WASHINGTON - A massive foreclosure rescue bill cleared a key Senate test Tuesday by an overwhelming margin, with Democrats and Republicans both eager to claim election-year credit for helping hard-pressed homeowners.
The mortgage aid plan would let the Federal Housing Administration back $300 billion in new, cheaper home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for government-insured, fixed-rate loans.
An 83-9 vote put the plan on track for Senate passage as early as Wednesday, but President Bush is threatening a veto, and Democrats are fighting each other over key details. Those challenges will probably delay any final deal until mid-July.
The bill advanced as separate reports underscored rising economic anxiety: Consumer confidence slid to its lowest level in more than 16 years, and closely watched indices showed a continuing decline in home values.
http://news.yahoo.com/s/ap/20080624/ap_on_go_co/congress_housing;_ylt=A0...
This is NOT a "housing rescue". It's the federal government loading up with mortgage losses from high-stakes gamblers called retail and investment banks. They want to steal $300 billion of YOUR MONEY and cover the banks that let people borrow too much money (largely to try to flip houses and condos).
If you are "too financially risky to qualify for government-insured, fixed-rate loans", THEN YOU SHOULDN'T HAVE A MORTGAGE. Bother to save money for a change and come back to the mortgage table with a much larger down payment.
There's no real money available to cover $300B in bad financial bets, on top of the already massively expensive war machine in the Middle East.
And the funny thing is that house and condo prices will continue to slide downward ... but Dodd's buddies will be covered, which was the only point of this matter.
Moves like this are ensuring we're going to have a deeper or longer Great Depression. It's 1929 right now. 1933-36 will be a LOT worse. Once the Prez and Congress are safely elected or re-elected, then the real state of the nation will be let out into the open.
This is very scary . The 95 % of us who are paying are mortgages now have to cover for those who jumped in too deep
Let the housing system collapse and take more than just us here in the U.S.?
The problem is global and is more than just some that over bought. It is part of the cycle that we know occurs.
We can afford most anything, print more money, raise the debt ceiling and off we go.
And the party of smaller government and more freedom is part of the plan to bail out people. How could a party in the U.S. simply state to us, sorry, your problem you fix it.
When after all both the party's created the problem.
that Bank shareholders take the hit. Why are financial institutions still paying the dividends they are? Why aren't more banks motivated to renegotiate the loans without goverment prompting? Foreclosure is very expensive. How many Senators who voted for this bill got sweetheart loans not avaliable to the general public?
Because they are in the business of managing monies and making money but, we have seen that many of the institutions will try and make money by hook or crook, and after all the bottom line is what is important and if some people loose and the institutions win, the game is still on.
Then come the calls for government intervention and then come the calls for no intervention and let the chips fail where they may and if some in the public loose, well too bad seems to unspoken sentiment.
Some people have been swept up in the downturn in the country, job loss, medical problems, etc., and did not take part in the zeal to buy a house they could not afford.
"The Federal Reserve has encouraged some banks to cut dividend payments to preserve money for lending, Eric Rosengren, president of the Federal Reserve Bank of Boston, said yesterday.
more stories like this
Such cuts mean shareholders receive less money. But reduced profits and increased expenses have forced some banks into a choice between using money to pay shareholders or to make loans.
Rosengren said the Fed was concerned that a reduction in lending could damage the struggling economy.
"We are encouraging institutions to take a look at their situation, and where appropriate to either reduce their dividends or cut their dividends," Rosengren said during a meeting with Globe reporters and editors. "That's one way to make sure that they retain more capital and that means you don't have to shrink as much."
http://www.boston.com/business/articles/2008/04/16/fed_favors_loans_over...
One of the things happening now, with the help of the fed, is that banks are borrowing money at low rates and instead of lending they are buying government securities and pocketing the difference.
Why not?
They are in business to make money.
Deregulation was the call to action, and now there is call for regulation in some quarters and some want nothing at all, just let what happens, happen.
"Over the past 20 years the restrictions imposed by Glass-Steagall have been gradually relaxed under pressure from the banks, which sought more profitable outlets for their capital, especially in the booming stock market, and which complained that foreign competitors suffered no such limitations to their financial operations. In 1990 the Federal Reserve Board first permitted a bank (J.P. Morgan) to sell stock through a subsidiary, although stock market operations were limited to 10 percent of the company's total revenue. In 1996 this ceiling was lifted to 25 percent. Now it will be abolished."
http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml
I'll tell you why. It's because the banks in question have PUBLIC CHARTERS. And we don't charter banks (i.e. authorize them to create money in our name) to steal money from us.
That's why.
But it's all going pear-shaped. News items are now suggesting that the "lending" (read: currency dilution) from the Federal Reserve is still going on strong with the institutions historically called "investment banks", whereas the lending to the retail banks is dropping off. Those investment banks (like Bear Sterns -- ring any bells?) are clearly making even larger bets on commodities, like ... well, here's one you may have heard of: OIL.
Literally, the money authority of our government is being completely subverted RIGHT IN FRONT OF US, and it's being used to impoverish us.
It should be that a publicly-chartered bank had to at least keep social good in mind when making loans and setting accounts policies. Any bank that didn't like those social aspects was perfectly free to get out of the Fed system, stop being a chartered institution, and become a private bank. There ARE such banks in the USA. But that means the Federal Reserve can't jump in and cover your bad bets.
Cake, and eating it.
Why sure.
Who wanted the banks to be free from regulation and make more money?
"While Democratic and Republican congressmen and industry lobbyists claimed that deregulation would spark competition and improve services to consumers, the same claims have proven bogus in the case of telecommunications, airlines and other industries freed from federal regulations. Consumer groups noted that since the passage of a 1994 banking deregulation bill which permitted bank holding companies to operate in more than one state, both checking fees and ATM fees have risen sharply."
"This comment underscores the greatest irony in the banking deregulation bill. Legislation first adopted to save American capitalism from the consequences of the 1929 Wall Street Crash is being abolished just at the point where the conditions are emerging for an even greater speculative financial collapse. The enormous volatility in the stock exchange in recent months has been accompanied by repeated warnings that stocks are grossly overvalued, with some computer and Internet stocks selling at prices 100 times earnings or even greater."
http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml
"Literally, the money authority of our government is being completely subverted RIGHT IN FRONT OF US, and it's being used to impoverish us."
Yes, yes it is, all with the help of Congress.
"It should be that a publicly-chartered bank had to at least keep social good in mind when making loans and setting accounts policies."
Stands in the way of making more money.
Being a good lender and business is of ye olden days, now, make more and more any way ya can.
Can we regulate social behavior with laws and regs?
During which administration the idea of the Adjustable Rate Mortgages was hatched and put into play?
"The bill, whose full title was "An Act to revitalize the housing industry by strengthening the financial stability of home mortgage lending institutions and ensuring the availability of home mortgage loans," was a Reagan Administration initiative.[2]"
http://en.wikipedia.org/wiki/Garn_-_St_Germain_Depository_Institutions_A...
If the administration and policies are of smaller and less intrusive government, makes one wonder why then would an administration want to put in place laws and acts that intrude in the dealings of the banks and lenders, and is this case helped to us be where are now.
Why will the housing system collapse? The assets will still be there. Eventually the chain of ownership will resolve down to people who will finally drop the prices that will spark progressive buying. Cash buys will become common.
Housing affordability is not secured by higher prices being covered by more financing. Affordability is secured by LOWER PRICES. Sure, banks will fold and people will have to move around a bit due to the foreclosures, but eventually, people will land in all this housing (barring the historically huge excess we have now) once the prices fall to meet their capacity.
Printing more money is fully part of the problem, when you think about it. Inflating your way out of such a mess only works when WAGES also undergo the same inflation. But wages are stagnating, if anything. The money-printing itself was done by morons bidding up the prices of houses and condos well in excess of 2.5 times the income of one household earner.
In short, the prices of housing became greatly overheated. They must correct. All attempts to stop the correction will just delay the general malaise. Of course, the Congress will still try, since as we've seen with Dodd and Conrad, the Real Estate Industrial Complex (REIC) has strong and frankly illegal influence with all levels of government.
Japan underwent a similarly overheated property market, which crashed starting about 1990. They've YET to recover, even 18 years later ... and Japan is the land with generational mortgages! Is that what we want to see in the USA? Mortgages that have to be carried from generation to generation since the twits who took them didn't care about the purchase price?
I welcome this crash since despite all my advice, people signed for larger and larger mortgages than rationality demanded. The sooner banks take their medicine, the sooner we can all get back to more rational economics. The shareholders in the banks just can't explain to me why they stuck it out for so long while their invested businesses took such plainly stupid and frankly criminal risks. Since they can't justify their investments, I encourage their losses. After all, you don't see rational people investing in actual snake oil, do you?
Sure we do.
People invest in all sorts of things.
People make handsome money advising people to invest in this or that and when the house of cards falls, don't blame the advisor, he or she was just trying to make money.
Blame the person who listened to the advise or read the claims, all shouted in the best Billy May's voice, IT'S A GREAT DEAL! BUY NOW!
We seem to have lost the motto of living within our means.