Good to see Moody’s rebuilding its franchise. Their aura of mystery is still reassuringly intact, two years after the subprime CDO ratings fiasco; as a bemused Firedoglake notes, in connection with two diametrically opposed, and politically charged, opinions about the tax cuts and their projected effect on the US credit rating: Can someone tell me […]
Read more...The Congressional Oversight Panel has issued another typically detailed report, this one focusing on the Administration’s widely criticized mortgage mod program, HAMP. HAMP is so widely recognized as being a failed program that when a group of bloggers met with Treasury officials last August, even Timothy Geithner didn’t try to pretend the program worked very well. The defense offered was that it “succeeded” by flattening what would have been a spike in foreclosures by getting some people into trial mods that failed and delaying the inevitable for a few months. Of course, that view conveniently omits the fact that servicers told borrowers that were current to quit paying so they could qualify for HAMP, plus the fact that the borrowers that did not get “permanent” mods also were assessed missed payments and late fees.
But the focus on HAMP has been mostly about how badly the program worked operationally, and less on the crappy design of the misleadingly-labeled “permanent” mods. Only in the US could a kick the can down the road strategy be branded as “permanent”.
Read more...Tomorrow, a group of homeowners is meeting with Iowa’s attorney general Tom Miller, who is leading the 50-state effort which is investigating foreclosure and mortgage lending abuses.
This group is presenting a letter to Miller asking them to prosecute bank executives for mortgage fraud and wants to show broad-based support for this idea via having concerned citizens sign it.
Here is the text of their letter:
Read more...There is a perfectly fine article up at the Wall Street Journal on the current, probably weakening, state of the housing market, save that it fails to discuss the elephant in the room, that of the continuing moribund conditions in the so-called private label securitization market.
Read more...anks, having trashed their once-sound model for the credit card business, are back trolling to find credit junkies, albeit of a somewhat safer type than the ones that blew up on them in the credit crisis.
Back in the 1980, the credit card industry, despite being more fragmented than now, had what looked a lot like oligopolistic pricing.
Read more...By Alexander Gloy, the founder and CIO of Lighthouse Investment Management
This week, EU leaders will try to agree on limited EU treaty changes at a summit (December 16-17). The aim is to establish a permanent rescue mechanism for countries in financial difficulties. On Monday and Tuesday (December 13-14) foreign affairs ministers will meet in Brussels to prepare draft conclusions. The BBC claims to have obtained a draft communiqué. We will analyze if a new European Stability Mechanism (ESM) has any chance to save the Euro.
Read more...The BBC has obtained a leaked copy of the EU draft communique on the so-called permanent bailout mechanism. Attentive readers may recall that current programs extend only to 2013, leaving a big question mark as to what would happen next, given the high odds that the countries perceived to be at risk would not be […]
Read more...We followed Chris Whalen, who gave a pretty apocalyptic prognosis for 2011.
You can view the segment here. Enjoy!
Read more...By Satyajit Das, an international expert on financial derivatives and author of Traders, Guns & Money: Knowns and Unknowns in the Dazzling World of Derivatives.
Nicholas Phillipson (2010) Adam Smith: An Enlightened Life; Allen Lane
Matt Taibbi (2010) Griftopia: Bubble Machines, Vampire and the Long Con That Is Breaking America; Random House
Joe Nocera and Bethany McLean (2010) All the Devils Are Here: The Hidden History of the Financial Crisis; Portfolio
Hamish MacDonald (2010) Mahabharata in Polyester: The Making of the World’s Richest Brothers and Their Feud: New South
Jeff Kingston (2011) Contemporary Japan: History, Politics and Social Change Since the 1980s; John Wiley
Read more...I suppose the latest efforts taken by the members of the foreclosure industry to silence and neuter critics represent a perverse form of progress. If you go by the Ghandi timeline, “First they ignore you, then they ridicule you, then they fight you, then you win,” opponents of bad foreclosure practices seem to have done enough damage as to now be worth fighting.
But what is telling are the desperate-looking but nevertheless potentially effective measures being deployed to hamstring the opposition. The vanguard of this effort are foreclosure defense attorneys, many of whom are solo or small firm operators, with not hugely lucrative practices or doing pro bono work (you don’t make a lot of money defending people who have no money).
Suing someone like that, even with a suit that seems spurious, throws a wrench in their operation….
Read more...ep. Marci Kaptur of Ohio has introduced a short bill, H.R. 6460, which would seriously restrict the operations of MERS by effectively removing Freddie, Fannie and Ginnie as users. The bill would bar the GSEs from guaranteeing or owning any mortgage that is either assigned to MERS or lists MERS as the mortgage of record. Note that those are the two roles typically set forth in the registrations at local courthouses which register mortgage in the name of MERS…..
Read more...By Tom Adams, an attorney and former monoline executive, and Yves Smith
As reported in the Financial Times, Senator Carl Levin of the Senate permanent investigations released damaging e-mails in which Goldman traders discuss “killing” some mortgage-related CDS shorts in May 2007. Levin understood the implications, that damaging the shorts would allow Goldman to buy CDS even more cheaply, but did not tease out the logical conclusion. This move was a likely a major step that allowed Goldman (and fellow dealers not under investigation who likely pursued parallel strategies) to package its remaining mortgage dreck into CDOs, which were launched as the reported squeeze evidently took place, and unload as much toxic inventory as possible before the wheels came hopelessly off the subprime bandwagon….
Read more...President Obama can solve the economy’s problems and win back his base, but he has to get with the program first.
For once, let’s praise President Obama (marginally), not bury him. As Bo Cutter has already argued, in the aftermath of the elections, the president probably did the best he could do on taxes. Ideally, the issue shouldn’t have even been something to haggle over in the first place had the Democrats (including the president) dealt with it before the midterms.
That said, the president’s petulant rant directed at his base was pathetic and misconceived in the extreme. The “No Drama Obama” guise clearly does not extend to his now frustrated supporters. Obama still genuinely does not have a clue as to why he has lost the trust of so many progressives. Many would have been prepared to cut him some slack if he had given them anything over the past two years, rather than a perpetuation of Rubinomics — an economically regressive blend of crony capitalism and deficit reduction fetishism.
To deal with income inequality, you need something more radical. You need reforms such as caps on executive pay and probably a system that simplifies the tax structure (to avoid creative tax avoidance), along with a broad base and a few basic, low rates to ensure a modicum of compliance….
Read more...If you had any doubts about whose side the Administration is on, this story should settle all doubts. From the Nation:
Consider this: the recent Fed audit revealed over $3.3 trillion in emergency assistance to the banks and other corporate behemoths during the financial crisis–no strings attached….
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n theory, I’m a wee bit late to the item at hand, a suit by failed mortgage bond insurer MBIA against Morgan Stanley on a second mortgage deal. But in practice, I’ve not seen any commentary on it and the suit has some interesting wrinkles.
Before we get to the details, however, a general issue: looking at this case is like deciding which of Cinderella’s bad sisters is less ugly. While mortgage bond originators and sponsors did not cover themselves in glory in the later years of the subprime business, MBIA is no prize. Of all the monolines, MBIA was the most dubious. In addition to the general, and now well known problem with the industry business model, that they were running at such high leverage levels that they could not take on any real risks, MBIA has its own special cause for concern, namely a less-than-arms-length reinsurance operation. And management has major ‘tude. I’ve never read investor reports that were as haughty and obviously truth-stretching as MBIA, and thus any claims it makes about the merits of pending litigation need to be taken with a fistful of salt.
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