Monday Open Thread
Welcome to the Monday edition of your open thread. Are you all bright-eyed and bushy-tailed today? I know I am! Share your thoughts below.
Crazy lady Sharron Angle is not only crazy, she’s dishonest. She ran an race-baiting ad about scary Latinos and immigration. She stood in front of Latino group and told them she was talking about Canada’s border:
Upon closer inspection, the entire message isn’t just racially divisive, it’s also intended to deceive voters. But for Angle, the extremist candidate in Nevada, we’ve got it all wrong. At least, that’s what she told a group of Hispanic high school students the other day.
U.S. Senate candidate Sharron Angle defended a series of campaign advertisements that use images of sullen, dark-skinned men and a map of Mexico to blast the immigration record of her Democratic opponent, Senate Majority Leader Harry M. Reid. […]
“I think that you’re misinterpreting those commercials,” said Angle, a tea party favorite who has rallied for stricter border enforcement.
Angle told the students she was “not sure that those are Latinos in that commercial” and appeared to suggest that the ad seeks to draw attention to the danger of potential terrorists entering the country from Canada.
Unfortunately the ad has been removed from YouTube so you can’t judge for yourself. Just in case you thought the ad was perhaps vague about what it was saying, Benen adds this:
Angle’s race-baiting ads, some of the ugliest since Jesse Helms, have all the subtlety of a wrecking ball. She shows viewers images of Mexicans and a map of Mexico over on-screen text about “illegal aliens.”
The only thing saving Angle is she’s running against the hapless Harry Reid.
Balloon Juice has interesting post about the outside spending in the 2010 election. The DNC is outraising the RNC by a large amount but outside groups are spending on behalf of Republicans by a 7:1 margin. DougJ speculates that this is the beginning of a new reality:
Some of this may be a result of the demise of the RNC. National committees tend to raise a lot more money when they control the White House and having Michael Steele at the top of the RNC can’t help. Karl Rove’s Crossroads group in particular may be a magnet for money that would normally have gone to the RNC; it’s possible that when they put Haley Barbour back in charge of the RNC, this will all change.
But it’s also possible that this represents a sea change, that the Republican party committees are on their way to marginalization. These things are complicated, but Citizens United, the outsourcing of Republican messaging to Fox and talk radio, and the rise of an alternatively branded conservative pseudoparty (I’m talking about teatards here) may mean that in the future the Republican party will not be a political party in the usual sense, that instead of being controlled by party operatives acting as filters (or pass throughs) for special interest influence, it will be run directly by corporations and conservative media, with no middle man at all.
So, do you think this is the future?
Tags: Open Thread
Obama is going on Mythbusters and they aren’t going to to test his birth certificate?
Wall Street bailouts are coming back. The foreclosure fraud is calling the value of mortgage-backed securities into question all over again.
Which raises the question: How would a Republican House deal with another round of TBTF bank collapses? They voted against stronger reforms, and they campaigned against bailouts, so they are pretty much locked in.
I guess they would respond with their all-purpose ointment: more tax cuts for the rich.
On second thought, you know what Repubs would do? They would fix the problem with retroactive immunity for foreclosure fraud. Actually Dems already tried, and Obama vetoed it.
Yes, anon, I think this foreclosure fraud crisis bubbling up right now is a big worry. I don’t think anyone has the political will for more bailouts. I hope we can be more creative than last time (rewarding the failures). Hopefully the new Financial Reform bill gives us enough tools to break up TBTF.
I’ll bet that’s the same “border safety” ad Vitter is running in LA.
I just heard that Richard Korn’s presser today really pissed off Tom Wagner and they are going to go head to head on Jensen’s show at 2:00.
Putting my cynicism on display again, I am anticipating that the Financial Reform bill specifically does not have the tools to deal with the Fraudclosure business.
The blog Zero Hedge has been posting on this and linking to this guy, who has an intriguing take on the entire debacle (read those posts in that order). His idea that a broken chain of title means you no longer are obligated to pay your loan seems legally controversial, but that doesn’t take much away from the detail of what this Fraudclosure looks like.
One of the reasons I was arguing against TBTF in October 08 was for stuff like this — a BK or pre-packaged BK or some kind of unwinding of the failed banks would have flushed alot of this kind of thing right out of the system. Just recapitalizing these banks wouldn’t provide enough incentive to rethink how they do business.
If there was any justice at all, these teatards (actually, all the of the repubs running against bailouts) should be asked to make public their attitudes towards bailing out the banks because of their mishandled mortgage issues. Because if you look at how much money these banks are throwing at them, I’d bet that they’ll find some dishonest way of justifying bailing them out…..
Ezra Klein posts about the results of a new Gallup poll which shows people don’t want to cut entitlement programs and would rather raise taxes to protect them.
Cassandra,
I hope the Congress revisits mortgage cramdown.
Thanks Nancy. I might have to put on my three mile island suit and listen to Jensen.
I hope they revisit mortgage cramdown too. There is also an idea of a negotiated principle reduction — for borrowers definitely underwater, who are making their payments, who are likely to make their payments. It puts alot of money back into the hands of a certain type of borrower which is its own stimulus.
Cramdowns are simply stealing equity from those who paid their mortgages on time and giving it to those who have not. The free market and buyers and sellers should determine the prices of real estate.
Did someone replace A1 with a different A1?
Not that I am aware of.
Cramdowns are simply stealing equity from those who paid their mortgages on time and giving it to those who have not.
How so? Foreclosures (that is, excessive or unfair foreclosures) steal even more equity from those who are paying their mortgages on time, by depressing home values.
There also comes a point where large numbers of foreclosures, even if they are fair and square, are harmful to the economy and to society, and need to be dealt with.
The free market and buyers and sellers should determine the prices of real estate.
And when the market has been manipulated for an extended period of time, how do you correct that?
You can’t have a rigged market on the upswing, and a “free market” only on the downswing. Free markets have to be fair markets.
Let’s take two home owners: Frugal Fred and Reckless Rob.
Frugal Fred buys a home for $80,000 and it appreciates to $100,000 over 5 years.
Then Reckless Rob buys an identical home next door for $100,000.
Both had put $10,000 down.
One year later, the market crashes and both houses are now worth $75,000. Reckless Rob decides to stop paying his mortgage.
Without a cramdown, Reckless Rob’s home is foreclosed, and a new neighbor buys the home for $75,000. Life is fair, and Frigal Fred continues to pay his mortgage.
With a cramdown, Reckless Rob’s mortgage is magically changed from a $100,000 home price to a $75,000 home price. Reckless Rob still has $10,000 equity in his home compare to Frugal Fred’s loss of $5,000 in equity.
If both stay in their homes and they appreciate in value over 5 years and they reach $100,000 in value again, Frugal Fred will have $20,000 in equity increase over 10 years whereas Reckless Rob will have $25,000 gained over 5 years. That is a huge difference in capital gains. And if they both decide to sell, Reckless Rob can undercut Frugal Fred in price.
This discussion does not even take into account that Frugal Fred is paying a higher interest rate than Reckless Rob.
So there is nothing fair about a cramdown. It only penalizes people who played by the rules and rewards people who took a risk and loss. And buying real estate is always a risk.
If you’re going to advocate for cramdowns then you should advocate that everybody get their mortgage principles reduced by the same amount or get a cash rebate fro the bank if they own the home outright.
Without a cramdown, Reckless Rob’s home is foreclosed, and a new neighbor buys the home for $75,000.
Here is where your lesson breaks down in reality. There aren’t enough eager new buyers to keep up with the wave of foreclosures. The house stays unsold and continues to drive down Frugal Fred’s home values.
Not to mention – when Reckless Rob bought that house for $100K, it was overpriced because of the manipulations of banks and mortgage brokers. They flooded the market with credit and caused the price of homes to be bid up. Then the used those bogus pumped-up home values to securitize the loans and make even more money for their own pockets.
If Frugal Fred has lost some home equity, then foreclose a banker’s home to recover it, not his neighbor’s home.
Anon, in this parable the market value of $75,000 takes into account the lack of eager new buyers and other foreclosures in the neighborhood. It is the true market price.
Whether or not Reckless Rob overpaid for his house is immaterial – Reckless Rob should not be rewarded for defaulting and being on the losing end of his risky investment with a cramdown and Frugal Fred should not be penalized for doing the right thing.
in this parable the market value of $75,000 takes into account the lack of eager new buyers and other foreclosures in the neighborhood. It is the true market price.
If you can’t sell the home, there is no market price. Or more precisely, the bank who now owns the home is not willing to sell low enough to meet the true market price. It is now a speculative investment for the bankers, and they are maintaining an oversupply of houses on the market, which takes down Fred’s home value.
Whether or not Reckless Rob overpaid for his house is immaterial – Reckless Rob should not be rewarded for defaulting
Manipulating market price is not part of a true free market. If the overpayment was the result of fraud or criminal activity, Rob should not be penalized; rather the fraudster should make Rob whole. Ideally the mortgage should be wound back and recalculated for its true cost without the fraud.
I don’t think that is really very realistic though, so we will have to find less perfect remedies that put the burden of the remedy on the fraudsters.
Anonone is COMPLETELY correct! and Anon is COMPLETELY wrong! Anone, did you ever hear of personal responsibility? Or ‘moral hazzard?’
Because the economy and the real estate bubble burst in light of the sub-prime market getting greedy, the investment banks packaging bad loans (i.e., mortgage-backed securities)and large insurors like AIG creating credit default swaps to ‘cover’ said bad loans (mbs’s, with the help of Moody’s, Fitch and Standard & Poor’s complicit credit ratings) WITHOUT any ‘real’ collateral, does it make it right.
When one defaults on their contract, whether via a mortgage, business loan, HELOC, or credit card deal, they’ve DEFAULTED! Nothing more, nothing less. Once the ‘Government’ invokes moral hazzard into the free market, our society fails to work. Furthermore, business as we know it, becomes fraught with special deals, political favors/paybacks and other socialistic remedies.
To wit: there are already a number of federal programs put in place to ‘help’ homeowners who are underwater, or who are about to be or are being foreclosed on. The Home Affordability Mortgage Program (HAMP) has been a complete failure. Over 50% of all homeowners who went on this program were ‘kicked’ off due to not being able to make their payments (remember Obama admin. touted this program will help 3.5 million homeowners). It has helped less than 300k homeowners, at a large cost to taxpayers. I know. I applied for it.
I was originally turned down. I read up on the program from the Fed’s own website, deemed I qualified, and called my mortgage broker back. They said I did qualify, then I didn’t. Then I decided to just forego this ‘joke’ program and suffer through a difficult personal situation (I lost 75% of my income since Oct. ’09). I cut all expenses to the bone and I’m barely hanging on (21 year homeowner with no late payments) However, I do not want government to ruin the free market and wreak havoc on our markets. Even if I’m still hurting.
Finally, 99% of all of the foreclosures held from Ally Bank (formally GMAC Mortgage), B of A, Wells Fargo and JP Morgan-Chase are legitimate. Sadly, some of these institutions hired unqualified people to robo-sign paperwork (their actions were wrong and they should be held completely accountable). However, these homeowners are at least 4 – 6 months behind on their mortgages and should be foreclosed upon, no matter how difficult this seems.
Asset bubbles can happen without manipulation. Housing prices can rise and fall for different reasons, such as a local economic depression due to the loss of a major local jobs provider.
The point is that is does not matter why Reckless Rob paid what he did – and you’re assuming he “overpaid” just because prices went down, which is a wrong assumption – he should not be rewarded with a cramdown and Frugal Fred should not be penalized.
BTW, Banks are short-selling foreclosed homes in many areas. In my story, the fair market value for the home was, in fact, $75,000. And it is my story. 🙂
Polemical, people should be foreclosed upon if they are, in fact, in default. The problem is in determining if they are, in fact, in-default according to the actual terms of the their loans and who they are in-default to.
Banks should not be allowed to foreclose on houses if they cannot prove that they are the rightful holders of the primary mortgage. In other words, banks shouldn’t be allowed to foreclose on somebody’s house just because they want to. They need to prove it legally. And right now, many of them cannot.
I agree Anonone. The ‘robo-signers’ and the mortgage servicers have created a serious situation. Especially as we’re trying to get past all of the TARP and other bailout programs.
They introduced the ‘proverbial’ wrench in the chain. Thus, now, it’s hard to dicern ‘who’ owns ‘what.’
Just another Ponzi scheme which was in the offing during the Bush “non regulation years”. If you bought a home in the last 10 years you paid more than the house was worth. You had felons posing as mortgage brokers, with no one checking any documents. It was “robo sales”. All those mortgages were bundled together and sold as derivatives to the point where the banks can’t even find your mortgage. I agree with Marcy Kaptur, “stay in your home”, “squat if necessary”. Make them produce the mortgage, they can’t. I have a good friend who bought an overpriced home, while both were making big money. When the bottom fell out they contacted Bank of America. They sent their paperwork 5 times and 5 times it “got lost”. Now Bank of A, have been caught and are claiming they didnt have any of the documents, even the agreement letter stating they should pay half the mortgage. They had all their documents and maybe a test case in New Jersey for fraud. Bank of America acted like the Obama plan to keep people in their homes wasnt worthy of their attention. They took advantage of millions who have already lost their homes and have no recourse. It was a ponzi scheme from beginning to end. Now all the banksters have the homes and don’t want to sell at the original inflated price. These robosigners hired by the banksters knew exactly what they were doing. Just as the mortgage brokers and the real estate agents worked together in the first ponzi scheme. Stay in your house thats the deal.
The Korn-Wagner discussion on Jensen was painful to listen to. Basically, Korn accused Wagner of failing to audit local school district money, which (Korn said) Wagner was legally required to do. Wagner responded that the local money was audited, but Korn didn’t know anything about auditing and that the local districts were audited. Korn said OK, where are the audits? Wagner said for financial purposes, the local districts were considered part of the state finances and somehow were audited as part of some other audits. Korn still kept pressing, but Wagner still couldn’t come up with any direct reference to which audits contained the audits of local district money. At this point even Jensen was challenging Wagner, saying “Where are the audits?”
Jensen though was remarkably dense and never went for the kill to pin down Wagner. Wagner ended up telling Korn to call his office for the information.
I don’t know anything about this issue but judging from Wagner’s evasiveness, Korn is onto something.
Either that, or Wagner is simply unable to explain auditing.