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Source:
Bill Black: U.S. Using “Really Stupid Strategy” to Hide Bank Losses
Peter Gorenstein
Yahoo TechTicker, Aug 11, 2010
http://finance.yahoo.com/tech-ticker/bill-black-u.s.-using-”really-stupid-strategy”-to-hide-bank-losses-535317.html
Just in case you missed this article in The Hill, the headline will save you from any suspense: Banks to benefit most from White House program to help fight foreclosures.
Here’s the bad news:
“Banks will get the biggest benefit from an Obama administration housing program designed to help unemployed homeowners escape foreclosure.
Housing experts expressed concern that banks, not homeowners, will be helped by the White House’s $3 billion funding infusion — $2 billion from the Treasury Department and another $1 billion from the Housing and Urban Development Department — going to those states hit hardest by the housing market crash and unemployment.”
This is no surprise, as we have mentioned repeatedly (here, here, here and here), the so-called mods and abatement programs are thinly disguised back door bailouts for banks.
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Previously:
More Foreclosures, Please . . . (March 25th, 2010)
Treasury Looks to Mandate Foreclosure Abatements, Mortgage Mods (February 23rd, 2010)
Fannie And Freddie And the Backdoor Bank Bailout (May 12th, 2010)
GSEs: $1 Trillion Dumping Ground for Bad Bank Loans (June 14th, 2010)
Source:
Banks to benefit most from White House program to help fight foreclosures
Vicki Needham
The Hill 08/15/10
http://thehill.com/blogs/on-the-money/banking-financial-institutions/114349-banks-to-benefit-most-from-white-house-program-to-stave-off-foreclo
Here are the items that I found most intriguing today:
• Yield Curve as Recession Harbinger (WSJ)
• Ports wary of stunted holiday rush (LA Times)
• Rates Fall as Market Fears Economic Weakness (NYT)
• Can the Nation Stimulate Its Way to Prosperity? (Federal Reserve Bank of Dallas)
• Turbocharged Germany: Their economy is growing by 9%/yr (Economist)
• Mutual Fund Cash Balloons (The Bond Buyer)
• “Was TARP Passed Under Bush or Obama? (Pew Research) Only 34% of Americans can answer that correctly…
• Invasion of the Argentine Ants (Esquire)
• Redesigning the New York City subway map (O’Reilly)
• The World’s Largest Tidal Turbine, Unveiled (Good)
What’s on your browser?
Mormons, Mullets, and Maniacs New York Viral Media Meetup
August 12, 2010
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With the passage of a $26 billion state aid package last Tuesday, Congress has now approved over $1 trillion in spending and tax measures to stimulate the economy , according to economists Alan S. Blinder of Princeton University and Mark Zandi of Moody’s Analytics.
The Washington Post breaks down the spending:
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click for larger graphic
Graphic courtesy of Washington Post
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Source:
President Obama signs $26 billion jobs bill to aid state payrolls
Lori Montgomery and Nick Anderson
Washington Post August 11, 2010
http://www.washingtonpost.com/wp-dyn/content/article/2010/08/10/AR2010081004201.html
Proving that there’s almost limitless potential for new versions of its iconic pony car, Ford Motor is reaching back 42 years to dust off one of its most famous names.
It’s bringing back the Mustang Boss 302. The original Mustang Boss 302 made its debut in 1968. Following its pattern, Ford is adding performance parts, a fancy paint job and a famous name to try to evoke nostalgia for a more carefree era.
Power is 440 HP; Ford hasn’t disclosed prices yet, but Ford marketing says the Boss 302 will be more than a Mustang GT ($29,645), but less than the Shelby GT 500 ($48,645).
Photos after the jump . . .
Tired of playing buzzword bingo ?
Then you need Unsuck-it.com — its the cure for terrible business jargon:
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click to unsuck
Janet Tavakoli is the president of Tavakoli Structured Finance, and has more than 20 years of experience in senior investment banking positions, trading, structuring and marketing structured financial products. She is a former adjunct associate professor of derivatives at the University of Chicago’s Graduate School of Business. Author of: Credit Derivatives & Synthetic Structures (1998, 2001), Collateralized Debt Obligations & Structured Finance (2003), Structured Finance & Collateralized Debt Obligations (2008), and Dear Mr. Buffett: What an Investor Learns 1,269 Miles from Wall Street (2009).
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Arianna Huffington’s new book, Third World America: How Our Politicians are Abandoning the Middle Class and Betraying the American Dream, paints a grim picture of the State of the Union:
“Every day, Americans, faced with layoffs and tough economic times, are forced to use their credit cards to pay for essentials such as food, housing, and medical care—the costs of which continue to escalate. But, as their debt rises, they find it harder to keep up with their payments. When they don’t, banks, trying to offset losses in other areas, turn around, hike interest rates, and impose all manner of fees and penalties…”
Third World America, P. 77.
Our mediocre grammar school and high school educational system continues its downward slide. The Great Recession is squeezing school budgets. We are failing our children, our most important resource of all.
In 2009, the American Society of Civil Engineers gave the nation’s infrastructure a near failing D rating:
“Flip on a light switch, and you are tapping into a seriously overtaxed electrical grid. Go to the sink, and your tap water may be coming to you through pipes built during the Civil War. Take a drive, and pass over pothole-filled roads and cross-if-you-dare bridges. The evidence of decay is all around us.” P. 95.
The over-hyped American Recovery and Reinvestment Act of 2009 earmarked only $72 billion of the $787 billion appropriation of taxpayer dollars to projects to improve the country’s infrastructure.
Meanwhile, multi-national corporations avoid taxes, sheltering $700 billion in foreign earnings to end up with a measly $16 billion (2.3%) tax bill. GM is among those companies, yet it took almost a half billion dollars in bailout loans. Boeing and KBR Halliburton are among the defense contractors that avoid taxes, while enjoying government contracts worth tens of billions.
Banks (not Fannie and Freddie) Crippled the Housing Market
Fannie and Freddie do not make loans. They purchase mortgage loans and earn fees for guaranteeing payments on the loans. According to the Mortgage Bankers Association, in 2006, Fannie and Freddie accounted for 33% of total mortgage backed securities issuance. In the first half of 2010, they accounted for around 64% of new issuance. They were forced to pick up the slack and buy more when Wall Street’s private label securitization Ponzi scheme blew up.
Fannie and Freddie are Wall Street’s dumping ground. They would have had problems on their own, but their problems would not have been close to their current scale, and they did not create the housing bubble.
Congress twisted arms to make Fannie and Freddie buy more than $300 billion of phony “AAA” rated mortgage-backed securities from banks, not counting loans that didn’t meet their stated requirements. Today Fannie and Freddie want banks to repurchase tens of billions of these loans, since they fail to meet representations and warranties, and the banks are fighting this obligation.
Top subprime lenders included Wells Fargo; Countrywide, purchased by Bank of America; Washington Mutual, now part of JPMorgan Chase; CitiMortgage, part of Citigroup; First Franklin (now closed), purchased by Merrill Lynch, which was purchased by Bank of America; ChaseHome Finance, JPMorgan Chase; Ownit, partly owned by Merrill Lynch, which was later purchased by Bank of America; and EMC, part of Bear Stearns, which was purchased by JPMorgan Chase. Most of the rest depended on massive loans from Wall Street. Many of these lenders were sued by states for fraud and paid billions in settlements.
The Aug Nat’l Assoc of Home Builders index was 13, 2 pts below expectations, down from 14 in June and at the lowest since March ’09 when it was at 9. Both Present conditions and the Future outlook fell while Prospective Buyers Traffic remained unchanged at a depressed 10. In particular, buyers traffic in the West, the area with the highest amount of foreclosures and thus greatest competition for the builders, fell 1 pt to 8, just off the record low of 4 in Jan ’09 and down from 19 back in May when builders mistakenly thought momentum would continue after the April 30th expiration of the home buying tax credit. What the figure today shows, again, is that low mortgage rates don’t matter in driving purchase decisions as “builders are expressing the same concerns that they are hearing from consumers right now, particularly the sense that the overall economy and job market aren’t gaining any traction,” said the NAHB Chairman.
"I sincerely believe, with you, that banking establishments are more dangerous than standing armies; and that the principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale." -Thomas Jefferson (letter to John Taylor in 1816)
After 3 quarters in a row that averaged just 1.2%, Q4 GDP grew 2.8%, a touch below expectations of 3.0% BUT Nominal GDP grew well below forecasts. Because the price deflator was up just .4% vs the estimate of 1.9%, Nominal GDP was up 3.2% vs the estimate of 4.9%. Personal Consumption rose 2.0% vs the forecast of 2.4%. Fixed Investment rose 3.3% helped by a 5.2% increase in equipment and software spending and residential construction rose by 10.9%. Trade was a slight drag on GDP growth and government spending was as well led by a 12.5% decline on national...
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