$1 TRILLION Mortgage Bailout

In a very serious effort to save the American economy from outright collapse the federal government wants to write a blank check to all of the good old boys in banking and George W. Bush. Why the hell not? We could put California up on Ebay to pay for it and I bet we might just have a few bucks left over to go to McDonalds for lunch.

What angers me about this whole situation was the deliberate melt down of serious oversight of the financial markets by the federal government. George Bush and the Congress that let him ride for free will go down as the most destructive President to our economy in our nations history! Thanks W!

Over at Politico they have this on the $1 Trillion Dollar bailout…

Congressional leaders said after meeting Thursday evening with Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke that as much as $1 trillion could be needed to avoid an imminent meltdown of the U.S. financial system.

Paulson announced plans Friday morning for a "bold approach" that will cost hundreds of billions of dollars. At a news conference at Treasury headquarters, he called for a "temporary asset relief program" to take bad mortgages off the books of the nation's financial institutions. Congressional leaders had left Washington on Friday, but Paulson planned to confer with them over the weekend.

"We're talking hundreds of billions," Paulson told reporters. "This needs to be big enough to make a real difference and get to the heart of the problem." - Politico

Let there be no doubts on this financial disaster, John McCain is not walking away from this bailout squeaky clean. While some Senators were screaming for regulation even two and four years ago, Maverick was pushing for absolutely no regulation from the Federal Government. With John McCain fighting for less oversight he was in fact enabling the people in the financial markets to recklessly loan out money to people that could never afford to pay it back. But McCain still saw no problem with that issue till this week when he flip flopped on the bailouts needed from the Federal Government to save not just a few banks but dozens.

If you look at the facts then you can clearly see who bares responsibility here and it isn’t the SEC Chairman Cox! Going back to March of 2008, not that long ago really, Politico had this to say on Phil Gramm aka the Mavericks Campaign General and finance guru…

The general co-chairman of John McCain’s presidential campaign, former Sen. Phil Gramm (R-Texas), led the charge in 1999 to repeal a Depression-era banking regulation law that Democrat Barack Obama claimed on Thursday contributed significantly to today’s economic turmoil.

“A regulatory structure set up for banks in the 1930s needed to change because the nature of business had changed,” the Illinois senator running for president said in a New York economic speech. “But by the time [it] was repealed in 1999, the $300 million lobbying effort that drove deregulation was more about facilitating mergers than creating an efficient regulatory framework.”

Gramm’s role in the swift and dramatic recent restructuring of the nation’s investment houses and practices didn’t stop there.

A year after the Gramm-Leach-Bliley Act repealed the old regulations, Swiss Bank UBS gobbled up brokerage house Paine Weber. Two years later, Gramm settled in as a vice chairman of UBS’s new investment banking arm.

Later, he became a major player in its government affairs operation. According to federal lobbying disclosure records, Gramm lobbied Congress, the Federal Reserve and the Treasury Department about banking and mortgage issues in 2005 and 2006.

During those years, the mortgage industry pressed Congress to roll back strong state rules that sought to stem the rise of predatory tactics used by lenders and brokers to place homeowners in high-cost mortgages.

For his work, Gramm and two other lobbyists collected $750,000 in fees from UBS’s American subsidiary. In the past year, UBS has written down more than $18 billion in exposure to subprime loans and other risky securities and is considering cutting as many as 8,000 jobs. - Politico

I just want to be clear on this issue, John McCain is going to reform the banking system and Wall Street by taking advice from one of the people to blame for the crisis? Sorry, not buying that!

Don't stand there telling the people that you are going to clean up this mess when you Senator McCain and your best buddy for life Phil Gramm were more than complacent for this massive and very costly mess. This isn't even funny, how can McCain face the American people and claim total innocence and he knows how to fix it. To late Senator McCain, the damage you have done is now complete.

Papamoka

Housing Bubble Burst!

With the never ending boom in housing foreclosures comes the reality of what the biggest players in the bust did wrong or were victim of. Owning a home is the biggest goal of every up and coming generation and the market that served that dream ripped many of those same people off. While the President gave the green light to lenders to have a “Free Market” he also enabled them to run wild without care as to whom would get burned down the road.

Buying a home knows no political philosophy when the lender tells you can afford the mortgage. Provided you do not plan to eat in five or so years. Small print, really small print.

The mortgage industry has become a process the application production line and the ones that have to face the music are the people that were just passed on through the process. Raise your hand if you know five or more people that you for one know should never have qualified for a home loan?

With the enticement of home ownership, the lenders sold the people a bag of goods with a self destruct button on it several years later. Over at MSNBC they have this piece on the victims great loan options for capturing the American dream…

The plain old adjustable-rate mortgage spells trouble enough. But three high-risk loans are causing most of the trouble:

Teaser ARM. This loan features an alluring initial period of very low interest, around 1% to 2%, which later resets to market rates. About 1.4 million borrowers will be jolted back to reality in the next two to three years as their introductory periods expire. Payments on a $200,000 loan at 2% are about $725 a month; at 7%, they're $1,340.

Subprime ARM. Nearly half of loans due to reset are aimed at low-income people, minorities and people with bad credit -- folks who can't or just assume they can't get a bank loan at a reasonable rate. Many are in a shaky financial position to begin with and so are in greater danger of defaulting. Subprime (also called nonprime) ARMs start high -- 7% or more -- and go higher. And higher. They often feature a fixed, lower-rate introductory period. But when that ends, it's "just the old-fashioned squeezarooni," Cagan says.

Option ARM. This is the real killer. It gives homeowners the choice each month of paying the principal and interest, just the interest or an even-smaller minimum amount. Every month you pay the minimum, you're deeper and deeper in the red. And up to 80% of option-ARM buyers pay only the minimum, according to Fitch Ratings. Because the minimum payment doesn't cover the monthly interest, the deferred interest is added to the loan balance. After the loan balance grows to a certain point, the lender will demand that you start paying the full principal and interest -- on your now-bigger loan. - MSNBC

This is not a case of predatory lending by any sense of the word. This is a case of corporate gluttony. Make the quickest amount of cash as fast and furious as you can and let the people holding the loans worry about it later. Well, it seems as if the people holding the bag later is us. How does an economy survive when the fundamental basis of the economy is housing and that goes bust?

You can not by any means blame the borrowers of all of the snake oil options that the lending industry presented to them. Our government looked the other way. Our leaders looked the other way because a dollar was to be made by friends of friends and the checks cleared over at campaign headquarters. Tom Delay and Nancy Pelosi are just as guilty in this crisis because nobody said boo! Neither of them will here your screams for help when you loose your house to the jacked up call of your loans terms.

I’m sure that you have heard or seen the radio commercials where President Bush has authorized the refinancing of your loan if it met certain terms. Think again, if you could not afford the house to begin with, could you afford it now with a refinance?

Isn’t politics wonderful. They cut your throat and make you look forward to cleaning up the blood.

Papamoka

Cross posted at Bring IT ON!