from itself. The money is paper. The paper is worth paper. The ink on it somehow transformed it into somethin g worth more than paper and ink but it is really just paper and ink. There is a huge transfer of wealth occurring right in front of our eyes and it is being disguised as a depression. The fed can’t allow itself to crumble and crash like the house of cards it is so it injects tremendous amounts of cash in to its babies…the investment banks. While Americans lose everything the fed makes the already wealthy even wealthier and the “slaves” just get nthe shaft. The same thing happened back in 1929 and was fed engineered as well. JP Morgan cleaned up back then as well…
We must end the fed!
It is extremely pathetic to compare the lead-based paint recall to the mortgage industry. In the mortgage industry, it is not only the lender’s responsibility but also the borrower’s responsibility to know what they are getting themselves in. Why should the government step in with my tax money and bail out a risky business that went sour?
Your argument shows that you have little understanding of micro and macro economics. If the government were to step in like you suggest, inflation would go through the roof and pose a much bigger problem than our current housing industry. Further negating your argument is the fact that the government doesn’t even have the capital available to do such a bail out.
Your entire article stinks of a socialist/communist agenda, with a horrible understanding of what problems would be caused by this action.
Shame on you and your realtor friend for putting this out for people to read. We all need to take responsibility for our actions; this includes borrowers, brokers, and the realtors who knowingly sold overvalued homes to unsuspecting buyers.
We need to recall the entire Bush Administration and his Goldman Sachs advisors who where responsible for the mess, I don’t see Treasury Secretary Paulson the Wall Street pioneer that encouraged deregulation, giving up any of his $700 million dollar fortune he made while CEO at Goldman from 2001-2006 to help the homeless, instead he is helping his friends get wealthier on Wall Street, preserving corruption at it’s finest as a public servant, a pure demonstration of ineptness in Congress/Senate/State officials which has been obvious for a long time as a pure and true waste of taxpayers money. Its revolutionary times and I encourage all Americans use the stimulus refund money as a cash advance to file Bankruptcy and move all monies out of financial institutions.
So, when a kid eats a tainted burger or gets lead based paint poisoning from playing with his toys, we should make Johnny man up and take his “ecoli or lead based paint” medicine? Just like we make homeowners/people suffer and take their toxic loan medicine. Hell, how can over 1 million people be so dumb but to fall for this snake oil and another 2 million plus on the way?
Mike you’re an idiot with a degree. A lot of you out there…….
It is the lenders responsibility because they sold what is called a “defective credit instrument” to the American people. A loan made to fail. Snake oil…..
Mike, it is obvious that you do not understand common sense and the law. These mortgages were “unfair and deceptive” in every which way. With how they marketed these products and how they sold them. These loans should be recalled, like Johhnys burger. Or your wifes car you bought because it was a lemon.
Who is the communist here? A man for the people or a man trying to protect the criminals and snake poi?
I could care less about your macro crap. This is about the American people suffering and our economy going down the drain because of these damn lenders.
Look in the macro mirror bud. We are in a recession, inflation is going up (HELL, milk, bread, diapers are all going up big time), and we are heading for a depression.
Obviously, you must be a Wall Street guy trying to still get fools to buy whatever it is your pawning on Wall Street today. Invest in China right? or maybe some drug companies? Since you and your pals destroyed the US mortgage and housing market.
Get your head out of the sand and take a look at main street pal, because you may be down from your glass tower on the ground here, sooner than you think.
The hype of “subprime” mortgages needs to really fcus on what brought the housing down to where we are today. for everyone out there that does not have a true grip on the mortgage industry/lending, subprime mortgages made up only 2.7% of all mortgages. Out of the 2.7% of subprime, it started off having a default of 19%. Lets say that all 2% defaulted and went into foreclosure, that would not have put us where we are today.
People like to blame this mess on brokers and investors that allowed some good and some bad borrowers into new homes. But lets get to the factual side of what went wrong.
Fact 1: Everyone that has to do with the lending industry mainly the housing were at fault. that includes the following: Realtors, builders, brokers, banks, secondary markets and the borrower.
Fact 2 : This industry is more regulated than any other lending industry out their, both federal and state regulate mortgages.
Fact 3 : What is killing this market is not the programs or borrowers defaulting on thier loans, but what is making the borrowers default on their loans.
Fact 4 : In most cases with anyone that took out an ARM product in the past 5 to 7 years is either now value in the home, lack of products and or programs and lack of lenders wanting to take on new loans.
Fact 5 : Investors are killing themselves off by shorting each other and calling in margins to protect themselves agains this down fall. The Feds are helping with this downturn as they kill the value in the dollar to help make the ARM (short term rates) lower for the next wave of ARMs coming due (estimates in the TRILLIONS). While killing the value of the dollar to help millions of ARM holders, this is causing inflation/hyperinflation/stagflation.
Fact 6 : There are 2 main ways for banks and investment firms to make money. Mortgages and fees from trading (many different types of trading as well as IPO’s etc.). If you stop taking in new mortgages (housing is at it’s lowest value, now is the time to take on new purchases and we know that the homes are a great value), and you are not bring in the fees from trading due to all investors worried about liquidity. Then you stop making money and what happens when some of your other investments start demanding money? Bear Stearns is what happens. They took on to much risk and when margins were called and investors started taking money out of hedge funds that held a lot of theses risks (CDO, SIV, CMBS, CMBX, etc.)it created a domino effect and brought them down.
Fact 7 : When a company like Thornburg mortgage is in trouble (they specialize in Alt-A Jumbo loans with very high credit scores, low LTV and large amounts of assets/reserves) only because margins are being called, not due to portfolio of mortgages defauting, you know what is really happening in this market. All investors are taking care of themselves even if it is hurting their bottom line by doing this.
Fact 8: We need to stop blaming subprime as it was only a small part of what is going on and finding out what really needs to be done to stop this spiral before we all are upside down in our houses. Common sense tells us if we bought a new house 7 years ago, there is no way that in todays market it should be worth less than 7 years ago. If you use that common sense, you will then understand it really is not the housing that is creating this mess, but the opposite. It’s the banks and investors (secondary markets) that are causing this mess.
Absolutely, a “do-over” couldn’t hurt. If the actual performance data of subprime loans was taken into account, i.e. a 20% failture rate is historically typical(for a round number), then only a 20% loss would have to be realized vs the 50%+ downgrading that is going on now. Subprime loans are not a new animal that showed up only a few years ago. Frankly, this is a perfect opportunity to overhaul the whole system. I find it amazing that I have to have mandatory training and a criminal back ground check, completed every year, to accompany my elementary school child on a school field trip–which is much more than some states require of those involved in the making of mortgage loans!
Moe,
Your an idiot, even after trying to explain your stupid analogy. These home owners willfully signed mortgages that dictated terms that they agreed to. Meanwhile, the lenders willfully lent money on terms they agreed to. If there was is a disconnect, it will naturally work itself out in terms of lenders who made stupid loans going bankrupt and people who took more mortgage and money than they can afford going bankrupt.
Meanwhile, if you’re going to recall these bad mortgages, what are you going to do about recalling all those ban home equity loans made on good and bad mortgages? Are we going to recall them too? Does this mean all the stupid consumers who bought a home they couldn’t afford at a market price that was far in excess of what the property is worth and who then took out home equity loans to buy stuff, and loaded up on credit cards to buy more stuff, are now going to bevy up and pay all that money they happily used to buy stuff they didn’t need or could afford?
I’ll bet not.
Brian, your post is excellent, but I have issue with your last point. Housing prices have outpaced other growth since before more than seven years ago. This goes back to the mid 1990′s. Moreover, its bigger than that. This also goes back to the Dotcom bubble and further back, to the fact that we’ve been continuously printing money like made for the past forty years.
Brian, excellent post however your facts are a bit overwhelming and confusing to George W. Bush or Presedential candidate John McCain, they don’t have clue as to what you are talking about maybe if you re-write it on the 1st grade level and use war terms to simplify it they might begin to understand.
The hype of “subprime” mortgages needs to really fcus on what brought the housing down to where we are today. For everyone out there that does not have a true grip on the mortgage industry/lending, subprime mortgages made up only 2.7% of all mortgages. Out of the 2.7% of subprime, it started off having a default of 19%. Lets say that all 2.7% defaulted and went into foreclosure, that would not have put us where we are today.
People like to blame this mess on brokers and investors that allowed some good and some bad borrowers into new homes. But lets get to the factual side of what went wrong.
Fact 1: Everyone that has to do with the lending industry mainly the housing were at fault. That includes the following: Realtors, builders, brokers, banks, secondary markets and the borrower.
Fact 2 : This industry is more regulated than any other lending industry out their, both federal and state regulate mortgages.
Fact 3 : What is killing this market is not the programs or borrowers defaulting on thier loans, but what is making the borrowers default on their loans.
Fact 4 : In most cases with anyone that took out an ARM product in the past 5 to 7 years is either no value in the home, lack of products and or programs and lack of lenders wanting to take on new loans.
Fact 5 : Investors are killing themselves off by shorting each other and calling in margins to protect themselves agains this down fall. The Feds are helping with this downturn as they kill the value in the dollar to help make the ARM (short term rates) lower for the next wave of ARMs coming due (estimates in the TRILLIONS). While killing the value of the dollar to help millions of ARM holders, this is causing inflation/hyperinflation/stagflation.
Fact 6 : There are 2 main ways for banks and investment firms to make money. Mortgages and fees from trading (many different types of trading as well as IPO’s etc.). If you stop taking in new mortgages (housing is at it’s lowest value, now is the time to take on new purchases and we know that the homes are a great value), and you are not bring in the fees from trading due to all investors worried about liquidity. Then you stop making money and what happens when some of your other investments start demanding money? Bear Stearns is what happens. They took on to much risk and when margins were called and investors started taking money out of hedge funds that held a lot of theses risks (CDO, SIV, CMBS, CMBX, etc.)it created a domino effect and brought them down.
Fact 7 : When a company like Thornburg mortgage is in trouble (they specialize in Alt-A Jumbo loans with very high credit scores, low LTV and large amounts of assets/reserves) only because margins are being called, not due to portfolio of mortgages defauting, you know what is really happening in this market. All investors are taking care of themselves even if it is hurting their bottom line by doing this.
Fact 8: We need to stop blaming subprime as it was only a small part of what is going on and finding out what really needs to be done to stop this spiral before we all are upside down in our houses. Common sense tells us if we bought a new house 7 years ago, there is no way that in todays market it should be worth less than 7 years ago. If you use that common sense, you will then understand it really is not the housing that is creating this mess, but the opposite. It’s the banks and investors (secondary markets) that are causing this mess.
Fact 9 : When borrowers with great credit scores start defaultng only beacause their homes have no value, and they can’t refinance out of their ARMS, is that the brokers fault for giving them that loan 5 years ago? Even if it was a 100% loan, it would have been able to refiance in a normal market where the home received a small 4% increase a year. No value, no loan regardless of the borrower ability to pay.
Let’s stop playing the blame game and fix the problem. How you may ask are we going to do this? Get out of panic mode, assess the situation, create a new plan and hold those responsible for the investments accountable for their actions. I would agree that the normal person will not be able to do this, but any share holder can as well as anyone can contact their elected offical and tell them that they need to stop reacting and blaming others and help find the solution.
My solution: 1) Create a new GSE that will only accept purchase with a max CLTV of 90%, construction loans at 90% of appraised value and get rid of any builder incentives.
2) Create a cap on all mortgages of 3% Yield Spread, this includes banks.
3) Cap all realtors at 5%, we all know that the house is jacket up to include this cost in.
4) Any home that is foreclosed on needs to show actual proof that the investor owns the note (must have origional signed note).
5) Place big fines and jail time for fraud (for any body that has to do with mortgages and mortgage back securities). $100,000.00 and mandatory jail time of 5 years would stop most fraud.
6) More regulation on the secondary markets, they are the ones that packaged up the mortgage backed securities and sold them as AAA ratings when they knew they were not.
7) Make any type of CDO, SIV and all the other fraud securities illegal as these are really only created to hide losses from investors.
Cap any exectutive pay at $10 million a year in total compansation, who really needs more to live on. Should the investors not be rewarded with more returns?
Chuck, you must represent the Media Establishment in all of this. Treating everyone like children and focusing on innuendo and outright bullshit while Rome burns around us.
Ah Brian, your analysis is good, but you’re a closest socialist. People, both lenders and borrowers, along with a Fed whose rates let money be available for far too cheap, made bad decisions. When we make bad decisions, we have to face the consequences. Not everyone behaved irresponsibly, bailing out the irresponsible parties only rewards their stupid behavior and punishes those who have avoided moral hazards as they should have.
[...] Submitted by Brian Hall [...]
I was *barely* able to re-fi out of my “toxic” mortgage, because I had enough equity in my home (because I took advantage of the dotcom bubble before the pop). Now; I am struggling with debt, but I worked it out, I am suffering, I am sacrificing, but I am making it. I would not be happy if others, who did NOT try to do something to fix their situation, got a “recall” or other bailout.
And I made a large personal loan to a “friend” – who is not paying me back. I am suing him. No bailouts. I want my money back!
The root-cause of this problem, really, has been wage stagnation. For years, the real-estate bubble kept wages down (industry didn’t have to give people raises if their “net worth” was increasing!) – Fix the wage stagnation, and people will be able to afford to buy stuff, and our economy will start working again. DUH! 2/3 of our economy is CONSUMER SPENDING. What are they supposed to spend?
N, wage stagnation is the problem? Fix the wage stagnation you say, and peope will be able to afford to buy stuff, and our economy will start working again. DUH you exclaim, 2/3rds of the economy is consumer spending.
DUH? How about DOH!
What does it tell you about a nation where 2/3rds of its economy is focused on consumers buying stuff. In the long term, its an unsustainable economy. Nations that become net buyers of goods manufactured by other nations become debtor nations, and debtor nations and their citizens go bankrupt, and with it, their standard of living.
We’re starting to see the beginning of it.
Wages are stagnant because we don’t produce or sell anything, all we do is borrow and spend. People can’t afford to buy things because we’ve tapped ourselves out and the free ride is over.
The basic problem here is that house values are out of there historic normal price range. 3x to 4x gross income is the typical house that a person can afford. House prices will return the the historic normal price either through asset deflation or monetary inflation. What scares investors (banks) is what is to keep the good credit risks paying for a home that they are upside down in. Myself I have been very cautious as to how much money I have taken out of my home (can’t say the same for my neighbours). Why should I be left out of any rescue package or monetary windfall of a “mortgage recall”. Even though I can pay my mortgage why should I continue to pay if others are being forgiven? The bottom line is both the borrower and lender have to suffer the consquences of bad decision making. The rating agencys need to regulated and “liar loans” (no assets or income) made illegal.
Brian Hall is right on! The root cause of our current situation is not run away real estate values or risky loans, but scared investors that have lost faith in mortgage backed products.
Home prices have increased dramatically in recent years, but SO WHAT? This has happed before without the “drama.” In the Northeastern US the average price of a home in 1962 was $22,000, while in 2006 it was $400,000 (US Census). That works out to a 6.8% annual appreciation rate over 44 years. During the 10 year period from 1996 – 2006 home prices increased only 6.2%. This appreciation rate pales in comparison to the increases between 1983-1987 when home prices increased a whopping 14% per year. What this means is that we are well within normal ranges of home price volatility.
Toxic mortgages? That’s like asking “Which keys on a piano are bad?” Any piano key can sound bad if it is played at the wrong time. Every type of loan product is designed to solve particular cash flow problems, and it is the responsibility of the loan officer and the borrower to ensure the selected loan product provides the best benefit. Many homeowners are walking away from their mortgages just because they are upside down. They are perfectly capable of making their payments, but they no longer see the benefit.
This problem is not going to go away just because home values drop another 20%. It will go away when investors faith and confidence is restored.
Stupidio, you’re a genious in your own mind and the smartest guy you know, I am sure…….. maybe Countrywide has a position for you?
Moe, we should switch names… Your quip manages to only prove my point, you don’t know what you’re speaking about, therefore, like most when defeating rhetorically, you seem inclined to resort to specious name calling and personal degradation.
As it is, your own logic continues to make no sense.
Given my stated positions and opinions thus far, I think it is readily obvious that I wouldn’t be caught dead me slinging “liar loans” or hawking bullish Pollyannish sentiment like Mr. McBride at a firm like Country Wide.
Well; Stupido, that is really my point – obliquely speaking. Wages are stagnant, because we’re a service economy. We don’t manufacture anything anymore. Executives grab huge proportions of payroll through their obnoxious pay packages (and their insider trading on top of it all).
Shift that back to the workers; put Americans to work to actually *produce goods* again, and compensate them fairly, and then we might be able to get some semblance of an economy going again in this country.
Otherwise, it’s just going to continue being the top 5% circle-jerking eachother at the country club, while the rest of us pay for their bail-outs through taxes, and monetary deflation.
The real answer, is not to stop paying your mortgage, but for everybody to stop paying your credit cards. if you stop paying the mortgage, the bank ultimately would get the home back. What does the bank get if you quit paying credit cards? Think about it.
We would screw the banks harder if everybody with credit card debt quit paying those. just my two cents.
N, I agree for the most part with your sentiments, but a couple of things. From a wage comparison US workers are noncompetitive, there’s a reason why jobs continue to be outsourced. Now, I will grant you (and fully agree) that many of our trade agreements are not fair trade agreements. Why we granted Most Favored Nation status to a country like China, and continued to do so while they continued to manipulate their currency and use slave and exploited labor to manufacture goods they send here is beyond me.
But the reality is that we only need to look at ourselves and our past decisions for many of these issues. We let our political parties, our representatives, get away with these deals. “Everyone” says Congress is corrupt, that they’ve all been in office too long, but then we all sit idly by and re-elect our local incumbent because “he’s not like the rest of the bums.”
Meanwhile, we buy manufactured goods made in China at rock bottom prices (with either stolen or in many cases, readily given intellectual property and manufacturing techniques to them) because they’re cheaper at Walmart. We borrow gobs of money to buy things we don’t need to maintain a lifestyle.
When I was a kid I had one pair of sneakers. Today, parents are buying kids $100 pair of shoes every other month [or were.] Likewise, we all buy houses bid up my mortgage brokers and developers at exorbitant prices, many secretly hoping (or outright trying) to ‘flip’ the property and make 20-50% returns (and then buy bigger houses someone else was trying to flip.) And many of those houses were built with immigrant labor, often illegal and exploited labor.
And all the while, we moved further out into the suburbs, which took longer commutes, bought bigger cars with crummier mileage (of course so our families could be safer!) and ignored everything else.
Our politicians, on both sides, are bought lock stock and barrel. Our institutions are corrupt (sure, we’ve doubled education spending over 20 years, and gotten worse results, but they only need more money!). We spend more money than ever on entitlements and government workers get bigger pensions for staying in the job less than ever while everyone else scrapes along in their 401Ks, if they have them.
But then again, those big company salaries that get paid out. Where are all these 401K fund managers and public pension managers railing against them?
Just watch a show like Suze Orman late some night on CNBC. You want to see the root of the problem, we only need to look in the mirror. It’s us, and a lifestyle that we never could afford, coming home to roost.
Credit card companies are scum and the fix is in, just watch the PBS FrontLine episode from a couple years ago and you’ll see, but…
You took the card, right? You spent the money, right? You owe the money, right? You accepted the terms of the card (however freak’n outrageous) when you agreed to use the card and take their money (which you didn’t have) to buy something (you wanted) that you couldn’t afford.
What entitles you to stop paying your credit cards?
Stupidio,
Historical home price appreciation is not “bullish Pollyannaish sentiment,” but it does show home values are NOT the root cause of our problems. Also, neither ‘liar’ loans nor stagnant wages created this problem.
Rising defaults and foreclosures didn’t hit California or Florida first because of high home values or toxic mortgages. They first hit states like Ohio and Michigan, because of job losses. When people lose their jobs there is no mortgage product that can save them. Once the foreclosure rate began increasing, mostly with subprime borrowers, the investors that purchased the non-performing mortgages wanted their money back. The first ‘domino’ to fall was New Century, the nation’s largest subprime lender, because they were not able to meet the refund demands.
We do have a serious problem, and it can only be solved if the root issues are understood.
PS: I am not with Countrywide.
“Fact 6 : There are 2 main ways for banks and investment firms to make money. Mortgages and fees from trading (many different types of trading as well as IPO’s etc.). If you stop taking in new mortgages (housing is at it’s lowest value, now is the time to take on new purchases and we know that the homes are a great value), and you are not bring in the fees from trading due to all investors worried about liquidity. Then you stop making money and what happens when some of your other investments start demanding money? Bear Stearns is what happens. They took on to much risk and when margins were called and investors started taking money out of hedge funds that held a lot of theses risks (CDO, SIV, CMBS, CMBX, etc.)it created a domino effect and brought them down”
You are slightly mistaken on this, as a prime broker for hedge fund, it was their withdrawal of capital from Bear Stearn’s that accelerated the fall. That and a hedge fund is slightly different from conduit funds you listed.. For example; hedge fund is a private equity pool, while most securitized transactions the conduit is formed for the sole purpose for entering into and fulfilling it’s obligations for that sole transaction; and is not authorized in engaging in other transactions that could create lien, contracts, or other general creditors. (in a simplified explanation.. without going into the distinguishing factors of arbritage or credit CDO’s, structuring of equity and debt within etc.”
borrowers failed to embrace financial literacy.
i am all for a mortgage recall. we were one of the stupid ones who fell into the trap. if something like a mortgage recall were to happen, it would not happen till satan bush gets out of office. everybody seems to forget this mortgage crap took on a real strong presence when that monster came into office. the whole thing was a big business set up to screw the little guy. it will take somebody with real honest guts to push for such a recall. stupid bush will have to be out of office.even at that the greedy sharks will still be lurking.
I’m sorry, I don’t agree with the credit card theory. I know what my balance is – and actually BoA jacked up my rate by about 16% (from 8 to 23.99) all of a sudden so I transferred my balance to a new one. But with my credit card, I know exactly what I spent – budgeted for it and I know what it costs me.
The house, however, is a losing battle – never bargained on such a negative equity position. This is what isn’t in my budget and has the noose around my wallet and family. I need to sell, I need to sell b/c I have to move, I have to move b/c my job requires it, I can’t sell b/c I’m upside down, not a little mind you, but a whole lot. So I’m trying to short sell – but even short no one wants/can buy, if I can’t short sell I have to rent it out, if I rent it out the rents will only cover about 40% of the mortgage payment, that will make me go bust in a couple years or so, don’t see the market recovering in a couple years. Hasn’t hit the bottom yet even.
Means time to take the medicine. Gear up and ready myself for foreclosure if no short sale, ain’t real happy with short selling either – but seems the best of alternatives currently available.
Perhaps I can find someone like Mr. McBride who thinks that values aren’t really all that high and would be willing to buy my home at its 2004 price and I’ll move happily along my little way and all will be good.
Confucious say investors, brokers and bankers failed to exercise financial literacy in lending money on collateralized debt obligations. Maybe pawnbrokers will get as smart as stock brokers and start lending 2x what somethings worth, like say on a broken microwave or something, boy that’d be great wouldn’t it – but I doubt it. A fancy education can make crap look like gold but apparently it can turn worthless paper into platinum.
Next, perhaps someone can explain “bullish Pollyannaish sentiment”? I think I took a wrong turn somewhere and ended up on the Wall Street forum, certainly ain’t familiar with that term.
I meant to say “A fancy education can’t make crap look like gold but apparently it can turn worthless paper into platinum.”
Aplogies, my typing skills ain’t so great.
moe is obviously a shill for the mortgage industry. he lives in a complete fantasy world. while you are at it moe, why don’t you get us all free houses to live in while you bail out your cronies. crying over spilt milk. i guess you have never heard of buyers remorse or people deserve what they get in the end. if you are stupid enough to think you can get something for nothing, then you deserve to get your head handed to you. i’m not about to bail out these irresponsible children that got in over their head like you. please refrain from writing any more of your terrible reports using specious arguments that aren’t even comparable.
As Marcus Aurelius once pondered, “What should be valued?” I wonder if he new anyone at Bear Stearns? I wonder if Ben Bernanke ever thought that filling Greenspan’s shoes would put him on the verge of plunging us into perhaps the greatest economic downturns in the last half-century—nah! Philosophical queries usually beget more questions than answers. So, with that in mind I suppose rather than pontificating about what the causes and conditions are that led to this mess, I’ll just keep an open mind and sell my gold bullion in the next couple of weeks and stash the cash in a mattress.
Everyone is to blame..I was a loan processor for many year and Realtor are a big part of the problem. The push push push to close. Doesn’t everyone want to close but let get it right 1st..Realtors stick there noses in where it doesn’t belong they are to bring a seller & buyer together. A realtor shouldn’t butt in on the financing..I took the Real Estate Exam as well but today Realtors are way to involved..When I sold real estate I showed property and listed property and when a P&S was agreed upon I had to get a original over to the lender and wait wait wait the lender and borrowers worked together on the financing I would get an approval letter and wait to hear we are ready to close..I didn’t know the terms ect of the borrowers financing in the depth they do know..I’ve had realtor tell borrowers hey your closing cost are to high when actually they were inline..When a deal is stuggling I know our company would cut there fee’s to help but NOT the realtor no way no no no… Realtors Charge way to much to sell a home for what the do..
As for the Borrowers they should read the documents and ask questions but no they want the house regardless even if they have to lie…
LO’s sell products that lender put out to them.. You sell a car you sell a product that Car companies put out ect..You do your best to learn about the product so you can talk intelligently to the customer/client..Once you just start to get it OOP’s here comes a change..
When I bought my 1st home and mind you I was 2 month from graduating from high school and getting married. we had to save like crazy and parents help out,you knew your banker by name. My biggest fear was letting them down so I might things work and we sold it and made a profit and it was a fantastic feeling. In todays world we can’t pay oh well walk away..we let me tell you a ton of current homeowners recieved gift monies from parent..so today problem extend pass the borrowers,banks what about all that gift money that someone was kind enough to help with..
Black & white “vanilla” loans are the only way to go might be tough but at least they are straight forward..
CEO’s they all need to have a reality check on how to run an honesty business and appriecate the people they have working for them without them they are nothing,keep your promise to your employees reward them for the hard work they put in. Hirer people base on achievement and just as important on honestly,integrity.If people need to be micro managed it would be management the set the foot print for the company..
Lets make document in all dealing plain and simple to understand.Even the closing Doc’s are ridiculous why because are a country of let just sue them..
We elect our goverment official so it up to us to fix the broke mess of goverment demanding better. They are all CEO’ only they are for all american..Do we really have a choice of President NO! why its all about $$$ them more money they have the better the odds…What has happened to us all..Actor can be President with no experienc why can they guy down the road trying to make a living..He/she has all the experience they are living it…But no $$$..
I love being an America but I’m extremely disappointed..
sorry for any and all typo’s I was getting more frustrated as I typed…
Moe on Mar 19th, 2008 at 12:47 pm
So, when a kid eats a tainted burger or gets lead based paint poisoning from playing with his toys, we should make Johnny man up and take his “ecoli or lead based paint” medicine? Just like we make homeowners/people suffer and take their toxic loan medicine. Hell, how can over 1 million people be so dumb but to fall for this snake oil and another 2 million plus on the way?
Mike you’re an idiot with a degree. A lot of you out there…….
It is the lenders responsibility because they sold what is called a “defective credit instrument” to the American people. A loan made to fail. Snake oil…..
Mike, it is obvious that you do not understand common sense and the law. These mortgages were “unfair and deceptive” in every which way. With how they marketed these products and how they sold them. These loans should be recalled, like Johhnys burger. Or your wifes car you bought because it was a lemon.
Who is the communist here? A man for the people or a man trying to protect the criminals and snake poi?
I could care less about your macro crap. This is about the American people suffering and our economy going down the drain because of these damn lenders.
Look in the macro mirror bud. We are in a recession, inflation is going up (HELL, milk, bread, diapers are all going up big time), and we are heading for a depression.
Obviously, you must be a Wall Street guy trying to still get fools to buy whatever it is your pawning on Wall Street today. Invest in China right? or maybe some drug companies? Since you and your pals destroyed the US mortgage and housing market.
Get your head out of the sand and take a look at main street pal, because you may be down from your glass tower on the ground here, sooner than you think.
________
Moe–
Let’s keep this somewhat professional. There is no need to call names because it only solidifies my original call that you have no argument here.
“An idiot with a degree”…I am guessing that you did not get a degree, which is completely fine. I know a lot of successful people without one, but don’t show angst towards me for having one.
The term that you reference “defective credit instrument” doesn’t stem from the original loan made to the borrower, but rather from the leveraging and re-packaging of these loans to MBS’s and then into complex investment vehicles such as CDO’s.
You compare my views to a man trying to protect criminals. As a matter of fact, I am one of the people who have lost drastically from the mortgage market. I lost 85k on the sale of my home, which in hindsight was heavily overvalued due to the inflated FL market.
You make the opinion that some of these unscrupulous lenders need to go out of business; I completely agree with you. By recalling all of these loans, you create more liquidity for these lenders to rebound. The bailout that the FED has performed with Bear Stearns is my exact point.
We have a major correction happening right now and I do not believe that the tax payers should front the cost. Fannie and Freddie are now able to buy more loans due to the lift of the capital requirements. This will probably end up seriously hurting the tax payer because the chance of failure is extremely high.
By the way, I am not a Wall Street guy. I am in the mortgage industry in many capacities and I have felt the full force of this whole mess.
This will be my last post because I do not want to read your pathetic and uneducated reply. I suggest you do some reading and catch up on the real cause of this mess and workout a better model for a solution. We can all bitch and complain about how bad it is, but novone has a great solution because there isn’t one. Only time will fix this and the more government involvement there is the longer the effects will drag on.
Best of luck with your blog.
We all can agree to disagree it’s what is call conversation.We have to respect the opinions of others..Does our goverment listening is the real question..We all can make a change even if its small..Let just work together instead of against each other..
Just being kind to each other is a start..I’m sure we all agree that there is enough hate in the world..
I say the goverment should be working as hard as the everyday person not taking vacation or recess when there is work to be done..I would like free health care and all thier perks as well but they have to vote on what we can and can not have..For all the money that the goverment has spent to help other countries they could help us here at home..When I get my payck at the end of the week and see the Taxes it kills me, we’re paying them but what are we getting in return.
Mike’s first comment, “It is extremely pathetic to compare the lead-based paint recall to the mortgage industry.” then Mike says, “Your entire article stinks of a socialist/communist agenda, with a horrible understanding of what problems would be caused by this action.
Shame on you and your realtor friend for putting this out for people to read”
Then you come back here after I replied not so nicely to your not so nice first comment on this blog and you expect me to be all nice and sweet? huh? your serious?
This is my house, my blog. I am a homeowner advocate and a consumer advocate. Don’t come here as a mortgage professional and throw the word communist and pathetic around in relation to my blog post and not expect to get flamed by Me.
Best of luck with your mortgage career. YOU’LL NEED IT!
Your are just like all the liberals, let’s see who we can blame. If you invest in the stock market and loose your life’s savings, whose fault is that? If these people were not sure about the loan or did not understand it why did they sign?
I have had people whom were offered a 5.5% 30 year fixed loan, but against my word would choose a five year arm at 5%. I would explain how nuts it was not to take advantage of the 30 year at 5.5%. Now is that my fault, in your eyes I’m sure it is.
Sir you are not an advocate, you just think you are. You are like alto of others that have no idea of what they are talking about.
Ralph, please take off the mortgage hat and think like a consumer and not a salesman for once. Yes, if you truly gave that advice to your clients, then I commend you and the people who refused the advice, deserve the loan they have now. True, no argument there.
I am all about common sense sir and not liberal agendas.
All I see as I look around and perform my job is over 1 million victims of mostly bad, toxic loans and I look to see who sold these mortgages to the victims.
YOU DON’T BLAME 1 MILLION PEOPLE. Just like you do not blame the people who get sick for eating tainted beef, because they knew they could possibly get sick. Or someone who takes medicine but dies because there is ALWAYS a possibility of dying and a warning on the label clear, red writing.
Who is playing the blame game as you “try” and cleverly make it look like I am in this to play the “Mr. Blame Game”, when you are obviously placing it on the borrower stuck in his toxic mortgage.
Sir you make no sense, you just think you do. You are like all the other mortgage has beens that have no idea what they are talking about.
I don’t mind mortgage folks, just not the ones that like Ralph the Mouth!
I hadn’t really thought about it that way. That is an excellent point. I think this all goes back to the concept of the physical versus conceptual, it is difficult for we humans to grasp what we cannot see hear, touch, or taste. It’s hard for us to pinpoint the source, no matter how bad it stinks. I wonder if those border dogs trained to sniff out large amounts of currency would be useful to those legislators and investigators who still can’t figure out the source of the problem.
They won’t be sniffing at my door. At least, not for that, lol.
It may just be time to wake up to the fact that they are creating money out of thin air, and that those who take their nose and twinkle it into existence have no more right to collect interest on it than you or I. I’d give my house up for that revolution, but I can’t just allow it to be swallowed into their trap.
Victims have guns held to their heads or are unknowingly swindled out of their money under false pretenses. Idiots who signed adjustable rate mortgages without reading the terms or without remotely understanding what they were signing are just that, idiots. I have no doubt that some folks were in fact taken advantage of, that certainly was the case. But the folks who signed “liar loans” committed fraud, and the folks who took ARMs or houses they couldn’t actually afford on the notion that “real estate always goes up” were speculating. And speculators sometimes (often) get burned.
Jason, great points and way to take responsibliity for your actions.
Stupidio, you are definitely right, speculators will suffer their fate, the problem is who is a speculator and who is legit. Who is an ethical broker or loan officer and who is not? But you cannot expect an every day Joe top understand these mortgages, especially pay options etc…..
I have seen just waaaaaaaaay toooooooo many Joe’s with too many pay options with 3 year hard prepays and 3 points on the back, to believe that they were not taken advantage because of their naiveness.
There is a lot of clean up work to be done out there. I am just trying to speak up for the Joe that was scammed, duped or swindled. Speculators are people too and it’s not fun what they are going through. But, that is the gamble you take.
Buying a home for the sole purpose of it being your American Dream should not be a gamble in any way. So, I will never buy into that notion
Still blaming the brokers for the trillion dollar global economic meltdown. hmmm, just like the feds, some just don’t get it. To find the root of the meltdown, follow the moneytree. I know as a broker, I did not make a billion, nor a hundred million, nor 50 million, not even 10 million…so yeah, it’s all the broker’s fault.
I could go on and on, but i’m tired…tired of knowing the truth of the matter…and knowing that no matter how much $$$$ the feds keep pumping into the markets, none of it will help the consumer…all of it to help keep the banks solvent, period. and i’m tired of knowing that struggling and suffering homeowners are the ones paying the cost of firing up the printing press….the american people get a little pocket money from this “economic stimulus package” and your banks get billions…
oh by the way, it’s all the broker’s fault…
B.O.N.D you are so right. Wait a year or two when people see double digit inflation, realize their lifestyle has utterly collapsed, and that unlike the 1930′s we don’t have any natural resources, globally competitive lower cost centers, or manufacturing opportunities brought about by others fighting wars to exploit to bring us out of this mess.
Moe, where does personal responsibility come into this? What ever happened to common sense? To we, ourselves, saying, “I don’t understand what I am about to sign, so I’m not going to sign it…”
I saw the run up and crash of property values in Boston suburbs in the late 1980′s and early 90′s, the crazy hysterics of the dot com bubble where a company where companies without profits were valued at hundreds of billions of dollars while brick and mortar companies with actual liquid assets were dwarfed by comparison, and recently the absolute ridiculous run up in property values nationwide, where even now here in New York City, where real estate never ever goes down, we’re starting to see panicky developers, flippers, and agents.
To excuse everyone as victims excuses them of their own personal responsibility and their inability to factor risk on account of the ever burgeoning safety blanket — the only problem being we keep borrowing money to buy more cloth, and we’re out of money and the cloth with buy isn’t going to last.
Oh look more “victims”
http://www.nytimes.com/2008/03/20/business/20mortgage.html
“They took out adjustable-rate mortgages at the peak of the housing bubble to buy homes they would otherwise not be able to afford. Or they refinanced existing mortgages to take cash out. And now, two or three years later, the day of reckoning is here.”
“These are not lower- and middle-income borrowers, but more affluent consumers with annual incomes of $100,000 or more who are increasingly being ensnared in the home mortgage crisis.”
The article is actually good in terms of relating how owners are attempting to work with renegotiating and refinancing their terms. However, I couldn’t help but notice that seemingly all of these “victims” refinanced homes to take cash out, or bought expensive properties with the intent to sell in a few years…
Moe–
When I take the time to read blogs such as yours, I like to become educated on opposing view points. Over and over again, readers have responded to your blog with strong and interesting arguments to your views. You then reply with no factual argument, but rather a finger pointing and judgemental bias that adds no educational or interesting information.
You call yourself an advocate for the American homeowner; how convenient that statement is. I have an outside viewpoint, but it seems to me that your patriotic pictures with the American flag behind you flowing so elagantly and your claims as an advocate for the homeowner are nothing but a ploy to make a strong buck off of those who are in desperate situations. You may say that you are providing a service to those who are in need…maybe so, but do not make persuading claims that are not backed by sound and factual information.
I am tired of the blame game and according to one of your previous posts, so are you. If that is the case, why do you so adamantly try to push blame onto all of the lenders? I will answer that for you; convenience, that’s why. If you allowed everyone in the game, including the borrowers, to share the blame then you would not have a blog to work on all day and your oh so patriotic pictures would have been a waste of time. I see you as nothing better than the politicians that you bash for not regulating this mess.
I would love to hear your response, especially if you have any information that could persuade me to see this through your eyes.
I wish I understood this better (this being the securities aspect). This is a complex game that we’re in; I like to call it the ‘wait and see’ game.
Here is a quote from an article that appeared in U.S. News and World Report dated 10 Mar 08. Mind you the quote was probably obtained prior to that date in order to make the publication deadline – but the title of the article was, “Nightmare on Main Street” authored by Luke Mullins. He quotes a Jennifer Zuccarrelli, a spokeswoman for the U.S. Treasury who offers the following; “we’re not interested in transferring risk from Wall Street banks onto the backs of U.S taxpayers.”
Then, March 16th (not even a week after this article was published) we get a whiff of the Bear Sterns adventure. You have to remember what these folks were sold on (homeowners). Loans/homes are sold, much like used cars I’ve come to learn. This is funny because I had never thought of it that way before. Interest rates were at their lowest rates ever – sure you might not have the greatest credit – but you pay this loan on time for 18-24 months and you refinance back into happyland (by the way – I only need to qualify you at the introductory rate anyway). Some people bought into this – but this isn’t everyone’s story. You also have to realize that this isn’t just a subprime problem anymore. So if you keep your focus there, you get off course rather quickly.
There are many reasons folks are going into foreclosure, you can’t cover every case in one fell swoop. Largely, the inflated values (falling prices) are a rising problem. Yet, this is apparently a necessary evil – why were here. Money to lend was everywhere, now it can’t be found (unless of course its your own) – so the price drops haven’t ended – the problem will get worse.
Although, my reasoning that loan workouts (lenders/investors working with borrowers) aren’t helping more folks to restructure their mortgages is because of the bond insurance and mortgage insurance that (for now anyway) can help the banks/lenders/investors cover a portion of their losses in the short-term, as opposed to the long-term when liquidity (TODAY) is such an issue. You now have the Fed offering short-term liquidity solutions to Wall Street investment banks, that aren’t historically privy to such funds – and they don’t have the same reserves that banks generally do. (this is my understanding anyway, which I confess to be marginal at best). This may help banks, whatever the flavor, with short-term liquidity problems; however, until the credit wheels get back to turning and values become more established (at least flatten out) – the problem will continue to compound. As it compounds, the liquidity crisis will linger. If we keep lowering rates (or don’t raise them) we’ll all be headed to Mexico to trade our dollars for pesos sooner or later.
It is my quess that once the bonds lose their AAA ratings and the insurance checks are all cashed and the mortgage insurance companies go belly up – these folks will then look to do more bartering with consumers. We have truly worked ourselves into a place where the value of the note is of more value than the collateral. Until we address this problem – this demise will continue – as this is the real reason why many homeowners aren’t happy (can’t refinance into better rates or sell – then lose their homes) and investors aren’t happy (afraid of foreclosures as well – lose their returns). Once the middle-men are cut out of the picture I think you will see more investor/lender/borrower cross-pollination.
Until then, we (investors/lenders) will continue the ‘wait and see’ game with the Fed.
Much like most of the folks not in the trap (which I am, confess), I don’t want to see the taxpayers shoulder this load or our dollar end up down the drain either. Nonetheless, if the lenders/investors don’t get into the game and play ball, this is going to drag on for years as resets happen well into 2012 and beyond. What’s the other solution?
Mike,
You know why Mike, because I am sick and tired of the broker scum that leave their little stupid comments that you call “interesting and opposing views”
The opposing views you speak of come from the broker and lender crowd and really, I do not have time to break out my debate card and get into it with the same old broker or lender song and dance comments. They can go to their Catholic confession hall or ML-Implode and talk about their mortgage views and sins…….
Its the same comments recycled over and over by the bitter broker crowd. Yours is just cleverly dressed up like you some nice guy calling Moe out on his blog.
I saw through you right away……
I have been at this for almost a year now and if I debated every broker comment and accusation, I would have no time to really help the people and homeowners who are suffering as a result of the mortgages these same people sold. So I made the sound decision to just swat at them like flies on my blog
Mike, it’s a complete waste of time, that is why. Kapeesh
However, there are many intelligent mortgage professional that come here and cleverly debate with open minds and comments. They may oppose me but they do not attack and then oppose me.
If someone debates me without placing their clever little attacks just like your sorry ass did, then I will “maybe” take some time and debate them. Most often that is not the case, such with your comment and I assume and can guarantee what profession you come from……….
HOMEOWNERS & LOYAL READERS ————————————
All I want to point out to the homeowners and loyal readers of this blog, is that 90% of the mortgage, so called professionals are out of work and hell bent on blaming homeowners because they are in complete denial that they have anything to do with this crisis. Of course they will target me because I have a loud mouth and I speak the truth.
THEY DON’T LIKE THAT!
When you hear this over and over from the same mortgage scum that sold these toxic loans, you get a little bitter at their stupid comments and accusations. The sailor comes out in me and I just want to tell them to F#%k O#@ and get a life.
I am not here to debate bone head mortgage people who are trying to justify their scamming ways by making me and borrowers look like the scum that they truly are.
They will go out of their way to discredit me because they are afraid of my voice and its reach. Trust me!
These are the same guys who sold you the loan that is causing you to suffer as they sit and judge you from their laptops and leave commenst on blogs.
I have assisted in saving 50 plus homes in that last 10 months. For free and I am doing a great service to homeowners and I will stand by my blog, my views and you till death!
Tom,
The solution is that ALL these loans need to be recalled and everyone should be placed in a 5.25% 30-40 year fixed. Then, if they default, tough luck, they then work with the lender and quit claim the property back to the bank. No need to foreclose and be Mr. Big Bad Lender!
The bank writes off the losses and does not have to go through the foreclsoure process.The bank then rents or sells the home at fair market value.
Instead of 5 years of housing hell, we will have 2.
Brokers and loan officers—————-
I have said this several times, I do not think that all brokers and mortgage professionals are scum. I have friends and colleagues who are in the profession and I have a lot of respect for them.
It is the unethical loan officer who did not do what is right when they represented clients and looked only at their commission as motivation when selling a loan. It’s these scammers who I dislike and there are a lot out there.
Just as there are ethical and honest mortgage professionals. These are the people we need more of and are needed in the mortgage clean up.
Just as I do not think all borrowers were saints. I am no idiot. They was a lot of fraud in the game by borrowers and I see it every day. Fortunately most of these people just take their foreclosure medicine and move on.
They certainly are not asking the lender to modify their fraudulent loan.
Most of the MEAT was already consumed……………
Moe, I am a retail loan officer ( for disclosure purposes!) for nine years now. I have done multiple loans for the majority of my clients. The reason that they keep coming back and sending their friends and family to me, is that I take the time to find out what their long and short term goals are. These loans include everything from the option ARM product to the 30 yr fixed, depending upon the specifice situation. I have a fairly comprehensive contact system, ranging from direct mail to email drip to all of them. I have had two clients (to my knowledge) go into foreclosure during that time, one a conv. 30 yr, and the other a 2/28. That being said, can you tell me, or point out where I can find out just how many mortgages there are total, vs how many are in foreclosure? Also, as you know, many homes recieved two foreclosure notices, one for the first, the other for the second, thus making it sound as if more actual homes are being foreclosed on than actually are. Also, I wonder how many of those notices went out on investment properties.. It IS a terrible thing to lose your home, and I think it is great you helping people to save their homes. Do you do due diligence on those you help to make sure they did not put themselves into the situation? Anyways, alwayd good to keep lines of communication open.
Moe–
I’m not browsing your blog with the intent of calling you out. I am sorry to disappoint you, but your gaurantee of your assumption that I am a mortgage broker is not even close to a reality. What is wrong with your assumption is that you draw the conclusion that anyone who disagrees with your article’s position must be a scum bag mortgage broker. I will agree with you that there are many scum bag brokers in the industry. I would also agree that the brokers should have some sort of fiduciary responsibility to their clients.
I have worked in many different capacities of the lending industry and have had the luxury of learning almost every side of the business. With that being said, I left the industry(voluntarily) to pursue bigger and better things. I saw the writing on the wall and I didn’t like what it said. My predictions proved true and that writing ended up being even worse than I thought.
Do you give these same false gaurantees to your clients as well? I would hope not.
I originally came to your blog from another site because your heading caught my eye. After reading said article, I was outraged that you spread such blatant disregard for financial responsibility. After reading many of your posts on different sites, I realized that you have a vested interest in shifting this responsibility off of the defaulting borrower. I do believe that you provide help to some people, but it is important for everyone reading to know that you have a monetary bias when you make claims about who is to blame.
In my previous reply, I asked you about this and your best response was to call me a “sorry ass”. Thank you for showing me that you really don’t have a substantial position on the topic; you just like to create the blame game and profit from it. Well done!
You have turned this into a mortgage blame game, when in fact my main opposition was that it is not the responsibility of the FED to recall loans nor do they have such authority. The more people like you that get the FED involved in these bailouts, the longer it will take to get through this mess and the worse our US financial fundamentals will become, thus providing the ammo for future recessions/depressions.
Moe,
There is a process of getting out of defective debt instrument, it’s called bankruptcy. BTW, the borrower that used that defective debt instrument shall vacate the house that she/he bought with that defective debt instrument. Problem solved.
When one does re call consumer doesn’t get to keep proceeds, he/she better return the goods whether it’s house, car or toys.
Do not buy stuff you can’t afford. I can’t stress this enough.
Well said, Mike!
Alan, Well put.
And Moe, for the record, I have no involvement in the mortgage industry other than as an interested outsider who’ll be damned if my already excessive taxes are used to bailout idiots who helped to inflate the bubble. There are two sides to every business transaction, and the notion that only the brokers are swine and swindled everyone just doesn’t compute. We are responsible for our own actions, our own judgments (right or wrong) and our own appreciation of risk.
This weekend I was up in New England where my folks live for Easter, as we drove around nice suburbia, I couldn’t help but notice all the nice new huge houses, and all the single families that had three and four cars parked out front, at least one in many cases, an SUV. No doubt they had multiple new electronics and televisions, probably have taken expensive vacations, and as most of the statistics tell us, probably have no more than a month or two of savings and a ton of debt and no equity. But sure, it’s all the brokers fault.
The free ride is over.
Have we all forgotten about the Bush family and the failure of Silverado Savings and Denver?
Bush is history. We have to look at our current candidates and see through the smiles and commercials that are all paid for….
The Federal Reserve is a fraud.
America’s elite are no more than tyrants and murdering, thieving criminals. The American people need to understand this quickly and be there for each other. Keep hold of your guns because the biggest danger to America is the Corpocratic/Globalists who are taking everything the founders envisioned America should be. You need to keep the right to bare arms in order to defend yourselves against these degenerates. Don’t vote! Simply prepare to take back what has been stolen, because if you don’t it’s going to be unimaginable.
Bush is history? He hasn’t left the building yet and doesn’t intend to, IMO. Wait and see.
Pyramid scams require new suckers to fill in the bottom. There are billions of muslum, hindu, and budist pyramid players to come in the eastern sectors of the globe. See why we have these new wars,,, for the solvency of the loan markets.
Let it all fall down now, it wil be easier to crawl back up while you are younger.
What can we say about banks. Thought we learned this lesson in the thirties, the eighties, and now we have this. Abolish the Federal Reserve.
Guns and bullets .Lots of bullets.
The financial frauds that comprise our predator elite know how you all feel about them, and that is why they went ahead with a massive nuclear build up; to be certain that they could kill us before we figured it all out.
For themselves they have built an elaborate underground world designed to protect them from the nuclear holocaust that we are scheduled to endure here on the surface.
They have in place and well stocked comfortable long term underground shelter for themselves and their thieving murdering war crime committing associates.
This is one of the secrets of why nuclear weapons were built. To shut us all up, once and for all. Believe it: They are not joking with us; the plan is still to exterminate us all with nuclear weaponry.
The plot to destroy humanity also helps to explain why the Extraterrestrials have been buzzing our world for over the last half century. ET told our nuclear war fighting elite not to ‘do’ a nuclear war, but our nuclear war fighting elite pretend that they are hard of hearing, and have ignored the wise advice of the high level powers.
The “Trigger” has been pulled on us many times over the decades. The ET have taken the ‘Keys’ to the nuclear arsenal away from our nuclear war fighting elite, and have so far; prevented our extermination.
We are all the “LIVING DEAD.”
This is why there is so much pressure on Bush and Cheney to continue to attempt to get a full blown nuclear holocaust underway, and soon. Our nuclear war fighting elite have not included in their plans any tribunals that they may be sitting in front of.
One thing is certain, Our nuclear war fighting elite are finished; the only question is: Will they be able to get around the Extraterrestrials and kill us before we get them into custody and place them in mental institutions for treatment of their aggressive criminal insanity?
Former FBI director J. Edgar Hoover was quoted: “The individual is handicapped by coming face to face with a conspiracy so monstrous, that he cannot believe it exists.”
The plan to exterminate us is real, It exists folks. That is why we are the “LIVING DEAD.”
I think She’s just a product of her upbringing. If you were in her shoes, you would understand. Obama, Hillary, McCain. Three controlled people who will further the greed that the wealthy have been doing for centuries to increase their wealth, while robbing the populous.
Too bad Ron Paul had to drop out. The only person who would have really made a difference in America.
Cheers.
TOO BAD THE MAIN STREAM MEDIA OR CABLE NEWS PROGRAMS WON’T DO THEIR JOBS AND INVESTIGATE OBAMA. THEY SEEM TO KNOW WHAT TIME HILLARY HAS LUNCH AND WHEN SHE GETS HER HAIR STYLED BUT NOT A WORD ABOUT THEIR “GOLDEN BOY”! ARE WE JUST DOOMED?
I ran across this “discussion” by chance, and really shouldn’t take the time, but I can’t help commenting.
The fact that FDIC insurance is limited to $100,000 has been widely publicised and is known to any investor with more than that amount to invest. Investors should also know that a higher rate of return is always acompanied by increased risk. There are other banks, and putting the amount limited to insurance coverage in each of a half dozen would have saved a lot of loss and grief. I’m sure Fran Sweet and her financial advisor knew this, and knowingly took this risk for an additional 1 or 2% yield. Why label her as a victim, or blame the bank for her deliberate decisions?
Penny Pritzker is a member of the “elite” families that engineer the finances of the U. S., the “insiders.” All the ranting in the world won’t change that one iota. All politicians know, have to know, members of these families. Just because they know them, if only socially, doesn’t mean they necessarily know all of their business dealings. So far as I can tell from the above blogs, there is no evidence of illegal activity by any of the participants. Finding of such activity should be cause for investigation by the FDIC. Ethics, you may bring it up, but some people don’t know the word even exists. If the government continues to bail out any major financial institution that gets into trouble, of course they will take risks. Pin the label on the responsible party, the U S Congress, which has the responsibility of oversight and has refused to take that responsibility seriously. How can it, when 95% of them are beholden to the bankers. “Vote wrong and I’ll pull my support.”
I object to the philosophy of guilt by association. Barack Obama may or may not have known everything his pastor said over 20 years. I have seen nothing in the media, absolutely nothing, about all the good he may have done in that time. What I see is that he is looking out for his clientle, just like the unions, the attorneys, the doctors, the farm bloc, the federal workers, and fifty other pressure groups are pressuring government on behalf of their members. He uses rather strong language to express himself. I haven’t heard him say anything that sounds like treason.
And how can the fact that Goolsbee and Pritzker live in the same neighborhood have any relevance?
As long as we are a society which accepts debt as wealth, we are going to be in trouble. Bruce and Franny Ward have it about right. The Federal Reserve Bank, a private bank owned mostly by foreignors, has brought the country from a republic to the brink of a dictatorship. What all “findings” that we don’t know about are buried in the files of the present and past administrations? And there is that further pressure, the Republicans and Democrats are almost equally divided, and rather than being concerned about the country, they’re concerned about the party. What we need is statesmen, not politicians
I was amazed and delighted that Ron Paul actually got between 5 and 10% of the Republican vote. If he were to get the daily coverage that a couple of spoiled brats calling each other names are getting, the country might have a chance.
God bless America.
God save America.
PENNY PRITZKER – SUPERIOR BANK FAILURE
It amazing the latest new federal bank bail out is Bear Stern. I am ashamed to say at my age that I was also dupped as well by The Queen Pritzker and her merry men. This woman ruin so many people’s lives, and really believes that she is so well respected and loved. This woman should be ashamed of what she did to so many, but she has no shame, only greed.
Where are the 1406 depositor’s – all the borrowers that could not afford these loans, paying unaffordable rates of interest alot of these being low income families and minorities that were also taken advantage of, where is the media, let’s be more interested in something that is fact and more important that another lie about Hillary dodging bullets.
He is a billionaire that instead of making a wrong – a right – passed all of her wrong doing on to the taxpayers, and then she is helping elect our new President, and he wants to remain blind to this. Another fact of the wealthy – large corporation taking advantage of the hard working men and women and being able to get away with it.
Go ahead, keep sensationalizing guilt-by-association stories that will bring down the best chance this country has seen for positive change in decades. Clarence’s comments above are astute, although the Ron Paul reference is a little nutty.
[...] Read\’c2\~Moe’s newest article,\’c2\~ Penny Pritzker and Obama Superior Bank Scandal.\’c2\~ [...]
The Clintons had a income of over 300 million in the past 6 years! They had control of this a long time ago but they were self serving as they are now! They don’t care about the housing market they just want the presidency! They’ll say whatever will get them votes. Even SNIPER FIRE!!!
Gee a crooked politician bought off by the uber rich. Who would have quessed.
[...] have wrote extensively on the Obama / Penny Pritzker relationship and now it appears Hillary Clinton also has another subprime “maven” on her [...]
Its called bad judgment on both their parts. The Dems and Rep will not look out for the aver citizen. Also, there is a such thing as guilt by association and it is used against the mob,Hells Angels and Outlaws, its called RICO. They say the same thing, not all of us do bad things we are just friends. There is no diff between the groups. Its called fucking citizens over to gain money and power.
This is total nonsense. I am a total Obama supporter and after 2 minutes of research I managed to put this whole thing to rest. Moe should really do his research before blogging without even trying. It irritates me when people don’t do their due diligence, especially after how much money she has raised for our (hopefully) future President!
Obama had this to say about the whole thing:
“Penny Pritzker was never accused of any wrongdoing nor did she receive compensation in relation to the closing of Superior Bank in 2001, and instead of walking away as millions of homeowners and stockholders suffered, the Pritzker family entered into a voluntary settlement and agreed to pay the government $460 million to defray its losses. Former FDIC Chairman William Isaac said he had ‘never known any investor in a failed bank to take responsibility as the Pritzkers have done.’ Senator Obama believes that the current housing crisis was caused by lax regulation and a system that put the interests of corporations before the interests of homeowners and investors and he has proposed an aggressive plan to step up the regulation of our financial markets to restore fairness and balance to our economy and to prevent a housing crisis of this scale from occurring again.”
And Penny had this to say:
“I regret that Superior Bank failed in 2001. I was chair of the bank from ’91-94 and over those years, the bank achieved high ratings from the Office of Thrift Supervision. Superior ‘s failure was complex. In short, the bank failed in 2001 because regulators concluded that the valuation of certain assets in Superior ‘s financial statements, which had been audited by Ernst & Young for many years and previously approved by regulators, was overstated and as a result the bank was not capitalized sufficiently. My family voluntarily agreed to pay the FDIC $460M to help defray costs incurred by the government and other losses in connection with the bank’s closure. We did this without litigation or any allegation by federal regulators of wrongdoing. I am proud of how my family responded to this situation.”
To Elizabeth from April 4:
I’m the Fran Sweet mentioned in the article. Elizabeth apparently you are a very gullible Obamaite. You believe Penny Pritzker? Wow what world do you live in!? Please see the Chicago Sun Times article dated Aperil 28, 2008, titled: Obama’s Subprime Pal which provides proof (a letter signed by Penny) that Penny Pritzker was actively involved in the management of the privately owned Superior Bank as late as May 31, 2001. Penny has never been accused of any wrong doing? Why do you suppose that is? Check out the unpaid loan the bank made to one of the bank’s owners. Note: Bear Stern bought some of the Superior Bank subprime loans after the bank’s failure. In addition, less than one year after Penny Pritzker stole $42 million dollars from the depositors of Superior Bank (not to mention the loan shark interest rates charged the subprime mortgage and auto borrowers)she had the audacity to give a philanthropical gift of $30 million to the University of Chicago. The same elitist university Barack Obama happens to have worked for as a professor of law and at which Michelle Obama worked at in a high level position. I suggest, Elizabeth that you continue your research on the Pritzker sweetheart deals with the government. How is they were able to obtain the Naval base land which closed near Orlando Florida for so little money? How is it the Ernst & Young accounting firm settlement resulting from the Superior Bank failure gave the Pritzkers 25% of the settlement and none to the stiffed depositors? Check into the relationship between Ernst & Young and other Pritzker businesses. (Smell like Enron does it?)
To John Jason and Elizabeth: Unfortunately for Barack Obama we are judged by the company we keep, i.e Jerimiah Wright, Penny Pritzker, Tony Rezko. Like Jerimiah Wright, Penny Pritzker is more than a casual acquaintance of the Obamas, see the Wall Street Journal article Money Maven. When candidates have political positions that are the same or very similar, wise people judge them by their character. One of the factors in judging character is the company a person keeps.
Elizabeth, you are walking around with blinders on mam. Money does wonders when you are facing prosecution. You know hundreds of millions seem to make things go away. While people like Fran Sweet get screwed.
You need to look more than 5 minutes. This article is based on several hours of research and not your 30 second google search.
Sorry, but your comment is funny and you may want to take your blinders off.
[...] By Fran Sweet [...]
The blinders you refer to belong to Ms. Sweet, who obviously had them on when she walked into the bank and didn’t see any of the signs (that are posted everywhere) saying only $100,000 is FDIC insured. This FDIC guarantee is universal all over the country and was no different at Superior Bank. When one dollar over the $100,000 went into the bank, that dollar was at risk. Nobody stole Ms. Sweet\’e2\’80\’99s money. She risked it for a higher return. She could have easily spread it around to five banks and would have been at no risk. I think we should really take a look at who\’e2\’80\’99s being greedy here.
I love how Ms. Sweet is ignoring the fact that she has received $367,000 out of her original $480,000 deposit. If my math is correct, that is a sight more than the $100,000 that she was legally entitled to. I wonder where the other $267,000 came from\’e2\’80\’a6 Hmmm, could it be from the Pritzker family?
Also, I am entirely amused when Ms. Sweet is constantly crying poor mouth. I don\’e2\’80\’99t know about anyone here, but I don\’e2\’80\’99t have $367,000 sitting around in my bank account. Not to mention the million dollar publicity campaign she\’e2\’80\’99s running.
Regardless, the amount of money Ms. Pritzker has raised for the Obama campaign and her cutting edge ideas on fundraising are impressive and there is no getting around that.
[...] a man with a major subprime lender as his campaign finance chair is being hailed as the new progressive hero who will lead Democrats to the Promised [...]
[...] Penny Pritzker & Obama – The Pritzker Family Superior Bank Scandal Barack Obama was in Chicago at the time of the Superior Bank failure & has full knowledge of what went on and the cause of the collapse. [...]
And so the next article will be a “What ever happened to the McKeating Five?”
Keating Five folks….Keating Five….
[...] course I am speaking of Penny Pritzker, billionaire (net worth $2.8 Billion US and ranked 135th on the Forbes List of Richest Americans) [...]
Everyone really needs to understand how the system is set up…it was, always has been and always will be desigen to support the big banks. The fed was set up as a way to funnel wealth to the big banks and squeeze out the competition to them(S&L’s, Thrifts, Investment Bankers).
The fed has a cetain level of tolerance of wealth being taken out of the banking system before they reign in the supply. The fed had given many warnings the past several years to those institutions mentioned above as competition to the banks to back off mortgage banking. The fed basically telegraphed what was going to happen and if you notice the players who are in the best position now are the big 4 (chase, BofA, citi and wells fargo).
The feds agenda is to have big banks in charge or the flow of capital for the simple fact banks are the way the Fed is able to control the flow and distribution of wealth.
The federal reserve was never set up to help or protect the average person. Anytime there is competition to the big banks (jp morgan, wells fargo, BofA, citi) the fed basically adjusts the spigot to re-distribute the wealth back to the big banks(oddly enough there are 2 ways to do this…-raise the fed funds rate so high to make it almost impossible for anyone other than big banks to function or to lower the fed funds rate so low that the big banks have cheap money to take over the competition, and pay very little to do so). You can see one side of this with the dilution of stock value with the capital infusions that most of the mid-smaller sized institutions have had to aquire to attempt to stay in the money game.
What is really going on is that almost all investment banks that stepped out of line and involved themselves in the big banks territory are being cut down at the knees. (The black knight being dismembered in monty python and the holy grail is a great example).
You would have seen all the Investment bankers go down if it had not been for the fact the IB’s were smart enough to entangle themselves with derivatives which created counter-party risk.
The fed could afford bears stearns to go down in flames and hand over the carcass to JP Morgan (It was not a bailout as the media is promoting), This was a warning shot to the other investments bankers to shap up and shift their activities back to bond trading and other such business and get out of the banking sector.
The discount window is only for banks who are under control of the federal reserve and was set up as a saftey net for capital emergencies…the IB’s did not have the ability to go to this window until after the fed made sure bears stears was insolvent.
Even then the fed allowed this window to be open to the IB’s only due to counter party risk.
It is amazing to see the dominoes fall in line—-Bear Stears was an 80 year old company….for this company to go down the way it did is crazy.
The IB’s that are left that do not have connections will go down as well or be gobbled up by a big bank.
Watch Lehman and Merrill…it will be a battle for these IB’s to survive.
Keep your eye on the big banks as they are the source and beneficiaries of all this chaos. Chase, BofA, Citi and Wells Fargo will be left standing with a greater share of the pie and in control of the market.
I would put my money on that once this shift of wealth occurs, the fed will announce some special program(s) and congress will sign a special incentive bill to assist the banks who step in to help those troubled homeowners to catch up or to refinance their homes and then housing will mysteriously stop the free fall and enter a stable period of appreciation- (appreciation by virtue of the special programs that will allow the surplus inventory of REO’s to be purchased similar to the FHA programs back in the mid-late 90′s to get rid of the REO inventory from the late 80′s S&L “crash”). I see the end game- The fed funds rate be pushed up at least 1-2% to help the cause-oil will drop, mortgage rates will come down and the dollar will get stronger so that the imported inflation will be knocked back somewhat.
In the meantime those of us who are being beaten down need to keep our chins up and keep fighting back. Keep fighting and requesting to get a modification or reduction because there is hope. We are getting closer to the turning point. By June of next year this enviroment will be much different mostly for the better.
Good Luck…