House Panel Approves Cram Downs
Submitted by
CalculatedRisk on Tue, 01/27/2009 - 4:08pm (599 comments)
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Let's just retroactively abolish all debts. Problem solved!
This is hilarious. If the government buys $500B in toxic MBS, then the House just allowed cramdown on the government.
Sweet.
Pass the debt all around folks.
It's just a shell game until the next election.
VIVA LA TANTA!!!!!!!
Basel Too writes:
This is hilarious. If the government buys $500B in toxic MBS, then the House just allowed cramdown on the government.
~~~~~
DOH !
How long until they bsn long selling ?
Why didn't they do it in the other order? Cram down, and then buy assets?
Anyone know a good online atty school to learn bk's?
I feel like I am getting a cram-down by being responsible and paying my bills....
this is a good first bite, and hope it becomes law. the rest of meal can be amended-in later. the key thing is getting it passed in some form right now.
"resell their home within five years to share the proceeds with their lender"
huh?
P.S.
Tanta argued that cram downs would help discipline lenders in the future.
So have it apply only to future mortgages. I would be fine with that.
I am not fine with changing the rules halfway through the game. I continue to believe that everyone in this debacle -- borrowers, lenders, banks, etc. -- should receive precisely what they signed up for. Cramdowns are just another form of bail-out of the irresponsible at the expense of the responsible. In My Humble Opinion.
Peter just told Paul not to worry - so, it is the taxpayer that is the last person (gender sensitive) standing.
Walking away is still better than getting a cram-down...
crispy&cole writes:
Walking away is still better than getting a cram-down...
Why?
If it's any consolation to those opposed to this, I think that the "beneficiaries" of cramdowns are going to either be in those houses for a long time or will re-default.
Cramdowns are just another form of bail-out of the irresponsible at the expense of the responsible. In My Humble Opinion.
Nemo
~~~~
With mortgages trauched and owners everywhere how else would you do it ?
@Nemo- I wonder if the concern with applying it to future mortgages would be that rates would rise at precisely the time the Fed is doing everything it can to keep them down.
"In key concessions to the banking industry, Mr. Conyers agreed to alter the legislation to allow court-ordered modifications only for existing mortgages and to require that ******borrowers contact their lender at least 15 days before filing bankruptcy******."
Conjure says, "BWAHAHAHAHA!"
"Does this require ROCKET SCIENCE?"
"Now the banks know what it's like to have their gonads squeezed."
I'm getting a new frame for my license plate:
"What would Tanta do?"
Walking away is better than a cramdown if you can buy or rent a similar house for less that the cram-downed cost.
Why?
If I am underwater on my home $200k and they take a cram-down of $100k...uhhh I am still underwater and I have to share the upside..PASS
Just buy a new house and then walk away from the old one...it has worked all over Ca for the last year, trade in your old underwater home for a cheaper home
The real economy is collapsing. My own company is about to lay off another 10% of its workforce. But out government is going to throw resources at the people who bought McMansions with an IO-ARM, and at the banks that made the the loans.
What an idiot I was for being frugal the last few years.
Tanta presented a very convincing argument as to the value of cram-downs discouraging predatory lending (I think that's what it boiled down to), but it seemed to me that default would be enough to discourage bad lending behaviour, not requiring court interventions via cramdowns. Tanta was very convincing though, so I'm still unsure on this issue. Court interventions in reducing the value of stupidly created mortgage loans would definitely have an effect on lending behaviour, it seems to me. This is so hard.
Basel Too writes:
...It's just a shell game until the next election...
That "shell game" will not last till the next election.
wtf Citi whats good for C is good for Amerika:
"Citigroup Inc. had demanded the changes in exchange for throwing its weight behind the bill, a move that angered the rest of the industry"
"I am not fine with changing the rules halfway through the game. Nemo"
But that's what the Republicans did in the last bankruptcy bill of 2005! They changed the rules! Now it's just being put back the original way it was. You should have no problem with that. No fair changing decades of practice in 2005, was it?
In case you missed it :
We Can't Afford to Buy the Toxic Assets !
Fact #1. Too big to save. Bank of America Corp. and Citigroup, Inc. have combined assets of $3.9 trillion, or 43 times the size of the Treasury bailout funds theyve received to date.
Fact #2. Bigger losses ahead. Even before any further declines in the economy, an unusually large portion of their assets are already in grave jeopardy commercial real estate loans going sour, credit cards loans tanking, auto loans sinking, and residential mortgages turning to dust. Now, as the economy continues to tumble, avoiding much larger losses will be almost impossible.
Fact #3. Big derivatives players. Bank of America and Citigroup are the nations second and third largest high-rollers in the derivatives market, with a combined total of $78 trillion in these bets outstanding. Thats over ten times the derivatives that Lehman Brothers had on its books when it failed last year.
Fact #4. Theyve bet far too much on each others failure. Bank of America and Citigroup are also the second and third largest participants in the most dangerous derivatives of all credit default swaps. These are the big bets that financial institutions make on the failure of other major companies.
But participants in this market are like shipwrecked sailors in a sinking lifeboat betting fortunes on who will live and who will survive: If a company bets too heavily on failures and too many companies actually fail, whos going to make good on those bets?
Nothing found for W Ral-aid-2- 29412
I am not fine with changing the rules halfway through the game. I continue to believe that everyone in this debacle -- borrowers, lenders, banks, etc. -- should receive precisely what they signed up for. Cramdowns are just another form of bail-out of the irresponsible at the expense of the responsible. In My Humble Opinion.
Nemo | Homepage | 01.27.09 - 7:33 pm | #
Are you in favor of eliminating cramdowns on all other forms of secured debt, or is it only cramdowns on primary residential mortgages that are a "bailout of the irresponsible"?
When cramdowns on primary residences were originally abolished, did you take a stand against changing the rules midstream on mortgages already written?
I am not fine with changing the rules halfway through the game. I continue to believe that everyone in this debacle -- borrowers, lenders, banks, etc. -- should receive precisely what they signed up for. Cramdowns are just another form of bail-out of the irresponsible at the expense of the responsible.
Nemo | Homepage | 01.27.09 - 7:33 pm | #
Although I understand your position, the lenders and bondholders are already being bailed. So why not help the more desperate borrowers?
On the positive side, this gives servicers, banks, etc. a real motivation to make real workouts happen. It gives servicers something to point to when dloing loss-mitigation analysis on workouts. It may even stimulate a new industry of people who get all the MBS buyers together to agree to workouts rather than suffer cramdowns.
"In key concessions to the banking industry, Mr. Conyers agreed to alter the legislation to allow court-ordered modifications only for existing mortgages and to require that ******borrowers contact their lender at least 15 days before filing bankruptcy******."
With 15 days notice, some of the ordinary benefits of bankruptcy may not be available to the person going bankrupt.
What an idiot I was for being frugal the last few years.
You won't feel that way when all the debtors are turned into pillars of salt. Or something equally Biblical.
What an idiot I was for being frugal the last few years.
Nemo | Homepage | 01.27.09 - 7:38 pm | #
Commie!
Mr. Sparkle writes:
@Nemo- I wonder if the concern with applying it to future mortgages would be that rates would rise at precisely the time the Fed is doing everything it can to keep them down.
Would be the same with outstanding loans
@ille_vir - I guess at this point a default is a de facto cramdown for most borrowers.
Prior to this time, real estate never, ever went down in value anywhere. Right right?
I'm not sure that there is a significant net change except that it adds a new layer to price discovery. (do they add the cramdown value to the MLS or to county tax records?) Oh, and people get to keep their homes for a while longer which is a HUGE win for politicians.
ille-vir:
default would be enough to discourage bad lending behaviour
That's what Alan Greenspan thought, too, and he's admitted he didn't realize what idiots bankers were. Tanta's right, make them realize they'll get stuck if they don't do due diligence or engage in predatory lending practices. (Anyway, as I noted above, the recent restrictions on bankruptcy are, well, really recent. Now's the time to fix them.)
mkt up 3 days i an row, mustard seeds growing, ALL IS WELL!!
Commie!
crispy&cole
lol
David in NY: Read Tanta's post on cramdowns. I don't want to go through it again but it was NOT the bankruptcy bill that changed the rules on cramdowns.
All: It's a basic principal of bankruptcy law that secured creditors are secured to the value of the securing collateral. The exception that was made for certain mortgage loans privileges first mortgage lenders over all other creditors. Why is that fair?
David in NY --
But that's what the Republicans did in the last bankruptcy bill of 2005! They changed the rules! Now it's just being put back the original way it was.
Do you have a reference? My understanding is that the 2005 BK bill had to do with credit card debt, and that mortgages have always been immune to cramdowns. (See e.g. here; search for "2005".)
You and me both NEMO - hence my changed tag.
Good night, America, how are you?
We've been crammed down according to this chart from economicrot
http://2.bp.blogspot.com/_5vkPiCEjjdg/SX51PRgoQQI/AAAAAAAADMA/RzccdMKcodk/s1600-h/net-worth.gif
ECONOMICROT
Willie Nelson singing City of New Orleans
YouTube - The City of New Orleans - Willie Nelson
Bond Girl - sometimes I'm really dense but what do you mean by "outstanding loans"? Any loan currently on the table but not finalized? I have a feeling I'm going to be really embarrased by the answer.
I was relying on an article from Mortgage News Daily:
T[he 2005 bill], heavily promoted by the credit card industry, virtually eliminated the ability of borrowers to wipe out their existing debt through a Chapter 7 bankruptcy filing. Most debtors now are forced to file under Chapter 13 which restructures the debt so that payments are made more manageable while allowing creditors a chance of eventual recovery. Courts can manipulate the terms of credit card and other unsecured debts to fit restructuring plans but cannot force changes in the contractual terms of mortgages so banks can foreclose on the collateral."
Maybe that's wrong.
A measure to allow judges to reduce the principal amounts of mortgages for troubled borrowers in bankruptcy...
...to make the legislation applicable to only existing mortgages...
This is simply ludicrous .
Once you have crossed the Rubicon and change contracts retroactively you are DONE. Nobody will believe you anymore. But on the other hand, maybe that does not really make any difference.
Discussions like this just show the desperation of America ! Endgame.
so much for disciplining the lender... what about us who thought the bubble was so crazy, decided to wait it out.... nothing....
mmm...Bob goes BK gets a cram down...mortgage is up for renewal...bank says no...Bob goes to other bank...other bank says no lending to cram downers...no mortgage renewal...house goes in foreclosure...first bank hold title...bank makes money
(Just wondering will we get 15 days notice is a company intends to go BK)
mortgages have always been immune to cramdowns
Aargh...not again....
The prohibition of court-ordered modifications for mortgages on principal residences was created in 1978; between 1978 and 1993 most bankruptcy courts interpreted the law to mean that while interest-rate reduction or term-extension modifications were not allowed, home mortgages could still be crammed down.
In 1993, with Nobleman v. American Savings Bank, the Supreme Court held that the prohibition on modifications of principal-residence mortgage loans also included cram downs.
Calculated Risk: Just Say Yes To Cram Downs
and that mortgages have always been immune to cramdowns. (See e.g. here; search for "2005".)
Nemo
~~~~
recollecting that cramdowns were allowed until the early 90's.
What does this do to comps? One house for sale with no cramd, and another, across the street that has been crammed-down?
Once you have crossed the Rubicon and change contracts retroactively you are DONE.
WTF do you think a bankruptcy IS???? Contracts are changed retroactively all the time in bankruptcy...it's the point.
Yalt --
When cramdowns on primary residences were originally abolished, did you take a stand against changing the rules midstream on mortgages already written?
I would have had I known about it. Remind me when that was (including a reference, please)?
Changing the rules ?
Congress does that every time they get a bill passed!
Bernanke and Paulson are changing them on a daily basis ...
1993, Nobleman v. American Savings Bank. Reference above.
Man, punishing the lenders is I guess what is required. I do think that lenders start off in a higher informational position than borrowers and have a higher obligation to society to make loans that make sense. They are more easily able to aggregate the resources of society and should be held to a higher moral standard. Yes, I THINK BANKERS HAVE A DUTY TO SOCIETY OTHER THAN PROFIT.
What does this do to price discovery mechanisms?
Granted, adjusting the principal of the loan is not exactly the same as adjusting the value of the property but this seems very off to me. This seems like a sale price that was changed after the fact. Still in the public record, but in totally different systems.
WTF do you think a bankruptcy IS???? Contracts are changed retroactively all the time in bankruptcy...it's the point.
Werner's point is that the lenders made the contract with the understanding that the mortgage could not be crammed down.
All lenders knew that they were fair game in a bankruptcy.
Thanks for the hat tip CR.
Regards,
Ken = ShortCourage.
Sorry to have taken every one back to cramdown history (based maybe on some weak evidence), but it does seem to me that the complaint that the rules are being changed is kind of irrelevant -- the rules haven't always been like this, and there's no reason they can't be changed to favor debtors now, just as they were changed to favor creditors a few years ago.
As usual, the details of what courts should be able to do may be debatable on the merits, but bankruptcy is a traditional remedy and there's no reason a priori that it shouldn't apply to mortgage debt.
" All lenders knew that they were fair game in a bankruptcy."
But erm, doesn't cram downs actually help the banks? If they're going to lose money anyway, might as well keep the property inhabited and maintained.
JimPortlandOR(Unrated) writes:
this is a good first bite, and hope it becomes law. the rest of meal can be amended-in later. the key thing is getting it passed in some form right now.
Jim, whats the economic climate like up in portland? I hear it's brutal in the cities, but even worse out in the countryside.
Credit is a privilege not a right ...
To both the borrower and lender ...
I don't mind the rule change. But if it doesn't apply to the future, it's obvious that nothing like reform of the financial industry is on the plate yet. Not until it all crashes and the population, wandering the street with time on its hands, begins actually thinking about what the gov't has done and who it favors.
I originally felt that Obama admin would be on the wrong path for 18 months until all the good-old-boy solutions failed, and then strike off in a real direction of real change because all else had failed. This and the "bad bank" leads me to believe I was spot on.
Bob goes BK gets a cram down...mortgage is up for renewal...bank says no...
Barley | 01.27.09 - 7:47 pm | #
Why is the mortgage "up for renewal"? BTW, I'm gonna lose on this deal. I unknowingly bought at the top of the bubble with fixed rate financing I can afford (28% DTI). I'm gonna lose a ton and I'm never gonna get bailed or crammed or anything else. (Unless I lose my job. Then I "walk away in place".)
So... 1978, then? Or 1993, depending on how you look at it.
Either way, I wasn't paying attention at the time.
And regardless, it does not change the fact that changing the rules to allow cramdowns amounts to a straight government-mandated transfer of wealth from lenders to borrowers. (Just as changing it the other way amounted to a transfer of wealth in the other direction. I oppose all such transfers.)
Let house prices fall further. Let people lose "their" homes and go back to renting, just as I have been doing. Rewarding people in proportion to how profligate they have been strikes me as bad policy, both pragmatically and morally.
Is there a limit on the number of cramdowns that one can do? Could a house be crammed-down to zero through serial bankruptcy?
By the way, I used to know a little about retroactive application of laws (I believe Landgraf is the case), and there's one principle that stands out -- Congress is presumed not to intend such application but if it clearly expresses its intent to have a provision apply retroactively, it does.
(Just for the record, my outrage about cramdowns pales in comparison to my outrage about bank bail-outs. Missed the earlier "bad bank" thread because I was, you know, working.)
So, now the government is promoting moral hazard? Nice...
Is there a limit on the number of cramdowns that one can do? Could a house be crammed-down to zero through serial bankruptcy?
No, the mortgage can't be crammed down below the value of the house. Also, after you declare BK, you can't do it again for several years.
What does this do to comps? One house for sale with no cramd, and another, across the street that has been crammed-down?
To be fair to everyone, if the BK courts are going to accept a particular valuation for cramdown, then the new value should be the market price.
money man, if you're around, this should be good for you. Now debtor BK attorneys will begging you for the lowest possible price. The bubble in reverse, if you will...
Housing Wire says much mortgage insurance is invalidated in the case of cram downs. Banks will eat even more losses. Especially Fannie/Freddie.
Who will this hust ? Cramdowns now that the USG will own all the paper.
Tell me when Bill Gross starts taking losses.
What about helocs and 2nds?
I'm surprised that there's all the support for not changing contracts through bankruptcy. I'm sure that everytime a business goes bankrupt and gets to abrogate the labor contracts with its unions, everyone here has been objecting vociferously, right?
"In key concessions to the banking industry, Mr. Conyers agreed to alter the legislation to allow court-ordered modifications only for existing mortgages and to require that ******borrowers contact their lender at least 15 days before filing bankruptcy******."
Conjure says, "BWAHAHAHAHA!"
mp | 01.27.09 - 7:37 pm | #
Tell 'c' I concur.
And regardless, it does not change the fact that changing the rules to allow cramdowns amounts to a straight government-mandated transfer of wealth from lenders to borrowers. (Just as changing it the other way amounted to a transfer of wealth in the other direction. I oppose all such transfers.)
I think you're wrong here. The income stream to be divided up among the creditors is unchanged. This was, and is, primarily a transfer of wealth among the various creditors. The first lender on the principal residence will no longer be privileged against all other secured lenders, and there will be a bit more left for any unsecured lenders.
I'll repeat myself: cramdowns are an accepted principal of bankruptcy law in all cases except for this one exception, which was granted because mortgage lenders convinced Congress that they made a unique contribution to the public welfare beyond that provided by any other lender.
Now that it's difficult for the mortgage lending world to claim that they're uniquely dedicated to the commonweal, why should they maintain this special privilege?
Feckless Ness writes:
I'm getting a new frame for my license plate:
"What would Tanta do?"
...
I was just "approved" for the license plate: BAILOUT and I ordered a license plate frame that reads "I Want Some TARP." I'm in Boise, Idaho, I doubt anyone here will get it ....
I originally felt that Obama admin would be on the wrong path for 18 months until all the good-old-boy solutions failed, and then strike off in a real direction of real change because all else had failed. This and the "bad bank" leads me to believe I was spot on.
Bob Dobbs
~~~~~
The economy will be a smoldering ruins in 18 months.
For Werner
The government said on Wednesday it expected the German economy, Europe's largest, to contract by 2.25 percent this year, revising down a projection it made last October for growth of 0.2 percent. Since World War Two, the German economy has not contracted by more than 1 percent in a year.
What an idiot I was for being frugal the last few years.
Nemo,
After the dot.com bust and 911, Bush told you to spend. It's not like you weren't warned.
I originally felt that Obama admin would be on the wrong path for 18 months until all the good-old-boy solutions failed, and then strike off in a real direction of real change
Wow... do you really seriously think Obama will retain any political legitimacy after he goes on the wrong path for 18 months?!?
He'd be the lamest of lame ducks.
"So, now the government is promoting moral hazard? Nice...
norma"
No, they're discourging the banks' engaging in moral hazard -- that's the big problem here.
We are missing an unintended consequence here. Some warning is dancing around waiting to be seen.
Any legislation written since I can remember that had a huge impact on the financial industry has always been written by the financial lobbyists. Everyone comments that nothing has changed with Pres Obama and the Democratic congress but we believe that new regulations are being written to penalize the banks and benefit the borrower? Does that add up?
I'm sort of at a loss to see how anyone who was "frugal" was hurt, by the way.
This cramdown thing is going to have me thinking with the few brain cells I have left. So difficult.
Thanks for all of your enlightening posts, all. G'night, and I'll see the late-night crew later.
Does that add up?
Could you restate your problem? You're sympathetic to the banks? You're amazed they aren't writing regulations for Congress anymore? You're not sure this is what's happening?
Cramdown, new mortgage, no payments for 6-12 months, walk.
Are state property taxes forgiven in BK? The states won't like this. At least they get back taxes when a forclosure ultimately goes through.
And thank you to Yalt for illuminating thoughts.
I don't understand the whole "We promise we won't ever do this again. Really. No really." aspect of the bill. That's like Chavez saying that he won't ever nationalize industries again.
Oh. Please.
Just go ahead and make cramdowns a permanent feature of the law and live with the consequences.
On cramdowns - A Bank Lawyer Blog...
Bank Lawyer's Blog: Cramdown's A'Comin'
I'm sort of at a loss to see how anyone who was "frugal" was hurt
Savers punished by the Fed devaluing the dollar. And they ain't near done yet.
From Economists View ~
Jas Jain says...
Rogue economists says it all. What a bunch of bron-and-bred American dopes.
Most economists are in the propaganda business. That includes evidoers Greenspan and Bernanke. Economists must bear blame for this crisis.
Jas
Sadly everything I said in the comments in 2007 has come to pass.
I'm sort of at a loss to see how anyone who was "frugal" was hurt, by the way.
You mean you can't see the folks who saved for downpayments and still could not afford a house for years?
Bitch about cramdowns if you want to, but banks and brokers got money to pay for their bonuses and dividends. Yah, you didn't like that either, I know.
But I think you guys would be more charitable if you heard from some homeowners who lost their jobs or worse, both spouses lost their jobs.
Or got sick and face huge medical bills. What about people who can't pay their mortgage because they thought they could afford a little extra expense to send a kid to a more expensive school? (Before a two-job household went to a one or no-job household.)
It's easy to bitch when other people who suffer misfortune. Murder-Suicide Leaves 7 Dead in California - NY Times.
I'll take my tin hat off after you quit bitching!
Are state property taxes forgiven in BK? The states won't like this. At least they get back taxes when a forclosure ultimately goes through.
Property tax liens are discharged vis-a-vis the debtor, but remain attached to the property to the extent allowed by individual state law.
Lets cram-down the common and prefereeds of bank stocks to zero, then clawback all the bonuses and ill gotten gains (strippers, blow, vacations,etc...) then I will be happy with cram-downs!
"... when it comes to "open-mindedness," it's hard to beat BofA, which sometimes is so open-minded that its brains fall out."
At nova's link, above.
I'm sort of at a loss to see how anyone who was "frugal" was hurt, by the way.
Because (one way of looking at it) is that life is a competition, and people who didn't follow the rules and should have gotten squashed, are not going to be squashed. This complicates the competition.
There, that explanation should suffice for those who don't believe in moral hazard. You want a world without moral hazard? It's a pretty ugly world.
Mr. Sparkle,
outstanding = existing
If you change the loss structure on existing debt, that cost will be passed on too (not just any costs associated with future debt).
Rob Dawg writes:
Sadly everything I said in the comments in 2007 has come to pass.
..
That's why I've practiced what you've said since 2007. BTW Thanks, I'm better off because of it. You ROCK.
Can I haz odious det talkie?
C
A very long an interesting article. Apparently the Italians (Unicredit) have a lot of bad exposure here and in Eastern Europe in general.
Why?
Loans to Central and Eastern European clients made up 13% of UniCredits assets at the end of 2007. These made up an even greater portion of its revenue21% in the third quarter, and at the top of the list in both cases - see charts below - comes Poland.
This was amazing!
Fortunately no one is suggesting that the level of loan defaults might be anything like the 60% anticipated in Ukraine (or Russia??, both of which fortunately make up a much smaller part of their portfolio).
SOurce:http://polandeconomy.blogspot.com/
Wednesday, January 21, 2009
The Forex Lending Crunch Means Trouble Is Looming Large In Poland
Poland now looks set to become the latest shoe to drop in the ongoing crisis which is steadily extending its reach from one country top another, right across the whole of Central and Eastern Europe - the latest and possibly the last in the sense that if Poland does role belly side up this will probably be the one which finally does turn the apple cart well and truly over.
If you change the loss structure on existing debt, that cost will be passed on too (not just any costs associated with future debt).
Bond Girl
~~~~~
Small potatoes ... take writedowns ... including bonds ...
$60 trillion in debt won't work.
I'm out, too, at least for a while...it's 7pm and I still haven't found time for breakfast. Maybe I'll be back for the late night session, or maybe I'll see you all in the morning.
Sorry, Nemo. That has to be horrible.
Doesn't a cram down create more bad debt for the Feds to bail out?
"You mean you can't see the folks who saved for downpayments and still could not afford a house for years?"
I think they're living happier, more secure lives than the people who got conned into a mortgage they can't pay after losing their jobs and face no relief in bankrupcy now, and maybe none later, or at least a long period of court proceedings, and maybe not being able to pay rent on a new place if they have to move, etc., etc. ....
Anyway, if they couldn't save enough for a downpayment, they were right not to buy a house -- I don't even see your point.
Maybe this was answered already: What happens to the residual - the difference between the original mortgage value and the renegotiated mortgage value?
Doesn't a cram down create more bad debt for the Feds to bail out?
Economist Moe Howard 3SU
~~~~
First we take out the share and bond holders ... fair's fair ...
Doesn't a cram down create more bad debt for the Feds to bail out?
No.
ova writes:
...the German economy,... to contract by 2.25 percent this year,...
Oh well,
a) it's just a prediction and wouldn't be the first one to be wrong, and
b) 2.25 percent still would be faaar better than what you will experience. (much more heavily indebted, little useful own production, wrong skills i.e."financial jongleurs", ups.. meant "financial engineers", etc. )
You're amazed they aren't writing regulations for Congress anymore? You're not sure this is what's happening?
David in NY | 01.27.09 - 8:07 pm | #
Both. There is some rule or twist to this that will benefit the lenders and cause the borrowers to have to keep this "cramdowned" debt. Either as a taxpayer or when they sell the home. The financial industry more than anything needs a bottom in the housing market. The positive feedback loop needs to be stopped.
Cynical but given support by the last 6 months of collusion between financial industry and the government.
From nova's link above:
In a concession to lenders, if a lender is found to have violated the Truth in Lending Act during bankruptcy proceedings, the institution would be subject to fines, but would not have to forgive the loan, as is the case currently.
How convenient! Gee, maybe it's not a coinicidence that Citi is OK with this!
Maybe this was answered already: What happens to the residual - the difference between the original mortgage value and the renegotiated mortgage value?
RockyR
~~~~
Hopefully the share and bond holders get whacked ...
And this will create more efficient credit markets...how?
Let the markets work...don't create more work for the courts.
I don't know if this is GDII. If this is not GDII, we are setting ourselves up for a Mad Max world.
Arbitrarily changing loss provisions will only decrease liquidity and increase cost in a given market.
In before "nothingburger"
That "shell game" will not last till the next election.
Werner | 01.27.09 - 7:38 pm | #
Won't even make it to the run up to the midterms which starts when... next fall?
Hopefully the share and bond holders get whacked ...
mmckinl | 01.27.09 - 8:18 pm | #
But, in the end, people get to keep homes they couldn't afford at prices they can pay?
How convenient! Gee, maybe it's not a coinicidence that Citi is OK with this!
~~~~
CITI went along to get the $300 billion back stop.
Werner-
Isn't there a German Blog missing it's idiot? :+)
Werner - Say hello to Morocco Bama.
Arbitrarily changing loss provisions will only decrease liquidity and increase cost in a given market.
Bond Girl
~~~~
Small potatoes ...
We can't support $50 trillion in debt ...
I'd rather see Citi and BAC at the 99cent store with Fannie, Freddie & Aiggee(sp.)
Preferreds up next...you too goobermint.
BTW, can the BOD "suspend" the divvie on the 5% Pref? I know, it doesn't matter, its all electrons...
But, in the end, people get to keep homes they couldn't afford at prices they can pay?
RockyR
~~~~
Those homes were over priced, obviously. They were overpriced by greedy bankers, the same bankers that gave them the loans.
trader walt ,
while that suicide/murder story is horrific, the article also says both parents lost their jobs "for cause", and were fired, they did not lose their jobs as a result of a layoff.
crispy&cole writes:
Lets cram-down the common and prefereeds of bank stocks to zero, then clawback all the bonuses and ill gotten gains (strippers, blow, vacations,etc...) then I will be happy with cram-downs!
My father-in-law is one of those prefered bank stock owners (Merril Lynch, now BofA, as well as Fannie/Freddie). Of course I don't want to see him hurt. But I can tell you that he bought that preferred stock with the full expectation that he would get great returns, and be protected from losses by government bailouts.
Gee, moral hazard in action.
Werner, Go to bed. It is 2:18 am
David in NY: I think the point about savers suffering is that all these buyers who lied about how much house they could afford and lenders who believed them helped cause house prices to skyrocket.
So if all these boneheads didn't inflate the market, more savers would have been able to afford/buy a house.
Posted on the last thread just as it died, would love to get some feedback on this sort of plan.
Force the banks to mark everything to market, or at least to level 2. When they do that, their capital will be severely depleted. Common effectively would be wiped out, as would preferred, sub debt would prob take a haircut. The Govt then buys new equity to bring the bank up to well capitalized levels, effectively owning 100% of the "new bank". It resets the salary schedule. The govt then appoints a new board, that will serve for a 5 year term, and can not be removed except for good cause (to minimize political interference in granting credit). This new board hires new executives who run the bank day to day. After 5 years the Govt has an IPO of the bank. Proceeds of the IPO earmarked to pay down Fed'l debt. Board/execs get a small % of the amount IPO proceeds exceed injected capitalization.
Dirk
It doesn't matter, anyway. As others have pointed out, we (taxpayers) are ultimately on the receiving end of this legislation. On so many levels.
Because (one way of looking at it) is that life is a competition, and people who didn't follow the rules and should have gotten squashed, are not going to be squashed. This complicates the competition.
Well now, that is really only one way of looking at it -- the banks' way. I think the best view of the situation is that it was the banks, and not so much the borrowers who "didn't follow the rules." A lot of folks got convinced (by financial advisors, banks, etc.) that housing was the best "investment" and borrowing to have it was the way to go. And the banks promoted this wildly (you ought to have heard the ads for interest-only loans, helocs, etc. here -- they were utterly shameless). I have no sympathy for the banks and I don't know why you all do. Jeez, they knowingly and deliberately fucked themselves and us. Why all the tears for them?
Cramdown? Still need a job.
Conjure Clock musings:
The "left behind," Evangelicals had this one all figured out years ago.
This world is going to end for them, and the non-believers are going to be the ultimate bagholders.
There will be some serious housing stock/automotive excess when this happens, at least in flyover country. On the plus side, Joel Osteen and his wife are staying put, with a somewhat surprised look on their faces, for eternity.
So if all these boneheads didn't inflate the market, more savers would have been able to afford/buy a house.
D Westly
~~~~
The banks inflated the home prices by giving out loans to people who didn't qualify ...
Am I the only person here that remembers going through Hell to get a mortgage even with a 20% down payment?
"Those homes were over priced, obviously. They were overpriced by greedy bankers, the same bankers that gave them the loans."
Those homes were overpriced by greedy buyers, bidding against one another in a game of real estate appreciation. The bankers were the enablers.
And Nemo is right. If you were frugal, you didn't make money on serial flipping, you didn't HELOC your way to new cars, expensive vacations, plastic surgery and all the other bling, you didn't collect 250k or 500k tax free on your RE gains.
Like Nemo, I am another American jerk whose taxes will pay to make good all the spendthrifts.
I don't care if Bernanke bends over and pulls out a bankroll of trillion dollar bills big enough to choke a horse, they can't save this eCONoME.
Those homes were over priced, obviously. They were overpriced by greedy bankers, the same bankers that gave them the loans.
mmckinl | 01.27.09 - 8:23 pm | #
I hope you're being sarcastic.
Either way, I'm now pretty pissed I didn't go out and buy a house I couldn't afford so I have the government come bail me out at your expense.
This is the stuff of revolutions...
It doesn't matter, anyway. As others have pointed out, we (taxpayers) are ultimately on the receiving end of this legislation. On so many levels.
If by "this legislation" you mean the bankruptcy changes, I'm not at all sure you're right.
WTF do you think a bankruptcy IS???? Contracts are changed retroactively all the time in bankruptcy...it's the point.
Yalt | 01.27.09 - 7:49 pm | #
Yes but usually if you have a secured interest the lender is given the choice taking the secured interest out of the bankruptcy pool. A cram down in effect negates that - I can see a BK judge allowing a cram down (or work out) but not mandating it. I can especially see the benefit of 'cramming' any deficiency balance as a result of a short sale or foreclosure... but the lender should still have the choice to take the secured property if they so choose... if not the loan isn't really 'secured' is it?
We could be complaining but I would rather sleep at night. Unless your a sociopath, married to a sociopath, the stress of a BK, cramdown, etc is not negligble.
@Bond Girl - yup, embarrassed as I expected.
It sounds like our points are similar - a change like this will ultimately drive up lending costs at a time when The Powers believe that they must keep them down.
"Am I the only person here that remembers going through Hell to get a mortgage even with a 20% down payment?"
Nope I even paid 10% on personal RE and 18% on CRE. 20% down was the easy part!
This crap has to stop and All the players need spanked Buyers, Bankers, builders, Realtors, Appraisers and the Government. Heads on a stick!
"I have no sympathy for the banks and I don't know why you all do."
Because the banks are insolvent and the only money they have is ours...taxpayer funds.
Am I the only person here that remembers going through Hell to get a mortgage even with a 20% down payment?
mmckinl | 01.27.09 - 8:27 pm | #
I sat out of the market because I couldn't afford a home at bubble prices. I'm the one who is doubly fucked here. It's as much the fault of the dumb asses who took on debt they couldn't service as it is the banks.
Again, this is stuff revolutions are made of.
Clearly a big challenge to balance two competing factors: 1) being a greedy idiot shouldn't pay and 2) not helping out the greedy idiots will hurt those of us who aren't.
I'm not sure cramdowns hit the right balance, but that is probably because I'm still focused on number 1).
we need a nothingburger cramdown taxpayer czar.
*dials up Davos.
One thing to consider: a lot, if not most, of the people who need a cramdown will not be able to make the payments on a cramdown.
I thought that was the Realtors job. Bankers were just dumb opportunists second in line.
Dirk,
Define government. Do you think the government is distinct in terms of interests from those currently in the positions?
Bank of the US. It hurts to type that but not as much as the alternatives at this point. Look, we jumped off this cliff two years ago. Just because it has taken this long for the ground to loom doesn't mean we get a do over.
After the dot.com bust and 911, Bush told you to spend. It's not like you weren't warned.
Angry Saver | 01.27.09 - 8:03 pm | #
Even democrats listened to Bush on THAT.
I am astonished that people here are making policy choices based on their jealousy(?) of people who seriously damaged, if not ruined, their lives by going into too much debt, and who are in bankruptcy proceedings as a result. May you all actually get to enjoy such fun!
If by "this legislation" you mean the bankruptcy changes, I'm not at all sure you're right.
David in NY | 01.27.09 - 8:28 pm | #
Hey, if you like it, defend it.
Am I the only person here that remembers going through Hell to get a mortgage even with a 20% down payment?"
Yes, I remember. We could have got a bigger place for 10k more but no one would stretch for that huge amount.
Yalt --
Now that it's difficult for the mortgage lending world to claim that they're uniquely dedicated to the commonweal, why should they maintain this special privilege?
As I said, I am sympathetic to this argument, and I would not object to changing the rules for future mortgages. (I understand the resistance to doing it today, but personally I have qualms. I would like to buy a house eventually; the cheaper, the better. More foreclosures, please.)
...
As for how being frugal costs you, open your eyes. While everyone else was out consuming, the frugal were saving. While others were living in McMansions watching 60" high-definition TVs, the frugal were living in small apartments.
Now, where is all of the bail-out money going to come from, exactly? The government cannot create wealth. The central bank cannot create wealth. So if these entities "give" wealth to someone, they must be taking it from someone else. Guess who that would be?
Who is harmed if the government chooses to artificially inflate asset prices? People who saved in the hopes of buying something in the future, that's who.
Wow Rob Dawg, I didn't figure you would go that route. I believe Nationalization is the only rational outcome here myself. It seems to be inevitable.
anon writes:
We are missing an unintended consequence here. "Some warning is dancing around waiting to be seen.
Any legislation written since I can remember that had a huge impact on the financial industry has always been written by the financial lobbyists. Everyone comments that nothing has changed with Pres Obama and the Democratic congress but we believe that new regulations are being written to penalize the banks and benefit the borrower? Does that add up?
anon | 01.27.09 - 8:04 pm | #
Something to think about. Nearly all financial legislation originates in the House and Senate Banking committees, while this bill and all bankruptcy stuff originates in the Judiciary Commitee. In short, there is the likelihood that broader political forces are at play in Judiciary than in the relatively narrow financial constituencies of the banking committees. I think it depends on which committee has got the jurisdiction. (There have been many battles about that in the House over the years.)
Those homes were overpriced by greedy buyers, bidding against one another in a game of real estate appreciation. The bankers were the enablers.
And Nemo is right. If you were frugal, you didn't make money on serial flipping, you didn't HELOC your way to new cars, expensive vacations, plastic surgery and all the other bling, you didn't collect 250k or 500k tax free on your RE gains.
Like Nemo, I am another American jerk whose taxes will pay to make good all the spendthrifts.
fried ...
~~~~
Me too....
but how do we get out of this mess with the least cost to the tax payer ?????
Take out the shareholders an bond holders first ...
I am astonished that people here are making policy choices based on their jealousy(?) of people who seriously damaged, if not ruined, their lives by going into too much debt, and who are in bankruptcy proceedings as a result. May you all actually get to enjoy such fun!
David in NY | 01.27.09 - 8:33 pm | #
Let those people go rent. I did.
From a purely selfish viewpoint, this seems like a good thing.
Cram downs should lower house prices, primarily by eliminating any desire by private capital to make mortgage loans.
Given that I've been saving and accumulating lots of cash, I'll be happy to see lower prices and difficult financing (especially at the Jumbo level).
On the other hand, those poor folks who cannot throw down a lot of cash will be bummed out when they try to buy a house.
Two years ago on CR I was considered a doom-mongering uber-bear; last year I was considered overly pessimistic; this year it appears I'm pretty much mainstream. Since my position's never changed, it appears the dark side is getting really crowded these days.
ot much of an intellectual so i rely heavily on firsthand anecdotal evidence -- i've got a good buddy that is in way over his head. he and his wife have a 10 year interest-only that they can just make the payments on now. he proposed to his wife in this house. they are raising their daughter in this house. they really want to stay in this house but they paid waaaay too much. i hope that they can get a cramdown so that they can avoid the devastating (on so many levels) consequences of "walking away"
i am a fanatical saver. generous with my friends sure, but puritanical in my saving ways.
If I am underwater on my home $200k and they take a cram-down of $100k...uhhh I am still underwater and I have to share the upside..PASS
The cram down has to be to a level the collateral can cover. So your example doesn't make much sense.
Was somebody up above complaining about having lost a house because they were too frugal? And somebody else said it wasn't their fault, Bush told them to spend. I don't follow any of that reasoning. Frugal people don't buy more house than they can afford, and sensible people did not listen to George W. Bush.
This crap has to stop and All the players need spanked Buyers, Bankers, builders, Realtors, Appraisers and the Government. Heads on a stick!
Economist Moe Howard 3SU
~~~~~
Agree 100%
ova writes:
Am I the only person here that remembers going through Hell to get a mortgage even with a 20% down payment?"
Nova: Until the 30s, the longest term available for a residential mortgage was five years, if I'm not mistaken. Don't know what the down payment requirements were.
Again, this is stuff revolutions are made of.
RockyR | 01.27.09 - 8:31 pm | #
Where is dotcommunist when you really need him?
"I am astonished that people here are making policy choices based on their jealousy(?) of people who seriously damaged, if not ruined, their lives by going into too much debt, and who are in bankruptcy proceedings as a result. May you all actually get to enjoy such fun!
David in NY | 01.27.09 - 8:33 pm | # "
No I am just tired of the Adult Toddlers in this country. If you played and lost grow up and take the medicine. BK? No one is putting you in the electric chair. Learn from your mistakes and join the grown ups!
The exception that was made for certain mortgage loans privileges first mortgage lenders over all other creditors. Why is that fair?
Because mortgages are generally non-recourse.
David in NY writes:
"May you all actually get to enjoy such fun!"
You mean like a loan reduction?
Or get rewarded for making a "honest mistake"?
or A multi zillion dollar bonus for not guessing the obvious?
BRING IT ON!
My belief is that there are many kinds of possible cram downs -- it may not just be a reduction in the amount owed -- it may affect the term or the rate. Many banks would be better off still getting payments, even if reduced payments, rather than having a foreclosure on their hands that they may not be able to sell.
Ya'll really think life is fair? You have not had that beat out of you yet?
Let them get a cramdown. You really think the bulk of these people will go laughing and dancing while you peer in through their Anderson windows?
Their life, for the most part, has peaked. A crappy built big house that they probably will be able to afford is it for them. That was their Willy Wonka Golden Ticket.
David in NY --
I have no sympathy for the banks and I don't know why you all do.
Can you quote an example where I or anyone else on this thread expressed sympathy for the banks?
You seem to think that one must limit one's disgust either to the "big people" or to the "little people". It is perfectly possible (and reasonable, IMO) to have disgust for both.
No bail-outs for banks. No bail-outs for homeowners. No bail-outs, period. Is that so much to ask?
Apparently, it is.
Anonymous writes:
...Werner-Isn't there a German Blog missing it's idiot? :+)...
Hihi, there is nothing like watching the ludicrousness of desperate credit junkies drowning in red ink.
Can you spell "Schadenfreude" ?
It seems that at this point, anything that is done will have major ramifications elsewhere in the financial structure. In this case, let's say this passes.
-What about the MBSs that are floating around out there? I assume this would have to cause their value to get slammed again, further eroding the balance sheets of banks.
-Price discovery is likely more complex because of the difficulty in getting two systems to communicate with each other.
Is this the oubliette that we have been cast into?
The real loser's are future borrows who will
have to jump though hoops for a mortgage.
The pendulum will swing.
I think cramdowns will make houses cheaper. Any buyer with any sense will check out the neighborhood to learn what the real cost of the neighbors' houses are.
Me too....
but how do we get out of this mess with the least cost to the tax payer ?????
Take out the shareholders an bond holders first ...
mmckinl | 01.27.09 - 8:34 pm | #
mmckinl... have you not heard of TARP?!?!? The bondholder and shareholders aren't getting taken out - YOU ARE!
Until the 30s, the longest term available for a residential mortgage was five years, if I'm not mistaken.
I remember at the peak of bubble-mania, there were idiots on the tube advocating 50 and 100 year mortgages so that houses could be affordable.
I sat out of the market because I couldn't afford a home at bubble prices. I'm the one who is doubly fucked here.
Again, this is stuff revolutions are made of.
RockyR
~~~~
How are you screwed if you didn't buy ?
There will be plenty of foreclosures even with the cram downs ... believe me ...
While others were living in McMansions watching 60" high-definition TVs, the frugal were living in small apartments.
Or were guests of others...Shotgun!
It still all comes down to Fraggles and Doozers. Pick your team.
BG, i was simply thinking the Treasury when I said Gov't. Sort of my thoughts on a nationalization plan.
"May you all actually get to enjoy such fun!"
You mean like a loan reduction?
Or get rewarded for making a "honest mistake"?
or A multi zillion dollar bonus for not guessing the obvious?
BRING IT ON!
You are totally unrealistic. And have never known anyone going through bankruptcy.
I m an appraiser and even I want appraisers heads on PIKES! There are too few honest ones out there. You can always spot the honest appraiser...he drives a Toyota Turcel with 200,000 miles and dresses with Wal-Mart fashion sense. Professional ....yes ...Rich...NO!
tj & the bear,
Yes, a long time uber-bear, you are.
And notice how the optimistic voices are mostly silent. Nobody has replaced Sebastian and O-Joe.
Speaking of O-Joe, did he ever admit publically that he was a fool?
David in NY writes:
I am astonished that people here are making policy choices based on their jealousy(?) of people who seriously damaged, if not ruined, their lives by going into too much debt, and who are in bankruptcy proceedings as a result. May you all actually get to enjoy such fun!
"Son, remember when you were growing up, and you asked me why all the other kids at school went to Hawaii and their parents had boats and bigger houses and they always had all the toys they wanted, and you asked why? And you remember I told you that we do the same job as they do, but unlike them, we are responsible, and we save our money, tighten our belts, act prudently, because the day will come when we need that money, when I lose my job, or mommy can't work, or god forbid something else... And you remember how I told you about the grasshopper and the ant? Well, son, it seemed like good advice, it seemed like some day this simple wisdom I shared with you would put you ahead in life when those lean times came. I guess I never counted on the fact that when it came time to pay the bill, when these folks who had saved so little with their cars and jet ski's and trips to Hawaii had to face their decision... I never counted... I never counted son on the fact that we'd be paying for them. With our savings. I guess, son, I gave you bad advice, because I'm an old, honest, fool. This ant was working for the grasshoppers all along, I guess. You didn't have those things so they could. I guess."
Old Kansas machinist talking to my friend, his son. Made me sad.
David in NY: absent consequences, even poorer decisions are made in the future. It isn't jealousy (or disdain, more accurately) of those who are suffering from bad decisions; it is a matter of trying to discern the larger implications.
The real loser's are future borrows who will
have to jump though hoops for a mortgage.
Sporkfed | 01.27.09 - 8:38 pm | #
Yeah, which means housing will be a bargain for those with cash.
Can you spell "Schadenfreude" ?
Werner
Can you spell Barvarian Meat Puppet who secretly worships Heydrich and will, if he lives long enough, watch Germany scramble for potatoes agai
My belief is that there are many kinds of possible cram downs -- it may not just be a reduction in the amount owed -- it may affect the term or the rate. Many banks would be better off still getting payments, even if reduced payments, rather than having a foreclosure on their hands that they may not be able to sell.
David in NY | 01.27.09 - 8:37 pm | #
Either way, they get to keep a house they can't afford with OPM while the rest of us struggle.
I haven't been this mad in a long time.
mmckinl: we just went through the wringer Dec'08 when we got mortgage for a house in the OC. We had 20% down but I had to show proof of citizenship, lastest phone bill. This was on top of usual w2, 1040, paystubs of 2 months, bank statements. Also they went over my transactions of my savings account with a fine tooth comb, including why I had transfered out $5000 (to my other bank's checking account was obvious if they put the two statements together). why were they worried about me money laundry or paying off escorts: it shouldn't have mattered in deciding whether I should get a mortgage or not.
ShortCourage,
Oddly enough what separated me from the likes of other less-bearish posters was my total cynicism regarding those in power. There was hardly a chance that they'd do the right thing, given human nature and the overwhelmingly negative incentives driving them. Sigh.
"You are totally unrealistic. And have never known anyone going through bankruptcy."
Would we have had so many bankruptices if people were 'realistic'?
Can you spell "Schadenfreude" ?
Werner
~~~~
Indeed , tell us about Hypo Bank ...
Germany ain't seen nothin' yet. As an exporting country you're screwed.
Deutsche Bank will cot Germany trillions of dollars ...
How many remember after the S&L mess PMI was instated for those who put down less then 20%? The reason was the default rate was higher and the insurance was to buffer this problem. Who allowed this to be side stepped? RED FLAG ANY ONE?
I haven't been this mad in a long time.
RockyR | 01.27.09 - 8:42 pm | #
One thing to remember - they only get the cram down in bankruptcy proceedings. Bankruptcy isn't that fun of a time. It is sort of like complaining that the open heart bypass patients get all the good drugs and all you got was time on that stupid treadmill & healthy food.
Rocky R:
Chill. So you tried your best to be economically rational, but didn't forsee this happening. You didn't see the big picture. Your fault. Save your anger for the time when the elite think that the rest of us are lazy bums, and we think that the elite are corrupt, so that neither group has any respect for the laws or for society, and this self-loathing, mistrust, and hatred of our fellow countryman metastasizes into a general disrespect for law and order, corruption, and economic collapse due to the weight of growing civil disorder.
Here's some Change...Timmy can't say Tarp?
January 27, 2009
Treasury Provides Funding to Bolster Healthy, Local Banks
Capital Purchase Program Funds 23 Banks to Help Meet Lending Needs of Local Consumers, Businesses
Washington, DC - The U.S. Treasury Department today announced investments of approximately $386 million in 23 banks across the nation as part of its Capital Purchase Program (CPP), a means to directly infuse capital into healthy, viable banks with the goal of increasing the flow of financing available to small businesses and consumers. With additional capital, banks are better able to meet the lending needs of their customers, and businesses have greater access to the credit that they need to keep operating and growing.
Paulson's version...
January 22, 2009
Treasury Provides TARP Funds to Local Banks
Washington- The U.S. Treasury Department announced details this week of a $1.5 billion investment in 39 banks made through its Capital Purchase Program.
Treasury created the Capital Purchase Program, a part of the Troubled Asset Relief Program, to help to stabilize and strengthen the U.S. financial system. Treasury allocated $250 billion under TARP's Capital Purchase Program to invest in U.S. financial institutions. To date, the Department has made $193.8 billion of investments, receiving preferred stock and warrants from participating institutions. Investments have ranged from as small as $1 million to as large as $25 billion, financing community banking and Community Development Financial Institutions in 43 states and Puerto Rico.
mmckinl... have you not heard of TARP?!?!? The bondholder and shareholders aren't getting taken out - YOU ARE!
RockyR
~~~~
Yep, but TARP won't work ... not enough money!
Nationalization NOT Bad Banks ... phone every politician you know ...
And regardless, it does not change the fact that changing the rules to allow cramdowns amounts to a straight government-mandated transfer of wealth from lenders to borrowers. (Just as changing it the other way amounted to a transfer of wealth in the other direction. I oppose all such transfers.)
Let house prices fall further.
Cramdown threats will get prices to fall further - and sooner.
"Can you quote an example where I or anyone else on this thread expressed sympathy for the banks?"
Anyone who has opposed cram-downs is expressing sympathy for the banks, who are the only ones who benefit by their absence. Why do you think the banks et al. are so fiercely opposing this? Why are you on their side? (The only real basis for opposing cram-downs is that they increase borrowers moral hazard -- but the more important thing, we have learned, is to discourage banks' moral hazard, which has been the real problem here. At least, I gather Tanta thought that.)
David,
I am not thinking about it in terms of punishing someone for their decisions, because I think moral hazard applies to both the bank and the "homeowner." I am thinking about it as an investor who expects that indentures in general will be honored, who believes that the government will not step in and retroactively change the legal framework associated with an investment because it is politically expedient for them to do so. Would I need to think about this possibility from this point forward? Do you think getting burned will change the risk premium I charge for using my funds in the future?
Too bad, the market seemed to be adjusting just fine. Home Sales up and prices down. We were getting to the bottom just fine, now rates will go back up to price in a unknown risk and housing will decline even further. The market has been effectively cleaning up the mess and this is another distraction.
Hoopajoops, LTD | 01.27.09 - 8:46 pm | #
I'm already there big time.
Yep, lets hate our neighbors. Watch the whole resentment thing get pumped up. Yes, lets not focus on AIG and bonuses. No, get mad at your neighbor who gets a 100k cramdown and life servitude to a shit box.
Hi, Werner
When we're broke, who you gonna sell your cars to?
"-Price discovery is likely more complex because of the difficulty in getting two systems to communicate with each other."
Yes, with tranches of these mortgages residing in electronic blips all over the world, how can they be modified? Who tells the downstream holders? How are they located? Do they have to agree if they are non-US?
Sounds like this cram-down stuff works only with mortgages that banks have held on their books and not sold. What about Fannie and Freddie portfolios?
Some 53% of borrowers with loans modified in the first three months of 2008 and 51% of those with loans modified in the second quarter could not keep up with payments within six months, according to U.S. Comptroller John Dugan, who spoke at a housing conference.http://money.cnn.com/2008/12/08/news/economy/mortgage_summit/index.htm?postversion=2008120917
So what will the Cram down do ? I think your going to create more problems. Let the loser take the losses.Thanks to the government We are all LOSER now
One thing to remember - they only get the cram down in bankruptcy proceedings. Bankruptcy isn't that fun of a time. It is sort of like complaining that the open heart bypass patients get all the good drugs ....
Good point, dryfly.
Geez to hear some folks in here, you would think that no bank ever made a mortgage on a second home, or an investment property, or a boat. All of those can be crammed down, the only exception is a primary residence. Also you would think that going BK is no big deal, it isnt and it hurts. Tripply so since the new laws went into effect in 05. It is not like a cramdown is a painless gift to the homeowner.
"Anyone who has opposed cram-downs is expressing sympathy for the banks,"
No, I want the all the banks to go BK then pick up the pieces. No nationalization. All we are doing is rewarding the crooks! Bottom to top!
When we're broke, who you gonna sell your cars to?
reptillian
There not selling now.
"borrower's"
Housing Wire says much mortgage insurance is invalidated in the case of cram downs. Banks will eat even more losses. Especially Fannie/Freddie.
This is the main problem with cramdowns, private MI as a business starts shrinking. Which isn't necessarily a problem, it's supposed to discourage bad loans by pricing them higher, but creative financing never ceases to amaze me.
Old Kansas machinist talking to my friend, his son. Made me sad.
Makes me sad too.
reptillian writes:
Hi, Werner
When we're broke, who you gonna sell your cars to?
reptillian
hi Reptilian, from whom will you buy the machines to rebuild your manufacturing base later???
MADE IN GERMANY i guess you will read a lot
DannyHSDad writes:
mmckinl: we just went through the wringer Dec'08 when we got mortgage for a house in the OC.
~~~~
yep, but during the bubble it was easy. Now we are getting back to fundamentals ...
"Yep, lets hate our neighbors. Watch the whole resentment thing get pumped up. Yes, lets not focus on AIG and bonuses. No, get mad at your neighbor who gets a 100k cramdown and life servitude to a shit box."
Right, nova. I don't get why everyone here is being jealous of other people whose lives are being ruined, but are siding with the banks (who, after all, weren't forced to lend anybody money) who caused this problem and are still paying big bonuses to their managers.
Old Kansas machinist talking to my friend, his son. Made me sad.
Makes me sad too.
Angry Saver | 01.27.09 - 8:50 pm | #
Maudlin bullshit. Save the Hallmark moment...
You don't do it cause of profit or loss. You either believe it is the right thing to do and live or you don't.
This doesn't affect banks one bit, they pass everything on to the consumer. 80:20 was always a fair risk to the bank, housing prices didn't decline that much historically until the golden rule changed. At 80:20 the risk was always on the homeowner not the bank, if the house was foreclosed the bank generally didn't lose any money because of the equity cushion, not anymore with cramdowns. So expect less lending except in the 80:20 realm and expect higher interest rates.
=It sounds like our points are similar - a change like this will ultimately drive up lending costs at a time when The Powers believe that they must keep them down.
Creating a special exemption from cramdowns didn't lower the mortgage interest rate. Taking the special exemption out and treating primary residence mortgages just like all other secured debt isn't going to raise it.
Maybe I missed it, but this really should be declared a...
NOTHINGBURGER.
I don't understand the outrage. Really. From the borrowers chair, chapter 13 was a shitty option before and will be a almost equally shitty option after. The only difference is you don't have to move to a rental unit if you don't want to.
FFDIC(Unrated) writes:
Hoopajoops, LTD | 01.27.09 - 8:46 pm | #
I'm already there big time.
Social order can survive corruption at the top... for a time. When the rest of the populace cottons on to the fact that the top is profiting by dealing in bad faith in trade for the public's good faith, when they get the impression that only a sucker deals honestly or refrains from stealing, slacking, embezzeling, smashing, or doing other such minor acts the moment he isn't watched, that is when shit really falls apart. When everyone tries to skim off the top, and only the idiot and saints are still making milk, then things go sour.
hi Reptilian, from whom will you buy the machines to rebuild your manufacturing base later???
MADE IN GERMANY i guess you will read a lot
Yoringe | 01.27.09 - 8:51 pm
By then Opa won't have a clue.
Hoopajoops, I think we are just about there...
How are you screwed if you didn't buy ?
There will be plenty of foreclosures even with the cram downs ... believe me ...
mmckinl | 01.27.09 - 8:39 pm | #
There is an opportunity cost here. I could be living in a McMansion right now driving a Bimmer I bought with a HELOC.
Just go ahead and make cramdowns a permanent feature of the law and live with the consequences.
This is the upsetting part. They're changing the law for the past. WTF? At least if it's also change for future loans there's less argument about the "changing contracts" aspect. But this just opens the door for careless lending down the road again, and before the future lending is considered careless again it'll be considered "making houses affordable" again.
" Dirk writes:
Geez to hear some folks in here, you would think that no bank ever made a mortgage on a second home, or an investment property, or a boat. All of those can be crammed down, the only exception is a primary residence. Also you would think that going BK is no big deal, it isnt and it hurts. Tripply so since the new laws went into effect in 05. It is not like a cramdown is a painless gift to the homeowner.
Dirk | 01.27.09 - 8:49 pm | # "
So tell me if it hurts so bad then why did they buy to much? Did they not teach math in the school they went to? Did they not understand loans were paid with money not made? They should not be able to cram down anything in my opinion.
As the song goes:
Gideon come up with his eyes on the floor
Said "You ain't got a hinge, you can't close the door."
Moses stood up above his six foot and ten
Said "You can't close the door when the wall's caved in."
David in NY --
Why do you think the banks et al. are so fiercely opposing this? Why are you on their side?
For the last time, THERE AREN'T ANY "SIDES". The enemy of my enemy is not my friend.
As for this only harming the banks, you don't know that (and in fact you are probably wrong). What you know is that it will help borrowers who borrowed too much. Period.
Who it will hurt depends on many, many things, not the least of which is how far our government and central bank are willing to go to "save the financial system". The evidence to date suggests they will go pretty far. Bond Girl is right: Ultimately, the taxpayers will almost certainly wind up footing the bill.
(And for the last time, again, I would probably support changing the rules for futrue mortgages. Obviously this makes me a sock puppet for Goldman Sachs.)
"This doesn't affect banks one bit,"
The banks don't agree with you, sue. They're twisting Congressmen/women's arms to stop the cram downs. They care, because it does affect them. I just don't see why you would care.
Nemo
For the last time, THERE AREN'T ANY "SIDES". The enemy of my enemy is not my friend.
there ARE sides. Its the Productive vs The Unproductive allways has bee
Sorry but "cram downs" are a piece of sh*t. Give up the house if you can not afford it! Duh!
The market has been effectively cleaning up the mess and this is another distraction.
sue
~~~~
You are delirious ... this is just the lull between sub prime and Alt A ... then throw in unemployment at 9% ....
Econbrowser: Distressing Picture of the Day
check out the coming Alt A and option arm crash...
Yep, lets hate our neighbors. Watch the whole resentment thing get pumped up. Yes, lets not focus on AIG and bonuses. No, get mad at your neighbor who gets a 100k cramdown and life servitude to a shit box.
nova | Homepage | 01.27.09 - 8:47 pm | #
That's what is so funny - who in BK is going to even WANT the damned thing? Is the BK judge going to ry to make him pay? Good luck w/ that.
Dirk,
When the losses from cram downs get passed from the banks to the tax payer it really bugs me.
The financial & political corruption is unbelievable.
The common good is not being served, rather it is being distorted for the benefit of the few at the expense of the majority.
"Yep, lets hate our neighbors. Watch the whole resentment thing get pumped up. Yes, lets not focus on AIG and bonuses. No, get mad at your neighbor who gets a 100k cramdown and life servitude to a shit box."
You'd be a sucker not to take their radio if they leave it out. The crime is too petty for the cops to get involved. Likewise, they'd be stupid not to steal your mail. Only suckers follow the rules when nobody is looking. The bigger the theft the better. The real way to get ahead is to get away with it.
These are the thoughts that follow corruption at the top. The elite figure that by behaving this way, they can grab the produce of society and rake off the cream. They don't count on the fact that by the time the rest of the people figure it out, they start playing by the same rules, and the pilfered cream is rotten. Now the elite doesn't steal out of greed, but out of necessity; to do otherwise would be to sink into the hellish morass the lower classes have become. You are in south america, one of the few rich, trapped in a perpetuating cycle of corruption, because the alternative is slipping down into the lawless mess your example created.
Chill. So you tried your best to be economically rational, but didn't forsee th...
Hoopajoops, LTD | 01.27.09 - 8:46 pm | #
10-4
So if all these boneheads didn't inflate the market, more savers would have been able to afford/buy a house.
The savers' time to buy a house is now, or coming soon. What's the problem?
man, they put another GS guy at the NY fed... all this talk on the hill...i'm almost ready to throw in the towel....I give up, i guess nothing to do except sit back and watch.....
damn...
Don't they make machine tools in Japan?
ova --
Yep, lets hate our neighbors. Watch the whole resentment thing get pumped up. Yes, lets not focus on AIG and bonuses. No, get mad at your neighbor who gets a 100k cramdown and life servitude to a shit box.
Can't we all find enough hate for AIG and for our neighbors? That is my dream.
there ARE sides. Its the Productive vs The Unproductive allways has been
Yoringe | 01.27.09 - 8:56 pm
The useless eaters? Sorry, society always has those. The poor and the idiots will always be with us.
Your reward is doing the right thing. That is if you really doing it for that reason. If you thought that if you sat up on command and barked when told to you deserve a doggie treat...
I'm already there big time.
FFDIC | 01.27.09 - 8:47 pm | #
Yup! Same here.
"Yep, lets hate our neighbors."
Our neighbors didn't give a dam when they bought and now dump it on us now did they?
Yep, lets hate our neighbors. Watch the whole resentment thing get pumped up. Yes, lets not focus on AIG and bonuses. No, get mad at your neighbor who gets a 100k cramdown and life servitude to a shit box.
nova | Homepage | 01.27.09 - 8:47 pm | #
Got mad at AIG, TARP, Bail-outs, all of it.
Do you think getting burned will change the risk premium I charge for using my funds in the future?
Bond Girl
~~~~
Nope ... This is the only game in town. You'll get whatever the market says you get ... and it will be less than you're getting now.
Hey Werner,
instead of worrying about cramdowns, here's your pal Medvedev ordering a new, more complete count of Russian deaths caused by the German invasion.
Something to think about while your exports fall off a cliff.
Forbes.com File Not Found
There not selling now.
nova | Homepage | 01.27.09 - 8:49 pm | #
Where my wife works sales are off 40-45% from last years (record) pace. They have already laid off twice based on a forecast of a 20% decline... be two more rounds. Might have the girl around the house more.
Can't we all find enough hate for AIG and for our neighbors? That is my dream.
Nemo
I have to respect a man who dreams big. Go forth Nemo! Lead us out of this valley of granite and inlaid teak.
Of course there are sides, Nemo. People here are for some ungodly reason shilling for banks, who desperately want to avoid the cram downs. And as near as I can tell, they're taking that position out of some odd feeling that some debtor may have made off with some money, and they were harmed by him. (Was it Mencken who defined Puritanism as the fear that "someone, somewhere, was having a good time"?)
Look, anything that sorts out the housing market fast is good. Cram downs are such a thing, and furthermore they'll alleviate a lot of suffering in places like Las Vegas and Detroit.
The point shouldn't be to punish debtors (or creditors). It should be to solve this situation, get back to normal. I think cram downs will help.
When everyone tries to skim off the top, and only the idiot and saints are still making milk, then things go sour.
\t Hoopajoops, LTD | \t \t \t \t01.27.09 - 8:52 pm
I think we're already there too, or close to it. Its not about economics anymore, or markets. Its about "fishing for bounties." Gaming the system to get the biggest handouts from government. The elite are experts at this game.
ope Nova it is the ppl who create WHEALTH trough any means and some who cream it off and live off it without contributing ( i dont mean the poor or idiots because they are productive too.. most likely the poor are the most productive see China may??)
When everyone tries to skim off the top, and only the idiot and saints are still making milk, then things go sour
Hoopajoops, LTD | 01.27.09 - 8:52 pm | #
I think we're already there.
Am I the only person here that remembers going through Hell to get a mortgage even with a 20% down payment?
Nope, I remember it too. I couldn't believe just a few years later people living paycheck-to-paycheck getting loans. I would've liked it if I was 80 and interested in selling, but seling at the time gave me no advantage as I would just have to live somewhere else and pay the inflated prices (or rent, which is a different set of hassles than ownership but no less hassle overall, IMO).
"Yep, lets hate our neighbors. Watch the whole resentment thing get pumped up.
~~~~
Be glad you have neighbors instead of boarded up houses with overgrown yards and junkies breaking in ...
AIG Derivative Trader anyone.
I feel like I am getting a cram-down by being responsible and paying my bills....
crispy&cole | Homepage | 01.27.09 - 7:32 pm | #
This must of been said - no, that's a cram up!
AIG Derivative Trader anyone.
sue | 01.27.09 - 9:02 pm | #
Exactly.
mmckinl: we were first time buyer in '95 and again in '08 (we rented from '05 to '08). I'm pretty sure my credit rating is much higher now, than what I had in '95. And had 20% down both times. However, this time seemed much more invasive of privacy than last one (esp looking over the detailed transactions). Phone bill was weird, too: we even had to take the original to the escrow office (fax wasn't good eough)....
you didn't make money on serial flipping, you didn't HELOC your way to new cars, expensive vacations, plastic surgery and all the other bling, you didn't collect 250k or 500k tax free on your RE gains.
Serial flipping only works if you stop before the market crashes. I doubt many serial flippers got out in time.
Gov. stupidity has no limits. Who is going to buy MBS anymore (beside the FED)? What about FHA insured loans, VA loans, PMI, etc, etc. What an idiotic idea. Just consider FHA for exemple. FHA insures a loan in case of default. Is a cram-down a default?
mmckinl,
The option ARM debacle will be bigger than most expect. An over arching mistake amongst the bears is that they weren't pessimistic enough.
A question. With house prices crashing, how many Option ARM borrowers are paying the absolute minimum? I'm betting almost all.
And as house prices in CA, AZ, FL & NV keep crashing, those option ARM mortgages get even deeper under water.
The walkaway rate on subprime will pale next the the option ARM bomb.
(Was it Mencken who defined Puritanism as the fear that "someone, somewhere, was having a good time"?)
I think so. And he lived in a row house with his mother!
Sorry to be late to the game. Just gpt back from a trip to the foutrth corner. For the uninitiated, you can look it up.
If that's what a looming depression looks like, I'll take two. Of course, they say it always hits there late and they're usually late coming out. And I have more to say, much more.
"
I originally felt that Obama admin would be on the wrong path for 18 months until all the good-old-boy solutions failed, and then strike off in a real direction of real change because all else had failed. This and the "bad bank" leads me to believe I was spot on.
Bob Dobbs
~~~~~
The economy will be a smoldering ruins in 18 months.
mmckinl | 01.27.09 - 8:02 pm | # "
And seriously -- what do you think it takes to make a major change in the economic system of this country?
Nothing less... nothing less... change will happen when the average citizen is sorely tempted to shoot any financier on sight.
There is no way out that does not involve pain and wreckage. No way. Wreckage it is, and then change -- one way, or the other. Recovery is quite possible out the other side. It was in '33.
I think you all underestimate just what kind of chaos real reform requires.
There is an opportunity cost here. I could be living in a McMansion right now driving a Bimmer I bought with a HELOC.
RockyR
~~~~
The Bimmer would be towed and your house would be not yours ... of course if you are thinking this way then you are no better than a speculator.
ova writes:
AIG Derivative Trader anyone.
so the Populace gets a cramdown and the bankers get a cream up?? well
walking around arbitraging moral hazard through market inefficiences.
*terrible speller...
I'm sure the banks oppose it because it is their problem until they find a way to pass the costs on. And because they probably still maintain some sense of uncertainty as to the timing and extent of government financial support (although we may not).
but the lender should still have the choice to take the secured property if they so choose.
Fannie and Freddie are sitting on so many properties they're almost defacto RTC's. And they have offers on lots of these properties, but like the banks they are still marking to slightly above market (which is still marking to fantasy, even if the fantasy is a little less fantastic).
Moe, gee maybe they got sick and had no or crappy insurance, got laid off, divorced. Tried to start a small business that didnt make it. Lots of reasons people go BK. The govt changed the rules in 05 to screw borrowers and help banks. Why have BK at all if the the biggest single debt most people have can not be affected. Lets just go back to debtor prisions. Or better yet, repeal that pesky 13th amendment.
Can't we all find enough hate for AIG and for our neighbors? That is my dream.
Nemo | Homepage | 01.27.09 - 8:58 pm | #
Hate is such an ugly word - let's just 'eat them' in a humane & passionate way - like they were free range poultry - cared for and well fed... running free prior to laying their cute little heads on the block.
"Look, anything that sorts out the housing market fast is good. Cram downs are such a thing, and furthermore they'll alleviate a lot of suffering in places like Las Vegas and Detroit."
So you think that cramdowns will put a floor under housing prices? I would think that they'll accelerate downward.
The Bimmer would be towed and your house would be not yours ... of course if you are thinking this way then you are no better than a speculator.
mmckinl | 01.27.09 - 9:04 pm | #
Obviously I'm not, or I would be all about the cram down. Please.
Because mortgages are generally non-recourse.
Charles Kiting | 01.27.09 - 8:37 pm | #
Nice theory. Check it out - Illinois is recourse, and it is nowhere near alone.
I think you all underestimate just what kind of chaos real reform requires.
Yep. And I hope we do not see it.
While others were living in McMansions watching 60" high-definition TVs, the frugal were living in small apartments.
So what? Those McMansions are now empty and their TV's can be had for half the price they paid for them.
Look, anything that sorts out the housing market fast is good. Cram downs are such a thing, and furthermore they'll alleviate a lot of suffering in places like Las Vegas and Detroit.
You think this is going to solve the housing problem? Seriously?
we need a skittle shatting, rainbow flatulating , single horned pony czar.
For a bit of morbid humor, Pandit speaks:
Pandit Says Banking System Is Well Capitalized
Hold your ribs so you don't crack one, it's good.
C
So what? Those McMansions are now empty and their TV's can be had for half the price they paid for them.
Charles Kiting
Sounds like the Faustian bargain.And it looks like some want to cheat the devil also..
"People here are for some ungodly reason shilling for banks,"
What part of "we are not for any bailout(bank/homeowner)" is difficult to understand?
I'm astonished at the outrage over the cramdown issue.
Sanctity of contracts? You mean like when the bank unilaterally changes the terms of a credit card agreement? Are you talking about when corporate borrowers can't repay and push equity onto the bondholders (which is what 'cramdown' means).
Every time I have bought a property with a mortgage, the lender has insisted on selecting the appraiser. Somehow, each time, the appraisal comes in to the penny of the contract price? Who is rigging that game?
If the banks are so worried about the sancitity of contracts, a secured contract says that they can take the security back if the borrower doesn't pay. Let them take the house back. Good luck selling it for anything close to the debt. If the banks want to take the collateral back and go after the borrower for the deficiency, let them go through judicial foreclosure, that will take a couple of years, and the property will be trashed when they get it back.
Face it, the banks made these loans knowing that a significant number of them would default, and hoping that they could shove the loans on to unsuspecting investors before the loans defaulted. The investors wanted a better return on their money than "safe treasuries", and willfully looked the other way when the rating agencies lied to them.
Now the banks and the investors want a bail out from the same poor suckers that they talked into buying these overpriced assets.
Fine, bankers want my tax dollars for a bail out, they are going to have to dance to my tune. Don't want the bailout, no problem, capitalism's creative destruction will sort things out, even if the banks don't like the outcome. But the banks can't have it both ways.
Option ARMs? Oh, no. Those people will be totally fine. All that granite will make up for that pesky negative amortization.
Jim, whats the economic climate like up in portland? I hear it's brutal in the cities, but even worse out in the countryside.
Hoopajoops, LTD
commenter 'scone' has some comments from Columbia County on an earlier post. I can't speak of anecdotes from outside the city with any experience.
I live in downtown PDX, and the economic climate hasn't dramtically changed IMO in the last year or two, except people are scared of a major depression coming. New condo's unsold. Rents stable. Unemployment is in 10-11% range statewide. Some retail vacating, but not overwhelming.
Portland didn't get a huge bubble on housing prices, and the decline in prices may just be starting in the city proper. The universities (Portland State and OHSU) are going to have big troubles because of state funding reductions, and there are lots of students in Portland.
The latest Case-Shiiler 20 chart that CR posted (today) shows only Denver, Charlotte and Dallas with less decline in housing prices.
TBTF: What Makes A Bank Too Big To Fail - Market Movers - Portfolio.com
Nova: Until the 30s, the longest term available for a residential mortgage was five years, if I'm not mistaken. Don't know what the down payment requirements were.
Seven and ten were somewhat common. The main thing is you needed 50% down and interest rates were almost always variable.
Bailout Recipients Hosted Call To Defeat Key Labor Bill
This could get nasty...AIG? BofA?
I still don't understand this fascination with a credit score.
Seems like another sham to me: You need a good credit score so you can more easily get yourself in hock up to your eyeballs.
Good grief, what's the benefit? It seems like people would be better off with no credit score and a used car.
..... I could be living in a McMansion right now driving a Bimmer I bought with a HELOC......
Thankfully the great computer in the sky can't figure that out yet.
Who would have thought that buying one depreciating asset with another would have worked out so well.
Heyyyylooo CR addicts!
Gee, am I glad I got my retention bonus provided by the ever charitable politicians and their taxpayers. Otherwise, I might have to try to negotiate a higher salary in the job market, and even though I'm POSITIVE there is no shortage of offers for such a valuable financial specialist like ME, why take the risk in these uncertain times, am I right?
Plus the wife's Benz is almost off lease, and she's going to want to trade up. So, lucky me I guess.
Now then, anyone want a CDO^2?
"Moe, gee maybe they got sick and had no or crappy insurance, got laid off, divorced. Tried to start a small business that didnt make it. Lots of reasons people go BK. The govt changed the rules in 05 to screw borrowers and help banks. Why have BK at all if the the biggest single debt most people have can not be affected. Lets just go back to debtor prisions. Or better yet, repeal that pesky 13th amendment.
Dirk | 01.27.09 - 9:06 pm | # "
Sorry non of that should give anybody a free pass. I am not going to tell you where I came from and what I have. Employees have taught me for years that most Americans are lazy in the head. If one never plans for trouble in life then they are risking failure. The reward should match.
"So you think that cramdowns will put a floor under housing prices?"
That was my (relatively uniformed) instinct. Mostly, however, I think it will keep houses off the market that would otherwise go in bankruptcy -- lower inventory would be good. I envision them mostly being more like workouts -- adjustment of lenght of terms, interest rates, a payment moratorium, or the like, that would keep a debtor in his or her home. But I don't think anybody here has a clear picture of what judges would or could do.
Granite is so declasse, now. It is even showing up in recently built, half-empty apartment complexes.
I haven't been this mad in a long time.
RockyR | 01.27.09 - 8:42 pm | #
TARP: aid for banksters who still get BONUSES! And for the jokers who bought these crappy MBSs, thus enabling the whole game.
Cram-Down: Help for people who are already going through bankruptcy.
I know which one pissed me off a LOT more.
fried writes:
trader walt ,
while that suicide/murder story is horrific, the article also says both parents lost their jobs "for cause", and were fired, they did not lose their jobs as a result of a layoff-----------------------------------
That's the employers version of events. It's always the employee's fault. Plenty of other eager workers...The number of eligible workers grew every year during the 8 year of the Bush administration, but the job market didn't grow at all. What are eligable workers supposed to do? Live in boxes?
Yep, people should save up for a 20% downpayment before buying a house. But if you don't have good health insurance, cancer can cost you $1,000,000 for treatment; shouldn't you save up a million dollars before you buy a home or start a family?.
How much more should you save before buying a house if you plan to have kids, if there is a chance that another Republican adminstration may send unemployment through the roof again and your job with it?