mortgage bailout

Paul Krugman wasted no time responding to the claims by Megan McArdle and others that he was the spiritual father of the housing bubble.

No, Paul. We don't think you were on the grassy knoll. Maybe Arlen Specter might. He was the investigator for the Warren Commission. We'll check if you want..

Problem is, Paul, the charge here isn't about pulling the trigger. It's about inciting the riot. And Clusterstock pulled up abundant evidence the McArdle quote was not out of context and entirely consistent with your agenda in 2001 and 2002.   

Paul, we understand. We've all called things wrong. Jeez, even people here think I'm wrong for writing at Dow 7000 the market had yet to reach bottom.  And it didn't until 6500. But people still say I got it wrong. Oh, well.  Maybe a little humility might be a good thing here, too.  Guess they forget my calling the 2008 mortgage hurricane. Oh well.

Now Paul, it you want to hang Alan Greenspan for botching the execution of the proposed strategy, I'm all ears.  How the "Maestro" didn't realize low short term bond rates=low ARM mortgage rates=excess housing appreciation---well, maybe that's what happens when you stop looking at the war in the trenches. 

If you do that, I'll back off thehack  charge for awhile.

The bigger problem , Paul, is once again you are out urging that the economy be pumped up when the track record in 1999-99 and 2005-07 is the Fed and the Congress are completely unable to turn off the spigot before things overheat.  Why will this time be any different unless you think liberal Democrats are immune to the avoidance of short-term political pain?   

I'm actually glad Krugman is an economist. Had he been an engineer, he would still be telling operators of nuclear plants to pull out the control rods to gain added power even after what happened at Chernobyl.

I remember when Paris Hilton was the poster child of why we couldn't eliminate the death tax. Certaintly essential government services were more deserving of the Hilton fortune that a vapid party girl.  (The vapid party girl seemed to be adding to the family fortune herself and granddad plans to give most of his money to charities , but why lets facts get in the way of class warfare; ) 

Well, we now have a "face" of those poor downtrodden people facing foreclosure as a result of the economic crisis.

Victoria Gotti is about to lose her palatial Long Island mansion.  

GARDEN CITY, N.Y. (AP) -- Growing up Gotti never included the threat of foreclosure — until now.

That's just what Victoria Gotti, daughter of the "Dapper Don," faces as the latest member of the infamous family to be called into court......

Now, Victoria Gotti is in another court, fighting the threat of foreclosure on her Long Island mansion, the same house used in the "Growing Up Gotti" reality show.

"I'm never going to lose the house — trust me," the 46-year-old author-turned-reality TV star told reporters this week after a federal court hearing......

Now, an appeals court has ruled that JP Morgan Chase Bank should be allowed to seize the property because of nonpayment of a $700,000 loan.

Hey, Victoria, there's a term for this. It's just business.

We can't have celebrities renting fixer-upper's in Levitttown, now can we?

While the Gotti heiress may be an extreme example, there's no doubt that hundreds of thousands of high livers around the country are eagerly awaiting federal intervention to avoid giving up their mansions, vacation homes and McMansions.

And the highly touted foreclosure prevention efforts have, hmm, gotten off to a slow start.

There's $75 billion floating around out there for this and when it's all said and done, I suspect way more of it will be used to keep affluent and profligate people out of foreclosure than the needy who fell upon hard time. Of course, what do expect when the President himself was a middle aged Harvard law grad who maxed out his credit cards. 

And why is I think that Chris Dodd, owner of three separate marquee properties, is going to have a warm heart for poor distressed millionaires like Ms. Gotti.

It's time for some "ethical populism" in American soceity. Which means who don't tax the working stiff (or saddle him with government debt) to bail out the beautiful people who can't balance a checkbook.

It's past time for those sorts of people to experience a more authentic "reality show" of living within one's means. 

NEW YORK, April 27, 2009 (Reuters) - Bank of America Corp (BAC.N) on Monday discarded the Countrywide brand in its mortgage operations, a name now sullied by risky home loans, an FBI investigation, and the high pay of its former chief executive.

next....

HARTFORD, November 3, 2010 (Reuters) Connecticut on Tuesday discarded the Dodd name from its U.S. Senate operations, a name sullied by sweetheart mortgages, associations with rogue financiers, an ethics committee investigation and inattentiveness to the worst financial crisis in a generation.

We've read all about how much it helped to be a "Friend of Angelo" when one borrowed money from Countrywide Mortgage.

Even Chris Dodd, who swears he didn't get a sweetheart deal on his interest rates, admits he got "enhanced customer service". (We still haven;t seen what special notes were scraled on his loan documents, have we?)

Well, that's NOT what Dodd's own constituents get when they borrowed from Countrywide and fell behind on their payments. 

The Hitchcocks of Farmington, CT are living a horror movie befitting ole Alfred Hitchcok himself.

See, they bought a house from Mr. Hitchcok's siblings which has been in the family for generations. Then Mr. Hitchcock got sick, couldn't work, and now they can;t make the payments. No McMansion bought with a fake appraisal or bogus application. Just the ordinary hard luck story the mortgage business has dealt with since its inception.

So, Countrywide should've let them sell the house and accepted the proceeds and called the mortgage even.  Didn;t happen.

    Lenders and mortgage servicers say they have added staff to deal with short sales, but they are flooded with requests they must review, painstakingly. Susan Hitchcock said she learned her offer was one of 150 that sat on a desk at Countrywide for two months before it was looked at. 

Guess the Hitchcocks got  "unenchanced customer service".

So Countrywide instead of accepting an offer for $185,000 decided to spend thousands in legal fees to foreclose on the Hitchcocks...and the bid came in at $183,850.  Brilliant economic decision, guys

Having Chris Dodd as chairman of the Senate Banking Committee didn;t do the Hitchcocks any good, now did it?

What's worse from a policy standpoint is while we see "remedies" to the foreclosure problem which are ineffective like Dodd's 2008 initiatives, or have horrendoes moral hazard consequences like mortgage cramdowns; the simple, tried and true ways to deal with defaulted loans like short sales aren;t being implemented by banks even when they are TARP recipients.  

Maybe the solution to our economic woes might be simply giving ordinary folks the same "enhanced customer service" Senators get.  

A group of seemingly unrelated stories are actually linked. And once again it is bad news for Senator Chris Dodd (D- Countrywide)

See, he really IS the "Countrywide Senator" since he attracted a grand total of FIVE contributors this year from the state he claims to represent in the Senate.

Five donors. From a state with five congressional districts. There's a groundswell of local support if I ever saw one. Makes the 3,000 at the Hartford Tea Party look large now.

By way of comparison, Dodd had fewer local donors this quarter than UConn woman's basketball coach Geno Auriemma has national titles.  

Dodd did raise a million; but most likely from people who can't vote for him and he may wish he didn;t raise money from.

Remember the auto bailout that Dodd's done such a wonderful job with?

The new Obama "auto czar" is Wall Street financier Stephen Rattner.

Mr. Rattner made the news today as the Wall Street Journal links him to a "pay for play" scandal involving the NY State pension fund. where it is alleged Rattner's firm made improper payments in exchange for receiving state investment funds.  This scandal is related to the demise of the former NY State Comptroller, Democrat Alan Hevesi.

So the man responsible for saving GM and Chrysler and protecting their pension funds played games with the NY State pension fund? Boy, that's encouraging. NOT.

But who is yet another "Friend of Chris Dodd"?

Stephen Rattner.  

Yep, he contributed the legal maximum to Dodd's 2004 re-election race.

====UPDATE====

Rattner's firm is now implicated in ANOTHER "pay to play" pension scam, this involving the New Mexico pension fund and Governor Bill Richardson

Another day, another sleazy Dodd contributor. (Downe, Madoff, Stanford, Cassano....) I ought to do a macro for these posts.

It looks like Dodd has "friends" on Wall Street; back here in CT, well, there's a different reaction.

Remember a couple of weeks back when I suggested Chris Dodd (D-Countrywide) was about to do a document dump about his VIP Mortgages?

well, the whitewash was held today.

And the timely was quite interesting. First we find Dodd gets lambasted the day before by the Hartford Courant.

and a hastily scheduled press avail is set up right between two massive CT news stories.

a) the am report that AG Dick Blumenthal is not running for Governor.

b) a 6pm statewide TV address by Governor Rell on the budget crisis.

Hmm, sounds like trying to "flood the zone"; perhaps Kurt Warner was calling this play. Seems like the Senator was hoping this play would "break coverage"

Well, it did get covered.

HARTFORD -"'Facing a record-low approval rating and partisan claims of sweetheart mortgage deals in 2003, a contrite U.S. Sen. Christopher J. Dodd on Monday finally let reporters review hundreds of pages of loan documents

Dodd also released a 24-page review of the loans from a Chicago-based consultant firm that he commissioned through his attorneys. Dodd could not say how much it cost.

The report, created by Cross Check Compliance LLC of Chicago, concluded that Dodd's refinancing was "consistent with those that any borrower who possessed similar credit, income, asset and equity positions would have received during the highly active refinance market that existed during the first half of 2003." The consultants said "Fees and charges paid by the borrowers were higher than the national average."

Reporters poured through hundreds of pages of mortgage documents for up to two hours and Dodd staffers were prepared to stay as long as they wanted to continue reviewing them. Many of the pages Dodd said he didn't see until after the June and July, 2003 loan agreements were finalized.

Reporters were prohibited from leaving the meeting room with the documents, which included real estate and personal financial information and Countrywide work sheets. At least three of the pages, dated from April, 2003, referred to Countrywide's "VIP" program and two pages called "refinance wrap-up sheets" contained hand-written "VIP FOA" notes with stars, indicating Dodd was classified among the "Friends of Angelo" Mozilo, the mortgage company's chief executive officer.

http://www.connpost.com/breakingnews/ci_11610295

OK, Chris, you let your friends in the press look at the actual documents; but refuse to let the general public see them?

This is reminscent of Richard Nixon volunteering to let a friendly Senator. John Stennis, listen to his tape recording and let him decide what was appropriate to release. 

 Sorry, Chris, in an era when one can post PDF files on the internet and let the public---including mortgage brokers whom you didn't commission---reach their own informed conclusions---this modified limited hangout  ain't gonna work.

The Courant's Jesse Hamilton expresses skepticism on some of Dodd's self-serving claims, noting that much of the preferential treatment involved float downs without penalities.  

Dodd also promised to refinance his mortgages, but as Hamilton points out "the collapsing housing and credit markets have driven lending rates into the ground.".

(FYI: I am presently refinancing a single family residence in CT. I will watch with interest whether Dodd gets a better deal than I did.)

If so, I'll know the Senator is still getting the same "enhanced customer service" from his new lender than he admitted today receiving from Countrywide. Yet, of course, he did "nothing wrong"

I could ask why Chris Dodd is still chairman of the Senate Banking Committee, but in light of Eric Holder, Tom Daschle and Tim Geithner about to hold three of the most important posts in America despite ethical blindness, I can only assume the late Daniel Patrick Moynihan had it right about defining deviancy down 

 Yep, it's Groundhog Day already. Instead of hearing Sonny and Cher, we can wake up to another day of a Democratic political insider trying to whitewash his record.

=====UPDATE======

The Wall Street Journal shares my sense we've been bamboozled by "Tricky Chris"'s nondisclosure disclosure

 "If, as Mr. Dodd claims, he has nothing to hide, then why is he still hiding it?"

Breaking news from CT today. Chris Dodd deigned to answer questions from a radio reporter.

The station owners decided not to air the interview.

http://www.everydayrepublican.com/2008/11/12/dodd-watch-day-153-censorship/

Now, Tom Scott is a former hardline Republican state senator and third party gubernatorial candidate. He's made no bones about the poor regard he's held Dodd in well before the "Friends of Angelo" mortgage scandal went public. But we are talking about a host on New Haven's top AM radio station here; not some blogger under a screen name

The New Haven Independent is an "alternative" newspaper that has little use for anything to the right of ACORN, but god bless their heart, they do like the First Amendment.  And here's their take on Tom Scott's last stand  http://www.newhavenindependent.org/archives/2008/11/exclusive_censo.php 

"Dodd Interview Censored"

WELI and Clear Channel are trying to paint this as some "creative disagreement" between Scott and his novice co-host. Sure. The suits at Clear Channel simply thought raking Dodd over the coals would be bad business for the whole chain.

Here's the interview too hot for New Haven to handle  http://www.newhavenindependent.org/archives/upload/2008/11/102808_edited_Dodd.mp3

I'd like to say this is the last time corporate radio squelches a controversial local host so as to make nice with the Democratic establishment, but I'm sure it won't be.

Front Page from CT largest's paper, the Hartford Courant

 Crumbling Financial Giants Gave Generously To Dodd

When a Democratic takeover of Congress put Christopher Dodd in charge of the powerful Senate Banking Committee, Connecticut's senior senator eagerly met with reporters, outlining his generally pro-industry positions, but pledging to put consumers — and the long-term health of the economy — first.

"At the end of my tenure on this committee," Dodd said in early 2007, "I want it to be said that the safety and soundness of our financial institutions was not weakened on my watch."

A year and a half later, Dodd acknowledges that the nation's finances are in an "economic maelstrom." And while Washington engages in an urgent search for after-the-fact fixes, there is also plenty of finger-pointing, and there are enduring questions about whether campaign cash — millions and millions in campaign cash — blinded Dodd and other overseers to the excesses of industry........
 

But now, some of Dodd's heartiest patrons have become the poster companies for the Wall Street implosion: AIG Insurance, Lehman Brothers, Merrill Lynch and Bear Stearns. And although Dodd has emerged in recent weeks as a key player in efforts to stabilize the economy, the five-term senator is also facing criticism that he and others in Washington did too little, too late to rein in those generous companies before the crash...........

I'm proud of my chairmanship," Dodd said in an interview Friday. He said he considered himself a pro-consumer lawmaker and said campaign cash plays no role in his thinking.

"It's an ugly system, and I hate it," Dodd said of the campaign-finance game. But he added, "I never have — nor would I ever — let a campaign contribution affect what I care about, what I champion, how I vote, how I hold hearings. Ever."

But although supporters see that as leadership, opponents call it opportunism.

They note, for example, that although Dodd amassed a strong rhetorical record on the housing crisis, it was not until 10 months ago that he introduced legislation aimed squarely at the industry, ....

But by then, the fatal damage was done. Bear Stearns had collapsed six months earlier, and in a matter of weeks after the bill became law, Lehman Brothers limped into bankruptcy court, and the federal government was compelled to bail out insurance firm AIG International and seize mortgage giants Fannie Mae and Freddie Mac.

All of those companies had put substantial money behind Dodd: more than $200,000 from PACs and employees of AIG in the past six years. Another $200,000 from Bear Stearns. And six-figure donations from Lehman and other companies now struggling under bad mortgage debt.

Of course, Dodd defends this record as consistent with his general philosophy

I'm not allergic to business. I'm not hostile at all," Dodd said at a December 2006 press conference as he took control of the Banking Committee.

http://www.courant.com/news/politics/hc-dodd0929.artsep29,0,3321771.story?page=1

Depends what business, Senator. You certaintly were very hostile to the telecommunications industry. Even shutting down the U.S. Senate to filibuster a bill to provide them immunity from lawsuits http://www.thenextright.com/ironman/chutzpahs-reward. Connect the dots , my friends. The Telecoms only donated $22,000 to Dodd last cycle.http://www.opensecrets.org/industries/recips.php?ind=B08&cycle=2004&recipdetail=S&mem=Y&sortorder=U   If you don't ante up, powerful Senators can be very  allergic to your business; especially if plantiff's trial lawyers have put a better bid on the table.

Take a good look at Senator Dodd. These are the people likely to be given carte blanche over our nation's economy in the immediate future---career politicians who are corporate socialists.

 I can only hope then we will be left with a few coins of change after they are done. 

 "Just tell me what your side wants," he said. "I can't negotiate with myself."

http://blogs.courant.com/on_background/

Well, having you quit the chairmanship of the Banking Committee would be a start

http://thenextright.com/ironman/the-bargain-for-the-bailout

Newt Gingrich has the same reaction to this debacle as I have

http://www.radioviceonline.com/2008/09/26/dodd-should-be-disqualified/

Letting Chris Dodd try and fix the financial markets is like taking nutrition advice from Michael Moore 

A letter by Jim Babka:

We've heard the President, the Treasury Secretary and the Federal Reserve Chairman make their case for a $700 billion bailout of the financial markets.  We're not persuaded. Quite the contrary. We reject their predictions of dire consequences if their plan doesn't pass. We're so convinced of this that we're willing to stake our continued existence on it.

If the economy goes into a deep slump because they didn't pass their bailout plan then charitable contributions will be among the first things cut from family budgets. If we're wrong then we'll be among the many institutions to fail. But we don't believe we're wrong. And
we don't believe we'll fail.

In 2003 dire warnings about "weapons of mass destruction" were used to justify an unnecessary war in Iraq. We bucked the tide of public hysteria and dared to claim that there were NO "weapons of mass destruction" in Iraq.

We were right, and popular opinion, driven by political fear mongering, was wrong. Now we're being told that our economy is threatened by "financial weapons of mass destruction," and we'll once again buck the hysterical trend by predicting that . . .

There are no "financial weapons of mass destruction" threatening our economy -- except for the $700 billion bailout plan.

We don't believe that mortgage defaults on a mere 3 million homes  have the power to halt the mighty American economic engine. It's really that simple.

Many wild claims are being made. Yesterday, on CNBC, Jim Cramer predicted a Great Depression II if the bailout plan isn't passed. Cramer is even willing to let the Democrats cap CEO pay and take ownership positions in troubled firms (socialism), if that's what it
takes to pass the bailout plan. Cramer, despite his great intelligence and personal charm, is madly, hysterically, wrong.

In the Great Depression 40% of homes went into foreclosure.
 

Today the foreclosure rate is only 6%, and the trend is toward fewer foreclosures rather than more.
 

We're far closer to the end of this problem than we are to the beginning.

Of course, the fear mongers will claim that we had a 40% foreclosure rate in the Great Depression precisely because the government didn't intervene soon enough, and that current foreclosure rates will spiral out of control if the bailout bill isn't passed. This reading of
history gets the true story of the Great Depression exactly backwards...

The myth is that President Hoover did nothing after the stock market burst in 1929. Nothing could be further from the truth. In fact, Hoover actually began the kinds of interventions that are commonly associated with FDR.   Roosevelt was merely copying, and dramatically expanding on what Hoover had already done, not setting a new course. And look at what the results were . . . a Great Depression that lasted for 12 long years!

Hoover and Roosevelt both tried to stop market prices from falling, which is exactly what the current proposal aims to do. But the result in the late 20s and early 30s was that the market never cleared, and so the Depression went on and on and on.

We could have the same thing again today if we allow the government to once again intervene in natural market processes.

The fact is that the politicians, the bureaucrats, and various hysteria mongers, are misleading us. They tell us that the market is frozen, but the fact is that commercial loans are at an all-time high, and even real estate loans ARE HIGHER THAN THEY WERE LAST YEAR!
 

 The fact is that . . .The current "crisis" is mainly centered among the highly leveraged
investment banks on Wall Street, but even there the market is far from frozen. Merrill Lynch was able to sell its bad assets and was then bought by Bank of America (which had earlier bought CountryWide).

Does this look like a frozen market to you? It doesn't to us. And would it really matter if the markets were "frozen?" Inactive markets simply mean that buyers and sellers of assets have a disagreement about what those assets are worth. We must not allow the politicians and the bureaucrats to substitute their judgement for the judgements of buyers and sellers who are, after all, SPENDING THEIR OWN MONEY, whereas the politicians and bureaucrats are asking to spend YOUR MONEY!

We've taken the time, and shown the courtesy, of hearing our "leaders" speak, and having done so, WE REJECT THEIR CLAIMS! THEIR MUST BE NO BAILOUT, OF ANY KIND!

Please be clear about what we're NOT saying.  We're NOT saying that things are rosy, or even all that good. As we explained Monday, we're feeling the effects of a FED-generated bubble pop. We are very simply saying that a bailout is wrong-headed and unnecessary, and could even make things worse.

 ex animo

davidfarrar