They Haven’t Managed to Stop the Nation’s Foreclosure Rate From Rising.
AMERICANS Robbed by their own Banks!
With every passing day of economic woe, the scale of the heist just perpetrated against America’s taxpayers by the country’s largest banks becomes more apparent.
In the shadow of the presidential election, the nine biggest banks were given $125bn of taxpayer money with the understanding they would send this fresh capital coursing into the economy in the form of loans. It was a plan inspired by Gordon Brown’s decision to recapitalise Britain’s main banks.
Unfortunately, the US government forgot to get the lending requirement in writing. Instead, the banks are sitting on the money, earning interest and mulling mergers and acquisitions and replenishing bonus pools for their employees.
A stinging letter from Leo Gerard, the president of the United Steelworkers and a bullhorn from traditional American industry, to Hank Paulson, the Goldman Sachs banker-turned-Treasury Secretary, is now in wide circulation and its contents should have Wall Street barricading its doors.
Hank Paulson spent $10bn on a stake in Goldman Sachs worth only $5bn
A very interesting article indeed. The information imparted should sustain your curiosity for months to come. This article stands as a means for future comparisons as we watch and feel the effects of a reality for which no one was prepared.
Is it any wonder this news is receiving NO…media play at all. Is it any wonder “why” lenders have abandoned foreclosing on people’s homes? Bankers turned the spigot on…. unleashing this maelstrom first on our country ruining many hard working American’s lives and now the World. Whats more, they don’t know how to shut it off! If this scenario wasn’t so sad, you would contend you were caught in a never ending loop of a Three Stooges movie. The Government, the Bankers and the Fixers Gone Wild!
They Haven’t Managed to Stop the Nation’s Foreclosure Rate From Rising. Why? It’s Simple …
1. All those modification efforts can’t overcome the negative impact of surging unemployment.
2. Many borrowers lied about their income and their assets in the first place, meaning they can’t even make the reduced payments their lenders are offering.
3. Others were speculators and second-home owners, who don’t qualify for relief.
4. Home prices are falling so far, so fast, that millions of borrowers are underwater — owing $20,000, $50,000, even $100,000 more than their homes are worth. They have little financial incentive to stay in their houses — even at a lower monthly payment — because they know they won’t breakeven for years, if ever. And many of them know darn well they can rent for less … sometimes much less … at a house or apartment down the street or across town.
5. Still others have loans that were ultimately sliced, diced, and repackaged into complex securities — now owned by various Ferrari-driving hedge fund managers who leveraged up to buy junky paper just a few months after they got out of B-school.
6. Because of the “miracle” of this financial alchemy … which made Wall Street rich beyond measure … these borrowers are stuck. Their loan “servicers” WON’T modify their loans because they’re afraid of getting their pants sued off by the investors who own securities derived from those underlying loans, securities that in some cases can lose value if the loan terms are changed.
The Hole Keeps Getting Deeper … And Deeper … and DEEPER …
How about the bottomless pit known as AIG?
The company made a bunch of stupid decisions to insure crummy mortgage-related securities against default. It clearly had no idea what the heck it was doing, and managed to lose a whopping $24.5 billion in the most recent quarter. But instead of going broke, they get thrown a helping hand courtesy of, well, you and me. The tab for that bailout keeps on rising — approximately $150 billion at last count! (This is the biggest Sin of All!…
Then there’s Fannie Mae and Freddie Mac. They take on hundreds and hundreds of billions of dollars of mortgage and interest rate risk. They pile headlong into the derivatives market, dig deeper into the riskier subprime and Alt-A part of the mortgage business, and continually operate on relatively small capital cushions.
Furthermore, they keep carrying billions and billions of dollars of dubious tax-related “assets” on their balance sheets and claim that means they’re in decent shape.
But soon after, the two companies are essentially nationalized.
And those tax assets? Fannie Mae just slashed their value by 78% to $4.6 billion