Yahoo took their title this morning from yesterday’s Wall Street Journal- Banks to ask government to take bad loan risk: [Hat tip L!]
NEW YORK (Reuters) - The banking industry is proposing to members of the U.S. Congress and the White House that some of the risk of troubled mortgages should be shifted to the federal government, according to a report in the Wall Street Journal on Thursday.
One proposal has been advanced by officials at Credit Suisse Group (VTX:CSGN.VX – News) and would let the U.S. Federal Housing Administration guarantee mortgage refinancings by some delinquent borrowers, said the report.
The Credit Suisse plan would open the way for nearly 600,000 sub prime borrowers, many of whom are delinquent on their mortgages, to refinance into loans backed by the FHA, said the Journal, which cited a Credit Suisse spokeswoman
The Wall Street Journal and the banking industry have chosen the wrong word when they say "risk." "Risk" implies a "maybe it will, maybe it won’t" character to a potential outcome. The better headline would be Banks to ask government to assume bad loan losses- because they know good and well that massive defaults on these loans are an absolute certainty.
This is not about "refinancing troubled borrowers." This is about getting bad loans off of lender’s books and having Uncle Sam [and taxpayers] to pick up the tab.
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Why not just take all the money from the ‘stimulus’ and just buy some foreclosed homes in FL, CA and NV?
Cut out the middle man, i.e The taxpayer
This is the American way; private profit based on public risk.
NVAttorney-
private profit based on public risk
You’d think in that scenario individuals would benefit and institutions would take the hit, but the taxpayers will be expected to bailout lenders. [If not in taxes, by having a cheaper dollar.]
It’s enough to make you long for a more Samurai approach where they apologize for failing and then fall on their sword. [figuratively, of course!]
http://www.metacafe.com/watch/400510/john_belushi_samuari_drycleaner/
I know what you mean Twist.
Actually this is a subversion of the American Way. The American way and what made this nation so great were free markets and individual accountability for your actions. This smacks of corporatocracy. You know the system…lobbyists and influential people get more from our elected officials then we do.
Or as my Father so succinctly put it…Money talks, Bull**** walks. Unfortunately we are not part of the former group.
I think the two party system has come to the end of its useful life and we are stuck with it.
Off Topic
Interesting revenue figures from California
Total is up YOY for Jan 08 with most of the increase coming from Income Tax: Corporate and Cigarette tax revenues are also up.
However, “Retail Sales and Use Taxes”
(01/08) $991,439K (01/07) $1,097,669K and shocker of shockers look what’s down …
“Alcoholic Beverage Excise Tax”
(01/08) $33,026K (01/07) $33,650K
the word is SHORT
Hutch-
Now if we could just get Igor to tell us which stocks he had in mind!
Metro-
Yes– that’s what I mean! [And you are taking Mr. Twist back!]
Metro,
I remember watching Samurai (John Belushi) when I was a kid. I actually do a pretty good imitation of him. Thanks for the laugh. I needed one.
Entropy:
You wish.
NVattorney has it right the first time. All countries including the US have grown by using protective tariffs, and massive government intervention.
Cowboys needed to be protected from Indians, by the Feds. Railroads were given land grants to develop The West. Big farmers (think ADM) have been given massive subsidies for years, to grow or not grow corn, and other crops. Farmers have been subsidised by being able to buy cheap water from Federal Agencies (Bureau of Reclamation) Big Government subsidised the invention of the transistor, the integrated circuit, intermodal shipping, the internets (not just a truck anymore), interstate highway system, electic power, etc.
Cheap oil has been a commandment of the US gov’t, ever since the borders of most all Middle East countries were drawn up by the US, and Great Britain.
Housing developments wouldn’t be profitable, if cities made them pay full freight for all their roads, sewers, and environmental impacts.
I mean, come on. You can argue if the gov’t intervention is a good or bad thing, but don’t be so uneducated and blindly flag-waving that you don’t see it.
I was a kid too when i first watched SNL. I used to have to sneak down stairs to watch. But that was when they were very funny.
I visited the Billy Goat Tavern in Chicago, that is how much of a fan I am of the old SNL. Cheeburga Cheeburga Cheeburga.
Banks appalled at Jingle Mail.
But not when THEY feel the need to take a hike.
http://www.ft.com/cms/s/5becb572-db30-11dc-9fdd-0000779fd2ac,Authorised=false.html?_i_location=http%3A%2F%2Fwww.ft.com%2Fcms%2Fs%2F0%2F5becb572-db30-11dc-9fdd-0000779fd2ac.html%3Fnclick_check%3D1&_i_referer=&nclick_check=1
Igor says ‘bellyup’
When the Wall St. millionaires and their banks can really get their campaign contributions back as cash on the barrel head at 1000x plus, from the public coffers paid by the middle class, we will truly have returned to the feudal state, and it may be time once again for the tree of liberty to be refreshed in the only way it can be…
Hutch-
It sounds like the credit crunch just keeps getting “crunchier”, despite the Fed’s best efforts.
Amen,
More embarrassing charts for Downey Financial, and Countrywide Financial at
http://calculatedrisk.blogspot.com/ today.
I’m looking to buy a little cheap acreage in a year or three.
Igor say badidea
Ok maybe in four years.
Metro,
My parents used to let me stay and watch SNL.I grew up in the Chicagoland area.
So Surak do you like the Billy Goat?
Metro,
I have never been there.