Chuck Schumer, bank killer
posted at 7:40 pm on July 11, 2008 by Ed Morrissey
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Federal regulators seized IndyMac today in the largest bank failure in decades. The FDIC will reopen IndyMac on Monday under its own control, keeping its $32 billion in assets while eating as much as $8 billion in losses. Guess what triggered the run on the bank that required FDIC intervention?
In a written statement, the Office of Thrift Supervision, which regulated IndyMac, said “the immediate cause” of the failure was statements made by Sen. Charles Schumer, a New York Democrat. Mr. Schumer in late June publicly raised concerns about the bank’s solvency.
“Although this institution was already in distress, I am troubled by any interference in the regulatory process,” said OTS Director John Reich.
Mr. Schumer couldn’t be immediately reached for comment.
Two weeks ago, Schumer publicly released a letter he had written to regulatory agencies, demanding action to prevent IndyMac’s collapse. Instead of shoring up the bank, the letter induced depositors to make a run on the bank. Within days, over $1.3 billion in deposits disappeared, forcing the FDIC to close the bank and pay off the insured deposits.
That move cost American taxpayers billions of dollars. Don’t forget to thank Uncle Chuck when you have a chance.
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Schumer’s doing for banks what he did for the Iraq war.
drjohn on July 11, 2008 at 7:42 PM
Lovely, it would be nice to hear the rest of the story, as it were.
dean_acheson on July 11, 2008 at 7:43 PM
Ouch.
We had a bank failure here recently, where I live. The FDIC came in, too. In this case, it was the stupidity of the bank in giving money to a group who believed they’d never have to repay….
The worst part is that the FDIC only insures up to $100,000. Anyone’s account over that is gone.
And we got stuck with the bill. I think shareholders should sue Schumer personally. Make HIM pay back the money. It might even strain Soros’s funds.
Idiot liberal.
Vanceone on July 11, 2008 at 7:44 PM
I was just reading this from Drudge link
Nice job. Looks like Gramm was right.
My parents Mortgage is with them. Dont know what happens with that.
WoosterOh on July 11, 2008 at 7:45 PM
A barrel of oil: $147
A share of General Motors: $9.00
Loose cannon Dems destroying a struggling economy…priceless
Cicero43 on July 11, 2008 at 7:46 PM
New York voters should Chuck Schumer.
Chuck is a verb here.
Steve Z on July 11, 2008 at 7:48 PM
Will add to this my report on my blog
Andrew Cuomo contacted Fanny Mae and Fanny mac months ago and worked out a “Deal” to set up independant appraisers to value the worth of home to be set for loans.
ACORN seems to at the least been asked about it and at the worst may have been behind Cuomo’s move.
Now we find out that Fanny Mae and fanny mac are in trouble after this “re elavuation”
William Amos on July 11, 2008 at 7:49 PM
We can only hope that the California DNC was their money in IndyMac
WoosterOh on July 11, 2008 at 7:52 PM
IndyMac has been in penny stock territory for a while now, so the writing was on the wall. But I’m sure Schumer’s letter hastened their demise.
phronesis on July 11, 2008 at 7:53 PM
Pure scum.
Claypigeon on July 11, 2008 at 7:54 PM
Imagine that…
VolMagic on July 11, 2008 at 7:58 PM
It’s that “mental recession” at work with a “nation of whiners”.
Schumer’s a schmuck, and Bush always looks about as commanding when interviewed about these economic problems as a blind crossing guard with his badge on upside down.
Not realizing that a show of strength and an appearance of confidence prevents panics more than all the tech talk in the world.
McCain needs to step up his game, now.
profitsbeard on July 11, 2008 at 8:00 PM
I Chucky about to remove his head in that picture?
- The Cat
MirCat on July 11, 2008 at 8:01 PM
Washington Mutual stock down to $4.95 today from $20 in Feb.
JiangxiDad on July 11, 2008 at 8:02 PM
Here’s Chucky. What a maroon!
MsUnderestimated on July 11, 2008 at 8:02 PM
Oh, how I wish we could…….How I wish we could. :(
ThePrez on July 11, 2008 at 8:03 PM
I hought he was simply going to remove his mask and show he really is “chucky” from the movies
William Amos on July 11, 2008 at 8:04 PM
The whole state of CA isn’t doing so well, with a $16 billion projected deficit this year, and a credit rating right down there at number 49 or 50 next to Louisiana.
JiangxiDad on July 11, 2008 at 8:08 PM
Oh boy,now the Banks are getting tossed under the bus!
One would think,especially during an election,that
no one wants any dirt,or controversy to tarnish their
party’s reputation,but for Liberals————–they
————-could give a rats !ss,and the Liberal
parade just keeps going,flip/flops and all!
And knowing Schumer,he’ll blame the (R)party,as usual!
canopfor on July 11, 2008 at 8:09 PM
Yeah, but Chuck got some ink and face time. That makes it all worthwhile.
a capella on July 11, 2008 at 8:10 PM
Schumer has some kind of political fight going with the OTS. It’s hard to figure why. IndyMac is based in California, so it makes no sense for Schumer to get so involved in its regulation, unless the big New York banks asked him to.
rockmom on July 11, 2008 at 8:11 PM
WaMu is the other very large bank regulated by the OTS. If it goes down, there may not be enough fees left from the other savings banks to sustain the agency. Maybe that’s what Schumer is after. It’s hard to figure. There has never been a hint of regulatory lassitude or politics by the OTS.
rockmom on July 11, 2008 at 8:13 PM
In the story I posted Andrew Coumo is trying to push federal laws and regulate US banks based in New York. In effect Cuomo is overstepping federal banking laws to push his own agenda onto them. Im sure chucky is right behind.
William Amos on July 11, 2008 at 8:15 PM
That deal happened after Cuomo investigated Wachimedshington Mutual and found a bunch of crap appraisals thhave at led directly to a lot of foreclosures. He could not directly do anything to WaMu because it’s federally regulated and states are preempted from regulatory or civil actions against federal banks. So he figured out a way around it by muscling Fannie and Freddie into a “Code of Conduct” that prohibits pretty much everything that all the major banks and mortgage lenders do with appraisers.
Eliot Spitzer, and Cuomo after him, are desperately trying to find a way in to regulate the national banks. God help us all if they succeed. There won’t be a lender left in New York.
rockmom on July 11, 2008 at 8:18 PM
Then why in blue blazes, every single time this goof comes up for re-election, New Yorkers keep voting him back into office?!!!
If this clown is now doing serious to the economy, why even bother keeping him occupying that seat he has been sitting in the Senate since who knows whenever?
If someone is not doing his job, and it is now causing damage in the process, you get rid of them! It happens to busboys, to stock clerks, to the Average Joe, and it should also happen to incompetent Senators!
pilamaye on July 11, 2008 at 8:19 PM
Sorry, that’s Washington Mutual. I have a crazy computer tonight!
rockmom on July 11, 2008 at 8:19 PM
I am always amazed at the facts at your fingertips! I thought OTS regulated all savings banks.
JiangxiDad on July 11, 2008 at 8:21 PM
Must read….
http://www.globalresearch.ca/index.php?context=va&aid=8974
Keemo on July 11, 2008 at 8:22 PM
Bank failures.
Oil price escalation.
Eminent domain abuse.
Mega-forest fires. (due to forever wild policies)
Open borders.
Sanctuary cities.
Terrorist civil rights.
DEM-olition Derby.
Dr. Charles G. Waugh on July 11, 2008 at 8:22 PM
From Eliot “Whoremonger” Spitzer to Hillary “Tuzla” Clinton to Charlie “Four-Home” Rangel to Chuckie “chuck me” Schumer, NY has some real winners for politicians.
jgapinoy on July 11, 2008 at 8:24 PM
We chase out lots of industries here in New Schmuck.
JiangxiDad on July 11, 2008 at 8:24 PM
This Schumer must be removed from the Senate immediately. The democrats hounded Trent Lott for a stupid statement, we should hound this guy out for causing such monumental economic damage. What a jerk.
jencab on July 11, 2008 at 8:25 PM
Now, that’s the Chuck Schumer that I know…
d1carter on July 11, 2008 at 8:31 PM
I have no idea what you are trying to say here but let me tell you what happened. cuomo went after washington mutual and e-appraiseit for pressuring appraisers about value. That’s a good thing. I was a prefferred appraiser for e-appraiseit for about a year until I told them to get lost because they are crooks. That was even before cuomo went after them, I was already telling people that at some point a state or the feds would go after e-appraiseit. So cuomo goes after this appraisal/loan processing management company and what comes out of it? A federal law requiring ALL lenders to use appraisal/loan processing management companies! Basically rewarding e-appriaseit for what? They didn’t get in trouble, they were given a monopoly by cuomo and the democrats. This move will not protect the integrity of appraisals, it will do exactly the opposite. It will put good appraisers out of business and give management companies control over those left. There will be more corruption and appraisals won’t be worth the paper they are printed on. The bill, with the help of Elizabeth Dole, has temporarily been stalled. The justice department needs to look into cuomos motivations and what e-appraiseit and washington mutual did for him and the democrats. It was as if cuomo was prosecuting a millionaire pedophile and the result was cuomo was a millionaire and the pedophile became the headmaster of all the kindergartens in America.
peacenprosperity on July 11, 2008 at 8:33 PM
Isn’t this just the kind of thing George Soros likes to do? That guy gives me the willies.
Cindy Munford on July 11, 2008 at 8:35 PM
Did Schumer break the law?
Kini on July 11, 2008 at 8:37 PM
I don’t even have the energy to look into it, but I hope someone is - it’s looking like Schumer’s part of a takeover attempt.
Isn’t this stock manipulation, or something like it? It’s certainly horrifically abusive, but that’s nothing new for Schumer, he’s a complete turd.
Merovign on July 11, 2008 at 8:38 PM
I work for a large financial services company and used to lobby for another one that no longer exists. So I know a lot about this stuff. I’ve been working on that Cuomo thing for months. It’s a disaster. The agency that regulates Fannie and Freddie got 40,000 comment letters opposed to it. My company employs in-house appraisers and this would be prohibited under the code of conduct.
Countrywide also owned an OTS bank, but only recently ran its mortgages through it. Schumer also helped to hasten the demise of Countrywide. That tells me he has some kind of bee in his bonnet about the OTS. Maybe it is the New York/Spitzer/Cuomo stuff. If they can kill off the remaining big OTS banks, maybe Cuomo can figure out a way to get at the OCC banks and the bank holding companies.
One can only imagine the kind of political protection money and favorable lending that the banks would have to start paying to Cuomo and that New York crowd if they became subject to state regulation.
rockmom on July 11, 2008 at 8:38 PM
Why the hell should the FDIC pay these morons?
If the National Bank was unConstitutional, then surely the FDIC is too.
Why should my tax dollars go to subsidize these people?
Tim Burton on July 11, 2008 at 8:39 PM
Bill Clinton did the same type of thing to the NASDAQ and ,in kind, the stock market in 1999 when he told a reporter the NASDAQ was oversold and not worth half of its face. It was great for him when it ran up while his adminstration outright lied about the GDP and created a huge vaccum but once he was on his way out he did some of his worst.
Beto Ochoa on July 11, 2008 at 8:41 PM
Explain your suspicions more clearly. What’s the diff. btwn. OTS and OCC regulated banks. Why would Schumer want to hurt OTS regulated banks?
JiangxiDad on July 11, 2008 at 8:50 PM
I sure am glad we just refinanced through our credit union.
Cindy Munford on July 11, 2008 at 8:50 PM
Schumer, Durbin, Reid, Pelosi, Murtha… all more dangerous to the US economy than another terrorist attack. Although you could argue that Schumer’s incredibly irresponsible and self-serving letter was a terrorist attack in itself.
Sugar Land on July 11, 2008 at 8:50 PM
July 2nd
Regulators to Schumer on IndyMac: Please shut up
WoosterOh on July 11, 2008 at 8:52 PM
Bank failures are scary for depositors, not borrowers.
(If your bank fails, you don’t have to pay your mortgage back :)
JiangxiDad on July 11, 2008 at 8:57 PM
Holy Hell! What is Chucky doing?!
Troy Rasmussen on July 11, 2008 at 8:58 PM
If there is an acceleration clause in your contract, why wouldn’t they demand payment from you before they fail?
Troy Rasmussen on July 11, 2008 at 9:00 PM
Oh Jeez, I was just kidding. Acceleration clause??? Yikes!
JiangxiDad on July 11, 2008 at 9:02 PM
WTF kind of bank is this? Either they’re lending to the mafia, or illegal immigrants.
Sydney Carton on July 11, 2008 at 9:13 PM
Here is an interesting article around the time Schumer ran his mouth.
http://www.banknet360.com/
Now we see why they dont want that info out.
WoosterOh on July 11, 2008 at 9:13 PM
Maybe we can hear someone on an open mic saying about Schumer, “I want to cut his n*ts out”
WoosterOh on July 11, 2008 at 9:18 PM
Bad-business policies and under-capitalization?
I know the point is to point the finger at Schumer, but it’s not his actions that caused the failure - it’s the fact that his actions had credibility enough to cause action
It’s an interesting argument though, ie less disclosure in government. Seems like that line would be a hard sell in this cycle, but I’ve been wrong before.
Spirit of 1776 on July 11, 2008 at 9:21 PM
Or this a deliberate move by Schumer to black-eye the economy as much as possible to help the non-incumbent party candidate.
Spirit of 1776 on July 11, 2008 at 9:23 PM
Lets see if up-Chucks good buddy O’Reilly has him on the factor to explain away this little bit of
activistprogressive politika. I’m starting to not give a rats ass about any of it and the thought of total destruction is looking like the only path to recovery, too bad I have kids!dmann on July 11, 2008 at 9:29 PM
PLEASE realize JiangxiDad was kidding! Don’t believe that for a minute.
1. Most loans made by bank and non-bank lenders are almost immediately sold individually or in bulk to investors like Fannie Mae, Freddie Mac, insurance companies, hedge funds, etc. They are not owned by the originating lender. Your obligation to repay the mortgage survives because the loan was purchased by another entity.
2. IndyMac did hold some portion of its loans in its own portfolio and services those loans and many of the loans that it sold to investors. For loans owned by investors, you still owe them the money; for loans owned by IndyMac - the receivers will try to package them up to sell at a big discount to investors. Borrowers who stop making payments will be in default and face the prospect of losing their home!
This stuff is confusing enough for most people without muddying the waters with humor that might be misleading.
in_awe on July 11, 2008 at 9:31 PM
I think IndyMac was doomed for some time now. No one issuing Alt-A loans in Southern California could have survived for all that long in this market. I do have some familarity with the company; My firm has its headquarters in Pasadena and a long time ago we actually held some stock in IndyMac (we sold a long time ago.) A few years ago there were quite a few nouveau riche indymac executives at the Pasadena country club, from what I hear. Now this. How times have changed.
phronesis on July 11, 2008 at 9:32 PM
Oh man.
IndyMac was one of the few places who would finance Owner/Builders (like myself). They touted their one time closing for construction and perm financing, which we liked, so we went with them. I tried to roll my loan to perm about 4 months ago, and they graced me with an offer of 9.25% (the wife and I have perfect credit mind you). Hmm.
Now I wish they would lose my mortgage paperwork :)
matd on July 11, 2008 at 9:33 PM
Upchuck Schumer strikes again.
ZK on July 11, 2008 at 9:37 PM
As an aside, I think I’m overusing the semicolon in my posts; but i just can’t help myself.
phronesis on July 11, 2008 at 9:38 PM
This goes a long way towards explaining why the ‘feds’ appeared to be terrified of a banking system collapse starting with the Bear Stearns collapse. Lehman, Fannie, Freddie, et al.
With commodity prices so high, I couldn’t figure out why the feds kept lowering interest rates. They were saying ’systemic’ problems with the banking industry.
This doesn’t restore confidence by a long shot; makes it worse.
It also goes back to the democrats push to ‘relax’ lending standards so more people could buy their first home.
rockhauler on July 11, 2008 at 9:46 PM
Semicolon; what is that?
WoosterOh on July 11, 2008 at 9:47 PM
Semicolon; what is that?
After you reach 50 its whats left of your real colon!
dmann on July 11, 2008 at 9:55 PM
I heard part of this on Levin’s show today.
As far as I’m concerned, this is a mere harbinger of the things that will become common occurrences … starting at about the end of next January.
Prepare yourselves people. I’m expecting that we skip right over a real recession, directly into a Major Depression.
And this time 95% of the blame will fall right in the laps of the vast majority of the politicians…. On both sides of the aisle.
LegendHasIt on July 11, 2008 at 9:56 PM
Cheer up, my friend. Despressions don’t happen absent tight monetary policy and protectionist policies. Even Comrade Obama couldn’t achieve all that by January.
phronesis on July 11, 2008 at 10:06 PM
It’s not like any of his money was in there…
New York’s junior Senator strikes again and unleashes suffering upon the masses once more.
Memo to New York: thanks a heap for unleashing this swine on the American public.
SuperCool on July 11, 2008 at 10:07 PM
Thanks for the link Ed. I just sent my thank you
to the scumbag asking him to resign in digrace.
Texyank on July 11, 2008 at 10:20 PM
Sorry, I had dinner guests and had to leave for a while.
It’s a bit of a stretch, but it’s sort of a divide and conquer strategy. OTS regulated savings institutions (the successors to the old savings & loans) operate under a very old statute that provides ironclad state preemption. OCC banks (most banks are chartered under the later National Bank Act and are regulated by the OCC) don’t have clear statutory preemption, but the OCC has issued regulations and defended banks in lawsuits to establish its preemptive authority. There may still be a feeling among New York state authorities that they can claim some regulatory authority over national banks, or that Schumer and his pals can intimidate the OCC politically into backing off of its hardline stance on state preemption. They need to be able to regulate all banks doing business in New York, or the ones they can’t get at will just take all the business. So they needed to kill all the OTS banks.
Or it could be much more prosaic than that. My dinner guest, who works for JPMorgan Chase in Manhattan, said flat out that this is about Schumer’s ego, and now he will have a kangaroo-court hearing about IndyMac’s failure and rake the poor schmucks from IndyMac and the OTS over the coals while the cameras roll. As much as I detest Chuck Schumer, I have a hard time believing he deliberately destroyed a $35 billion financial institution and cost thousands of people their jobs and savings, just so he could have a few hours of grandstanding.
It also could be that Schumer tried to shake down IndyMac’s executives for contributions to the DSCC and they told him to shove it. I haven’t looked at the FEC reports, but I would not be surprised to find major bucks being donated by all the other big banks, and zero by IndyMac. They were not very interested in politics or policy. I’m not sure they even had a lobbyist in Washington.
rockmom on July 11, 2008 at 10:25 PM
Just looked it up.
Top contributors to the DSCC:
1. Goldman Sachs $362,550
2. JPMorganChase $311,604
12. Morgan Stanley $169,450
.
. Citigroup $146,250
.
. IndyMac Bank $0
rockmom on July 11, 2008 at 10:39 PM
Way to go Chuckie, you really need to kick that bad habit of bouncing checks, this one is a whopper.
Zorro on July 11, 2008 at 10:45 PM
Somebody better be investigating why Chucky intentionally tanked a bank.
Believe me, he new exactly what he was doing. The only question was how did he gain from it.
TheBigOldDog on July 11, 2008 at 10:54 PM
When fuel, food and other goods become unaffordable due to government policies; When politicians do precisely the opposite of what it takes to sustain a decent economy; When banks fail and the FDIC can’t cover all the losses; when they put an extra 20 million people into the already broken (and broke) Social Security system; when the price of a Dollar falls to somewhere between a lira and a peso; when even jobs at McDonalds start to dry up; when the few remaining net-tax PAYERS have to support a nationalized health care system, I see depression and Depression.
A year ago I wouldn’t have believed that we’d see anything like what we are seeing now; I believed that the people managing the economy wouldn’t let the politicians ruin it completely. But now it is pretty obvious to anyone that is paying close attention, they are in cahoots to ruin it together, for their own short-term gains.
And I’m much less worried about what Marxist President Obama will do than I am about what Arrogant Idiot President McCain cooperating fully with a Pelosi-Reid legislature… and using Executive Orders to enforce his stupid agenda during the rare occasions when the House displays the tiniest bit of common sense and thwarts him.
My family’s well diversified net worth has already fallen by 15% this year… 5% in the last month alone; a lot of it in Fannie Mae, Freddie Mac and T-Bills. My best paying CD just got renewed at 1/3 the interest it got for the last two years.
I shudder to think of what it will be like when their credit cards get maxed out and reality finally sinks in to the hordes of people spending like crazy.
The future is bleak my friends, and only a miracle will save us.
LegendHasIt on July 11, 2008 at 11:00 PM
Bad-business policies and under-capitalization?
I know the point is to point the finger at Schumer, but it’s not his actions that caused the failure - it’s the fact that his actions had credibility enough to cause action
It’s an interesting argument though, ie less disclosure in government. Seems like that line would be a hard sell in this cycle, but I’ve been wrong before.
Spirit of 1776 on July 11, 2008 at 9:21 PM
TheBigOldDog on July 11, 2008 at 11:03 PM
That’s not true. The FDIC is funded through bank premiums not tax dollars. Regulators say it will cost the FDIC $4-8 billion. That will come from the agency’s balance sheet.
seanhackbarth on July 11, 2008 at 11:29 PM
I’m sure he believed that it was inevitable … but I’m equally sure he believes what will work out best for him.
Schumer for crapper-in-chief!
njcommuter on July 11, 2008 at 11:39 PM
“It’s all in your head.”
-Phil Gramm
labrat on July 11, 2008 at 11:42 PM
Oh, in that case it’s fine for Senators to cause runs on banks causing them to fail. Heck, the insurance company is paying. And who really cares if a $4B - $8B loss causes the FDIC to raise premiums which in turn causes banks to raise fees and rates? Heck, it’s only the
taxpayersAmerican public getting screwed.TheBigOldDog on July 11, 2008 at 11:45 PM
To all those “suck it up” people out there. this is the beginning. 8 billion. That’s one bank. some say 300 banks are close to insovency. some of the biggest banks like citi and wasington mutal are in dire straits.
As long as home prices continue to fall this will contiue to happen at an increasing rate.
we could have saved alot of this from happening last year by helping homeowners in over their heads, by requiring banks to rewrite loans that were written by fraud and closed with fine print. But no.
We had to “suck it up”
Did all the “suck it up” people think it would not effect you because you paid your homeloans, that you had on time payments or because you credit was good? Why bail out the people that were too dumb to understand the loan terms? why bailout the banks or wall street?
this is why. FDIC insurance. What all the “suck it up” people failed to understand is that taxpayers are on the hook for the entire thing because of FDIC. Freddie mac and fannie mae? we are on the hook for that also to the tune of $5 TRILLION.
So no matter what the taxpayer will pay and pay big. We could have paid a relative small amount a year ago. But no we had to “suck it up” now the bill may be in the trillions.
You can not solve national problems created by the nation by “sucking it up”
add into the fact that by waiting we caused the dollar to sink, caused the stock market to tank, caused oiland food to rise due to the lower dollar, caused the loan rates to rise as more fear was placed in the loan market, caused the unemployment rate to go up, the lower stock market and higher unemployment will impact federal and state revs which will cause the defciet to go higher which will cause the dollar to go lower which will cause oil to go higer etc.
By “sucking it up” we have created what is known as a negative feedback loop. We could have bailed out a small 1-5% of the homeloans in this country. Maybe would have cost about $300 billion in total.
the fed has already blew thru this amount and since we waited it is not near enough to begin to stop the negative feedback loop.
“suck it up” “let them eat cake” “recession what recession?” ” nation of whinners” “mental recession” words to NOT live by.
Now people will begin to pullback, pay off debt, reduce interest rates increase savings rates which are good things in a good economy,, but when your economy is based on 70% consumer spending it will be the death knell for this economy.
Deflation is in the air for assets and inflation is in the air for basic necessaites like fuel and food. not a good combination
Let’s see how we “suck it up” a year from now by then the cost might be $10 trillion.
unseen on July 11, 2008 at 11:57 PM
Numbnuts labrat, do you understand the point that if Schumer would of kept his yap shut, the bank would not of had a run of $1.6 billion dollars withdrawn?
I will go slow. Schumer used emotion to tank a bank, the same emotions Gramm is talking about. Schumer played on those emotions. It is exactly what Gramm said, it is all mental.
The Rats always want to hammer the Republican for using scare tactics with 9/11 and Terrorist, well, Schumer, the Rats and numbnuts like labrat are using worse tactics as they are ruining peoples lives.
WoosterOh on July 11, 2008 at 11:58 PM
What’s the alternative, curl up in the fetal position and cry?
TheBigOldDog on July 12, 2008 at 12:02 AM
LegendHasIt on July 11, 2008 at 11:00 PM
I have been telling people for almost a year that this was going to happen. they called me chicken little. I said the repbus should drop the line about it being a recession or not and deal with the preception. they said I was a troll. I said that we needed to jump on the problem and bailout the subprime housing problem, they said we needed to “suck it up”
well I wish I was wrong because these people’s failure to understand the problem and deal with it is not only causing me and my family economic problems but is impacting the entire nation and driving my country into the arms of socialism as night follows day.
unseen on July 12, 2008 at 12:05 AM
And you think the government swooping in and arbitrarily ordering the abrogation of hundreds of thousands of contracts would have had no effect on future investment in the U.S.? Or on the valuation of the 95% of mortgages that are still performing? If you do, I have a bridge to sell you!
This was a bubble that was going to end badly no matter what happened.
rockmom on July 12, 2008 at 12:09 AM
TheBigOldDog on July 12, 2008 at 12:02 AM
The alternative is to pay the piper now instead of waiting. We need to bailout housing market, require banks to rewrite the bad loans, to give the banks the capital they need. To trade capital for bad loans.
We need to drill for our own resources increase our assets and thereby increase our tax rev and our dollar. we need to require government to cut spending except for the bare necessities of paying the bill, funding the army, and seeing that the day to day functions of government are met.
We need to scrap the new farm bill and pay farmers to GROW food not pay them to idle land.
those would be good starts. Once housing stablizes and inflation retreats the rest the free market can work out.
Some problems are bigger than the free market can handle without detroying the entire economy and needs government help. That is why government is a necessary evil.
unseen on July 12, 2008 at 12:12 AM
Yet you want to bailout the housing market. I guess it’s all in who’s ox is being gored.
TheBigOldDog on July 12, 2008 at 12:16 AM
I’d love to meet Schumer one day. I want to meet someone who’s this stupid in person!
SouthernGent on July 12, 2008 at 12:18 AM
And what are the going to “bail out” the housing market with, monopoly money? I think you;ve got a little consitency problem going on here.
TheBigOldDog on July 12, 2008 at 12:19 AM
Schumer is many things, like conniving, narcissistic, dishonest and vicious, nut he’s not the lest bit stupid.
TheBigOldDog on July 12, 2008 at 12:21 AM
rockmom on July 12, 2008 at 12:09 AM
yeah the bailout of bear streans made everyone pull their money out of the US and the stock market. Stable economies bring inflows of capital. economies that are on the brink of ruin causes outflows and panics.
The government shoring up the housing market would have been a net positive for investment in the US, and strengthened the dollar.
It is the government ’s job to police the market. when things like “prepayment penalties , loanshark interest rates, homeloan writting that defies the bounds of reality start to occur. It is the governments responsibility to ensure cheats, white collar criminals, and greed does not destroy your economy.
but you know your way is working out just fine. Bubbles popping esp housing bubbles have a way of causing depressions. If you want to live in a depression, have your entire savings wiped out, your job lost etc because you don’t want to bail out a couple hundred thousands of loans. that’s cool.
i really don’t want those things to happen and I would rather not see my last 20 years of hard work wiped out because of some dumb people that couldn’t be bothered to read the fine print and greedy bastards that wanted to make a quick buck.
unseen on July 12, 2008 at 12:22 AM
TheBigOldDog on July 12, 2008 at 12:19 AM
that would fall under paying the bills. Maybe I wasn’t be clear there.
unseen on July 12, 2008 at 12:23 AM
That’s why the market rose until the recent downturn….
I don’t think the owners of Bear Sterns would call what happened a bailout. They’d call it a fire sale.
TheBigOldDog on July 12, 2008 at 12:24 AM
The only thing that’s going cause the dollar to strengthen is for the Fed to raise rates. You think the housing market is in trouble right now, wait until rates start to rise.
You must be really underwater….
TheBigOldDog on July 12, 2008 at 12:26 AM
TheBigOldDog on July 12, 2008 at 12:16 AM
The ox is inflation. we have a twin problem defaltion of assets and inflation of commodites. To decrease the inflation you must increase supply. That means growing more food, drilling for more oil.
To stop deflation you must stabilize downward prices. that means putting a floor in price thru bailouts, decreasing supply, massive buying of assets.
If farmers were facing a deflationary event that was causing the entire nation to go into a massive recession/depression I would be all for taking supply off the market and paying the farmers not to grow. But that is not the case. we need more food not less.
unseen on July 12, 2008 at 12:27 AM
Also don’t forget that a hell of a lot of the losses that have been booked by banks and other financial services companies in the last two years are ptaper losses, i.e. forced writedowns of assets that nobody wants to buy right now but which do have an intrinsic worth that is not zero. Accounting rules have substantially exacerbated the crisis. Banks have to “mark” these assets to market value, even when there is no market and the underlying loans are performing. If the institution is federally regulated it bucan quickly run into its regulatory limits of capital and loss ratios, which is when the FDIC takes over. If it’s a publicly traded company like Countrywide was, its stock gets hammered and its credit lines get pulled.
There are a few sizable privately held, nonbank lenders that are still in business and are poised to make a crapload of money when all this shakes out.
rockmom on July 12, 2008 at 12:31 AM
TheBigOldDog on July 12, 2008 at 12:24 AM
The market has been falling since oct of 2007.
firesale?
if not for the bearstearns bailout the market could be at 8,000 right now.
The fact that the FEd stepped in and bailout bear streans allowed the market to have a massive INFLOW of money. Which caused it to advance from mid mar to mid may until the inflation of oil caused a tank which in turn caused the credit crisis to come back in spades.
unseen on July 12, 2008 at 12:31 AM
I agree with most of that. We cannot use the free market to slove all of the problems which were created not only by the free market, but by a combination of the free market and government. We have to prevent the failure of those things which will trigger systematic risk and loss to reverberate throughout the system. This means we cannot allow Fannie and Freddie to default on their debt. It means we cannot allow a major Ibank to default on their creditors either. The devastation caused by either of those events would hurt everyone and destroy our economy. But Paulson does have a point. Institutions that took excessive risk should suffer for it to prevent moral hazard. It is wrong to socialize all risk. I think the so-called bailout of bear sterns was actually a pretty good way of addressing both these issues. Common shareholders took a big hit but default to counterparties which would have in turn caused many other defaults were avoided.
phronesis on July 12, 2008 at 12:32 AM
Um, no. We have inflation because there is to much money slushing around the economy due in large part to negative real fed rates. The fed can’t raise rates to fight inflation and strengthen the dollar because it would exacerbate the housing crisis so they are caught in a bind.
TheBigOldDog on July 12, 2008 at 12:34 AM
TheBigOldDog on July 12, 2008 at 12:26 AM
growing economies tends to support strong currency. rates have some effect on the vaule of the currency but it is economic growth that strengthens the currency more as those of other countries exchange the currency to buy assets within the growing country.
as far as being underwater? My Ira and 401K are up for the year and sittng in cash. My personal stock account also up for the year and all my floating interest rate bills are paid in full. In fact most of my bills are paid in full ( left to go). so positive investments and hardly no debts. I wouldn’t call that being underwater would you?
unseen on July 12, 2008 at 12:36 AM
Do you follow economics? Fireslae. Bears Assets were given to JP Morgan for $2 a share and the owner were busted out. That’s called a firesale.
TheBigOldDog on July 12, 2008 at 12:37 AM
rockmom on July 12, 2008 at 12:31 AM
yes some of the losess are paper losses but paper losses have a tendency to become real losses. Those loans that are performing what happens when the unemployment rate goes up because of a reduction in spending and those people that were paying their loans can no longer pay them. what happens when the forcloure price they get is less than the paper loss. the regualtions for capital to debt are there for reasons so that banks do not have to have fireslaes and book those paper losses as real losses. The main problem is the capital/debt ratio was too low. thus banks must raise capital to be able to keep those paper losses as paper losses.
unseen on July 12, 2008 at 12:39 AM
Turned out to be $10 in the end. Still a steal with the government insuring most of the debt. But the alternative would have far worse.
phronesis on July 12, 2008 at 12:41 AM
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