Comments on: Yet Another Program to Enrich Banks at Taxpayer and Borrower Expense http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html Sun, 22 Nov 2009 01:21:03 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Yves Smith http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46844 Yves Smith Sun, 10 May 2009 05:14:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46844 a stranger,<br /><br />I have complained in other posts, at length, at the failure of the Administration to take interest in finding ways to cut the mortgage securitization Gordian knot.<br /><br />Having said that, the Administration could not force the courts to do cramdowns, that would need to be a change in bankruptcy law.<br /><br />I did write the point on cramdowns backwards, oops. I have discussed earlier that the reason the cramdowns have been opposed is that the big banks who hold the top tranches do not want to take hits. a stranger,

I have complained in other posts, at length, at the failure of the Administration to take interest in finding ways to cut the mortgage securitization Gordian knot.

Having said that, the Administration could not force the courts to do cramdowns, that would need to be a change in bankruptcy law.

I did write the point on cramdowns backwards, oops. I have discussed earlier that the reason the cramdowns have been opposed is that the big banks who hold the top tranches do not want to take hits.

]]> By: a stranger http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46842 a stranger Sun, 10 May 2009 03:50:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46842 Although the fact that mortgage cramdown would solve this doesn't really meant anything, you know. That's Congressional action, not the Administration. You can rail against both, but it seems that while it is not a particularly efficient policy, it's one the Administration can do while Congress flounders. Don't conflate the two. Although the fact that mortgage cramdown would solve this doesn’t really meant anything, you know. That’s Congressional action, not the Administration. You can rail against both, but it seems that while it is not a particularly efficient policy, it’s one the Administration can do while Congress flounders. Don’t conflate the two.

]]> By: a stranger http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46841 a stranger Sun, 10 May 2009 03:42:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46841 You've got it mixed up. BK is distributed pro rata, mod by junior tranches first. A BK by nature is meant to distribute losses equitably barring any sort of seniority; most mortgage securities did not account for this. You’ve got it mixed up. BK is distributed pro rata, mod by junior tranches first. A BK by nature is meant to distribute losses equitably barring any sort of seniority; most mortgage securities did not account for this.

]]> By: mmckinl http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46114 mmckinl Wed, 29 Apr 2009 06:59:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46114 More great reporting ...<br /><br />.......... thanks Yves More great reporting …

………. thanks Yves

]]> By: attempter http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46110 attempter Wed, 29 Apr 2009 06:46:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46110 I guess it all comes down to:<br /><br />If you believe resuming pseudo-"growth", i.e. reflating the bubble, is possible beyond an emphemeral zombie interval, and you believe this is desirable even at the cost of having to reconfigure all American activity (not just financial/economic policy) around corporatist welfare, then I suppose there is no alternative to this endless menagerie of paying protection money to thugs. I guess it all comes down to:

If you believe resuming pseudo-”growth”, i.e. reflating the bubble, is possible beyond an emphemeral zombie interval, and you believe this is desirable even at the cost of having to reconfigure all American activity (not just financial/economic policy) around corporatist welfare, then I suppose there is no alternative to this endless menagerie of paying protection money to thugs.

]]> By: FairEconomist http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46106 FairEconomist Wed, 29 Apr 2009 05:17:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46106 A nasty side effect is that the terms are so generous 2nd mortgage holders will almost never agree to a mod outside of the program. A nasty side effect is that the terms are so generous 2nd mortgage holders will almost never agree to a mod outside of the program.

]]> By: slugworks http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46105 slugworks Wed, 29 Apr 2009 05:01:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46105 The only silver lining would be if the majority of 2nd mortgages that are underwater mortgages are under far more than $12k. (I'm guessing they probably are, but corrections welcome.) Then we're back in the same hostage scenario as before, just with less money at stake, correct? The only silver lining would be if the majority of 2nd mortgages that are underwater mortgages are under far more than $12k. (I’m guessing they probably are, but corrections welcome.) Then we’re back in the same hostage scenario as before, just with less money at stake, correct?

]]> By: tyaresun http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46104 tyaresun Wed, 29 Apr 2009 04:43:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46104 Simply unbelievable. I want to believe that gettiing rid of Geithner and Summers will fix things but that hope is dimming. Four more years lost. What a travesty. Simply unbelievable. I want to believe that gettiing rid of Geithner and Summers will fix things but that hope is dimming. Four more years lost. What a travesty.

]]> By: john bougearel http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at.html#comment-46102 john bougearel Wed, 29 Apr 2009 04:21:00 +0000 http://www.nakedcapitalism.com/2009/04/yet-another-program-to-enrich-banks-at-taxpayer-and-borrower-expense/#comment-46102 Yves, <br /><br />See Kindleberger's Homer Hoyt references in Mania Crashes and Panics pg 111-113 <br /><br />The "speculators in real estate feel no such compunction" to cover their losses when the housing market collapses and they get the equivalent of a stock market margin call. <br /><br />Still Hoyt writes, slowly but inexorably the real estate investor <br />is ground down, and with him suffers his bank. <br /><br />and yes, it took roughly 3 and more full years to grind them down. Yves,

See Kindleberger’s Homer Hoyt references in Mania Crashes and Panics pg 111-113

The “speculators in real estate feel no such compunction” to cover their losses when the housing market collapses and they get the equivalent of a stock market margin call.

Still Hoyt writes, slowly but inexorably the real estate investor
is ground down, and with him suffers his bank.

and yes, it took roughly 3 and more full years to grind them down.

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