You can count on these people never taking responsibility for the mess they have created.

It's all the Democrats fault, somehow, say their spokespeople like Limbaugh.

Hold one's horses, please.

The world of high finance has come to a startling juncture. But it is as much both Parties' fault as it is nobody's.

Most of the deans of high finance were pretty moderate folks. About 50% DEMs, another 50% GOPs. Sure, the GOPs generally wanted less regulation and supported self-interest hard. Think of Enron, Halliburton, Arthur Anderson. All heavily GOP firms. Think of Coal, Timber, Gambling, Oil, Drilling, Aerospace and Defense, dirty utilities, and Mining companies. Most are GOP-led companies. Think of job exporters like WalMart -- think GOPs. Think of huge private companies like Bechtel, Amway and Koch Industries -- GOPs.

There seems to be a propensity among the elites and plutocrats to be a GOP. And they are very protective oftheir privilege. But Wall Street and banking have produced a number of intelligent DEMs, too. Think Hank Paulson, Cyrus Vance, Paul Krugman, Robert Rubin -- all DEMs. And all very savvy financial types. And how many of them would have called for tighter lending and more regulation? Probably most.

So not all financial types should be painted as greedy, uninquisitive, deregulating goons.

The world of high finance has come to a startling juncture. But it is as much both Parties' fault as it is nobody's.

~T&C

This is true.

Part of the problem as Spud see it is the overly cozy relationship between BigBiz, BigGov and BigMedia.

Too many pols spend their time in office setting up their post-governmental swan dive into a big pile of cash in the private sector like Phil Gramm did when he crossed over from being the Chairman of the Senate banking commitee to become vice-Chairman of UBS or when they go from being in government to becoming lobbyists.

The corporate MSM tend to ignore the excesses on both sides of the aisle and if their conciouses give them any grief they can always say to themselves that they are merely doing their patriotic duty to not "spook the markets".

Be Well.

I have a mortgage question.

When a person takes out a mortgage with no down payment, or very little down, the lenders require the borrower pay for PMI (insurance which guarantees payment of the loan to the lender should the borrower default). It's my understanding that the cost for PMI is always included in the monthly mortgage payment. PMI is carried by the borrower on his mortgage amount until the borrower has enough equity in his home not to need a PMI guarantee anymore.

Okay, why aren't all these lenders of the subprime loans being paid back for theor borrowers' defaults on their subprime loans by the PMI insurance policies they were obligated to carry?

Where's the PMI insurance payout to cover the amount of the mortgage for these defaulted on loans?

Anyone know?

Very good question Califchris. We talking about the very same thing today at work.

Cali,

In you post you answer your own question.

It's my understanding that the cost for PMI is always included in the monthly mortgage payment.

If there is no monthly payment coming in there is no coverage for the loan, it was set as a default problem from the very beginning.

Cali,

Who owns the insurance, the same banks up the money tree.

Chris-I think a lot of people got hit when they renewed their mortgages. They may not have had it on the newer mortgage. But on the original. you would have thought payment would be automatic since they defaulted, whether in arrears or not..

Strange

NG3

But on the original. you would have thought payment would be automatic since they defaulted, whether in arrears or not..

Strange

Exactly. I never had PMI insurance in my mortgage payment but from the ittle I understand of it, a borrower with not enough down payment is required by the lender to carry it and the monthly premium for the PMI was included in a borrower's mortgage payment each month. It was exactly these types of loans -- subprimes with no interest, no down payment -- which needed PMI in the first place, right?

So when a borrower defaulted -- before they could build up the equity to no longer require PMI -- then the PMI insurance company should have paid off the lender. What's the purpose of having PMI in case of the borrower defaulting if when the borrower defaults there's no payoff to the lender? Why even have it?

They may not have had it on the newer mortgage. But on the original. you would have thought payment would be automatic since they defaulted, whether in arrears or not..

Isn't a borrower suppose to have PMI until he has built up an 80/20 equity in his home. I may be wrong but I don't think your obligation to carry PMI with your mortgage disappears simply because your rate went up on the newer mortgage. It boils down to how much equity you have built up as owner of your home and then when the equity is 80/20 you can request the lender no longer make you carry PMI on your mortgage. I think.

Everybody knows that the only way to foster a successful economy is to tax the holy crap out of the wealthy and give that money to the poor.

The greedy have been in control for far too long. The poor will get their opportunity. Payback (payday!) is here. The time is now.

Fannie Mae & Freddie Mac were wonderful accomplishments of the democrats. The greedy wealthy (I know, the word 'greedy' is redundant when discussing the wealthy) have run Fannie & Freddie into the ground - seeing the poor properly housed was too much for the neocons.

GoBama08!

Be Well.

Chris,

There's two problems with the PMI argument:

1. Global finance is so sophisticated and interlocking; a carrier with premium money doesn't stack it up in a vault, but invests it. With markets crashing and investments falling, the assets to pay claims are evaporating.

2. Insurance companies will do anything possible to avoid paying a claim. They will drag it out, hoping that they can get someone else into the vortex.

I hate the idea of any kind of bailout, but I also appreciate the fact that this collapse will bring down the many good companies with the bad ones.

Everyone from individuals to big employers relies on debt to grow. A lack of stability is going to choke off a lot of good people and good employers.

Vernon

Look at the market today -- just a regular day at the DOW -- nothing very scary there.

This bailout proposal has absolutely NO restrictions or demands or laws in it that these same frauds and loopoholes by the financial institutions will not be taking place in another month or two after the bailout.

This joke of a bailout was cobbled together with no punitive action to be taken against anyone. It's an insult. If these banks, etc, need an infusion of cash then let the government give them a loan -- with interest rates and a time certain to pay it back. Right now there are no guarantees any of this money ever need to be repaid.

In fact billions are being set aside for ACORN and La Raza -- two the the main groups responsible for using the threat of lawsuits on the banks if they didn't hand out these subprime loans to minorities and others whose credit did not normally qualify them for a loan. The banks didn't want to be sued so they went along with it. Now were going to give BILLIONS of this bailout money back to the La Raza and ACORN extortionists again! Why? Looks like these politicians are all planning on business as usual, doesn't it.

Two madmen are ruling NEWSWEEK right now: Joe Klein hates McCain and Fareed Zakaria hates Sarah Palin.

Actually I see Fareed as the counterpart of Heather Mallick, only his hatred is sanitized enough to be publishable. Hatred nevertheless.

ooops... Put Joe Klein to TIME, not Newsweek.

There ya go, two weekly magazines in the pockets of Obama.

There ya go, two weekly magazines in the pockets of Obama.

#15 | Posted by takitez at 2008-10-01 01:32 AM | Reply

We need thousands. So far there are two--who are the rest in the pocket of, dummy? The peopple who want golden parachutes for leeches and lower tax rates for millionaires?

Only rich people and idiots should vote republican--which are you?

I'm just looking to the sky for divine intervention but food goes to waste and the pain lingers.

Sorry your panties are in such a knot. Your tired old liberal screed can be simply answered with the same old answers, which have the added benefit of being true. It's "rich" people that start businesses, create jobs, lend capital, innovate and create economic growth. Government can't do any of those things, without it simply being a transfer of wealth, and we know what that's called.

Get over Bush's fucking up the war. The war is virtually over (unless the new guy fucks up what's already in place). Barry's war policy is virtually indistinguishable from McCain's, so there's no reason to support Obama because of his war stance. And there's plenty of reasons to NOT support him, since he's much more likely to screw up the fragile situation that's there now.

And keep wasting your time going after the golden parachutes. Take their bonuses, take their salaries, take all their fricking assets and it's still a drop in the bucket. We have bigger fish to fry, and all you'll end up doing is scaring the competent CEOs away from US companies. Now THAT will make a difference. Oh yeah, CHANGE.

And before you get all worked up on your "deregulation" mantra, open your eyes and ears and check out the CSPAN tapes. The problem with the banks was caused by government tampering, forcing banks to lend money to people that couldn't afford the loans, and then literally close their eyes to the impending danger. The bill to address the lack of proper oversight (co-sponsored by McCain) was shitcanned by the Dem leadership (who was being very well paid by the Freddy/Fanny lobbyists - #1:Dodd #2:Obama)

Now the bungling Dem-led congress, with its 10% approval rating, is shoving a socialist-style takeover of the banking and insurance industries. Very clever, if they actually planned it. Pass horrible regulations like Sarbanes-Oxley which force institutions to artificially discount their assets, impose mark-to-market accounting to force liquidity problems, and then use the taxpayer's money to steal these assets at a discount.

Get over Bush's fucking up the war.

That is perhaps the dumbest seven words I have ever read on the internet.

Congratulations.

Maybe PMI as well as title insurance which protect the lender should be paid by the lender.

CC

WRT to PMI, it is not that simple

first, lenders will often offer 2nd mortgages to cover the balance on the 1st mortgage to get around the need for PMI. I did this for my first home.

second, the value of the insurance is not for the full value of the loan. The insurance only covers a small portion of the value of the loan, because the bank (in foreclosure) also receives the asset (house) so no need to insure the whole thing.

third, people were failing on their loans nearly immediately, thus not even starting to pay PMI.

An Example.

Person A buys a $500,000 house with 0 down. he gets $525,000 to cover closing costs,etc (this may be an extreme example). The value of the PMI may only be 5 or 10% of the LOAN amount, lets say $50,000

so a year goes by and the borrower is faling to make payments and the overvalued house has lost $100,000 in value. house if foreclosed

BUT it gets worse. Lender has foreclosing fees, lawyers fees, (and I may be wrong here but is responsible for any liens on the house, ie taxes, workers, etc).

but the value of the house is only $400k but the real value is what can be received in a foreclosure sale-which will further lower the price cause a. there is a glut of houses for sale AND buyers realize lenders are very eager to unload the properties cause if they DONT unload them, they are paying property taxes, insurance on these houses.

dinsey truth,

your ability to see backwards is a tribute to this countries education system.

Lending policies and interest rates were not established by poor people, nor have they engaged in systematic fraud which eventually blew up in the conmen's face. Greedy liars have been left holding the bag and now seek a Government bailout.

The tranfer of wealth under BushCo staggers the imagination,and the results are obvious to anyone with half a brain. Paulson was preparing this bailout package months ago, even as he repeated to the proletariat that the economy was fundamentally sound. Then he attempted to cry wolf and ram it down our throats in three days. Free Markets are a myth, what we are witnessing is the "Shock Doctrine" in play. Everything Paulson has done is unethical, yet intended to be written into law. There is no chance in hell that the money he requested would be used to shore up the economy. The credit market are frozen because US companies have been dumping toxic paper on unsuspecting foriegn buyers. They have said,no more. A bailout would simply provide a profitable exit strategy for the liars and thieves that have caused the credit markets to seize up. Like the S&L crisis, these people are criminals who need to be prosecuted, not rescued. Yet Paulson offers up cash and a get out of jail freecard. Corrupt to the core, like the rest of the BushCo gang.

hahaha!

Right, the crisis is all the fault of the free market. It had nothing to do with politicians insisting that freddie and fannie start giving loans to poor people who can't afford them, people who subsequently defaulted.

Keep living in your fantasy world.

I'd like to see a politician stand up and say we don't give in to terrorists, financial or otherwise.

"Keep living in your fantasy world...."

What? That poor people are the ones who ruined Wall Street? Yes, and you were stabbed in the back at Versailles.

"In 2003, the Federal Reserve initiated policies to combat the risk of deflation. As part of their policies, the Fed dramatically cut its federal-funds interest rate in order to temporarily encourage consumer spending and stimulate the housing market. The Fed did not begin to raise their key rate again for over a year. During this time, rates were so low that it was extremely easy for banks to market subprime mortgages with low introductory rates of which the large majority were structured as ARMs with a two-year introductory fixed-rate period (2/28 ARM). Many of the new homeowners were not aware of or were not concerned with the fact that their rate, and house payment, could have a dramatic increase once their interest rate started to adjust. Many times, they were consulted that their loan was a "band-aid loan" and that they could refinance again once the fixed rate period ended and their interest rate was due to adjust. At the same time, many of these home owners experienced large gains in equity resulting from the hot housing market and were able to take cash out to pay off credit cards and make large item purchases. If they started to get in financial trouble, they were able to refinance again."

"Keep living in your fantasy world...."

The fantasy, ala Neil Boortz and others, is that the rich are always heroic while the not-so-rich need to be shot.

"here's a news flash: Bush is not running for President."

Really?

Can you name one major economic policy difference between McCain and Bush?

hahaha!

Right, the crisis is all the fault of the free market. It had nothing to do with politicians insisting that freddie and fannie start giving loans to poor people who can't afford them, people who subsequently defaulted.

Keep living in your fantasy world.

#24 | Posted by cockandballs

beyond a talking point, perhaps you could provide some backup to this assertion. Please provide documentation as to how the federal government FORCED any entity to enter a mortgage contract.

I have pointed this out REPEATEDLY

Borrowers and Lenders signed the mortgage contracts.

Under zero down, the borrow has ZERO invested in the property. he can just walk away from the property with the ony POTENTIAL downside being a black mark against their credit.

The lender has the liablility of the loss of the loan-ie foreclosure costs and reduction in the value of the asset.

So unless it is proven that the federal govt FORCED the lenders into these mortgages, then the blame is clear.

Fanny and Freddy did not originate any of those toxic loans, their lending standards are too high for that. What really happened is that loans bundles were peddled to them as "insured mortgages" by unregulated Investment Banks, Insurance Companies, and Stock Brokers.

On top of that Fanny and Freddy's Mangmeent was keeping two sets of books. One real, the other faked in order to inflate stock prices and Executive Bonuses.

200 of this Nations Top Economists have written Congress and told them bailing out crooks is not a sound plan. Yet it remains alive, because no one in Washington wants the level of corruption to be revealed to the public. Our political system recycles vaste streams of money from Corporations through politicians and back into the Corporate Media Coffers. This gives us Government of, by and for the Corporation. Can't you see that Capitalists and Labor, both essential components of a prosperous economy, will always fight over their share of the pie? Can't you see that the interests of Labor has been crushed?

Right Wing apologists for this kind of behavior are too easily swayed by the bullshit that passes for news in the mainstream media.

If only those poor people the government forced lenders to fund hadn't invented and marketed the trillions of dollars worth of credit default swaps sold to other innocent and naive bankers, we wouldn't be in these dire straits.

If only those poor people the government forced lenders to fund hadn't invented and marketed the trillions of dollars worth of credit default swaps sold to other innocent and naive bankers, we wouldn't be in these dire straits.

#33 | Posted by silver_ironist

Wow, you are an Ironist. Thanks for that wonderful comment. FF

These arguments always descend into name calling, and I love the proof texts that get cut and pasted from nutcase websites to prove even nuttier arguments.

Barney Frank and others DID pressure the social engineering loans.. and it did contribute to the problem... that's a fact.. BUT, its nowhere near the whole story..

Simple greed by some very big shots at both Fannie/Freddie and the rest of the investment banking community enabled by both congressional and administration laxity, coupled with not just poor people, but middle and upper middle class folks signing on for loans they could not afford put us here. The Bush administration certainly holds some responsibility, but it started before them..

This is a bi-partisan scandal.. with plenty of sleaze bags on both sides...

"Okay, why aren't all these lenders of the subprime loans being paid back for theor borrowers' defaults on their subprime loans by the PMI insurance policies they were obligated to carry?"

There are ways around PMI. You used to be able to take a first mortgage up to the threshold that would require PMI. Then take a 2nd mortgage for the rest and not have to pay PMI.

Eventually, banks did stop giving 2nd mortages to subprime borrowers and then later stopped doing subprime altogether. But plenty of people got 1st and 2nd mortgages up to 100% of the inflated "value" of their home when the bubble was still strong.

Yeah, get over Bush fucking up the Mideast war.

Get over his having killed your son. Get over his bankers having foreclosed on your house. Get over his making a buck a gallon on the preposterous amount you pay for your gasoline.

Get over Bush's industrial pollution making our air unbreathable, our water undrinkable and our plane's temperature unendurable. Just go hug a tree.

Don't get out panties in a bunch over his tapping your phone and reading your mail, of declaring openly that the law does not apply to him. There's more. But you get the idea ... herm

"Under zero down, the borrow has ZERO invested in the property. he can just walk away from the property with the ony POTENTIAL downside being a black mark against their credit."

I worked in this industry briefly around the time that lending standards first started to tighten up but were still very loose. You had to see the credit reports of these people. $50K in credit card debt was pretty much the minimum. Why were they refinancing? So they could pay off their credit cards and then run up another $50K+ in debt. You could see on the reports that people had done this 2 or 3 times already. And the bank would still approve them knowing full well the idiot is just going to run up his/her cards again and that there was no more equity left in the house. The bankers were driven by pure shortsighted greed. But I don't feel bad for the borrowers either. They lived beyond their means for years and years and if at any point they would have just stopped spending like fools, many of them could have avoided the consequences. But they just had to guy out and by more stupid crap. Fuck them. I don't want to bail them out any more than I do the bankers.

Bush can certainly be called MAD but

Cheney can only be qualified as Diabolical!

"...the $700 billion is just part of a massive pump and dump' scheme engineered with the tacit approval of the US Treasury and the Federal Reserve. Once the banksters have offloaded their fraudulent securities and crappy paper on Uncle Sam, they will do whatever they need to do to pad the bottom line and drive their stocks up. That means they will shovel capital into hard assets, foreign currencies, gold, interest rate swaps, carry trade swindles, and Swiss bank accounts. The notion that they will recapitalize so they can provide loans to US consumers and businesses in a slumping economy is a pipedream."

Treasury Secretary Henry Paulson and his designated wrecking crew have but one objective: theft. Their own world is doomed - "The system is de-leveraging and nothing can stop it," says Whitney - so they are pulling off one last, mega-heist before it sinks beneath the waves.

When we are confronted with the surreal spectacle of John McCain and Barack Obama attempting to destroy each other even as they rush to deliver nearly a trillion dollars to the same master, while the people scream at both of them to "Stop!" - we know that "change" is coming. But not the kind the Democrats or Republicans anticipate.

Excerpted from Glen Ford @ Counterpunch

But I don't feel bad for the borrowers either. They lived beyond their means for years and years and if at any point they would have just stopped spending like fools, many of them could have avoided the consequences. But they just had to guy out and by more stupid crap. Fuck them. I don't want to bail them out any more than I do the bankers.

#37 | Posted by Sully at 2008-10-01 10:43 AM | Reply | Flag:

But you don't know what they spent their money on, sully. What if it was medical costs?

1. Global finance is so sophisticated and interlocking; a carrier with premium money doesn't stack it up in a vault, but invests it. With markets crashing and investments falling, the assets to pay claims are evaporating.

2. Insurance companies will do anything possible to avoid paying a claim. They will drag it out, hoping that they can get someone else into the vortex.

I hate the idea of any kind of bailout, but I also appreciate the fact that this collapse will bring down the many good companies with the bad ones.

Again Vernon shows some of that global ignorance.

Save cash, stock price goes up. Spend cash, stock price goes down. Simple as that. Stock price is based upon for the most part cash holdings or savings, not investment.

Good companies are not brought down by this because that would mean they were no good at actually looking at the portfolio.

As much as avoid paying a claim is in insurance companies they are the ones who didn't keep to actually holding the sums needed for the product they insured. Fraud is a terrible business, and insurance companies are the king of that business.

"I myself feel that our country, for whose Constitution I fought in a just war, might as well have been invaded by Martians and body snatchers. Sometimes I wish it had been. What has happened, though, is that it has been taken over by means of the sleaziest, low-comedy, Keystone Cops-style coup d'etat imaginable. And those now in charge of the federal government are upper-crust C-students who know no history or geography, plus not-so-closeted white supremacists, aka "Christians," and plus, most frighteningly, psychopathic personalities.....

Privatize the public schools! Attack Iraq! Cut health care! Tap everybody's telephone! Cut taxes on the rich! Build a trillion-dollar missile shield! Fuck habeas corpus and the Sierra Club, and kiss my ass!"

Kurt Vonnegut, 2003.

At least 70% of us now believe all or some of this. Pity we didn't in 2004 when we could have cut our losses. But we didn't.

Blueinbushland, thanks for bringing up Vonnegut's 2003 interview. After the ellipses in the first part:

I shortened it for readability. I meant to include the "Do this! Do that! Mobilize the reserves!" part but missed it on the copy/paste. The randomness of "Do this! Do that" exactly characterizes their unthinking certainties and "Mobilize the reserves!" came back to bite us in the ass with Katrina. All of it was so true. As we've now discovered to our great cost.

Vonnegut was a major author, perhaps even an icon, within our American culture. Artists such as he often cut through all the crap to basic truth when the rest of us are still stuck on wishful thinking and giving the benefit of the doubt to people unworthy of it.