…and Who They’ve Decided to Help (2)

El Presidente‘s new “stimulus package” and the Democratic roll-over version of same is theoretically meant to stimulate the economy by giving money to people who really need it and will spend it on basic necessities to keep the economy humming. These are the people who haven’t seen a raise in 25 years or have been out of work, yes? Well, no, not exactly.

On Jan. 24, House leaders and the White House announced a preliminary deal that included stipends for all workers and breaks for business, but no money for extended unemployment or food-stamp assistance and no mention of permanent tax changes.

So who’s getting this bail out besides the banks? Guess what George W Bush’s idea of a “needy” consumer who deserves aid might be. Yup, you guessed it: the near-rich.

Elizabeth and Ben Kilgore are back in the real estate market. All it took was a little-publicized section of the economic stimulus package President Bush signed into law last week that lowered the borrowing cost of buying a more expensive home.

***

[I]f the limit on loans backed by a government-backed housing finance entity like Fannie Mae is raised from $417,000 to the full $729,750 she has been hearing about, Ms. Kilgore said, “we will be able to get a 30-year fixed mortgage for less than what we’re paying now plus our homeowner’s dues.”

Mr George “Silver-Spoon” Bush is less concerned with the people about to lose their homes (he’s offered virtually nothing to help them) than he is with making sure the well-off don’t have to scrimp and that they get a good deal on that Big New McMansion they’ve got their eye on. God forbid they should get stuck with a (yecch!) condo. *shudder*

Three years ago, when they bought their first home, they resigned themselves to buying a condominium because it meant taking out a mortgage they knew they could manage.

“This will push us into a price range that’s now financially possible,” said Ms. Kilgore, a real estate agent in Marin County.

Yay! The Kilgores are now Republican for life. Screw the rest of the country. THEY GOT THEIRS! Eyes on the prize, people.

The temporary change in the loan limits is not about to revive the housing market on its own. But in some of the higher-priced regions of the country that have been hit hardest by the flagging real estate market, it could make a big difference. For if anything is going to breathe new life into the local housing economy in places like the San Francisco Bay Area, San Diego, Washington and Boston, it is home buyers emboldened by the prospect of larger loans at lower interest rates.

(emphasis added)

There you go. Things are so bad the upscale markets are starting to weaken, and what does Silver Spoon key on? Hint: NOT the people on marginal incomes who got royally reamed by real estate scam artists and the banks who expected to make fortunes on their predatory practices. No sir. No relief for them. And no relief for housing markets in areas where they’re imploding because wages are low (the South, for instance). No no. We’re only concerned about the “flagging real estate market” in “higher-priced regions”.

Priorities, people. Priorities.

Daniel Billett, a mortgage broker in Seattle, where homes in the downtown area sell for a median price of around $400,000, said that he, like dozens of people he knows, is poised to refinance an existing jumbo loan at a lower interest rate.

“As soon as the loan limits are implemented and lenders are accepting applications. I’ll be the first in line,” said Mr. Billett, whose company, Response Mortgage Services, has been receiving a steady stream of inquiries from clients in recent weeks. “I’m going to save hundreds, and I mean hundreds, of dollars every month on my current jumbo loan, by switching to a conventional loan.”

That’s who Silver Spoon cares about. Not you. Are we clear?

How the Mortgage Crisis Got to be a Crisis….(1)

There’s a certain irony in the mortgaghe crisis, and a certain justice, though that justice is about to become, as always, injustice in order to protect the Usual Suspects. The ironic justice of it was put succinctly today by one Edmund Andrews in one of the Grey Lady’s patented business stories. Whether he meant to or not is another question.

Over the last two decades, few industries have lobbied more ferociously or effectively than banks to get the government out of its business and to obtain freer rein for “financial innovation.”

But as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives for an epic government rescue plan is suddenly coming into fashion.

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

I guess he did.

Yes, it’s that old Round Robin of Yesteryear:

Deregulation -> Speculation -> Collapse -> Govt Bail Out

I know. You said that would happen when the Dereg Boys came around selling their snake oil with high-falutin’ promises and their fingers hovering bare inches from the pocket you keep your money in. And you were right. So was I. Who could have predicted that business would use deregulation as an excuse to bring back all the old scams (along with a few new ones) that created the last economic collapse?

You could. So could I. In fact, WE DID.

Who could have predicted that when the shit hit the fan and the greed, the wild speculating, the lying, false annual reports, phony accounting tricks, and outright scamming of both customers and their own investors threatened to bring down the whole House O’ Cards, the very same con artists who’d created the mess would be banging on the Treasury’s doors with both fists and demanding our tax money, screaming, “Save us! Save us!”

Well, you could have. So could I. In fact, WE BOTH DID.

Despite our predictions (pretty easy, not-too-hard-to-figure-out kind of predictions, sort of like, you know, predicting that the sun will rise in the east), y’all just went ahead and listened to the Siren Song of Greed thinking they (The Great They) was gonna make y’all rich. Despite many warnings, signs, and signals that what they wuz gonna do wuz make theirselfs rich by skimming your money, y’all went ahead and decided that De-regulation wuz a Good Thang. And now they’re gonna make you – all of us – pay through the goddamn nose to save their sorry asses.

See, E Andrews misses something kind of key.

Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

In practice, taxpayers would almost certainly view such a move as a bailout. If lawmakers and the Bush administration agreed to this step, it could be on a scale similar to the government’s $200 billion bailout of the savings and loan industry in the 1990s.

(emphasis added)

Not really. Unfortunately, more than $$$200BIL$$$ has been thrown at the banks to solve this problem already, more than half from the govt and it ain’t done shit except buy the investor class and the financial class a li’l more time before it all caves in, like propping up a sagging, rotten roof with toothpicks – A LOT of toothpicks. Another $200BIL$$$ wouldn’t fix it, either, but if such a package does get aimed at aiding the borrowers (the victims) rather than the lenders (or “perps”), it would actually do more to limit the damage than the so-far followed policy of having banks and govts “lend” $$$BILLIONS$$$ to, you know, each other.

It would mostly benefit banks and Wall Street firms that earned huge fees by packaging trillions of dollars in risky mortgages, often without documenting the incomes of borrowers and often turning a blind eye to clear fraud by borrowers or mortgage brokers.

A rescue would also create a “moral hazard,” many experts contend, by encouraging banks…to take outsize risks in the future, in the expectation of another government bailout if things go wrong again.

If the government pays too much for the mortgages or the market declines even more than it has already, Washington — read, taxpayers — could be stuck with hundreds of billions of dollars in defaulted loans.

Uh, yeah. And where have we heard that before?

Oh yeah: every time deregulation goes smash, here come the perps and the con men and the bankers and their lobbyists with their hands out.

Will we EVER, you know, learn? These people haven’t changed since Cato was a Roman slumlord. Enough is never enough and they don’t care who pays for their folly and greed as long as it isn’t them. (Which means it’s always, you know, us.) Can we just stop believing their lies now, please? Pretty please?

Oy.

Mass Gov Proposes State Take-Over of Municipal Pension Funds

When Duval Patrick was running for Mass Gov, he kept saying he was something new and different and making promises nobody expected him to keep. One of those promises was to make sure that other cities and towns got more of the state money the legislature had been saving for Boston. We didn’t think he’d ever get away with that even if he meant it.

We’re finding out how wrong we were.

Foreclosure filings up 70 percent in 2006

We knew this was coming, didn’t we?

Petitions to foreclose on Massachusetts homeowners rose nearly 70 percent in 2006, and the number of distressed properties that went to auction increased 46 percent, a report said today.

Wal-Mart (ahem) Expands? (Updated)

If this isn’t the be-all, end-all, last-word killer argument for finally dumping deregulation, I don’t know what is: Wal-Mart wants to become *cough* a bank.

The federal agency that insures bank deposits is expected to decide this week whether Wal-Mart Stores can move ahead with its plan to open a bank.

Wal-Mart critics want the Federal Deposit Insurance Corp.’s board, which meets Wednesday, to deny the retailer’s application for a type of bank known as an industrial loan company, or ILC.

Bush Edict Lets Banks Off the Hook

Endangering Community Development

Published: NYT, August 21, 2004

The Bush administration, which has already hobbled programs that provide housing subsidies for the poor, is undermining the Community Reinvestment Act, the most successful community revitalization program in the nation’s history. The act requires banks to lend, invest and provide banking services to poor communities. So far, it has made more than $1.5 trillion available, much of it to developers and nonprofit groups that build affordable housing for the elderly and disabled people, as well as to medical clinics and other projects that would never get built if they were left to the private sector.

Thoughtful critics in the banking community have a point when they argue that the program needs updating and simplification, so that investments are targeted more effectively and banks have less difficulty complying with the act. But two of the federal agencies that oversee the banking industry have proposed a drastic change that could allow more than a thousand banks to back away from their community development obligations, leaving consumers in many states with worse banking services, and the communities themselves devoid of badly needed development projects.

The proposals are aimed at reducing the regulation of smaller banks, which have always thought that the return on community investments is too small and that the administrative costs of complying with the act are too high. The current law requires large banks to be evaluated on what is commonly known as the “three-part test”: how they lend, invest and provide services in their communities. Small banks – those with assets of $250 million or less – are evaluated on a less stringent basis. But under new rules promulgated by the Office of Thrift Supervision, which oversees savings and loan associations, those more relaxed standards would apply to S.& L.’s with assets up to $1 billion.

The Federal Deposit Insurance Corporation, which oversees thousands of banks, is proposing the same adjustment. The government should update the regulations to make it simpler for banks to comply. Nobody likes red tape. But the Bush administration has a way of presenting a major policy change as a minor effort to tidy up cumbersome rules. Banks should not be allowed to jettison community reinvestment responsibilities – which occupy a tiny fraction of banking assets – in the quest for profit. If these new regulations are allowed to stand, the loss of C.R.A.-driven investments could be significant in some states, like Alabama, Florida, Idaho and New Hampshire. Communities could eventually find themselves back in the dark ages of redlining and financial isolation.