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Here is your open thread for Monday February 18th, 2013. You may post random links and off-topic discussions here. Also, if you have an idea or a topic you’d like to see covered in an article, please make it known.
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Keeping in mind that profits from the Fed, after some dilution, make their way to the US Treasury, it might be interesting to know who has decided (in secret) that the interests of the Bank of America shareholders are more important than helping physically and psychologically maimed veterans. Shame on you, President Obama! Shame on you!
Don’t Blink, or You’ll Miss Another Bailout
“Here’s the skinny: Late last Wednesday, the New York Fed said in a court filing that in July it had released Bank of America from all legal claims arising from losses in some mortgage-backed securities the Fed received when the government bailed out the American International Group in 2008. One surprise in the filing, which was part of a case brought by A.I.G., was that the New York Fed let Bank of America off the hook even as A.I.G. was seeking to recover $7 billion in losses on those very mortgage securities.
It gets better.
What did the New York Fed get from Bank of America in this settlement? Some $43 million, it seems, from a small dispute the New York Fed had with the bank on two of the mortgage securities. At the same time, and for no compensation, it released Bank of America from all other legal claims.”
http://www.nytimes.com/2013/02/17/business/dont-blink-or-youll-miss-another-bank-bailout.html?pagewanted=1&_r=2&ref=business&
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RE: Blurtman @ 1 – I don’t like BOA at all, but when they’re brought up in this context I wonder how much of the issue pertains to Countrywide loans. The government really pressured BOA to buy CW, so it does seem a bit unfair to then sue them for what CW had done (even though technically that did remain a possibility–the purchase didn’t eliminate the liabilities).
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RE: Kary L. Krismer @ 2 – Unfair? Please.
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RE: Blurtman @ 3 – Yes, unfair.
Government: Please buy CW–we really need you to buy CW to help the economy.
BOA: No, we don’t want to.
Government: But it’s really necessary. Things are bad right now. CW is too big to fail.
BOA: Oh, okay.
Government: Good. Now that that is done, you owe us money for what CW did prior to the time you owned them. Give us more money than what you agreed to pay.
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RE: Kary L. Krismer @ 4 – It was Bank of America’s decision, ultimately.
Government: Please buy CW–we really need you to buy CW to help the economy.
BOA: No, we don’t want to.
Government: But it’s really necessary. Things are bad right now. CW is too big to fail.
BOA: Sorry, but it is full of toxic crap. Why don’t you claw back Mozillo’s ill gotten millions as a starter? And start recognizing losses as losses?
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RE: Blurtman @ 5 – Maybe a compromise? A clause in the sale requiring BOA to fire any CW employee that the government later finds was involved in wrongdoing. The idea of punishing a corporation, especially one that has basically already died, is sort of absurd. Go after the people who did bad things.
And again, this whole discussion is based on the assumption that most/all of what the government was complaining about was CW activity. To the extent it was BOA activity, I wouldn’t have a problem with it at all.
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RE: Blurtman @ 1 –
I don’t know what this has to do with Veterans.
What I do know is that the article is about Country Wide, and resolving those issues.
If you were to make the case that the Country Wide loans should be forgiven, and those who are paying the mortgages get something, great. You’re not making that case, you are haggling about the amounts of money to resolve the Country Wide loans that were sold as securities. All of that money is still sitting there somewhere in the accounting.
It has to be resolved to move on.
We need very strong banking regulation, there is no doubt about that. I look at this as a more of a fact-finding mission than anything else. Now that we know how the money was stolen, where it went, and how it can be recovered, our government should be able to set some common sense guidelines to ensure this doesn’t happen again.
I don’t see anything in these law suits that fixes anything. I only see that our government has much more to do to rein in banking.
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By Blurtman @ 5:
Government: We asked Lehman to help us out like this one time, but they refused. Now they’re gone. Wink, nudge.
Like Kary, I don’t like BofA, but they bought CW with a gun to their head. Their stock is down like 80%. Net,net, the government hasn’t done them any favors.
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I would add that a lot of what the government does in trying to punish is ineffective. The National Mortgage Settlement (state AGs), punishes the servicers by paying money to Peter that was damages for Paul. Also, much of what they have to give up is money they’re not very likely to receive–a large part of the punishment is illusory.
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Everyone is acting like it was impossible to wind down Countrywide. There were plenty of methods to do this. Off the top of my head: Bankrupt Countrywide and go after the C-level execs for clawbacks; the Feds could have taken over Countrywide like they did with GM or AIG.
BoA took them over because they saw a ripe client base and thought they understood the risks. They had 67 analysts spend a month investigating the takeover. It’s absurd to try to cast this as “BoA selflessly absorbed a massive unknown risk because Uncle Sam held a gun to their head”. BoA knew or should have known exactly what they were getting into.
And Lehman didn’t exactly collapse because they pissed off the US Government. There’s the little matter of holding onto some of their fraudulent mortgage-backed securities, repo 105 (a shady accounting practice allowing Lehman to magic up $50 billion dollars in non-existant money for their balance sheet), and counter-party exposure to Bear Stearns’ collapse.
People are trying to rewrite history before the ink is even dry.
As for Blurtman’s comment –
- I’m guessing that it’s related to Obama’s unresolved promise to aid veterans, but I don’t want to put words in Blurtman’s mouth.
RE: David Losh @ 7 – I am by no means an expert in prosecuting financial crimes, but Bill Black is, and numerous state Attorneys General are. They’ve been shouting from the rafters for a decade that these crimes are going unpunished, unprosecuted, and uninvestigated. Fruadulent MBS were not foisted on investors due to lack of laws, but lack of enforcement. Further wrist-slap fines of less than 1% of the profits on these scams will not resolve the situation.
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RE: Plymster @ 10 – I’m not saying it would have been impossible to wind down CW, only that the government pressured BOA. And no matter how much research BOA did in a month, there’s no way they could fully assess the situation in that time.
In any case, how would they possibly set a price in that scenario. I would be like in a house sale situation if the buyer and seller came to terms, but the buyer could just over the next four years demand inspection items be fixed. No buyer would agree to that, but that’s essentially what BOA signed up for.
I would also point out that BOA would presumably have been willing to pay more back then if they could some how buy clear of these claims. You would think that at a minimum the US government would have waived the claims. That would have made more sense for both parties.
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RE: Plymster @ 10 –
I think Elizabeth Warren made inroads last week: http://www.latimes.com/business/money/la-fi-mo-elizabeth-warren-bank-regulators-jail-20130218,0,4352717.story
The mess of BofA has to be cleared up, but as we move forward. New enforcement needs to go into place.
I agree, there may be more than enough laws to prosecute, but it would be cumbersome.
We need a fresh approach to banking to ensure it can’t get out of control the way that it did.
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RE: Plymster @ 10 – Right. In this day of cried for balanced spending, just think what perhaps a netted $1 billion would do for veterans’ care and rehab programs, educational programs, anti-poverty programs, etc. Instead, let’s just continue to bail out criminal leeches and their shareholders.
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RE: Plymster @ 10 –
That was a good link to Veteran Affairs. I was unaware of the backlog or how bad it was. I do know that many Veterans of the Iraq, and Afganistan wars are suffering. Many have unresolved issues about the war, and end up outside of the VA system to get relief.
What our government did to Viet Nam vets was one of the worst outrages, and only now they are settling Agent Orange claims?
The boots on the ground mentality is one of the reasons I prefer drones, and targeted kills. When we throw young people into a foriegn country with no real combat experience, against in many cases people who have been at war for decades, it creates a lot of trauma.
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By David Losh @ 12:
Breaking them up would be a good start. Totally eliminating interstate banks would also be good.
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RE: Kary L. Krismer @ 11 – RE: Plymster @ 10 –
I am also not saying it was impossible to wind down CW. However, there was a lot of concern about contagion at the time, and apparently someone thought it a bigger problem. It took more like 6 months to do that deal, and most people in the industry had heard that BofA didn’t want to go through with it well before the deal was finalized Lehman could have been saved cheaper than Citi, but, well, they just weren’t a team player.
I would agree that it is absurd to claim that someone did something “selflessly” because they “had a gun to their head”. That is a contradiction in terms, which is probably why I have never heard that argument before.
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RE: Kary L. Krismer @ 15 – Bring back Glass-Steagall
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RE: Blurtman @ 1 –
Although Kary’s argument concerning presure to buy CW doesn’t amount to a legal defense, it does probably have some equitable value among the power brokers. The financial world was scared chocolateless in 2008. When Lehman went BK the Brit’s froze the assets in GB and banks almost stopped paying each other to hold onto cash. CW probably didn’t have much outside the US, but the world financial system was on the brink of freezing up. CW alone probably wouldn’t have forzen the system, but a BK by AIG probably would have. Large US corporations were at risk of running out of operating capital if credit lines and bank accounts froze. Most of them would have survived, but small companies that run out of operating capital DIE a quick death when the money runs out and its not that easy to revive them once they’re dead. Once those jobs are gone, they don’t come back overnight and the spiral downward can quickly get out of control.
But that’s only half of the story. If I’m the lawyer for CW or a B of A or a trustee in bankruptcy and have to defend claims against CW or the bankruptcy estate for selling bad MBS’s, CDO’s etc. because the entity in bankruptcy knew or should have known that the underlying mortgages were truly liar loans, I’m going to bring fraud claims (which are non-dischargeable in the judgment debtors bankruptcy) against all the borrowers and all the mortgage brokers and other loan originators on all the potential liar loan bad mortgages in the MBS’s. B of A and CW would arguably have subrogation rights to the fraud claims even if after transferring the mortgages to the MBS’s they didn’t have a direct claim against the mortgage brokers and borrowers.
As a Bankruptcy Trustee IT’S MY JOB and my duty to the creditors and to the shareholders to pursue these claims if they may bring in more than they cost to pursue. Because fraud judgments aren’t dischargeable in bankruptcy, this equation would arguably include the ability to pursue the judgment debtor for at least 20 years with wage garnishments etc.
If I’m defending B of A against government lawsuits, I’m going to make sure that the government lawyers understand that B of A will making it rain chocolate for decades if they force us to file a bankruptcy or pay a huge settlement. So, do you want to accept my lowball offer, or do you want me to bring tens of thousands of fraud lawsuits against mortgage broker’s and defaulting borrowers all over the country. B of A will get default judgments against thousands of debtors who can’t afford to fight, and they’ll clog the courts for years with thousands of claims that are contested. It would cost B of A alot to employ the lawyers, but I think the lawyer’s and others involved in recovering assets in the Maddoff case are getting something like Six Hundred Million to recover assets. I can kick a lot of defaulting borrower ass for Six Hundred Million.
It’s your move. But before you fire the first shot, somebody might want to tell Bill Black that B of A probably isn’t holding the same cards that the S & L’s were in the 1990′s. Perhaps B or A’s potential claims were close enough to a risk of assured mutual destruction to rise to the level of a get out of jail free card.
Caveat: I don’t know anybody inside the negotiations between the banks and the government so I’m making up the argument set forth above. I don’t know that my suspicions set forth above are accurate. I’ve never seen the issue I described above discussed anywhere. But I am a lawyer who practiced at times in the area of commercial lending. If I were defending the banks, I would have researched and potentially used the above in negotiations. If anyone has better insight or information please feel free to educate me. The above is merely a theory, not a known fact. Please note that I’m aware that the statute of limitations on fraud claims is usually short, but I think it generally runs from discovery of the fraud and probably from the time B of A suffers the loss, and it’s possible that it might be extended based upon at least a couple of theories available to B of A.
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RE: One Eyed Man @ 18 – “…and banks almost stopped paying each other to hold onto cash.” Of course, you mean digital credits, not cash per se. Banks’ lack of transparency, corrupt ratings, and bankers’ knowledge of the crap on their books and the fraud game they were playing prevents them assigning digital credits to banks as messed up as they know their bank is? Please. Cue the violins. And what standing would BAC have to sue mortgage brokers, if BAC knew the loans were crap but kept buying, bundling and selling them like CitiBank did? Until the music stopped.
And if one buys your explanation of what is the equivalent of financial terrorism, that is,”If I blow up, I take the women and children with me” then let’s break up the TBTF banks. As the opposite is happening, and the TBTF banks are getting even bigger, your explanation of why the banks were bailed out must be wrong, for why would anyone allow such a design to get even more dangerous?
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RE: One Eyed Man @ 18 – I don’t think you’re saying this, but to be clear I wasn’t suggesting it was a legal defense. I’m just saying it seems unfair for the federal government to be pursuing BOA for CW issues.
In case no one has noticed, I don’t really like any politicians. The last one I liked is now dead–Norm Maleng (sp?). I bring him up because there is such a thing as prosecutorial discretion. Years ago someone had two or three guys break into his house, and the owner chased them off with a gun. The owner shot one of them in the testicle while he was trying to escape over the fence. Although clearly a case of golly fine shooting, it was also clearly not self-defense, Even so, Maleng didn’t bring any charges. It was clearly a crime, but I doubt few if any would call on the prosecutor to charge the homeowner.
I would also note that what I’m talking about would only apply to the federal government. The states and individuals would not be so affected by what my “fairness” position, nor absent possibly passing legislation would there by anything the federal government could do to affect such claims.
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By Blurtman @ 19:
LOL. It’s not just coincidental that the same administration allowing that is promoting the Affordable Healthcare Act as something that will save people money.
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On the topic of BOA, the NWMLS is currently warning/advising listing agents not to follow BOA’s advise on short sales. Apparently BOA was telling the listing agent to leave the listing active until BOA approved the short sale. The proper advice from BOA would have been to not give any advice, but the proper action for the listing agent would be to take the listing “Pending Short Sale” if they want to continue to solicit additional offers.
Hopefully this was a very short lived situation because any listing agent worth squat would have realized it was improper and contacted the NWMLS about the situation.
For those of you not familiar with changes to the NWMLS forms, the short sale form since at least August, 2011 has provided that the seller may solicit additional offers. Prior to that it was a choice on the form to be negotiated.
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What’s the price of fraud? $35 per instance.
So they have multiple employees on a conspiracy to commit mail and wire fraud charge, have the subsidiary CEO dead to rights, and she tried to cover it up.
I’m betting on zero jail time and and less than a $250k fine.
The next time you get a $101 ticket for not having your seatbelt buckled, cite this as to why that is “cruel and unusual punishment”.
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RE: Blurtman @ 19 –
Even Bill Black says the government agencies don’t have the money in the budget to fund a decent investigation of the legal claims against the banks, so how are you going to get the executive, much less the house republicans and the T-Party Toadies to pay for that, or to break up TBTF entities and further regulate the the Holliest of capitalist Grail’s euphemistically referred to as the free market. If you’re a politician you’ll be labelled as a leftist liberal who kills jobs and destroys the competitive advantage of American business.
What you call financial terrorism is what legal Orks would call legitimate bargaining leverage and is likely why 47 million is an acceptable settlement. There are numerous externalities to the calculus of the settlement that make the cost benefit analysis arguably unfair and unreasonable, but on a practical political level the social, economic and political costs mean that bad guys on all levels walk and the public accepts 47 million to avoid opening up the wounds on the financial phallus so that the seed of capital copulators will continue to trickle down their faces and provide them some minimal level of economic sustenance.
I’m not saying that you’re wrong Blurtman, only that the public and the politicians are co-dependents of the capitalist financial copulators. As F’d up as it is, its the American way of capital formation and its still the most successful and efficient system for economic growth in the world. Unfortuanately its the financial dog system. We’re all Wall Street’s doges, but if you kill Wall Street, you lose the nice car, the abundant food and energy, the pretty clothes and the nice abode they keep you in. America is the land of the consumer slut (both male and female alike). Capital formation and entrepreneurial spirit aren’t the relm of the altruistic. They feed off your needs and many of them will cheat if they can. But without them the whole pie will likely be smaller. If you’re a capitalist society, you have to accept that you sleep with the devil and try to keep one eye open and your back to the wall.
As to the mortgage brokers, just because the banks sold the fraudulent loans initiated by mortgage brokers to a third party doesn’t necessarily mean the banks will be prohibited from pursuing a claim against the mortgage broker who defrauded the bank. If the mortgage broker can prove that the bank was a co-conspirator at the time the loan was created he probably has a defense, but if the bank merely failed to do its due diligence through proper and thorough underwriting I think the bank could pursue a claim even if they commited fraud when they formed the MBS. In any event, for purposes of negotiating a settlement, its the ability to argue that your claim has merit and the threat to pursue a claim that provides you a chip to bargain with even if you might fail if you actually brought a claim. The leverage is in threatening to start a fight because generally everybody loses in a fight.
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RE: One Eyed Man @ 24 –
Investors have flocked to bonds and Treasuries for a reason. There is no capital formation in a lawless market. If the economy was doing so well with criminals at the helm, we would not have hordes of Wall Street analysts screeching about a bond bubble, and the stock market would not be so thinly traded.
Keep in mind the current recovery is built on $3 trillion of magicked money from the Fed ($30 trillion once reserve ratios are accounted for), and trillions in additional Federal debt.
As long as there is no trust in the market (not just between the banks, but among investors), there will be no recovery.
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RE: One Eyed Man @ 24 –
I would agree, but I would point out that those banks most likely to have also been involved are also probably gone. WAMU comes to mind, and that would raise similar issues to BOA and Countrywide, but there I would say Chase should not be able to use their acquisition of WAMU as a defense. Those individual mortgage brokers did not pressure Chase into buying WAMU, and also this would be a situation where the mortgage broker was using the situation as a defense, not as a hammer.
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I was trading BAC @ the time of this s-storm, and I believe BAC structured the CW deal, both legally and accounting-wise, so they could bankrupt it, if things went really to h*ll in a hand basket. So I think there is/was always that option if a lawsuit posed an existential threat.
I’m of the opinion that Kenny-Boy was the initial driving force behind both the CW & ML takeovers, but the Feds pushed them once they looked under the hood and got cold feet.
Lewis kept repeating CW’s ‘loan platform’ as the reason to buy CW. Both McColl & Lewis had lusted after ML for decades, so they had their beer goggles on.
I’ve never understood the hatred for BAC by the lefties.
BAC had ceased making subprimes in 2001 and their shareholders paid the price for it.
Ply – 1 month of DD isn’t very much.
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By banjo country @ 27:
That was my understanding as well, but that doesn’t change my fairness analysis.
My “hatred” of BOA just stems from the fact that they suck at being a bank if you’re a customer of theirs. They are incompetent and they make you stand in long lines just to see a teller.
Ignoring my post about short sale status above, BOA has actually been one of the better banks dealing with short sales.
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RE: One Eyed Man @ 18 –
You left out a big number in your theory, and that is the amount of the loan.
Underwater mortgages, much more than fraudulent borrowers, caused the Real Estate mortgage market to crash.
Banks didn’t due diligence anything. They made loans, sold the loans, and went on to the next one.
It made no difference who the borrower or mortgage broker was.
The banks draft the documents, and approve the loans. The banks have the right to challenge an appraisal, and they knew for sure those appraisals, with double digit appreciation, were bogus, but they didn’t care.
The banks had access to global financial conditions and were aware that these bogus loan amounts would never be returned.
This is the banks business we are trying to justify, but they did bad business with full knowledge.
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RE: One Eyed Man @ 24 – Too well stated and possibly reasonable. ;>)
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RE: One Eyed Man @ 24 – If there is a possibility of $7 billion in claims, and you have a 30% chance of prevailing, and the lawyers get half, that is still $1 billion to injured vets, Head Start, the NIH, you name it.
There is one major cost that is not quantitative, and that is the destruction of the belief of a fair justice system in the USA. For example, when all Americans know that we are throwing penny ante drug dealers in jail, but letting execs who have laundered billions for the drug cartels walk, it tells Americans that there is no law.
And the ridiculous excuses offered by Lanny Breuer, that we cannot assign criminal charges to the bank, HSBC, because it will bring down the financial system, of course is a pathetic dodge. It is an insulting excuse. Even if one believes this, how would jailing individual execs bring down the financial system? Why are we not bringing criminal charges against these individuals?
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RE: Blurtman @ 31 – The country’s drug laws have already taught millions that the law is an ass. I don’t think this mortgage thing will have that much more impact. ;-)
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You Bloggers Have Done a Wonderful Job Describing the Frustrations of Our Current Banking System
No wonder the very rich just hoard and hide all their money overseas [much of it untaxed BTW, ask Apple], they don’t trust ‘em either….
Boeing Strike Vote Today
I see the Everett Herald was more neutral, the Seattle Times made it almost a slamdunk strike authorization today….
http://seattletimes.com/html/businesstechnology/2019271248_speea27.html
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RE: Plymster @ 25 –
I agree with you to a certain extent, but in the words of Mikhail Kalashnikov, among others, “perfection is the enemy of good enough.” Our markets will never be a perfect and pure environment. Everything is relative. Our securities markets are probably the most transparent in the world. And our economy is stronger than Europe’s and probably stronger than most others with the exception of certain resource based economies and some emerging markets like China which appear to want to be like us.
Our markets have a certain level of corruption, but they are still the most transparent securities markets in the world. People who make the general comment that regulation is bad fail to see that a market is nothing but a set of regulations to establish rules and enforcement mechanisms to facilitate trade. There is no market without regulation. The rules and enforcement mechanism have to be strong enough to instill faith in the market place but also must not be so burdensome as to cost more than the benefits of the market place. That balance is not perfection where all miscreants are caught and convicted. It’s a level of regulation where the cost of regulation isn’t overly costly while detering enough impropriety to provide faith in the market place. Where that point of balance is will always be a debate with ever changing issues.
Trade allows for specialization and efficiencies thru economies of scale. Caplital formation and debt (money and terms providing for payment after delivery rather than barter) are essential to facilitate trade, specialization and economies of scale. If people want a growing economy they probably need fiat currency and robust capital markets. Deficit spending and QE may act like a short term shock absorber to stop downward economic acceleration, but they aren’t long term means for providing economic growth. At this point, they are at best a bridge allowing for GDP growth while we achieve deficit reduction over time.
Flooding the market place with money (fiat currency, QE, etc) is a false addition to GDP in the short term, in the sense that it creates an offsetting debt burden on future consumption. But to the extent that it results in a permanently higher level of production and consumption, the Keynsian would say that it can be used to stop a spiral into depression caused by lack of confidence and lack of demand.
The current level of US deficit spending is IMO unsustainable and foolish. I know that’s not a unique opinion, but I’ve had it since what I felt was the unreasonable debt spending of the Reagan Administration. Although our level of debt spending is foolish, it would also be foolish to immediately balance the budget “cold turkey” because the result would be an immediate contraction of several percent in GDP (5% reduction in federal spending is probably a 5% reduction in GDP) causing immediate recession and a potential immediate downward spiral to the economy. Staggered cuts a little like Simpson Bowles that cut about 1% of GDP (150 Billion) per year from federal spending for about 5 consecutive years would probably leave us with positive but small annual GDP growth each year while eventually bringing annual federal deficits back below the rate of GDP growth if not eliminating the annual deficits entirely.
If no one can agree on what to cut, I suggest that everyone’s ox gets gored until they are about 15% to 20% less than current spending after 5 years. If cuts of 1% per year are too big then make it 1/2% per year for a longer term but IMO we should do it despite the pain to be felt in military spending, medicare, welfare, government pensions, etc.
One could argue that as long as SSI is directly funded by FICA that it be balanced on its own, but any true tax reform should probably eliminate FICA and the income tax in favor of a consumption based tax (a national sales tax, even though its regressive) because that would put foreign imports on the same tax basis as domestic goods. The regressive nature of the sales tax would probably have to be offset by some form of government subsidy for the truly needy (an entitlement system) perhaps funded by a smaller vestigial income tax or property tax on the wealthiest citizens.
IMO that would be the best thing to do but we all know it won’t happen because so many people believe we would just end up with a sales tax and an income tax. I say where’s your capitalist spirit, no risk, no reward.
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On the “hidden inventory” front, I just noticed a Fannie Mae property go active today where the trustee’s sale was apparently 1/4/13. That’s not that much of a delay given the fact they don’t even have the right to possession for 15 days after the sale.
They are asking $70,000 more than the short sale listing price. I think they’re very high on price, but in this market . . ..
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RE: Blurtman @ 31 – Alternative answer, to the one I provided in post 32.
Do you really think the public is going to pay attention to an issue like this, when their focus instead is on an incredibly important killing in South Africa done by someone who had a mediocre performance in the Olympics? Get your priorities straight! ;-)
Edit: I forgot to mention Michelle Obama’s bangs. Also incredibly important.
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RE: Kary L. Krismer @ 36 – Yes, there are always these popular distractions (Fergie’s baby!!!!), but Average Joe’s that I talk to know something stinks to high heaven. It is that obvious.
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On a topic we’ve discussed here in the past, Senate Bill 5352, in addition to making a bunch of technical changes mainly pertaining to the use of the words “broker,” “agent,” and “firm” also makes it clear that the duties of an agent (broker) under the statute are statutory duties and replace any fiduciary duties agents might have.
This is probably consistent with the latest case law on the topic, but more clearly written.
http://apps.leg.wa.gov/documents/billdocs/2013-14/Pdf/Bills/Senate%20Bills/5352-S.pdf
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When the cattle rustlers bought off the sheriff, what did our forefathers do? They gave the russlers neck ties, and showed the sheriff who was the boss. The average, law abiding citizen. We used to worship that image in the USA. Perhaps we all became corrupted by the easy dollar, or perhaps it is a bit of “Don’t worry citizen, we may restore your wealth if you just cooperate.”
I am cheered to see the Come and Take It gun owners’ movement. I hope the government enacts some real objectionable legislation, something intolerable to these folks. Throw in a few high profile arrests, and who knows? (For the record, I am a confirmed pacifist and on the sidelines, and guns scare the crap out of me.) But if we are lucky, it will come down to the average citizen saying Enough! Hopefully peacefully.
http://www.youtube.com/watch?v=Wp_K8prLfso
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RE: Blurtman @ 39 –
OK, I’ve followed your train of thought on banking prosecution, and think you’re right, there should be justice, and we are long over due.
What Old One Eye just proposed was prosecuting the individual borrowers, and mortgage Brokers. That was a pretty popular diversion at the time of the crash. Let’s just blame liar loans rather than the appraisals far in excess of any reasonable value. Let’s give banks a pass for allowing loans that were based on bogus sales prices.
We still have the same problem today because the government stepped in to prop up those bogus loan values. It will take us decades to dig ourselves out of this amount of mortgage debt that isn’t secured by a sales price of the property.
So, now, who do we prosecute?
The Banksters for sure caused the problem, and the people in charge, the ones who allowed pricing to far outstrip value, should go to jail. Now prove it ever happened.
The problem is in the pricing of the properties compared to loan amount. It’s fraud to sell a rusty nail with a known value of zero for $100K in a blinded market, but you have to prove the value was a fraud.
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Can’t keep up with the pricing and the dearth of quality here on the east side. Unbelievable what is going pending and people asking for 2006/2007 prices.
Check out the predictions for 2013 on the Redfin Seattle Blog… here is a snippet:
You will be priced out forever, first time home owners, due to historical low interest rate as such chance is rare, almost not, in future! I procrastinated for 15 years (for a long time) to buy my first primary home and got it at 780k where as my friend bought a similar home 350k seven years before my purchase. Both homes are at 1.2 M now and my friend has new home putting the old on rental at $3500/month. Am I not priced out for ever compared to him? I learnt a hard lesson….
Me.. I just talked my landlord into not raising my rent for another 1.5 years.
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Please refresh my memory here. What kind of pressure did the government put on BAC to acquire CW? What kind of power did the government hold to ensure that this happened?
These days the government gets blamed for everything. They were getting blamed for putting pressure on lenders to make subprime loans Could those lenders have said “No, we’re not making subprime loans. We have a responsibilty to our shareholders to act conservatively, you know, like a bank?” Seems to me that they were very happy approving anybody with a pulse for a loan, in order to get that extra half a percentage in interest.
Fast forward a bit, what would the government have done if Bank of American had told them ” No, thanks. Countrywide is way too risky.”?
They might have thought it risky, and they might have considered pressure being applied, but at the same time, don’t you think they were doing a little happy dance at the prospect of buying a huge mortgage company at what they figured to be an enormous discount?
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RE: Ira Sacharoff @ 42 – Pressured might be a bit too strong of a term, but clearly the government didn’t want any more large entities to go under. For one thing, they wanted someone else to clean up the mess of each of the big banks and other financial entities that were failing. Encouraged might be a better term than pressured.
At the same time I think it would be fair to say BOA saw some benefits to buying CW. They possibly saw a lot of value just in their systems. I don’t follow BOA, so I don’t know how they did long term increasing their percentage of mortgage loans made as a result of that purchase.
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Researching this a bit further, maybe it was Merrill where BOA was really pressured. This is the second page of a three page article, but it get right into it.
http://www.theatlantic.com/magazine/archive/2009/09/the-final-days-of-merrill-lynch/307621/2/
I had totally forgotten that BOA bought Merrill.
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RE: Ira Sacharoff @ 42 –
C’mon Kay, Now who’s being naive? In fairness, if I’d only heard this after the fact, I’d be skeptical too. Also in fairness, the Fed is not simply the gub’mint. It is quasi-public, quasi-private. It is the bank’s bank, and also a key regulator, also the lender of last resort. The Fed decides if the bank is up to participating in this or that business, if it is sound or not, if it’s worthwhile to help the bank out of a jam, or let it hang in the wind, or if it’s time to force the issue. It’s not about a formal mechanism to compel an action. It’s about institutional memory. If BofA really wouldn’t play, the Fed could have pushed another of the few truly big players. And then, even without the CW problems, BofA would quite possibly not have been deemed worth saving.
RE: Kary L. Krismer @ 44 –
No; it was CW
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