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Archive for the ‘Obama's slush fund’ Category

A Historic Flood of Red Ink | The Weekly Standard.

Obama has cause a historic flood of red ink and his latest budget will put our nation $7 TRILLION  further in debt (he is trying to tell us it will “save” $3 trillion!).  Yet this “Thing” rather than sticking to his own business is sticking his nose and his political organization Organizing for America in the middle of  a battle to save the state of Wisconsin.   There are simply no words for Obama  anymore, simply none that I and my dictionary find adequate at any rate.


The following article from the Weekly Standard is an eye opener.  I have only copied over a portion of the article so to read the entire article do click the reference above.  BB


Let’s try to put that into historical perspective (the source for all of these figures is the White House Office of Management and Budget’s historical tables):

* In actual dollars, President Obama’s $4.4 trillion in deficit spending in just three years is 37 percent higher than the previous record of $3.2 trillion (held by President George W. Bush) in deficit spending for an entire presidency. It’s no small feat to demolish an 8-year record in just 3 years.  (And yet the MSM aren’t saying a word about this.  In fact they are out there praising their presidents efforts at “budget reform”. BB

* In inflation-adjusted dollars, President Obama’s $3.8 trillion (in constant fiscal-year 2005 dollars) in deficit spending in just three years is nearly double our $2 trillion (in constant fiscal-year 2005 dollars) in deficit spending in the five fiscal years during which we were fighting World War II (FY 1942-46). It’s no small feat to nearly double the United States’ inflation-adjusted deficits during the largest conflict in human history, and to do so in less time than it took American GIs to fight that two-front war.

* As a percentage of the gross domestic product (GDP), President Obama’s average annual deficit spending is 9.7 percent of GDP. That’s higher than during any single year of the Great Depression, the Cold War, the Korean War, or Vietnam. In fact, the only deficits in more than 200 years of American history that have exceeded even 6 percent of GDP have all involved either the Civil War, World War I, World War II, or President Obama.

* In average annual deficit spending as a percentage of GDP, the nearby chart shows how President Obama stacks up against other presidents who have served during the past four decades.

* The Obama deficit legacy, moreover, will be felt well beyond his tenure in office, especially if that tenure extends beyond a single term. First, Obama’s spending through 2012 essentially doesn’t include Obama-care. The CBO projects that Obama-care will increase spending by more than $2 trillion in the overhaul’s real first decade (2014 to 2023). That’s more than $2 trillion that could -otherwise be used to pay down the debt, rather than allowing the debt to rise continually and then piling a massive new entitlement program on top of it.

Second, President Obama’s gargantuan deficit spending will hamstring future efforts to make ends meet. Under Obama’s own projections, interest payments on the debt are on course to triple from 2010 (his first budgetary year) to 2018, climbing from $196 billion to $685 billion annually. Under his projections for 2018, interest payments on the debt will exceed all defense spending, including wartime spending. Think about that: In the first budgetary year after the next presidential term, our creditors are projected to get more money than our military.

At the end of 2008, just before President Obama took office, the national debt was $9.986 trillion and 69 percent of GDP. Under his projections, eight years later it will be $20.825 trillion and 104 percent of GDP. That’s right: Our debt will soon exceed our national economic output for an entire year. And that’s even if you believe the president’s rosy projections of 4 percent real GDP growth over the next four years, considerably higher than the 2.7 percent achieved over the past quarter-century and the 3.2 percent over the past half-century.

To correct our course, we need to advance real entitlement reform and repeal the looming entitlement that could be the boulder that breaks the camel’s back: Obamacare. House Republicans need to produce a serious budget that offers real entitlement reform, as they appear poised to do. (I very much disagree with this authors opinion because the Old Dog Republicans are pansy butts too!  BB) Actually enacting entitlement reform, however, will require presidential leadership. The most effective champions of bold fiscal prudence on Capitol Hill and in the statehouses, respectively, have been Representative Paul Ryan and Governor Chris Christie. In the wake of President Obama’s wildly unprecedented deficit spending, such leadership is now needed at the presidential level.

Jeffrey H. Anderson was the senior speechwriter for Secretary Mike Leavitt at the U.S. Department of Health and Human Services.

Rising number of small banks are becoming TARP ‘deadbeats’.Those of you who have been with me for  awhile know that I raised my hackles and  the posts flew out of my keyboard over the TARP program (that was before they called it TARP and just called it what it was and is:  BAILOUTS.)  As it turned out Wall Street didn’t need the money because as soon as the Congress decided after the fact to put some strings and regulations on these funds they started coming back to the Treasury and with interest and penalty payments even.  The big guys wanted the government  out ASAP.  TARP was by any standards if measurement you want to use a complete failure to stimulate the economy.  It was however a complete success at putting our great grandchildren in debt and causing the economy to continue downwards due to this high federal debt.

Then of course we also had the Stimulus Plan, huge Budget and more bailouts and government actually taking over private businesses (auto industry, Freddy Mac and Fannie Mae).

The banks that got government funds were supposed to lend out the money but of course they didn’t because with the economy going sour they didn’t want to be part of those who went out of business.    Now we see they are not even paying their interest payments on what was supposed to be a “loan”.

But not to worry after all this is the federal government and everyone knows the feds only come after the peons like you and me who might owe the government a coupler hundred dollars at most.  You see peons can be frightened by the tough talking federal lackeys.  (Lackeys who are very well paid by the way!)

Rising number of small banks are becoming TARP ‘deadbeats’

A Treasury report shows that more than 120 institutions have  missed their quarterly dividend payments.

A Treasury report shows that more than 120 institutions have missed their quarterly dividend payments. (Mark Lennihan)

By Brady Dennis

Tuesday, September 14, 2010

Big Wall Street firms have the most bruised public reputations, but it’s a collection of smaller banks that continues to plague the Treasury Department’s bank bailout program.

The latest report from the agency shows that more than 120 institutions – nearly all of them small banks – have missed their scheduled quarterly dividend payments, which is more than a sixth of the banks that received federal aid during the financial crisis.

In addition, five banks that received capital injections from the $700 billion Troubled Assets Relief Program have failed altogether, making it highly unlikely that taxpayers will recover the nearly $3 billion poured into those institutions.

The Treasury report showed that at the end of August, a record six banks each missed six dividend payments. Saigon National Bank in Southern California has missed seven.

The rising number of “deadbeat” banks, as they are known, has prompted calls for Treasury officials to take action to protect taxpayers’ investment.

The bailout legislation gives the Treasury the authority to appoint two members to the boards of banks that miss six or more dividend payments, but the agency has refrained from doing so.

In its report, the Treasury stated that in weighing whether to exercise its option to appoint directors, it would “prioritize” institutions in part based on whether the government’s investment in the bank exceeds $25 million.

That list includes AnchorBank of Wisconsin, which received $110 million, and Seacoast National Bank of Florida, which received $50 million.

“We are exploring a number of options on how to properly exercise our contractual rights so to best protect the interests of taxpayers,” Treasury spokesman Mark Paustenbach said.

Administration officials are quick to point out that, overall, the TARP program has fared far better than initial projections and that the estimated cost of the program has continued to dwindle. (The nonpartisan Congressional Budget Office recently lowered the projected final cost to $66 billion.)

They say that while the missed payments from an increasing number of community banks are a legitimate problem, the amount of taxpayer money at stake pales in comparison with the government investments in companies such as General Motors and insurance giant American International Group.

In addition, they note that taxpayers have already recovered three-quarters of the TARP funds invested in banks.

Others expect the problem of missed dividend repayments to continue to grow as small banks continue to struggle with the lagging economy and troubled loan portfolios. Most large and healthy banks long ago repaid their aid and exited the bailout program.


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“The number of institutions missing their dividends will tend to go higher,” said Linus Wilson, a finance professor at the University of Louisiana at Lafayette who has monitored the government’s aid efforts. “You have the really strong institutions leaving the program, and the not-so-strong ones tend to get worse.”

During the crisis, the Treasury pledged to give aid only to banks that were in relatively good shape but that needed help to weather the financial upheaval. Looking back, Wilson said, some of the government’s investments “were really speculative at the time.

He cited CIT Group, which failed despite a $2.3 billion infusion of taxpayer money, and OneUnited, the Massachusetts-based bank that has missed six dividend repayments and has come under scrutiny for seeking help from U.S. Reps. Barney Frank (D-Mass.) and Maxine Waters (D-Calif.).

Wilson said the wave of missed payments also should stoke skepticism about the administration’s plan to make more taxpayer money available to community banks through a small-business bill that the Senate is expected to take up this week. Among other things, the legislation would create a $30 billion fund that smaller banks could tap to extend loans to businesses.

Administration officials have insisted that weak or troubled banks would be excluded from the program and note that, to participate, a bank’s federal regulator must deem it viable.

The People Versus the Government.

This is a good article by Alan  Caruba stating some hard factsx and things going on in the Democratic Party and the states that are in disagreement with Obama.  But the most significant thing he wrote was:

Obama is Marxist ideologue

All this comes back to the fact that Obama is Marxist ideologue. He is also a liar, a trait no one likes, and a narcissist who gives continued evidence of regarding the presidency as a daily opportunity for self-indulgence and bottomless ego satisfaction.

A recent Investor’s Business Daily editorial said, “As Americans suffer economically, President Obama golfs, vacations, campaigns, appears on a frivolous talk show—and vacations some more. Gee, don’t we have a war and other problems to attend to?”

Obama may not be easily removed, but he can be politically neutralized if Republicans can gain control of Congress in November. There are barely 900 days left in his first and hopefully last term; still time for him and his cadre of czars to do more damage.

Another really great article: Deceit and Denial upon Our Ramparts

Pundits and talking heads keep saying that Obama and his administration just don’t get it, can’t learn from their mistakes, aren’t listening or don’t understand the average American citizen. Nothing could be further from the truth. Obama is listening, he does understand us and he gets it. He just hates what we stand for. It’s the Republicans that aren’t listening, don’t get it and don’t understand that we get it, we understand and we will do something about it. We are tired of being collateral damage to a deceitful, disdaining administration run by ideologues with no practical experience at any level and by politicians who lie, cheat and steal from every living human on this planet by virtue of their supposed elitist entitlement as members of a “ruling class”.

Obama is not incompetent either. He knows precisely what he is doing. His ancient agenda is deliberate and premeditated, full of disdain for everything America stands for, full of contempt for “rich people”, “poor people”, free enterprise, white people, black people, brown people, white women in particular, Jews, Christians, Catholics, Mormons, freedom, American tradition and American law. Want proof, just read his books.  He is clever, deceitful and damaged goods with no shame and no conscience. To a nation of ordained free patriots, Obama’s appearance of total incompetency is simply the measure of his intent and his refusal to accept the reality that socialism is not an acceptable form of government to Americans and a historically failed, incompetent system. Each day, while Europe scrambles to free and save itself from another miserably failed socialist experiment, Obama drives another nail into the coffin of our Republic.

Ten Reasons to Oppose Dodd-Frank – The Editors – National Review Online.

Interestingly this article begins with an admonition to Senator Scott Brown (R. MA.)  He is the one I have come to calling The Traitor!  He ran as a Republican and won in a liberal democrat state, and on top of that he won Teddy Kennedy’s seat.  Then he came to congress and proceeds to play with the Democrats.

Anyhow aside from that these are ten good reasons to call your Senator now and yell your head off about the Dodd-Frank Bill.  I still find it amazing that the two people most responsible for the last financial break down would be given the right to write the law to regulate so that the next one would not occur!  How ironic is that?  And when they finished their writing what they had was a sure fire ticket  on a fast train straight to the next financial crisis!  BB

There are many reasons to vote against this bill. Here are just a few:

The Congressional Budget Office has put the ten-year cost of the bill at around $19 billion. The Democrats initially tried to fund this obligation via a tax imposed on large financial institutions. You opposed them. They went back to the drawing board and emerged with a funding mechanism that, were a corporation to try it, would get its accountants sent to prison for fraud. The bill would now “cancel” the Troubled Asset Relief Program a few months early, thus “saving” the government around $11 billion.

But the government wasn’t actually going to spend that $11 billion. As far as we know, the administration wasn’t planning on making any additional TARP loans. (The $11 billion over three months represents estimated losses on future TARP loans.) As House Financial Services Committee ranking member Spencer Bachus put it, the only way the math works is if the administration had made secret plans “to purposefully make loans in the next two months that would lose billions of taxpayer dollars.” We concur with Bachus: The Democrats are “rewriting the law to use TARP as their own personal slush fund to pay for new government programs.” You should oppose this move — it opens to the door to future, similar chicanery involving “unspent” TARP funds.

You should also oppose the other funding mechanism the Democrats concocted: an increase in FDIC assessments that would fall on small and large banks alike, even though the FDIC’s new resolution authority only applies to large financial institutions. If you opposed the previous bank tax, which only applied to large banks, there is no reason why you should now support a bank tax that underwrites large financial firms at the expense of smaller depository institutions.  (And of course you all know who will pay this tax don’t you?! BB)

: You have expressed concern about the so-called Volcker rule, which would curb “proprietary trading” by federally insured depository institutions. Democrats have watered down this provision in order to win your vote. But the compromise version would still leave banks and bank holding companies at the mercy of federal regulators, who would have wide discretion over what constitutes prop trading. If Congress wants to ban specific investment practices, it should pass specific laws to address them, rather than rely on government bureaucrats to do the heavy lifting. Giving financial regulators more arbitrary power is a recipe for more uncertainty — and more lobbyists.

THE MORAL HAZARD COUNCIL: The bill would establish a new Financial Stability Oversight Council tasked with seeing the next crisis coming. The folly of this council is that it creates the impression that the government has its eye on the ball, which breeds laziness and incaution in the banking sector and gives the bankers someone else to blame when things go wrong.

BAILOUT AUTHORITY: Senate Republicans dug in and won some good changes to the new resolution authority that the bill would create, limiting the FDIC’s authority to bail out the creditors of large failed financial institutions as they are unwound. But too many loopholes remain. The FDIC retains the ability to structure GM- and Chrysler-like transfers of company assets that favor the politically connected at the expense of secured creditors. This legislation would also enhance the Federal Reserve’s authority to make broad extensions of credit to struggling financial entities. The Fed is only supposed to use this authority to help firms that are illiquid, not insolvent. But the line between the two is blurry, and regulators tasked with preserving “financial stability” have every incentive to blur it further during a crisis, as witnessed when former Treasury secretary Hank Paulson forced TARP money on healthy and weak banks alike.

“CONSUMER PROTECTION”: The proposed Consumer Financial Protection Bureau (CFPB) would have broad powers to impose job-killing regulations. Though housed in (and funded by) the Fed, the CFPB would operate as an independent agency, with rule-writing ability and enforcement authority. We all favor prudent consumer safeguards, but those safeguards can be strengthened without creating yet another onerous bureaucracy. The CFPB could significantly reduce credit access for small businesses, and thereby jeopardize America’s wobbly economic recovery.

The corporate-governance language (“proxy access”) in Dodd-Frank would greatly expand the influence of Big Labor and harm the interests of mom-and-pop investors. Even if you favor the idea of “shareholder democracy,” this is the wrong way to promote it. The chief beneficiaries of proxy access would be politically connected activist groups (such as the AFL-CIO and the SEIU), not ordinary shareholders. You’re quite familiar with the union agenda. Do you think it would help or hurt shareholder value?

Additional  info see below: Securities Industry and Financial Markets Assn. spent about $1.4M in 1Q to lobby lawmakers

Morning Bell: The Dodd-Frank Assault on Economic Recovery | The Foundry: Conservative Policy News..

I was sure nothing could be worse than Obamacare which was jammed down our throats by the Democrats and a few traitor Republicans, but the Congressmen have outdone themselves with the Financial Reform Bill.  Of course it was written by the two people most responsible for the financial crisis in the first place so they knew just what was needed to insure that we have a bigger and better financial crisis next time.  They even put their names on the bill so when it happens we will know exactly who spit in Americans faces and then laughed all the way to the bank with their  contributions from the financial industry lobbyists.  You know things are bad when The New York Times which has been an Obama clarion from day one  says this bill is a disaster.

The Heritage Foundation as usual gives a very good  easy to understand analysis of the Dodd-Frank Bill and you really should understand what is ahead for us because as sure as God made the little green apples that give you a tummy ache the Congress is going to make the Dodd-Frank bill  happen and it will give you poverty:

Morning Bell: The Dodd-Frank Assault on Economic Recovery

Posted June 29th, 2010 at 9:16am in Enterprise and Free Markets with 28 comments

Following the release of the 2,000-page Dodd-Frank financial regulation bill last Friday, fixed-income portfolio manager Christine McConnell told Businessweek: “Clarity is good. [Once financial institutions] understand the rules of the road they’ll be able to accommodate their business models.” There is only one problem: passage of the Dodd-Frank bill doesn’t provide any clarity. In fact, it does the exact opposite. The New York Times explains: “The bill, completed early Friday and expected to come up for a final vote this week, is basically a 2,000-page missive to federal agencies, instructing regulators to address subjects ranging from derivatives trading to document retention. But it is notably short on specifics, giving regulators significant power to determine its impact.”

In other words, this law is going to be continually rewritten by federal bureaucrats for years to come. And the continued uncertainty it will create is just the beginning of its faults:

Permanent Bailout Authority: The Dodd-Frank bill creates an “orderly liquidation” process by which regulators are empowered to seize financial institutions that they believe are in danger of failing and liquidate them. While the lack of a broadly accepted process for closing down large financial institutions helped lead to the massive bailouts of 2008 and 2009, this liquidation process is problematic. Federal regulators are granted broad powers to seize private firms they feel are in danger of default, and these powers are subject to insufficient judicial review. Such governmental discretion to seize private property is constitutionally troubling.

Trusting the Same Regulators that Failed Last Time: The legislation establishes a new 10-member Financial Stability Oversight Council composed of regulators that would be responsible for monitoring and addressing system-wide risks to the financial system. This council would also have nearly unlimited powers to draft financial firms into the regulatory system and even force them to sell off or close pieces of themselves. Unfortunately, it is extremely difficult to detect systemic risk before a crisis has occurred, and the council would serve mainly as a group to blame for failing at an almost impossible task. On the other hand, its huge powers are much more likely to destabilize the financial system by stifling innovative products while failing to detect dangers posed by existing ones.

Brand New Innovation Killing Regulators: The bill also creates a new Bureau of Consumer Financial Protection with broad powers to regulate the financial products and services that can be offered to consumers. The new agency would nominally be part of the Federal Reserve System, but it would have extraordinary autonomy. This autonomy would impede the efforts of existing regulators to ensure the safety and soundness of financial firms, as rules imposed by the new agency would conflict with that goal. For many consumers, this would make credit more expensive and harder to get.

Micromanaging the Market: The conference committee also added a form of the “Volcker rule” which would largely prohibit any bank or other institution with FDIC-insured deposits from undertaking proprietary trading or from owning or sponsoring hedge funds or private equity funds. While the legislation does reject the near-total ban on such investments, the difference between legitimate and traditional activities and those the Volcker rule seeks to ban would be difficult, if not impossible, to determine. Attempting to do so would require an intrusive, expensive regulatory compliance system that by its nature would micromanage day-to-day activities.

Fannie and Freddie Forever: Despite much rhetoric about ending bailouts, the bill does nothing to address Fannie Mae and Freddie Mac, two of the largest recipients of federal bailout money. These two government-sponsored enterprises, now in federal receivership, helped fuel the housing bubble. When it popped, taxpayers found themselves on the hook for some $150 billion in bailout money. The failure to address their future is a serious error and shows just how hollow are claims that this agreement will prevent future crises.

These are just some of the major flaws in a bill that is just one House and Senate vote away from President Barack Obama’s desk (a fuller list can be found here). But final passage is not as sure today as it looked Friday. The passing of Sen. Robert Byrd (D-WV) leaves the majority one vote short of the 60 needed to move for a final vote. In addition, the insertion of an estimated $20 billion in new taxes has Sen. Scott Brown (R-MA) reconsidering his original vote in favor of the measure. Scott released a statement explaining: “My fear is that these costs would be passed onto consumers in the form of higher bank, ATM and credit card fees and put a strain on lending at the worst possible time for our economy. I’ve said repeatedly that I cannot support any bill that raises taxes.”  (This tax on banks has now been removed and instead the money will be gotten from unused TARP funds.  Unused TARP funds were supposed to go back to the treasury!  BB)

Explaining that the Dodd-Frank bill would force banks to either take on more risk to recoup earnings diminished by reform or behave too conservatively in order to avoid losses, financial analyst Chris Mutascio summarized the ultimate effect of the legislation: “Pick your poison—neither tastes good to us and we believe neither is particularly good for the economy and job growth.”

Do go  here. to read a complete list of what is in this bill.  BB

Securities Industry and Financial Markets Assn. spent about $1.4M in 1Q to lobby lawmakers

Associated Press
06/29/10 2:30 PM EDT

WASHINGTON — The Securities Industry and Financial Markets Association spent about $1.39 million to lobby the federal government on housing, banking and other issues in the first three months of this year, according to a disclosure report.

That’s up slightly from the $1.35 million that the trade group spent in the year-ago period, and ahead of the roughly $1.3 million it spent in the fourth quarter of 2009.

During the January-March period, the trade group lobbied the federal government on numerous measures, including legislation related to helping homeowners avoid foreclosure, promoting bank lending through deposit insurance, creating a consumer protection agency and reforming credit rating firms.

The trade association also lobbied on legislation to regulate trading of derivatives, reform short sales of securities, retirement account transparency and patent and tax reform, according to the report filed on April 20

Read more at the Washington Examiner:

The SEC’s Dangerous Gamble – Page 1 – The Daily Beast

The Daily Beast has an interesting story on the SEC vs Goldman saga today.  (In fact they have several if you are interested .)

The problem with litigation is losing. But even if the SEC prevails, its reward may prove ephemeral.

But to quote Jimmy Breslin, in suing Goldman Sachs, the SEC “received immediate lacerations of the credibility.” This begs the question why, considering that this SEC litigation takes it places it hasn’t been before—

challenging the premier firm of Goldman Sachs,

about a synthetic derivative transaction,

on which Goldman lost millions of dollars,

where the parties were sophisticated and not in obvious need of SEC protection,

after a year-and-a-half investigation,

filed immediately after the President threatened vetoing financial reform legislation that doesn’t strongly regulate derivatives,

and a few hours before release of the Inspector General’s Report on SEC inadequacies in attacking Alan Stanford’s Ponzi scheme,

but apparently without giving Goldman advance notice of the filing,

or exploring possible settlement, and

splitting 3-2 along political lines in a major enforcement action.

More significantly, it comes when the SEC is badly in need of “unlacerated credibility.” Since January 2009, the SEC has done an admirable job of laying a solid foundation for restored credibility. But, its suit against Goldman could undo much—if not all—of that effort if the litigation doesn’t turn out satisfactorily, and even if it does, if reports about dissension and political splits are accurate.

Now I do not want to imply that this SEC  Saga isn’t important because it is and it has a great deal to do with just how the Obama Fanatics  take over of the financial sector of our economy will come down.  If the bill that our infamous Senator Chris Dodd wrote isn’t curbed considerably then that sucking sound you will hear screaming off to Asia, and Hong Kong in particular, will be our largest financial institutions.  When they go they will of course take all their beautiful job creating money with them.

No, this story is important.  BUT, it is also a smoke screen for what the other  hand is doing as have been all of Obama’s crisis and scandals.  The other hand in this case is working overtime to slip thru the VAT or Value Added Tax.  This is a tax on every buying American.  it is a hidden tax because it is just added into the cost of the product so no one realizes exactly how much they are paying in tax.  This of course makes it real easy to raise the VAT tax rate anytime the government needs a little more money.

It also means lowering American living standards to European levels.  Yes, I did say lowering American living standards to European levels.  Not many Americans are aware of just how much higher our standards of living are than Europeans on a comparable  income level  until we visit friends or relatives in Europe or have them visit us here and  have them comment  on things that we take for granted.  That, or thinking their American relatives are really much more “well off” than they actually are!

At any rate regardless of Senator McCain’s non-binding vote taken in the Senate with 85 Senators saying they would not vote for a VAT, a VAT is in our future.

The above referred story however is interesting in explaining the situation with the SEC vs Goldman saga, but also in pointing out that the Democrats are really biting the hand that feeds them since Democrats have received much more in campaign funds from Wall Street than have Republicans.  After all it was Democrats Representative Barney Frank and Senator Chris Dodd (among others) who have  made it possible for Wall Street to make the unreal profits they have been able to make over the past few years that led to the Financial  Crisis which was really a Mortgage Crisis.   Money was made on Wall Street by playing fast and loose with the mortgages given to people who could not afford them  which was because Frank and Dodd made it government policy to pressure banks to make these bad loans.  Well, the banks did and got their profit and then sold the mortgages to Fannie Mae and Freddie Mac when they were huge PRIVATE mortgage companies.  This then left Freddy and Fannie holding the bag when the foreclosures started coming down but no worry Wall Street  bankers and the big Democrats campaign donners were off the hook and it was already decided in the dark rooms of Congress that the government (TAX PAYERS) would buy out Freddy and Fannie and make them government or PUBLIC agencies with buy outs possible forever (just like the Post Office!).

Moral of story:  Wall Street knows it is more lucrative to buy off the crooks in congress, and the Democrats seem to hold the title for having the most crooks.  BB

New Obama Mortgage Plan: A Backdoor Bank Bailout | Cato @ Liberty

President Obama has decided to help his campaign contributors in the financial industry once again with a program whose first phase was an abysmal failure.  (See:  Bailout watchdog criticizes home loan program

New Obama Mortgage Plan: A Backdoor Bank Bailout

Posted by Mark A. Calabria

Today President Obama announced an expansion and modification of his Home Affordable Modification Program (HAMP).  While one can debate the merits of incentives to keep unemployed families in their homes while they search for jobs — I personally believe this will more often than not keep those families tied to weak labor markets — what should be beyond debate is the various bailouts to mortgage lenders contained in the program’s fine print.

Several of the largest mortgage lenders, including some that have already received huge bailouts, carry hundreds of billions worth of second mortgages on their books.  As home prices have nationally declined by almost 30 percent, these second mortgages are worthless in the case of a foreclosure.  Second mortgages are usually wiped out completely during a foreclosure if the price has decreased more than 20 percent.  Yet the Obama solution is now to pay off 6 cents on the dollar for those junior liens.  While 6 cents doesn’t sound like a lot, it is a whole lot more than zero, which is what the banks would receive otherwise.  Given that the largest lenders are carrying over $500 billion in second mortgages that may need to be written down, we are looking at tens of billions of taxpayer dollars again being funneled to the very banks behind the mortgage crisis.

If that bailout isn’t enough, the new plan increases payments to lenders to not foreclose, all at the expense of the taxpayer.  While TARP was passed under Bush’s watch, and he rightly deserves blame for it, Obama continues these bailouts in the name of avoiding a much needed correction in our housing market.

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