Earlier this morning, we discussed how badly the Treasury department, along with Congress, had bungled the bailout monies.

These two graphics show exactly what an awful deal the taxpayer got for our monies.

Buffett’s Better Deal

click for much larger graphs

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Source:
Paulson Bank Bailout in ‘Great Stress’ Misses Terms Buffett Won
Mark Pittman
Bloomberg, Jan. 10 2009

http://www.bloomberg.com/apps/news?pid=20601087&sid=aAvhtiFdLyaQ&

Category: Bailouts, Corporate Management, Credit, Taxes and Policy

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

49 Responses to “Bungling the Bank Bailout”

  1. VennData says:

    They need to add Warren’s taxes into this to get the true number. Uncle Sam always gets his.

  2. DL says:

    It’s entirely unrealistic to expect the government to get terms that were as good as Buffet got. I’m amazed at how many financial journalists even suggested this as a possibility. Buffet’s investment constituted an endorsement of the firms that he invested in (or at least that was probably what the firms were hoping for). Money from the government, on the other hand, is a sign of desperation.

    * * * *

    Barney Frank wants to put new restrictions on those banks that have received bailout money:

    http://latimesblogs.latimes.com/money_co/2009/01/barney-banks-ge.html

    He says that the banks can return the money if they don’t like it.

    This is one of the few good ideas that Barney Frank has had.

  3. ben22 says:

    DL,

    A little off topic but Barney Frank is one reason why I’m buying lots of muni’s.

  4. KidDynamite says:

    @DL: I VEHEMENTLY disagree with everything you wrote. Is it ENTIRELY reasonable to expect the government to obtain better terms (although we’re only asking for equal terms ) than Buffett got. You even mentioned that taking money from the government was a sign of desperation: capital raised under desperation does not dictate its own terms: the LENDER dictates the terms.

    Which brings up another problem with the bailout, and with Barney Frank’s ridiculous retroactive stipulations: the government forced this money on all the big boys in an effort to NOT have any one bank look like they were coming to the Gov’t with hat in hand, which would have created further runs on the bank. Now Barney wants to attach stipulations after the fact? Horrendous. Nevermind the fact that you cannot “track how the money is spent” as Barney wants to do (FUNGIBILITY baby! it’s not like the TARP dollars have red x’s painted on them) – these after the fact rules would be like if your mortgage lender decided 5 years later that you weren’t allowed to paint your house blue – completely absurd if it wasn’t in the upfront terms.

    Barney & Co. screwed this up MISERABLY when they gave out the money – they should have stipulations for any FUTURE money – retroactive stipulations are absurd.

  5. mark says:

    BR – Is there an archive of quotes of the day?

  6. VoiceFromTheWilderness says:

    Kind of like the way the government bungled giving billions of dollars to Halliburton — lots of pay and no results.

    This only seems like bungling. The idea that the modern economy is ‘results driven’ is one of the first ideas one has to dispense with when getting ones first job in corporate america. How intruiging that it persists as a lens through which to view the actions that arise from corporate america. The people that are busy getting bailed out, are the ones that lectured the world so sternly about how ‘it’s all perception’.

    That they are busy attempting to perpetuate the perceptions they deem useful should come as no surprise.

  7. wally says:

    I think this analysis completely misses the point: Paulson INTENDED to give the money away, not to get “good deals” for taxpayers. That’s the only way a bailout makes any sense at all. If you get profitable terms, you haven’t bailed anybody out.

  8. Steve Barry says:

    And this is a surprise, why? There are 6 Billion people on earth…maybe the last person I would chose to negotiate a good deal for the taxpayers with Goldman Sachs is Hon. Henry M. Paulson Jr.

  9. DL says:

    KidDynamite @ 12:42

    “Is it ENTIRELY reasonable to expect the government to obtain better terms (although we’re only asking for equal terms ) than Buffett got”

    No. Not unless the government takes over a given bank. As matters currently stand, the banks are (more or less) free to refuse the money if they don’t like the terms. We could go the way that Sweden did in the early 1990’s, but I don’t favor that.

  10. Andy Tabbo says:

    Agree with DL here and some others. To compare the Paulson injection with Buffett is comparing apples and oranges. Goldman Sachs did the deal in order to get the “Buffett Good Housekeeping Seal of Approval.” The had to buy Warren Buffet for that Hug and Kiss. And Warren Buffet decided to SELL OUT his name for what he thought was a great price…I guess every man has a price!

    The government was merely flailing about attempting to prop up the entire banking system. They were trying to bail out the whole system. Paulson wasn’t trying to do a good deal.

  11. rww says:

    As with everything else, we get the bailout we deserve.

  12. Steve Barry says:

    If the government wasn’t trying to get a good deal, what was all that crap that “the taxpayers would probably make money on the deal?” I wasn’t keeping track who was saying it…was it Bowyer…Luskin? Farrell?

  13. DL says:

    If the bailout of Citigroup had been up to me, I would have required ALL of the following:

    Sell off the Smith Barney brokerage unit;
    Sell off the Travelers Insurance unit;
    Sell the corporate headquarters building (to someone who will lease it back to them);
    Wipe out the stockholders and bondholders;
    Fire all the Board members;
    Fire another 50,000 employees beyond the 50K that they did fire.

    And then, if the top executives STILL wanted taxpayer money, I’d think about giving them some.

    Companies should be forced to pay a VERY high price for bailout money.

  14. Mannwich says:

    @DL: I believe Travelers is already independent and no longer part of Citi. My neighbor his a bond Portfolio Manager for them here in the Twin Cities.

  15. Mannwich says:

    @DL: Here’s the thing – if companies are forced to pay a very high price for the bailout money, they won’t take it, which is fine with me. Let them fail or nationalize them for a while, kick out the bad actors and then spin them off private again. I don’t see what would be wrong with the Swedish plan, other than for “free market” ideological reasons. We’re well past the point where ideology should even play a factor in what should be done. It should be all doing what works at the best price, period. Anything else shouldn’t factor into the decision-making process.

  16. rww says:

    It wasn’t bungled, actually. Actually it worked, everything is better now, the worst is behind us, and the rally will continue. Bob Doll and Barton Biggs say so, so what more could you ask?

    http://www.bloomberg.com/apps/news?pid=20601213&sid=aniVfrQCC5Pw&refer=home

  17. Marcus Aurelius says:

    KidDynamite said:

    “. . . “track how the money is spent” as Barney wants to do (FUNGIBILITY baby! it’s not like the TARP dollars have red x’s painted on them). . .”

    _________

    As the banks are insolvent (and I’ll bet an exhaustive audit would show that they were/are), I’d argue than all of the dollars should have red Xs on them, or that we simply assume any dollar held by a bank receiving TARP funds is a TARP dollar.

  18. Mannwich says:

    It is inevitable to me that the banking system is going to be nationalized one way or another (it’s already a de facto nationalization without the requisite benefits to the public) but that they’ll try everything else (and waste truckloads of dough in the process) before doing the right thing.

  19. Andy Tabbo says:

    Please don’t take my earlier comment as any sort of endorsement of Hank Paulson or the Bailout. If we’re going to spend trillions of bucks I would have rather done the following:

    1) Set aside a $1 Trillion Debtor-In-Possession Fund to handle the tsunami of bankruptcies coming from Lousy Business models that only existed because of extremely cheap debt. Beef up the Bankruptcy Court system to handle the onslaught.

    2) Set aside 250bn/year in a massive Unemployment Fund for our newly unemployed brothers. 250bn is a generous number….5million new unemployed workers * $50K median income.

    We need to understand where we are….we’re in a deflationary spiral/depression. Banks aren’t lending and businesses don’t even want to borrow. We’ve simply seen a complete reversal in sentiment. Screw the shitty banks. Let’s just get the cash directly to the individuals who are hurting the most: the newly unemployed. Let the failed businesses either restructure their debt or go Ch.7/liquidation.

    To use the Mush-mouth Mohammed El-Arian’s overused “sick patient” analogy a little differently….The U.S. has an extremely bad case of Food Poisoning and is laying on the cold bathroom floor, occasionally puking into the toilet. There’s nothing we can really do for the sick person except apply a cold compress, keep him hydrated and encourage puking until the virus exits the system.

    Other than that, I think the government needs to start thinking about longer term structural things with the country…figure out how we can remain competitive. i.e.

    How can we make our education/vocational system stronger?
    What kind of investments can we make into our only real resource, the American people?
    How can we encourage more entrepreneurship?
    How can we attract more businesses to our shores?
    What can we do with our legal system that will reduce the amount of lawyers/accountants/litigation? We have so many smart people in the country wasting away in legal/accounting offices providing little discernible value to the country.
    How the hell can we reverse the course on our trade deficits?

    Sorry for the long rant….

  20. DL says:

    Mannwich @ 1:48

    By many accounts, the Swedish rescue worked pretty well. If we could repeat their success, and not bail out anyone else, I might not be so opposed.

    One of my concerns is the “slippery slope”. The more people you bail out, the more that it becomes an entitlement… even the porn industry wants a bailout.

    Similarly, the more power that government gets, the more likely it’ll try to grab more.

    So I want bailouts to be very rare and to impose a high price on the recipient.

  21. rww says:

    AT, I fear the answers to your “How can we…” questions is “we can’t.”

    We can’t support 5 billion people trading trinkets, no matter how efficient we become.

    It would not be surprising here to see China and the rest of the “undeveloped” world renounce industrial/consumer capitalism and resume their agrarian ways. Why would anyone want to follow us down this road?

  22. Robert says:

    Let’s remember. Paulson et al. were happy to let Lehman, Bear etc. go under. When the rumors starting swirling about Goldman, his friends picked up the phone and said save us, then we got action. As someone before said, Paulson didn’t want to get a lot out of Goldman, that would defeat the purpose. This Goldmanization of our Treasury that started with Rubin has to end.

  23. ThreeFold Commonwealth says:

    Here lies the problem. Warren Buffet is the problem. Follow the money. He has 20% of Moody’s Rating Service. We do not have a financial melt down if Moody’s is on watch doing their job. He is in the derivative whore bed with Goldman Sachs. Goldman invented the disaster scenario and continues to throw gasoline on the fire.

    Warren is aiding and abetting illegal schemes penetrated on the public. This is a horrid tale of self-dealing, market manipulation, fraud and light of day cover up. Warren Buffet by his own prognostication is in the Cat Business, taking cash while insuring the catastrophe. In his quaint oracles letters from Omaha he says he is alive until the 1 in 33 year event bankrupts him. Warren is the fat lady and until he sings we know the this penny opera isn’t over.

    Change ain’t enough when we talk trillions. Does anyone remember the Lewis Brothers, super heros of common stock holders rights? ThreeFold Commonwealth now. Separatation of powers. Separate the three spheres of power. POLITICS. ECONOMY. CULTURE. We see the government is now all.

    Crimes have been committed. Justice needs to be served. Best for health and wealth in 2009.

  24. john haskell says:

    DL- you want bailouts to impose a price on the bailee but are ideologically opposed to the Swedish model? I assume now you have abandoned your earlier nonsensical insistence that the government can’t get terms as good as the private market? The Swedish government got 100% of banks’ equity for 0- an unbeatable per share price. Think about it.

  25. DL says:

    Andy Tabbo @ 2:04

    I generally agree with your economic philosophy. A few additional points:

    1 ) trial lawyers are economic parasites and there’s no way to get rid of them;

    2 ) the financial engineers, will, unfortunately be back with a vengeance within a few years;

    3 ) you didn’t mention the debt issue. At least in principle, the tax code could be modified to increase the after-tax cost of debt. If phased in slowly, that might be in the long-run interest of the U.S. economy.

  26. carleric says:

    I don’t understand all this confusion over Paulson and Goldman. The only reason Hank ever went to Congress for bailout money was to save his friends at Goldman. He didn’t then and doesn’t now give a single tinker’s damn about his country, the taxpayers or anything else defensible. This was a favor pure and simple. Anyone who thinks the TARP and money disbursments was ever designed to do anything other than to provide handouts is naive beyond comprehenstion.

  27. KidDynamite says:

    DL – why wouldn’t the banks like the terms? the terms are TOO favorable for the banks! that’s the point. THere is no reason why any private investor, buffett or otherwise, should be able to obtain better terms than the gov’t.

    look at what Germany just did with Commerz… they took 25% of the common equity!

    Paulson and the House should understand that COMMON stock has voting rights, and the ability to vote on restrictions…

  28. KidDynamite says:

    i also can’t stand the idea of Bill Gross amassing positions in something, and then telling the gov’t “you HAVE to bail this out or the consequences are dire!”… taxpayers paying private bondholders. oy vey.

  29. Ken says:

    Mannwich wrote: “It is inevitable to me that the banking system is going to be nationalized one way or another (it’s already a de facto nationalization without the requisite benefits to the public) but that they’ll try everything else (and waste truckloads of dough in the process) before doing the right thing.”

    How about a compromise? Don’t nationalize the existing banks, but set up a national bank. This bank would provide some subset of existing bank services, specifically those we can’t do without. I’ll leave it up to everyone else to make their own list, but I would include savings accounts (i.e., borrowing short) and making collateral-backed loans (i.e., lending long). Similarly it would be excluded from any activities deemed non-essential, or too disruptive to the private economy; for example I would keep it out of the equity and securities markets. I guess that as I’ve just described it, it would be a giant savings-and-loan, running on the ancient principle of “borrow at 1, lend at 2, home by 3″.

    The advantage of this entity is that when the private banking sector freezes up and will not perform those essential duties, people can still go to the national bank for those services. Also, it cannot be offensive in any way to the remaining free-market ideologues; as a government entity, obviously it cannot be more better than the real banks, so it cannot compete with them. It will not be taking any legitimate business off those banks, it will just be doing those things that the private sector can’t or won’t do; which is kind of what government is for, right?

  30. dunnage says:

    Paulson, as he made quite clear, intended to get nothing in return.

    The European supply side insisted on some return for cash. Paulson begrudgingly got something from the Select 9.

    From the beginning — his original 1 pg. contract — Paulson was clear. How could he have bungled in the above manner. Nobody listens to the man. How many times did he have to say he did not want to give money for mortgage foreclosures. And everybody wonders why it did not happen. He did not want to give money to autos. He said so.

    Right or Wrong, Paulson is clearly Supply-Side cash with no strings to stem systemic risk.

  31. rob says:

    American Taxpayer = Investor of last resort! Nuf said!

  32. Paulson had no option to walk away from the table. Of course he got a worse deal. He was given no leverage.

    Warren on the other hand, remembers all about what he was doing in 1974:
    http://mast-economy.blogspot.com/2009/01/what-was-warren-doing-in-1974-how-about.html
    and was salivating… knowing he could play hardball investor and just wait around for the best deal. Not to mention his returns down the road.

    It is quite unfair to Hank to do this comparison.
    Warren in Hank’s shoes would have performed in a similar manner. Hank in Buffett’s position exacts a great deal as well.

  33. usphoenix says:

    @threefoldcommonwealth : I can’t believe anyone would plant this on Buffet. What planet are you from anyway? Do you have any concept of what he has done to try to rescue our system? Sure he’s looking after his interests, but they should be ours too. What got buried months ago was how he invested in muni’s to rescue them and bolster their rating. And us as well.

    I am suddenly feeling incredibly stupid responding to such a comment.

    But I hear lots of chatter about everything except the next chapter. Munis.

    Any recent news about caltran?

    I mean, come on, is it a matter of narrow NYSE focus, self-serving narrow mindedness, or stupidity?

  34. AGG says:

    VoiceFromTheWilderness is right.
    Also on the complicity of Buffett in the current problems we have, it should be a given. This guy is lionized by the media and stock people. Doesn’t that tell you something? His idea of a well run business is a trucking firm with no load limits that carries asphalt for road repairs. He isn’t just allergic to risk, he is allergic to competition. He didn’t give a hoot about Indian farmers losing water to a new coca cola bottling plant. He could care less about a bunch of dams killing salmon runs in Washington. His “sweet grandpa” looks are a facade.He wouldn’t have a nickel if his daddy hadn’t been in high politics and the “other stuff” coca cola is well known for all over the world; it’s rumored to be a “company” business front.
    You can all go back to bean counting now. We’ve got a depression. Live with it.

  35. ThreeFold Commonwealth says:

    We start here. I used to say give Greenspan, who’s alibi is that he is the dumbest banker in the history of money, immunity. But now? Add Madoff to the racketeering charges. Give them both immunity and watch the names fly. Let’s do this with Goldman, Buffett and every other “smar money” entity that received tax payer money. Let’s audit the trades. Let’s find out what Goldman and Buffett et al were long and short and when. Let’s see who profited from Bear Stearns’ done deal at $9 but out the door at $2. Let’s see how the chips fell on Lehman and who profited from what side bets on the worst financial disaster since the depression. Warren Buffett’s “wonderful life” partner Charlie Munger explains it nicely when he talks about the position that Berkshire had when they “saved” Solomon Brothers back in the 1990′s. Charlie clearly understood that Solomon Brother traders and management were “bending the normal standards of accounting.” Charlie and Warren both understood that Solomon Brothers were crooks. They liked the money. They continued in the game. They are a mutt and jeff crime syndicate. Warren’s derivative bet at a $5 billion dollar payment to him that the market would be lower in 15 years shows the “down home” investing skills of Warren. The bet was placed with unnamed parties with Goldman Sach as the intermediary. Will the greatest fleecing of the working man and woman’s pension and retirement funds go unpunished? No. Justice will be served. Why? Because God loves widows, orphans and the good ‘ole US of Aye.

  36. spigzone says:

    The bailout was not ‘bungled’ unless such is referring to Bush & co.’s failure to ram down congress’ throat and get passed a law much more akin to Paulson’s original proposal, allowing them to to float a couple or three trillion to ther Wall Street buddies instead of a measley 300 billion.

    Considering the circumstances surrounding the bailout situation congress did pretty damn good job by keeping the damage to 300 billion.

    All in all, Bush and the boys did their level best to make lemonade from the lemony fact of the economy collapsing far sooner and harder than they had anticiopated (it was SUPPOSED to keep the facade of prosperity until the the democrats took over) and so they made one last gallant effort to suck as much wealth from the future of the country into the hands of the elite few as humanly possible.

    Don’t blame ‘congress’ … blame the fooking republicans. Sure, the democrats sucked because they let the Bushco and the republicans batter them into one giant walking stockholm syndrome but it was the republicans that COMMITTED grand theft country and high treason.

    76% of this countries republicans still approve of Bush. That’s a flat out endemic and bone deep failure of integrity. The republicans have become nearly utterly corrupted and are 95% culpable for the current state of affairs and never forget it.

    That said, the Democrats suck tailpipe … though Barack may turn things around … if he doesn’t, this country may not remain free for much longer.

  37. vaughn says:

    glad to see you hitting this so hard Barry…..

  38. vaughn says:

    Good post Spigzone excepting your assessment of O…..He is hiring from the same polluted gene pool that got us into this mess.

  39. vaughn says:

    From LondonBanker…..
    It is now clear to me that policy makers in the West are determined to apply every available resource to underpinning failure, misallocation and executive excess. As this discourages the honest saver from parting with cash, policy makers are ensuring that deflation will wreak its havoc on the financial and real economies of the world. Only when that deflation has played out and rational policies that reward market-based management and returns are restored will it be worthwhile to invest again. In the meanwhile, any wealth saved securely from state seizure will “swell” to buy more assets in future – a key aspect of deflation and a key means of restoring the control of the economy into the hands of more farsighted savers and investors.

    I have quoted Mr John Mill before, but it bears repeating: ““Panics do not destroy capital; they merely reveal the extent to which it has been destroyed by its betrayal into hopelessly unproductive works.” The extent to which capital has been betrayed in the past quarter century under Bretton Woods II, bank deregulation and the Basle Capital Adequacy Accords is unrivalled in the history of fiat banking. The bankers, lawmakers, regulators and academics who collaborated in the betrayal still hold power, like the well-armed brigands in the fortress, and their continued collaboration to prevent accountability must inevitably discourage honest savers from risking further loss. Even so, it is the savers/peons who hold the ultimate power as they can starve the brigands.

    Some day soon savers will revolt at financing further depredations. They will refuse to buy even government securities, gagging at the quantities of issue forced upon them under terms of only negative return. When that final massive bubble bursts, deflation will follow its harsh corrective course and clean out deficit-financed “unproductive works”.

    When that happens, if reason is restored in markets with effective oversight, I might consider investing again, very selectively, in whatever productive works might then be on offer and only when secure in realising – and retaining – a positive yield.

  40. Greg0658 says:

    3foldC – good always triumphs over bad?
    you watch to much Disney
    (powers of a tele-photo lens over wide-angle)

    here in America we turn the other check and forgive
    (well .. maybe not when it comes to money . we get even)… if possible

    anywhichway … an fyi to log

  41. KidDynamite says:

    @greg – the best part of your post by far was the Freudian slip: “here in america, we turn the other CHECK and forgive.” just write another check baby!

    indeed…

  42. much on the “not bungled”-side of the ledger, we’ll see things, more, clearly, if we “deny Ignorance(as a predicate)”.

    http://www.thefreedictionary.com/deny
    http://www.thefreedictionary.com/predicate

  43. WaltFrench says:

    Several posts approximate this, but let’s consider the possibility that the Bailout is primarily Theater.

    (Under this hypothesis), The banks are STILL bankrupt after the bailout. Their balance sheets, if honestly marked to market, have hugely negative net capital. (And the value of assets, tied to mortgages and derivatives thereof, are still racing to the bottom with the Case-Schiller index.)

    The purpose of the Bailout was to reassure the public that the banks would be there tomorrow for their ATM withdrawals, for their credit cards to work, for their checks to clear. It was touch and go for a while, as the banks themselves refused to believe in the fiction. But LIBOR, and spreads over it, are now back out of the stratosphere, and the carping about a bad deal can begin.

    But any deal, no matter how much the Gummint bought senior equity, still leaves the Gummint holding equity rights to… nothing. It is senseless to talk about how good a deal Treasury got, because the bailout — complete with the wink-wink nonsense that “we don’t really need this money but we’re taking it so as to reduce the possible opprobrium tbat others would earn from accepting it” — is merely an effort to buy time until somebody can figure out how to reflate the asset prices. But pushing up housing again probably can’t be done without the massive inflation that nobody wants, and a direct bailout of all the “bad actors” who bought McMansions with no down and liar loans has already been made impossible due to the very visible moral hazard that would entail.

    So we have this creak-along Bailout Theater. Hope the ending is interesting. Wish the ticket price wasn’t so high because I’m not liking what I’ve seen so far.

  44. bondjel says:

    This is why I found myself wondering when you had a short post saying you thought Paulsen was doing a reasonable job. He seems to be looking out for Goldman pretty well, and as you recall from “When Genius Failed” Goldman was the firm most aggressively trying to push their own interests.

  45. Greg0658 says:

    GWB just now “hard things dont happen overnight”
    true … and good will prevail
    … but maybe not in your lifetime

  46. Robespierre says:

    In my opinion Paulson was looking after GS and not to the taxpayers. The bailout is functioning as designed. Why do you think he insisted on immunity from prosecution? JMHO

  47. mknowles says:

    Goldman Sacks-USA.

  48. canyonlake says:

    Are bail outs to the banks really the answer? Is there a secret real estate market with only information available to a few?

    Is bail out relief in the billions to banks and the mortgage industry really the answer? Will it really help the economy or hurt the economy and country even more? We have many families losing jobs and the highest unemployment in 15 years hitting 9.3% in Los Angeles. California being more and more less desirable for businesses to remain in California or be able to do their business here.

    Is it just another way for the rich to get richer and the poor get poorer? Just another way for wealthy investors to flip homes? Isn’t many of the reasons why we are really in this mortgage mess is investors flipping properties, some realtors not listing homes on the MLS so they can double end a property instead of split a commission, only present an offer to a homeowner if that listing real estate agent represents the homebuyer too and even holding open houses and telling a homebuyer if they really want this home they can’t use their real estate agent and would have to go through the listing agent to get the home, telling a homebuyer to get that home the homebuyer would have to pay such and such price and at times $100,000 or even more over the last recent sale in the same year. Even real estate agents were told that there is so many relocating to Southern California that from this point on there will not be enough housing to those moving to Southern California and many homebuyers may never be able to afford to buy a home due to increasing prices so homebuyers will need to pay the growing inflated prices. Homebuyers getting an interest only loan just so they could get into a home thinking in a few years there would be so much equity in their home they can refinance getting a better loan or just buy another upgraded home.

    I’ve personally lived in Canyon Lake for 3 years and some homes have been sitting vacant since before I’ve lived here and obviously no one has maintained the home including water and probably the POA dues weren’t paid by someone. Seeing the properties sit vacant for at least 3 years and not even having a for sale sign or on the MLS personally ticks me off. In the 1990’s banks would list their properties with real estate agents and put the homes on the MLS once vacant and available so the home still had a chance to sell for a fair price not hurting the property values drastically as home auctions. In today’s economy many families are willing to work with the banks, still many getting kicked out of their homes because the bank won’t work with them, the homes sit vacant long lengths at a time with no real estate sign and not even listed for sale, not on the MLS so real estate agents and the public see it available and have the opportunity to be sold at a fair price and even auction off the home for an unreasonable way below even current market values.

    Example a Canyon Lake home sold in August 2004 single family residence, 1500 sq. ft. waterfront with dock, 50 ft. wide lot, sale price $690,000 loan amount $565,000. The homeowner recently had financial problems and instead of the bank reappraising the home to today’s fair market value, negotiating a lower interest rate, not working with the current homeowner, doesn’t list the property so real estate agents know the home is available, not listed on the MLS, auctions off the home with the homeowner still living in the home that’s still wanting to negotiate with the bank to keep the home. Most of the public doesn’t know about auctions or how to get information about homes being auctioned. Most homebuyers wanting to purchase a home rely on websites such as http://www.Realtor.com and a real estate agent thinking all real estate agents have access to what is available to buy. Even going to a search engine such as Google inputting the actual address most times no information comes up on these homes and is a secret to even real estate agents that may even have a homebuyer that would consider buying that home at fair market value. The example home was auctioned off recently for $250,000. Is this right? We have wealthy investors buying up properties well below a fair market price, less than half of what the actual loan is, available to very few that have information on the property with just intentions of turning around listing with a real estate agent for what the area is currently selling for. The losers are families being kicked out of their home, ruined credit, many that can never recover and tax payers having to pay to help the bank bail outs and the banks keep asking for more and more bail out money.

    Banks should be doing everything possible to work with the homeowner or as soon as the home is foreclosed and vacant list the property for sale with a real estate agent with a for sale sign on the property and on the MLS so everyone can see the home is available and for what price. Laws need to be in place that banks need to have to list a property for at least 90 for sale with a real estate agent and listed on the MLS for the public to see at a fair market price before a home can be auctioned off. If the bank does not they should lose their license. Receiving bail out money and just dumping a property for any price is not the answer and will not help the economy or country.