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Why “Firing Ed DeMarco” is No Solution to FHFA Refusal to Engage in Principal Modifications (Updated)

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Today, Acting FHFA Director Ed DeMarco wrote to Congress, after due consideration, reaffirming his position that he will not permit Fannie and Freddie to lower principal balances of mortgages of borrowers that are delinquent. This is despite the fact that the top analyst in this space, Laurie Goodman, has determined that principal modifications are the most effective form of mortgage modification, resulting in much lower refault rates than interest rate mods or capitalization mods. And that makes sense. Why should a borrower struggle to hang on to a home when even if they make all the payments, when they sell they they are stuck with a big tax bill? And as we’ve stressed, private label investors are overwhelmingly in favor of deep principal mods for viable borrowers, and that’s because foreclosure is costly and leaves them worse off.

So it’s more that a bit puzzling to see DeMarco nix principal mods, particularly in light of a Treasury program that provides subsidies to investors of 18% to 63% of the amount forgiven, depending on the loan to value ratio of the loan. With those kinds of bribes subsidies, how could DeMarco say no?

Well, DeMarco has. His logic is twofold. First, bag considering the subsidies, they are just a transfer from one pocket (Treasury) to another (Fannie and Freddie) and therefore don’t count as far as the conservatorship mandate of saving taxpayer dollars is concerned. Second, he goes into dueling model mode, and not being able to see his model an d model assumptions, one can’t tell how hard his team has gone in tweaking assumptions to produce the desired result. (if I get my hands on his 18 page letter, which I’ve seen referenced but not posted, I will update the post if it gives more insight on this matter). He concedes in his letter that if you do mods for borrowers that are now delinquent, you see a “small” net benefit (Treasury claimed $1 billion even after the cost of subsidies, it would be telling to see what DeMarco came up with). However, he contends the taxpayer could come up much worse off if people who were current defaulted in order to qualify. His bottom line: “We concluded that the potential benefit was too small and uncertain, relative to the known and unknown costs and risks.”

As much as this blogger is firmly of the view that this is a poor economic decision (deep principal mods are a sound idea, as long as you have a decent approach for vetting borrower income and other debt payments to see if they are viable with a mod), I have to hand it to DeMarco as a bureaucratic infighter. He is effectively throwing the abortion of HAMP results in Treasury’s face. Recall that HAMP did not require borrowers to default in order to qualify for mods, yet many did out of misdirection by servicers. Now in fact, servicers are unlikely to play that game this time, since a principal mod reduces their servicing income. But the fact, as detailed by Neil Barofsky in his book Baiout, that Treasury was indifferent to how homeowners fared under HAMP, and merely saw this as a vehicle for “foaming the runway,” meaning spreading out the number of foreclosures over time, rather than saving borrowers, led to irresponsible actions (like ordering servicers to sign up people for trial mods initially without even qualifying them), numerous changes in program design (disastrous for highly routinized servicers) and lack of concern with the fact that many people lost their homes by virtue of HAMP who might have kept them, has produced some data (in particular, informed estimates of the number of people who defaulted to qualify for HAMP) against the Administration. And notice in its speedy rebuttal letter to DeMarco, Geithner concedes that DeMarco has the power to take this action: “…you have the sole legal authority to make this decision.”

One might wonder why DeMarco is being so intransigent. I am told that he is an old fashioned public servant (as opposed to the tail his opponents are trying to pin on him, that of being a Republican hack), which means he may well believe the strategic default meme (from everything I can tell, this is vastly overblown with primary residences, but is a real phenomenon with second homes. And even with a second home, the damage to one’s credit record alone is a substantial deterrent). What does appear to be different in this crisis is that people who are current on all their obligations will default on their homes. That is interpreted to be a strategic default. But the word from attorneys and mortgage counselors is that these are anticipatory defaults: borrowers who were already under some duress took another reversal, and could see that hitting the wall was now inevitable. Rather than default when they were totally out of money, they default when they still have enough left to at least cover moving costs and a rental deposit.

Needless to say, the Administration stalwarts are up in arms, calling for Obama to fire DeMarco. They might as well yell at the tide. It actually discredits them to rail like this, in that it reveals a failure to do basic homework. First, both the White House and DeMarco have said as the head of an independent agency, he can’t be fired. Second, even if DeMarco were to conveniently disappear, a new appointment would have to be approved by the Senate. Recall what happened with the CFPB. Senate Republicans blocked the nomination of Richard Cordray; Obama had to install him as a recess appointment. Given that Fannie and Freddie are pet demons of the Republican base, not just party stalwarts, the Republicans would more likely to play games to keep the Senate officially in business to stymie a recess appointment than they did with the CFPB (as much as they were not keen re Cordray, he did not merit the sort of pitched battle that an Elizabeth Warren nomination would have elicited).

So what would happen if DeMarco disappeared and there was no new permanent replacement? Another acting director would be chosen from among the four current deputy directors. They have similar views to DeMarco, and I’m told they’d fight Treasury at least as hard as he has.

The way to beat this is not via taking out a contract on DeMarco, it’s in doing a better job of promoting the merits of principal mods and debunking the “deadbeat borrower” meme. But here, the soi disant left has preached to the converted rather than trying to make headway with the broader American public. There is enough distress in the heartlands and enough well warranted antipathy for banks that it ought to be possible to make inroads on this front. But with Obama and Geithner dyed-in-the-wool neoliberals in charge, the failure in messaging comes from the top.

Update 7:00 PM: Adam Levitin points out, per Ezra Klein, that Obama could get rid of DeMarco via simply making a permanent appointment on a recess. Technically true, but Obama had that option to him long ago, in fact back in 2010 when the Senate let his appointee Joseph Smith hang in the breeze and Smith withdrew. And he also could have done it earlier this year, when DeMarco first made his opposition to principal mods clear (he deferred taking a stand as long as possible).

To replace DeMarco at this juncture would be waving a red flag in front of Fannie and Freddie hating Republicans, and would bolster Romney’s campaign by giving them a solid anti-Obama talking point. And the reality, as we indicated above, is that Obama has never been serious about helping homeowners. He’s never crossed swords with the folks who demonize borrowers in distress, never had any of his minions get tough with recalcitrant servicers. He has plenty of latitude to make an impact, and the only thing he threw his weight behind was the cosmetic, bank-serving mortgage settlement. He’s clearly made the calculation, and he has determined he is well served with DeMarco in place as a scapegoat.

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65 comments

  1. F. Beard

    Steve Keen’s universal bailout (which he calls “A Modern Debt Jubilee”) avoids the need for principal mods and gives an equal amount to non-debtors too. What’s not to like? Inflation risk? Then levy a ban on further credit creation and meter the bailout to prevent excess growth in the total money supply (reserves + credit).

    Politically, who* can disagree? Who sent back their “stimulus checks” from GW Bush and Obama?

    It’s only money that is needed. Let’s create it by spending it. Claw-backs and prison sentences can be done more leisurely; let’s not pretend we have to wait on those.

    *Besides misanthropes like MLTPB.

    1. rc

      Another helicopter strategy? When everybody gets a handout, that money becomes worth less and no one gains anything, except a temporary illusion.

      And what is the point of principal reduction? Just to make people feel good because their house is worth more so they can go out and use it as an ATM again?

      NO! Just let them live in their underwater house. Whats the difference. A house is just a place to live, it is not an investment. It doesn’t matter what it’s worth.

      1. F. Beard

        When everybody gets a handout, that money becomes worth less and no one gains anything, except a temporary illusion. rc.

        That depends. Imagine that banks were forbidden to extend any more credit? What would happen to the money supply? Since “loans create deposits” then loan repayments destroy deposits. The effect would be MASSIVELY deflationary UNLESS the Federal Government did some “helicopter drops” of new money.

        It’s pretty simple. The ability of the banks to create money (“credit”) has created this problem. Abolishing that ability would allow the problem to be solved without destruction of the currency.

        Reform allows restitution and vice versa. One hand washes the other.

        1. Foppe

          Beard: yes the loans would be destroyed, but (to the extent that they kept those CDOs etc. themselves) the banks would still have the money to give away as bonuses, no?

      2. Foppe

        1. how is this “another”? There has never been a first one (unless ‘banks are people too’)
        2. ‘underwater living’ sounds fun, until banks start to demand additional security

  2. rc

    I fully expect Obama to use principal reduction as part of his reelection campaign. If this means getting rid of De Marco and replacing him with some whore, then so be it. Probably the so called “top analyst” Laurie Goodman would like the job

    This is why you don’t want woman in government. They think in grays while men tend to think in black and white. This may be good in some instances but when it comes to rule of law it’s is disastrous

    1. Brett

      You do realize Yves is a woman, right? And you do realize your post makes you sound like a misogynous moron, right?

      1. rc

        Yeah! So what. I stand by what I said because it is generally true. There are exceptions of course.

        I know a politically correct little man like you cannot bare to think there are differences between men and women and any one to doesn’t tow the feminist PC line is a misogynists or Chauvinist Pig.

        But what really ticks me off are men like you and Obama who think like women

      2. Tim

        RC caveated his statement saying there were exceptions. What is your problem?

        Sexism is one of Yves blind spots. She sincerely believes men and women are the same as opposed to being equal yet different.

        IN GENERAL women are far better managers than men, and men are far better leaders than women.

        Men tend to be far better atheletes on average than women (what would happen if championship WNBA team played the championship NBA team?).

        Yet the world record holder woman in a track and field event can still perform above 99.999…% of men in any particular activity by the numbers, so there absolutely will be excellent exceptions.

        So given the limited pools of people in high political positions it is easily possible that a woman could be a better leader than the men, but that would be the exception rather than the rule.

        For all that, I’ll tip my hat to Yves and Naked Capitalism and say that women are much better bloggers than men as this is a most excellent website ;-)

        1. Yves Smith Post author

          No, you mischaracterize my position. And even though you have good intentions. you engage in the sort of stereotyping that hurts both genders.

          For classes as large as men and women, the differences WITHIN each class are greater than the difference BETWEEN classes. So your comment like “men are good leaders while women are good managers” works to the detriment of women who have what it takes to lead and men who are good managers. And there are tough as nails women (I’ve met some in M&A who are fierce) and nurturing men. Stereotyping makes it hard for people who don’t hew to gender stereotypes to succeed personally or professionally.

          I’ve also come to realize I don’t see people primarily through gender, and most people do, so I find it hard to relate to their world view.

          Oh, and BTW, “equal and different” sounds an awful lot like “separate and equal” which was found in practice to work to the disadvantage of blacks. For instance, in our society, leading is much better paid and valued than managing, so your formulation that is tantamount to “women aren’t leaders, men are” justifies relegating women to second class roles.

          1. darms

            Being a nurturing man happily married to a tough as nails woman mangaer I must agree w/Yves here…

        2. Mark P.

          Interesting what comes scuttling out when you just lift up a rock a little. Oh, well.

    2. F. Beard

      We need someone who at least understands that the US is monetarily sovereign, a money ISSUER and not a money USER.

      The banks are by far the biggest money creators. Strip them of that privilege and the Federal Government would have to spend large amounts just to prevent massive deflation.

      Sometimes a man’s hardheaded view of reality is simply wrong.

    3. Chris

      WTF is wrong with you? Why do people like you still exist in 2012? You’re a sexist bastard and there should be a group of people assigned to show up at your door and beat the crap out of you because you are too stupid to live.

      Men are the reason we’re in this damn mess. Dumbass men on wall street all trying to see who has the biggest dick by making ever more stupid bets and will never admit they were wrong. Instead they bluster that they need $700B or the economy gets it. Same goes for every one in charge – Bernanke, Geithner, Paulson, Bush, Obama. We’d be a lot better off if there were more women in power in this country.

      Go join the Taliban. Your views will fit in well there.

  3. michael hudson

    It looks like a staged charade to me. The explanation is ideological more than obvious economic interest. Today’s Financial Times laid out the arguments for why mortgage debts SHOULD be reduced:
    Shahien Nasiripour, “Data back case for mortgage forgiveness as aid to recovery,” Financial Times, July 31, 2012.
    Forgiving part of a mortgage can save money if it causes an even bigger reduction in the number of borrowers who default. … There are 11m “underwater” borrowers in the US – those with mortgages worth more than their home …. Fannie Mae and Freddie Mac either own or guarantee about half of all outstanding home loan debt, …Mortgage servicers – companies that collect mortgage payments and initiate foreclosure when borrowers default – have been reluctant to write down debt, citing a fear of investor-led lawsuits. A change of FHFA policy could reduce investors’ grounds for legal action.

    The Treasury SHOULD have written down debts. But Geithner acts as a lobbyist for the banks. NO taxpayer dollars were needed at all! The banks should have taken the loss. That would have simplified everything. Fannie Mae could have sued for fraudulent mortgage filing.
    So the key to all this is the road NOT taken.
    Michael

    1. Glen

      I tend to agree with you – kabuki theater. It’s extremely hard to believe Geithner is for principle write downs at this point. This is a man that did everything but give a BJ to the CEOs of all the TBTF banks and Wall St banksters. To think that he’s even remotely in favor of write downs for average Americans strains credulity.

    2. Susan the other

      To legally write down principal, Treasury would have to buy the MBSs from the trusts, no? That’s what Timmy should do, some kinda universal solution that resolves the inconvenient fact that the trusts are holding “securities” that are not in fact backed by mortgages because the mortgages are not backed by notes because the bundlers wanted to be free to do multiple pledges. So we are left with an otherwise unresolvable legal ownership problem – this “title-deed” thing. But maybe Geithner prefers to save his money to buy Greece. Which also has a serious “title-deed” thing to resolve. And lots of credit default swaps to settle.

  4. Conscience of a Conservative

    I’m one who thinks DeMarco is correct.
    First Obama wants this for votes, despite the fact that individual home owners achieve only a modest benefit in mortgage payment and often default anyway.
    Second Geithner is for this because it makes bank held 2nd liens more valuable and more likely to be money good
    Third reductions will punish the tax payer. It’s been very cleear that any awards help the banks more than any other party.

    1. Conscience of a Conservative

      Of the top ten states where the GSE holds under-waterloans 6 are consider in play come the November Elections, Florida, Michigan, Arizona, Ohio, Nvada & Minessota. This is just politics pure and simple.

  5. Brett

    Yves, where has Obama said he can’t fire this guy? What does FHFA being an independent agency have anything to do with it? Barofsky was head of an “independent agency” called SIGTARP and Obama had free reign to replace him whenever he wanted.

    Furthermore, the FHFA website says DeMarco was designated to his role as ‘acting director’ by Obama.

    I think your right however that replacing him would be difficult given the need for the Senate to confirm him.

    Obama should have used a recess appointment months ago to get an actual head in there, one that had no problem with the plan Geithner proposed, if that is indeed their intention.

    As a cynic, I would assume that if Obama doesn’t fire this guy, the plan all along was for principle mods to be rejected but for Obama to be able to campaign that he wanted to do them but just couldn’t because of that meanie “independent” overseer in the FHFA. That way he could throw a bone to his base and say he tried.

    1. Yves Smith Post author

      No, please read Barofsky’s book. SIGTARP was not an independent agency. It was part of Treasury and believe it or not, Barofsky reported to Geithner!

      He was an Inspector General, not head of an independent agency.

      1. Brett

        Yes you are right, I misspoke (or mistyped). I actually am reading the book right now, it’s great.

  6. JGordon

    I admire Demarco a lot, even if he is a government beauracrat. Seems to have a bit of integrity anyway.

    An Obama appointment is sure to be a political animal who will have the dual mandate of 1) protecting the criminal bankers who dumped a bunch of toxic garbage on his agency, and 2) implementing policies that will theoretically get his boss reelected, no matter the cost to taxpayers.

    1. JGordon

      Although on the other hand, I don’t really believe that property rights will have much meaning soon, so this is all kind of abstract to me.

      When things really start getting bad, I’m just going to pick whichever building I like that’s in a good location, and just sort of move in.

    2. jpmist

      What is really baffling is that Demarco appears to be one of the more competent bureaucrats we have in Washington and yet there are calls for him to be fired?

      Fannie Mae in four years has gone from $29 billion in losses in Q3 2008 alone to actually making a profit in Q2 2012. A few more years of that and Fannie will have completely paid off what it owes to the Treasury.

      Who in Washington has been as remotely successful at anything?
      Certainly not Congress, who in 4 years has yet to submit a bill getting Fannie Mae out of receivership. Certainly not Obama who’s best idea to help the Housing Crisis was to give the 5 Banks a cheap get out of jail card.

      Now that Fannie Mae is starting to turn a profit my fear is that politicians will start to think of Fannie as a piggy bank to affect housing policy when all they have to do to change Demarcos’ job description is PASS A BILL. But they can’t do that, can they. . .

  7. briansays

    modification but not principal reductions
    from a 30 to a 40 year amortization schedule
    in japan i believe they take it one step further
    if there are children they become obligated on the loan
    regardless of age(which i recognize may run afoul of western law and the requirement of the ability to form contractual intent)
    in part it works because teir is a cultural stigma to selling grandma’s house as you are dishonoring your ancestors
    worth considering??

    1. F. Beard

      No. The solution to onerous debt is not to reschedule it! Screw all these more debt solutions! Debt to counterfeiters is NOT morally valid.

  8. steelhead23

    I do not wish to be obtuse, but even if the economic multipliers suggest that revenue growth from such a bailout (Krugman argues that bailed-out folks would spend more following the principal mod) would exceed the cost (doubtful, but plausible), I would object. Perhaps the term moral hazard is overused, but should not the risk-takers pay the cost of such mods? That is, even if the purchasers of MBS were duped by the originators (there are civil remedies there), shouldn’t they bear the cost of shoring those bonds up? Now, I might support some back-door approach – like tax bennies to those who willingly reduce principal, but buying the cost down directly seems to me to be an investor bailout as much as it would be a homeowner bailout. Yeah, I understand that “the investors” in MBS may include my pension fund, etc. and I may be cutting my own throat, but I am so sick to death of the banksters getting off the hook because to save the dupes, we have to save the dupors that I would rather take a hit than see the fraudsters pick up one more dime of my money. And yes, I fully recognize that my personal enmity toward banksters may be clouding my judgement. So be it.

  9. acmerecords

    m.hudson is right -
    the road not taken & the shills for FIRE who chose not to take it
    i go further…
    time to nationalize these insolvent tax dollar supported banks ..time for more than a haircut ..time for a clean shave

  10. DM

    I worked in a bank once and the first thing they do when commercial loans go bad is start to write off interest and then principal. It’s a tough call between expecting people to back their commitments and allowing them to get the same treatment that other near-defaulting entities receive. I think the solution was to resurect a RTC type handler and let the default and repurchase party begin. The sooner it’s over with, the sooner we can get on with things.

  11. Nate

    Loan principle modification is not required. Rather the interest rate modification is all it is required.

    For most people if their mortgage interest rate is lowered to under 1% ( one ), their monthly payment will be reduced by $500 to $1,000, based on relative to the principle balance owed. Today we have historical low rates, one year treasury index is mere 0.125 percent. Most people pay 2.5% to 2.75% margin over the index rate. If we limit the margin rates to be not greater than the index rate, the index + margin = 0.25%. Most people will be able to pay off their principle balance sooner with lower monthly payments.

    1. F. Beard

      That fixes borrowers but the non-debtors will scream “Where’s mine?” The Austrians ignore that credit creation cheats debtors but they are quite correct that it cheats non-debtors.

      Steve Keen’s solution or something similar fixes everyone from the bottom up but I suppose we need a lot more heat before people see the light.

      1. Mark P.

        ‘…but the non-debtors will scream “Where’s mine?”’

        Sure will. Go read, say, the comments thread at the NY TIMES on this and see — granted it’s a self-selecting cohort — just how many people are pathetically oblivious to anything else (like, it was the most monstrously manipulated credit bubble in history) besides dumb resentment that somebody, somewhere might actually get a break.

        1. F. Beard

          besides dumb resentment that somebody, somewhere might actually get a break. Mark P.

          The resentment may be dumb but it is accurate. Non-debtors have been screwed too. It’s dumb to ignore their legitimate complaint.

          For the life of me I can’t see why people aren’t jumping for joy at Steve Keen’s solution or similar. I suspect a punishment seeking pathology.

          1. amanasleep

            @ F. Beard:

            Partly correct.

            In truth, if Obama, Romney, Boehner, Pelosi, Reid, and McConnell held a joint press conference and said that the best course of action for the economy was universal bailout, nobody would believe them.

            For most people, the concept that debt creation is money creation, and that government debt is a valuable commodity, and especially that giving free money to everybody is A) possible and B) a reasonable and sober policy during a debt fueled recession, is so deeply counterintuitive that they simply will refuse to believe it.

            This fact has been understood by among others Paul Krugman, who has pointedly ignored all flavors of MMT during this election cycle. If he embraced it he would immediately be branded as a loony and loose his position as the leftist voice of reason. OTOH if Obama wins a second term and adopts some of Krugman’s policy prescriptions I would then expect that Krugman will seek public rapprochment with Steve Keen after their dust-up a while back.

  12. Greg T

    Call me cynical, but I have a hunch that DeMarco is being set up as the fall guy to cover for Obama administration policy. I have a hard time believing they can’t cajole Demarco into doing principal reductions. DeMarco is playing the good soldier by taking the blame for something that Tim Geithner and by extension, Wall Street wants …no principal reductions.

  13. Trader

    Get the government out of Fannie and Freddie, and let them go bankrupt. How many hundred billions do we have to pour down those holes?

  14. ian

    The problem I have with modification and principal reductions is that a lot of people are simply in the wrong house – it could be way beyond their current means, even with big reductions or they could have lost their job in an area with dismal employment prospects. Keeping these epeople in their homes at all costs doesn’t realistic.

  15. Dave of Maryland

    Screw this pleading with governments who are deaf.

    Let’s go back to eminent domain. There might be a wrinkle.

    Say the local government condemns the property and offers to pay fair market for it.

    What if the city attorney tells the treasurer to only accept a clean title? What if MERS can’t do that?

    Then it’s back to the county clerk’s office. If they don’t have clean records, then what?

    To county court, to file for abandoned property? Can you do such a thing?

    Most local governments are so corrupt that they could schedule a fake abandoned property hearing, and have it slammed through unopposed. The banks would scream, but the appeal would be thrown out because the original case was not contested.

    Here’s where it gets fun: The city picks up eminent domain property at no cost to itself, due to MERS being an unresolved mess.

    So what does the city do with the property?

    It could offer a mortgage at 1%. The city would need no capital to do so, since it would be the owner by default.

    Or it could offer long-lets (30 years), such as is done in London, and be a landlord.

    Either way, the city takes a HUGE haul.

    My mortgage is $1500/month. If the value of the property was knocked back, if the interest rate was 1%, that’s a new payment of maybe $800 a month. Good for me.

    Property taxes are about $3000/year.

    If the city got the mortgage payment, it would be getting $9600 a year. It could drop property taxes altogether and live off mortgage income.

    Even at brand-new, never before seen levels of local corruption, there would still be more money in city hall than it’s ever seen before.

    Enough to pay for enhanced city services that might make up for interest income lost by seniors and pension plans.

    In one swoop, the banks are killed, people with mortgages get relief, cities get an income. Where’s that threat of redlining?

    I’m not an attorney, I don’t even play one on the blogs, but it all hinges on not having a clean title, and declaring the property abandoned as a result. Tell me where I messed up. Or pinch me.

    1. tiebie66

      Interesting idea because clouded title must have numerous consequences and present a wide array of possibilities. Quiet title? Adverse possession? There must be plenty of prior experience with clouded title and the outcomes it can lead to. I, too, would like to hear more.

    1. Yves Smith Post author

      There are no cramdowns on owner occupied housing in BK. Changes in rules that would allow for that have been defeated repeatedly. And this is an anomaly. Pretty much every other type of collateralized debt has the secured debt written down to the value of the asset and the excess included in unsecured debt in a BK.

      1. Susan

        I would, and I know others would be interested to hear your reply to Dave of Maryland above, Yves.

  16. psychohistorian

    This kabuki continues to hide the ongoing attempt to prop up real estate prices so somewhere some folks don’t lose some derivative bets and the Fed can foist off the Maiden Lane dreck at something close to par.

    1. John F. Opie

      Truer words have not been spoken. This is the only solution that doesn’t break the bank, so to speak, and it is the one that everyone has doubled down on.

      If the market were allowed to operate, real estate prices would have collapsed in most markets, especially in places like Las Vegas that saw an enormous bubble. It would have drawn the banks out into the open as to their general insolvency – mark to market – and taken down the whole rotten house of cards.

      So now we have the rot extending from the one or other cards to more and more of the cards, without anything being down to stop the rot. Everyone’s desperately hoping and praying that the markets recover and this all turns out to have been a bad dream.

      Right.

  17. sierra7

    The comments on this page and the re-actions to the financial crisis in general prove a point:
    As long as things go well for capitalism (as we practice it) everything is hunky dory….
    As soon as we face major financial crisis such as we do now it just disentigrates into a giant “circle jerk”.

    1. citalopram

      I would agree with that. The simple fact of the matter is that there are certain degrees of capitalism, from far right libertarian, free-market wackery to social democracy similar to some systems in Europe.

      The current system needs to be “tweaked”; the major players behind this austerocracy need to be driven out, and a more sane and fair system needs to be brought forth.

  18. Jim Shannon

    There is solution – but these Ivy League Robots are too programmed to develope one.
    I have a solution that should have been the way mortgage money was always lended.
    But you will never get the Malignant Narcissists that are running the show to admit they are in fact all hot air.
    Protecting CentaMillionaire$ and BillionairS money as the people pay for their corruption and greed!

  19. Scott Osborne

    If the administration were serious about helping underwater homeowners, they would be pushing to allow bankruptcy courts adjust residential mortgage debt. This is all just a farce.

  20. Mortgage modification

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  21. Richard Davet

    Demarco is nothing more that a bit player in the ever evolving lousy theatre production called “The GSE Business Model”.

    All this discussion about resolution without any mention of shutting the bastages down as they are FUBAR. Cost $190 billion to date with no end in sight.

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