Isn't the pic just... I don't know, it makes feel all Akubi with chocolate sauce inside. The idea of helping the distressed borrower for the benefit of both borrower and lender is just so appealing. The problems however as not just the devil in the details or even the traditional definition of moral hazzard but the externalities that are being ignored. Without these bad loans going bad the poor neighbors will continue to be saddled with unduly high tax assesments but for one example. No, when mods affect me by distorting markets I have no hesitancy in speaking up to protect my position.
21 comments:
first, murst and foremost..
I don't know if that image is that 'Akubi' like.. seems almost too much like "Moby Dick".. pursuit of the whale at all costs..
"Simon del Desierto"??
I don't put much 'religion' into the point of view of those who want to 'help' the distressed. Neither do I put much 'religion' into the thoughts of Wall Street pundits etc.. other than maybe the blind faith that they are right, that their point of view superceeds all, lack of logical thought process follow through..
Hello??.. anyone out there??
I guess everyone is out to lunch... 8-P
My lunch was over a long time ago! But I've got some work to get done. After I make this post.
I think one thing that is lurking at the backs of the minds of the legislators and regulators is the number of people with a home who are *not* late on their mortgage and who *can* afford the payments. And that's a very, very large number. Much larger than the number of people in trouble. They'd dearly love to bail out the poor beleaguered borrowers (free votes, yay!) and the poor beleaguered financial institutions (free campaign donations, yay!), but they fear the wrath of the mortgage-payment-making majority.
And that majority--as Rob is so ably demonstrating--is not staying silent this time around. Read any message board or listen to any call-in show on this subject, and you will hear a lot of calls for no bailout.
If I thought it had a chance of working I might not be so vociferous.
Sure there's a bit of "not fair" in the mix. That's hard to avoid but my points are firmly in the enumerable consequences. Those who could afford are paying higher taxes because of these FBs. Higher insurance, higher borrowing rates. In many cases they were required to pay higher prices because they were thrown into competition with truly unqualified bidders. When auction houses do this it is illegal but when banks do it it is extending the American Dream to a great audience. Jeez. And don't even get me started on OER and inflation.
Rob
Don't be so hard on yourself.
These bozos are going to get it in the shorts. They may get a breath mint for the trip to hell, but they are going down and meeting the devil.
The system in convulsing because the risk was improperly assigned.
Now you have meatheads trying to change the rules in midstream.
The investors are going to walk away from funding all loans and screw the millions of hard working homeowners who are going to have to get new loans in the coming years because of ARMs are coming due.
I liken it to the water damage/wind damage in La. Sure it sux when people are left holding the bag. BUT living below sea level you think they would have flood insurance. If the courts had sided with the plantiffs, some might have gotten a couple bucks in 10 years, but you can be sure the price of insurance would automatically include flood damage for all homeowners, even those who have to purchase the stuff from the govt or who live 500 feet above town. Or the carriers would have all pulled out of La which would have caused havoc for all the other homeowners throughout the state who must have insurance as part of their mortgage.
I'd like cold Sam Adams beer running from water taps and every weekend to be sunny and warm, but it just ain't going to happen.
When the statehouse gets a reality check from the bankers ("You have no clue how bad things could get in your fair state"), this will be dead.
As John Butcher Axis sang 20 years ago:
"if wishes were horses, then dreamers would ride"
If wishes were horses,
Beggars would ride.
If turnips were watches,
I would wear one by my side.
-19th Century scottish nursery rhyme
I'm "hard" on myself because there's a lot of people I respect on the other side. Normally i can convince people I'm right or admit I'm wrong. This is something different. I know I'm right but can't gain any traction. Some of those people "have" to make loan modifications because it is their job. not just following orders but they see it as doing their job the best way possible. They got in trouble with untested and ultimately proven bad models. Now they are trying new untested models to get out of their troubles.
Did anyone see the SAC Bee about Casey
http://www.sacbee.com/103/story/337761.html
How about getting the money for the FBs from the people who profited ? Seller, appraiser, mortgage broker and RE get to fund the bail out. Hmm on second thought that won't work. Guess we have to stick it to the tax payers again.
But we should get an equity position in the property and collect on the backside. One way to do it would be to eliminate the $500,000 exemption when the house is sold.
Fun Article... hope y'all enjoy.
http://www.sfgate.com/cgi-bin/article.cgi?f=/n/a/2007/08/22/financial/f142910D52.DTL&tsp=1
So BoA just invested $2B into CFC in the form of convertible securities paying 7.25% annually with a conversion price of $18/share. Sooo, what happens, CFC is up $4 or 20% after-hours. I think some shorts are going to be hurting tomorrow.
Ratlab,
Exactly. BofA gamed the system and screwed the shorts. Free money for the manipulators. And the BofA downside? 7.25% interest. Whyinthehell didn't CFC go to the 5.75% infinite 30 day revolving window?
And of course, Mozilo has to take the opportunity to spew more crap from his mouth.
"Bank of America's investment in Countrywide represents a vote of confidence and strengthens our balance sheet, enabling us to position Countrywide for future growth and success," Angelo Mozilo, chief executive of Countrywide, said in the statement.
Non-voting preferred stock.. convertible to common.
In bankruptcies, preferred stock has higher priority than common. Bondholders first though. I haven't seen any debtor in possession things yet. I wonder if there was a contingency on no debtor in possession financing allowed to get this deal.
"Eventually I think they'd be looking to acquire the whole firm," said Ganesh Rathnam, a Morningstar Inc analyst who covers Bank of America. "I don't see why they would otherwise buy $2 billion into it."
Bingo.. through bankruptcy as holders of preferred shares.
I've been offline in jury duty and not sure why my name came up...As far as the photo I was thinking _Il bidone_ perhaps...?
Not sure? Look at the picture. Look at the picture on your website. Move your toungue a little to the left and I'll be able to explain it.
In the big picture the seduction of easy money, the loose morals, etc. all play into the issue of forebearance.
4:36 Ratlab said
"enabling us to position Countrywide for future growth and success," Angelo Mozilo, chief executive of Countrywide, said in the statement."
Swap the name Countrywide for Digital and you have GQ Bob's statement just before he sold out DEC to Compaq.
every time I hear that phase it perks my ears up. Seems like every time I hear it, it is the corporate version of "last call" in a barroom.
Whenever you hear management say "poised for growth" remember to bend over, grab your ankles, close eyes and relax so it doesn't tear as much....
If it is your boss who spews this phrase, get the resume updated and out into circulation pronto.
H.
Rob Dawg said
Whyinthehell didn't CFC go to the 5.75% infinite 30 day revolving window?
Because they would have the same problem Snowflake had with going to bankrupcy. Namely opening their kimono.
In this case, they would need to reevaluate their asset base, and they will gnaw off their paw first...
Ain't transparency a bitch?
H.
"Write some checks, bail 'em out, prevent a destructive housing deflation that (Fed Chairman) Ben Bernanke is unable to do. After all 'W', you're 'the Decider,' aren't you?" Famed bond fund manager Bill Gross
wrote .
Is that a picture of hot lips?
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