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Should Obama Help Banks or Homeowners?

January 21, 2009 RSS Feed Print

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My guy Andy Busch of BMO Capital Markets attacks the nationalization issue:

Circling this back to Geithner, there is a fundamental choice facing the US government and today we'll see how the designee responds. The choice is over whether the government should nationalize the banks or not. It is a choice over skill sets and profit incentives. As supported by the takeover of Fannie Mae and Freddie Mac, the US struggles with how to manage these entities. To take over a bank and make decisions on how to lend or how to dispose of assets or how to manage a "for-profit" entity, the US Treasury or FDIC or Federal Reserve would be out of their depth.

This takes us back to the central question of how to resolve the banking crisis in the United States. So far, the US government has addressed the symptoms of the disease and not the disease itself. The symptoms include credit, liquidity, and toxic assets. The cures have been acronyms, backstops, and discussions of forming a "bad bank".

The disease remains housing and home prices.This is why I expect new TARP money to flow towards the housing market and to reduce the supply of foreclosures. Here's an idea: why not declare that as of January 1st 2009, all homes in foreclosure will be purchased by TARP? This attacks the supply or inventory problem forcing prices down. It would take away a major negative driver of bank assets. Yes, but it still means the government has to do something with those homes.

The best solution would be to follow the RTC model by putting the properties together and then holding a fire sale to clear the market. The government would take the loss between what they pay for the homes and what they sell them for to the market.It's this loss that no one wants to take or absorb. While the US taxpayer is on the hook for it, this solution attacks the central problem. More importantly unlike an acronym or a "bad bank", it will stabilize home prices. Taxpayers can live with nationalizing or socializing home owner losses from the real estate market much easier than they can live with taxpayer losses from the banking industry. Let's see which political party picks up on this first ...

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soundtracks of AL 8:10AM July 17, 2009

I have a whole lot of time because I lost my job due to massive state budget cuts.
I did what the president strongly recommended and applied for a refinance. I paid $550 for an appraisal only to be told that my house has decreased so much in value that I will need to purchase mortgage insurance to get the refinance. A refinance that would cost me 4-5 thousand dollars that would be added to my principal on a home that I have already lost most of my equity in, does not make sense. But I was a good American and did what my president asked. Now I have to pay for the appraisal even though it does not make any sense to refinance. This additional cost this month makes it almost impossible for me to afford my mortgage payment. So basically it appears that the president's advice might force me into foreclosure.
I do not qualify for his housing plan because my loan is not backed by fannie or freddie.
Anyway it appears that all he was asking is the American taxpayer/homeowner just give more money to the banks that we have already given billions to.
He needs to encourage/force banks or mortgage companies to lower interest rates on existing home loans at no expense to the homeowner.
I am angry that the president took on the role of financial advisor to American homeowners before doing the research. Refinancing is not a feasible option right now for most of us.
I pray for my country.

Deborah of HI 3:40PM April 22, 2009

YOU HAD PROMISED THE USA PEOPLE THAT THERE WAS GOING TO BE A CHANGE , WELL IN MY LIFE THIER SURE ENOUGH IS , I LOST MY CAR I LOST ONE OF MY HOMES , IM GOING INTO FORCLOSURE WITH THE 2ND HOME I LIVE IN , I LOST MY BUSSINESS I LOST MY P/U TRUCK TO GO EARN A LIVING TO MAINTAIN MY HOME AND BUSSINESS // WHAT THE HELL YOU DOING IN TURKEY WE NEED HELP HERE WE NEED YOU TO GET ON THESE BANKS TO RELEASE MONEY , I NEED A TRUCK I NEED TO PAY MY BILLS IN SOMEWAY , WHY ARE YOU GIVING MONEY AWAY TO MILLIONARES , I DONT HAVE 5 DOLLARS IN MY POCKET , ALL OF AMERICA DONT HAVE 5 DOLLARS IN THERE POCKET , I GAVE YOU AN IDEA ON HOW WE AMERICANS CAN HELP OURSELVES DID I HEAR FROM YOU NO , ALLS I HEAR ITS GOING TO BE A ROUGH RIDE WELL , WE CANT GO TO LAS VEGAS , BUT THAT MEANS YOU TOO CANT RUN OFF TO OTHER COUNTRIES ON UR PRIVATE JET EITHER ,( WE NEED HELP ) 300MIL PEOPLE NEED YOUR HELP TAXES AND GIVING MONEY TO THE BIG WHEELS ARE NOT WORKING , JOBS YOUR JOBS ARE ALL UNION THAT SUCK THE BLOOD OUT OF CONTRACTORS , WE NEED TO GET TO THE PEOPLE LIKE JOE THE PLUMBER ,, WELL IM RON THE WINDOWMAN (RONNIE WINDOWS)
HELP US OR LET US HELP OURSELVES SET UP A FUND FOR PEOPLE THAT ARE REALLY BROKE - 5X 300MIL = 1,500,000,000 USE TEN DOLLARS IT WILL BE 3 BILLION A FUND THAT WOULD COME FROM OUR POCKETS VOLUNTARILY THEN WE CAN THE USA PEOPLE CAN COME FOR THE AID UNTAXED INCOME , I NEED A LOAN CAN YOU HELP ME I NEED ONLY 50,000 USD SO I CAN START MY BUSSINESS UP AGAIN CAN YOU HELP , WE WILL NEVER HEAR FROM YOU OR ANY POLITICIAN , THE REPUBICANS HAD DESTROYED THIS COUNTRY AND I SEE YOUR NOT GOING TO HELP ITS TOO BIG FOR YOU , WE ALL WILL BE LIVING IN TENTS SOON , I WATCH THAT CNN NEWS EVERYDAY HOPING FOR A GLIMMER OF HOPE BUT I SEE NOTHING , THEY SHUT MY MY CELL PHONE OFF TODAY GATEWAY FOR ANY BUSSINESS TO COME IN , MY WIFE WORKS BRINGS HOME 250.00 A WEEK TO COVER ANY BILLS , WE WILL LOOSE OUR HOME BECAUSE EVEN WE ARE WAITING FOR THE RELIEF WE CANT AFFORD IT , WE HAD TO GO CH.7 FOR PROTECTION , I WENT TO THE FORD COMPANY ASK THEM TO SELL ME A USED 10,000.00 TRUCK THEY WONT DO IT I ASKED FOR ANOTHER TRUCK THAT WAS ON THE LOT 5000.00 CREDIT NO GOOD NOBODY WANTS TO DO IT , NEXT THING FOR ME TO DO IS DIE BECAUSE I DONT WANT TO LIVE LIKE THIS , BUSH RUINED ME FROM MAKING 1.2 MILLION A YEAR TO NOTHING 0 , PLEASE STAY HOME AND HELP HERE OTHERWISE PEOPLE ARE GOING TO LOOSE HOPE IN YOU , HELP THE PEOPLE FIRST IS WHAT YOU SAID , YOU FIRED THE GM CEO, WELL FIRE THE BANKS LIKE B.O.A. / CHASE C.E.O THEY GOT UR MONEY AND THEY ARE NOT LETTING LOOSE TO HELP US OUT HERE YOU PROMISED CHANGE SO CHANGE IT

RON MCCREA of NV 11:02AM April 09, 2009

Should Obama Help Banks or Homeowners?

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