Which will engender another bubble of some kind to follow the internet and real estate bubbles.
Doesn't anybody understand, this is what the banks wanted. This fix was not pushed on to them by the nanny state. The banks want to avoid foreclosures, and if they can do so and still get a decent albeit smaller return they will be tickled to death.
I’m all in favor of a Free Market for religion, starting with an end of my tax subsidy of religion via property tax exemptions. Let religions compete freely for adherents and contributions, and let thsoe who’s adherent can’t pay for municipal services relocate or go out of business.
I think I have 5 3/8... not the bottom but a nice number for the next 27 years none the less....
MORTGAGE MELTDOWN
Interest rate 'freeze' - the real story is fraud Bankers pay lip service to families while scurrying to avert suits, prison
Sean Olender
Sunday, December 9, 2007
New proposals to ease our great mortgage meltdown keep rolling in. First the Treasury Department urged the creation of a new fund that would buy risky mortgage bonds as a tactic to hide what those bonds were really worth. (Not much.) Then the idea was to use Fannie Mae and Freddie Mac to buy the risky loans, even if it was clear that U.S. taxpayers would eventually be stuck with the bill. But that plan went south after Fannie suffered a new accounting scandal, and Freddie's existing loan losses shot up more than expected.
Now, just unveiled Thursday, comes the "freeze," the brainchild of Treasury Secretary Henry Paulson. It sounds good: For five years, mortgage lenders will freeze interest rates on a limited number of "teaser" subprime loans. Other homeowners facing foreclosure will be offered assistance from the Federal Housing Administration.
But unfortunately, the "freeze" is just another fraud - and like the other bailout proposals, it has nothing to do with U.S. house prices, with "working families," keeping people in their homes or any of that nonsense.
The sole goal of the freeze is to prevent owners of mortgage-backed securities, many of them foreigners, from suing U.S. banks and forcing them to buy back worthless mortgage securities at face value - right now almost 10 times their market worth.
The ticking time bomb in the U.S. banking system is not resetting subprime mortgage rates. The real problem is the contractual ability of investors in mortgage bonds to require banks to buy back the loans at face value if there was fraud in the origination process.
And, to be sure, fraud is everywhere. It's in the loan application documents, and it's in the appraisals. There are e-mails and memos floating around showing that many people in banks, investment banks and appraisal companies - all the way up to senior management - knew about it.
I can hear the hum of shredders working overtime, and maybe that is the new "hot" industry to invest in. There are lots of people who would like to muzzle subpoena-happy New York Attorney General Andrew Cuomo to buy time and make this all go away. Cuomo is just inches from getting what he needs to start putting a lot of people in prison. I bet some people are trying right now to make him an offer "he can't refuse."
Despite Thursday's ballyhooed new deal with mortgage lenders, does anyone really think that it can ultimately stop fraud lawsuits by mortgage bond investors, many of them spread out across the globe?
The catastrophic consequences of bond investors forcing originators to buy back loans at face value are beyond the current media discussion. The loans at issue dwarf the capital available at the largest U.S. banks combined, and investor lawsuits would raise stunning liability sufficient to cause even the largest U.S. banks to fail, resulting in massive taxpayer-funded bailouts of Fannie and Freddie, and even FDIC.
The problem isn't just subprime loans. It is the entire mortgage market. As home prices fall, defaults will rise sharply - period. And so will the patience of mortgage bondholders. Different classes of mortgage bonds from various risk pools are owned by different central banks, funds, pensions and investors all over the world. Even your pension or 401(k) might have some of these bonds in it.
Perhaps some U.S. government department can make veiled threats to foreign countries to suggest they will suffer unpleasant consequences if their largest holders (central banks and investment funds) don't go along with the plan, but how could it be possible to strong-arm everyone?
I love Mark Steyn, but I think he misinterprets Huckabee just because it is the shortcut to an argument against him. He never has advocated a theocracy and he never will. He is not the best fiscal conservative candidate ever, but he is just as good as Bush in that area. Those candidates which claim fiscal conservatism aren’t all that consistent either. They like the rhetoric but when it comes time to vote, they spend our money to buy our votes. The problem is us more than it is them.
I believe the banks are behind this effort because they and the investment banks do not want investigations into the subprime mess. Investors and stockholders will sue like crazy when they find out just how deceived they were.
What will be found by investigators is wholesale fraud by banks, mortgage brokers, investment banks, and ratings agencies, with the willing or unwitting collusion of borrowers.
Paulson, who before he became Treasury Sec’y was the head of Goldman Sachs, has his hands deep inside the start of this subprime mess and would probably like to avoid a perp walk to jail a la Enron, as would a whole lot of Wall Street insiders.
That's very true. As America demonstrates, faith thrives in a free market. In Europe, the established church, whether formal (the Church of England) or informal (as in Catholic Italy and Spain), killed religion as surely as state ownership killed the British car industry.
This is utterly superficial. If a monopoly killed Christianity in Europe, it took 1600 years to do so. The demoralizing effects of two great wars, and Christian complicity(real and imagined) in them, had a lot to do with it. Propagandistic political movements like Communism, nationalism, and Liberalism, the sexual revolution, Darwinism, all have had erosive effects.
It is not "conservative," it is Nixonian.