Everything you need to know about the bailouts
Originally posted 2009-03-22 20:41:56 -0500. Bumped by carol.
in 2 short paragraphs. A relatively long post for Atrios. Wheeeeeeeeeeeeee!
What's The Goal?
Others have made this point in various ways, but if the goal is to bail out the banksters and keep the existing too big to fail financial order in place with the same cast of characters in charge, then all of this sounds like a cunning plan.
If the goal was really to get banks lending again they'd be funneling large sums of money to healthy (mostly smaller) financial institutions who actually made sensible choices over the last few years.
Meanwhile a fire sale is going on:
Lenders have become so overwhelmed by the foreclosure crisis that they are starting to unload properties in bulk to investor groups at steep discounts.
Investors then flip the properties for a profit without necessarily improving the home.
For example, a unit of Citigroup, the troubled financial giant, sold a foreclosure in Temecula to an Arizona investment firm for $139,000 when comparable homes in the area were selling for $240,000 to $260,000.
The firm listed the home for $249,000, received multiple offers and the property has entered escrow, said Amber Schlieder, the real estate agent who handled the listing.
Citi left a 100 grand on the table. This looks like a great way to abuse the taxpayer even more.
I want to know who they are all selling in bulk to.
Remember who else was buying up the mortgages in bulk?
So it may come as a surprise that a dozen former top Countrywide executives now stand to make millions from the home mortgage mess.
Stanford L. Kurland, Countrywide's former president, and his team have been buying up delinquent home mortgages that the government took over from other failed banks, sometimes for pennies on the dollar. They get a piece of what they can collect.
"It has been very successful - very strong," John Lawrence, the company's head of loan servicing, told Mr. Kurland one recent morning in a glass-walled boardroom here at PennyMac's spacious headquarters, opened last year in the same Los Angeles suburb where Countrywide once flourished.
The Treasury has shown a willingness to recklessly toss all of our futures away to keep these "Too Big Failures" operating in their self-entitled comfort zone.
What incentive do the banks have to sell these properties for as much as they can when they can sell them in bulk at a loss to their buddies' companies (or even their own companies) so they can turn a profit on them and doing this knowing the failure bankers can ship off all of the bills for the losses to us? Think about it.
If Geithner were handing these trillions to the smaller more responsible bankers some of us little people would be able to buy these cheap houses...
But this way the elite get to keep all of the assets in their greedy hands and have us pay for their gambling addiction failures too. And then they will turn a profit on selling us these properties AGAIN.
“While some critics are distressed that Mr. Kurland and his team are back in business, the executives say that PennyMac’s operations serve as a model for how the government, working with banks, can help stabilize the housing market and lead the nation out of the recession. “It is very important to the entire team here to be part of a solution,” Mr. Kurland said
Important for Whom? You, maybe, but not me.
I am thinking predatory lenders should already be in jail and that this is a model for more financial disaster for taxpayers. I smell smoke and all I see are bulk fire sales and a bunch of greedy arsonists standing around with their gasoline soaked hands in our pockets...
And, so far, the elite are achieving their goal of bailing out themselves with our money. And they have even found more ways to profit from their own failure. While we foot the bills.
Comments
Connecticut Man1
March 22, 2009 - 22:09
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From buhdydharma at dKos
Some extra food for thought:
Read on...
Connecticut Man1
March 22, 2009 - 22:51
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Via Newsweek,
Follow the Bailout Cash:
Connecticut Man1
March 23, 2009 - 00:03
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Via Tengrain:
A picture is worth trillions of dollars:
rba
March 23, 2009 - 10:21
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Perspective
"Q: What if markets never recover, the assets are not fundamentally undervalued, and even when held to maturity the government doesn't make back its money?
A: Then we have worse things to worry about than government losses on TARP-program money--for we are then in a world in which the only things that have value are bottled water, sewing needles, and ammunition."
Brad DeLong, The Geithner Plan FAQ
Read the rest. It's worth the click. And let's be careful out there with statistics and numbers. Remember, we're dealing with trillions of dollars of 'gains and losses' created from thin air, embedded in 'derivative' instruments whose value will rise and fall over the term of the underlying assets.
Trying to set a value *today* on those 'toxic assets' makes nailing jello to a wall look easy.
Connecticut Man1
March 23, 2009 - 11:12
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If the house of cards falls..
We may be dealing with over a QUADRILLION "dollars of 'gains and losses'" most of which are "created from thin air, embedded in 'derivative' instruments whose value will rise and fall over the term of the underlying assets."
Since that post he has corrected the cumilitive number.
Now they are around 1.4 Quadrillion.
And then there is this:
Just so you know what your money is flowing towards supporting:
Connecticut Man1
March 23, 2009 - 11:23
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That first story is relatively new...
The other two are older and for some perspective.
Connecticut Man1
March 23, 2009 - 11:49
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Good riddance...
In the fianacial times and, as the buzzflash submitter noted, these self-etntitlement morons that broke the world economy are not trying to be funny here:
Bankers on Wall Street and in the City have struck back against moves by US lawmakers to slap punitive taxes on bonuses paid to high earners at bailed-out institutions.
Senior executives on both sides of the Atlantic warned of an exodus of talent from some of the biggest names in US finance, saying the "anti-American" measures smacked of "a McCarthy witch-hunt" that would send the country "back to the stone age".
There were fears the public backlash triggered by AIG's payment of $165m (£114m) in bonuses to executives at the unit responsible for losses that forced a $170bn taxpayer-funded rescue would have devastating consequences for the US's largest banks.
"Finance is one of America's great industries, and they're destroying it," said one banker at a firm that has accepted public money. "This happened out of haste and anger over AIG, but we're not like AIG."
An example of an idiocratic financial leadership that doesn't realize, yet, that we know how stupid, incompetent and greedy they are. You can leave your bonus on the table as you leave and we may, yet still, clawback your paychecks that amounted to a rape of the economy. The other option is taking a pound of your flesh closest to your greedy heart...
rba
March 23, 2009 - 13:19
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Background
See, among others: Credit Default Swaps 101: A Primer On Legal Remedies [Robins, Kaplan, Miller & Ceresi LLP].
This firm seems to have one of the better overviews of current rulings in U.S. courts regarding CDSs. Part of that overview clearly shows that absent an 'unwinding' of the complex webs of CDSs, 'value' may be a moving target.
Connecticut Man1
March 23, 2009 - 13:59
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Bankerese mixed
with legalese? I may need another pot of coffe before trying to plow through something like that... lol
rba
March 23, 2009 - 15:44
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Nah . . .
it's shorter than what you've linked to here, and they do a good job keeping it clear. 'Course if you read the few cases (they're out there), it's probably best to brew the coffee double strength.
Connecticut Man1
March 23, 2009 - 16:17
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It seems that
Jane Hamsher sees the same problem I do, regarding who can buy the houses, with the bailout... Every single little piece of info we get makes this bailout stink even more and more.
There is no doubt in my mind that we have gone from a failing plutocracy to a kleptocracy.
It is no longer about what is good for America but only what is good for the elite and what will keep them in power. No matter what angle I look at all of this from I can not find any upside - none whatsoever - for the average American in this bailout.
I started reading that story now. At least they avoided the legalese... lol
rba
March 23, 2009 - 19:32
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I agree with . . .
Longman's take on the Hamsher piece.
susie dow
March 24, 2009 - 23:45
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Helpful
I was having trouble with Jane's piece but couldn't put my finger on why. I didn't have time to poke around and find out more. Good find.
jem777 (not verified)
March 25, 2009 - 04:27
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To make it simple: Private
To make it simple: Private bailouts are done by individuals who do it because they are passionate about the bailout and feel that it needs to be done in order to secure the future for the "bailoutee". Public bailouts are done by the government using incoming government revenues for the same reason. Both are risky and debateable.
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