"New home sales fall less than expected - New home sales drop less than expected in June, raising faint hopes for less bleak future"

By MARTIN CRUTSINGER, Associated Press

Last updated: 1:32 p.m., Friday, July 25, 2008

WASHINGTON -- The Commerce Department also reported Friday that orders to factories for big-ticket manufactured goods such as cars, appliances and machinery increased by 0.8 percent in June, the strongest gain in four months and much better than had been expected.

But excluding demand for defense equipment, total orders would have been up a much more modest 0.1 percent.

Analysts said that the June performance for durable goods was being propped up by sizable military spending for equipment, reflecting the ongoing wars in Iraq and Afghanistan, and this was offsetting widespread weakness in the rest of the economy.

Orders for defense capital goods shot up 15.8 percent in June following a sizable 14.1 percent increase in May.

"With orders excluding defense falling at a 4 percent annualized rate in the second quarter, it is pretty clear manufacturing is hardly thriving," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.

http://www.npr.org/templates/story/story.php?storyId=92933200


Ban On Naked Short-Selling Spurs Stocks

All Things Considered, July 25, 2008 · Ever since the Securities and Exchange Commission decided to ban temporarily a practice called naked short-selling last week, the stock market has been rising. Some observers say it underscores how big a menace naked short-selling has become.


my questions;
???Would this also effect oil prices? Isn't this illegal?

It's legal. The NYSE can and does make rules on short sales. The rule might affect oil prices, of course I don't know whether they will go up or down.

The link isn't active...but when regulation starts to limit stock trading...it sounds an alarm
concerning the market...to me...I thought regulation of mortgage paper sellers and traders would come first.

When speculators...either in stocks or oil are targeted...it usually means the market of either
is considered dangerous to national economics...politicians...and their stooges may be trying to stop a slide
that has a deeper root...which they can not influence. Regulations do not change economics.

IMO we are about half-way into the problem...tighten that belt...it probably will get worse before it gets better.

Not in America ...

Oil futures are not traded on the New York Stock Exchange ....

They are traded on a different exchange, as commodities and they are not regulated by the New York Stock Exchange ....

They are regulated by the Commodity Futures Trading Commission, I believe it is called ...

I'm tightening ...

Our education tracks each other's...politics is politics...survival is that.
Take care of your people and those you cross paths with who deserve it.
We didn't ask for leadership, but it's gonna be pressed on us. And, I believe
you are up to it...we will be humbled (again), but we must help those new-meats
that have no clue. No matter who is president...we will provide for those who
don't know how...it is the requirement of our experience. Peace, my Yank Brother.
That's respect I don't give cheaply...if you know me...it's the deepest.

Thanks for that vote of confidence, IH ...

It's much appreciated ...

And I'm with you on this particular mission ...

It's called citizenship ...

And so ...

An old boy from North Carolina in the Army told me that I was alright with him because I talked slow for a Yankee ...

I took that as a compliment ...

And so ...

Politics is also a healthy dose of pure BULL**** ....

We got a chunk of our education because of it ....

And so ...

Brother....we come from a time when real things count.

The rest...don't mean nothin'. If it freezes up there...come here...
if the oceans rise here....I'll be lookin' for santuary.

I expect nothing...and try to prepare for everything. It's just the walk.
God may not sustain me...but He's been so good to me so far...
I can not gripe...if it ends tomorrow...well, I've been blessed.

Xin Loi.

I think the assertion that, "Regulations do not change economics." is an over statement. I think you could find as many economists that would question that as would support it.

And the pendulum swings...from no oversight to Big Government...both suck, IMHO.

http://online.wsj.com/article/SB1217039047...=googlenews_wsj

Two More Banks Fail
Regulators Seize First Heritage,
First National Bank of Nevada
By DAMIAN PALETTA
July 26, 2008 1:02 a.m.

WASHINGTON -- Federal regulators shut down two national banks late Friday in the latest chapter of the credit crisis, and the Federal Deposit Insurance Corp. successfully protected all depositors by selling the accounts to Mutual of Omaha Bank.

The Office of the Comptroller of the Currency, a division of the Treasury Department, revoked the charters of First National Bank of Nevada, based in Reno, Nev., and First Heritage Bank of Newport Beach, Calif. The FDIC was appointed receiver of both banks.

Both those banks were units of First National Bank Holding Co., based in Scottsdale, Ariz.

First National Bank of Nevada had $3.4 billion in assets and $3.0 billion of deposits, making it a relatively large failure by historical standards -- but much smaller than the $32 billion of assets that IndyMac Bank of Pasadena, Calif., had when it failed earlier this month. First National Bank of Nevada had 25 branches, some of which came from its June 30 merger with the First National Bank of Arizona.

The OCC said First National Bank of Nevada "was undercapitalized and had experienced substantial dissipation of assets and earnings due to unsafe and unsound practices."

According to regulatory filings, the Arizona-based bank that was folded into First National Bank of Nevada had a net loss of $131.3 million in the first quarter. The bank socked away $95.9 million in loan-loss provisions, a sign that it was being overwhelmed by problem loans. First National Bank of Nevada had a first-quarter net loss of $7.3 million, hurt by a loan-loss provision of $18 million.

First Heritage had a first-quarter net loss of $1.9 million, according to a regulatory filing.

During the housing boom, First National Bank of Arizona made mortgage loans throughout much of the U.S. Even as the housing market was weakening, the bank revved up its riskier mortgage lending, an analysis of lending data by The Wall Street Journal showed last year.

A bank executive said at the time that much of the jump reflected borrowers who got second mortgages. The bank subsequently scaled back that business.

First National Bank of Nevada had spent months trying to dig out of trouble. James Claffee, who recently joined the company as president and chief executive officer, told the Arizona Republic less than two weeks ago that he was hopeful the bank would be able to raise capital.

"We're working diligently to correct our capital situation, focusing on our customers and continuing to provide the same quality of good service they've had in the past," he told the newspaper.

On Friday night, the home page of the bank's Web site included a link to real-estate listings for more than 100 residential properties owned by the bank, likely as a result of foreclosures.

The second failed bank, First Heritage, was much smaller, with three branches, $254 million, of assets and $233 million of deposits. The OCC said it closed First Heritage Bank because it was undercapitalized.

"The OCC also found that the bank had incurred and is likely to incur losses that will deplete all or substantially all of its capital, and there is no reasonable prospect that the bank will become adequately capitalized without federal assistance," the OCC said.

A deal that would have essentially spun off First Heritage to a private-equity firm fell apart last December.

Seven banks have failed so far this year, including three having more than $1 billion of assets.

The number of failed banks this year has already surpassed the total from 2004 through 2007, but it is nowhere near the pace set during the savings and loan crisis in the 1980s and early 1990s, when several thousand banks failed.

Regulators have been preparing for more bank failures by adding staff, bringing on contractors, and intensifying training. The FDIC, which was created in 1933, has made a concerted push in recent months to educate bank customers about the deposit insurance rules. The FDIC insures accounts up to $100,000 per depositor, or $250,000 for some qualified retirement accounts.

The FDIC said Friday night's failures would likely cost the FDIC's deposit insurance fund roughly $862 million.

Mutual of Omaha Bank has more than $750 million in assets and operates 14 retail branches in Nebraska and Colorado, as well as commercial lending offices in Dallas and Des Moines, Iowa. The bank, a unit of insurer Mutual of Omaha, has said it plans to build a network of community banks in fast-growing U.S. markets where its parent has an existing base of insurance customers.

"We would first like to reassure all customers of First National Bank of Nevada and First Heritage Bank that all their deposits are safe and accessible," Jeffrey R. Schmid, Mutual of Omaha Bank's chairman and chief executive, said in a statement. "Their deposits will automatically transition to Mutual of Omaha Bank and we will be open for business on Monday morning."
-----------------
http://online.wsj.com/article/SB1217026792...=googlenews_wsj

Senate Energy-Speculation Bill Is Blocked
By IAN TALLEY
July 26, 2008; Page A5

WASHINGTON -- Senate Republicans on Friday blocked a vote on legislation to rein in speculation in the energy markets, instead calling for energy votes that would expand domestic petroleum production and more nuclear power development.

Democrats, in a 50-43 vote, failed to gain the 60 votes needed to bring the speculation bill forward for consideration on the Senate floor. Now they face another week of energy debate as Republicans threatened to hold the measure up to hammer home their "drill more, use less" policy.


With President Bush pushing to lift restrictions on offshore drilling and oil exploration in Alaska, the Wall Street Journal Digital Network asked New Yorkers what they think. (July 25)
The Democrats' legislation would require the Commodity Futures Trading Commission to set limits on the amount of speculative trades that can be made by participants who aren't buying futures to offset their exposure to the actual commodity, including in over-the-counter markets and other exchanges exempt from the same oversight as the New York Mercantile Exchange.

"There's clearly nothing more important in the country for Congress to deal with ... than the price of gas at the pump," said Sen. Mitch McConnell (R., Ky.). The minority leader said his party would continue to hold up business on the Senate floor until Democrats allowed them to offer a series of amendments on expanded offshore drilling, oil-shale development, nuclear power and other energy alternatives.

Republicans have been trying to use a swell of public support for increased petroleum production -- including areas currently closed on the Outer Continental Shelf -- to break Democrats' opposition to lifting a decades-old drilling moratorium.

Senate Majority Whip Richard Durbin, an Illinois Democrat, said the Republicans' strategy boiled down to pure politics. "They believe they have a winning hand, they believe the 'drill now' is the winning message to take into November," when the country will elect a new president, he said.

Oil prices sank to their lowest in weeks Friday as investors questioned whether crude has cooled enough to reflect a serious deterioration in demand. Prices at the pump eased to nearly $4 a gallon, and light, sweet crude for September delivery fell $2.23 a barrel to $123.26 on the New York Mercantile Exchange. But Americans continue to feel the pinch from high fuel prices, and recent polls suggest that energy remains a top economic issue for voters.

The spat over the number of amendments that would be allowed to the Democrats' energy bill fits within the general tone of debate over the legislation. Both sides have repeated that acting to bring down the price of crude oil is their top priority, but both have then accused the other of not taking the issue seriously.

Senate Majority Leader Harry Reid of Nevada said he has offered the Republicans to have separate votes on drilling, oil shale and nuclear, but that they have so far declined the offer.

Republicans said they haven't received a formal offer.

The House of Representatives also is considering an energy-market antispeculation proposal, but its legislation would give the regulator more discretion to set trading limits and exercise new power.

The legislation would extend the CFTC's oversight to previously exempt over-the-counter markets, according to House Agriculture Committee Chairman Collin Peterson, a Minnesota Democrat. It also calls for new full-time CFTC staff to "improve enforcement, to prevent manipulation and to prosecute fraud," he said.

The House Agriculture Committee approved the bill Thursday, and it is set to go to the floor of the House of Representatives for a vote next week.

Specifically, the bill would codify actions taken recently by the regulator, forcing position limits on the designated contract markets such as the New York Mercantile Exchange and foreign boards of trade such as IntercontinentalExchange's ICE Futures Europe.

Anyone notice the failed banks are in CA and NV...and held in AZ? That covers The Speaker of the House and Majority Leader of the Senate's jurisdictions and the Republican candidates'. Regulation? By whom?

It's interesting, IH ....

I heard this on the radio news this morning at 6:00 a.m. up here....

I heard nothing about it until then ...

At the end of each day, I diligently scan down through the breaking financial and national and world news, and there was no mention of these two failures ....

I notice on your clipping that it was released at 1:02 a.m.

That's a good time of night to put out news like this ....

The tree fell in the forest ....

Nobody was around ....

Hence ...

It made no noise ....

And so ....

I wouldn't have known either - except I drive right by the one on the corner to come home and noticed some people milling around front and decided to check what was going on.

There was a 15 second story on it on the 11PM news - and that was that. FNB of Nevada has been around forever, too. Fortunately, they are not my main bank - though at moment I'll probably just leave my account there and not cause more issues.

Sorry - time expired in my edit...


I wouldn't have known either - except I ran into my corner bank to cash a check yesterday and the doors were locked with a notice in the window.

There was a 15 second story on it on the 11PM news - and that was that. FNB of Nevada has been around forever, too. This bank has been very good in terms of having a large sign posted that describes exactly how FDIC insurance works and gives examples of accounts - but since it was purchased even those that ignored the warning won't lose any money at all.


This mornings local Review Journal article I just read:




Jul. 26, 2008
Copyright © Las Vegas Review-Journal

U.S. regulators take over First National Bank

Branches to reopen on Monday under Mutual of Omaha Bank banners

By JOHN G. EDWARDS
REVIEW-JOURNAL

It looked like business as usual when a woman with a child walked up to the front door of the First National Bank branch at 4950 W. Flamingo Road about 5 p.m. Friday.

The door was already locked, and she walked away having come about a minute too late, probably unaware that First National had closed for good.

The bank's five Las Vegas branches, however, will open Monday under a new banner: Mutual of Omaha Bank.

The Omaha, Neb.-based insurance company is buying First National Bank of Nevada, which was placed under federal receivership late Friday, the first Nevada-based bank to be seized in 18 years.

Mutual of Omaha will assume the $3 billion in deposits at First National and an affiliated institution, First Heritage Bank of Newport Beach, Calif., Federal Deposit Insurance Corp. officials announced Friday evening. Mutual of Omaha also will acquire some of the banks' assets in the deal.

The sale means that all of First National's depositors -- even those with uninsured deposits exceeding the FDIC's $100,000 limit -- will avoid any losses.

Customers will be able to access their checking accounts, debit cards and automated teller machines this weekend and will be able to withdraw money from tellers on Monday. Yet customers need not do so, said David Barr, a spokesman for the Federal Deposit Insurance Corp.

"Their deposits will continue to remain insured by the FDIC," Barr said. "There really is no need for customers to do anything. They should look at it as business as usual and as just a change of ownership."

Jim Nolan, a spokesman for Mutual of Omaha Bank, agreed.

"We think it's a good news story for the depositors of the bank. Not a penny will be lost," he said.

Mutual of Omaha, a 99-year-old member-owned insurance company, entered the banking business in January 2007. It had $800 million in assets and branches in Nebraska and Colorado only, prior to acquiring First National.

The company wants to expand its banking operations into areas with high growth, particularly those where it has strong name recognition and many insurance clients, Nolan said.

Nevada, Arizona and Southern California fit that description, he said. The bank will serve both consumers and business customers.

Some analysts had expressed fears that numerous homeowner associations with more than $100,000 on deposit at First National, would lose money with the shut down. The bank holding company provided services to homeowner associations around the country and counted on homeowner associations for $1.2 billion of its $3 billion in deposits.

Local banking officials Friday evening welcomed the way FDIC officials handled the First National shutdown and sale.

Because all deposits are being assumed by Mutual of Omaha, "there is no financial destruction to the local community, and we are very lucky the FDIC approached it that way," said Bill Martin, CEO of Service1st Bank and a former federal bank regulator.

The Nevada Financial Institutions Division made the first announcement of First National's closing Friday night, but federal regulators bore full responsibility for oversight at the bank because of its national charter. The FDIC said the closing will cost the government's insurance fund $862 million.

First National Bank is the fifth bank and the biggest bank to fail in Nevada since the Great Depression. Frontier Savings, which had $247 million in deposits, was seized in 1990. The other failures were Great West Bank and Mineral Bank, both of Las Vegas, and Sierra Savings & Loan of Gardnerville.

Ray Lamb owned First National, which was known as Laughlin National Bank in 1998 when he acquired it. The bank is not related to another First National Bank in Nevada that operated here several years earlier.

First National's closure is the seventh FDIC-insured bank to have been shut down this year. The most recent and largest closure occurred earlier this month when the FDIC seized IndyMac Bank of California.

First National often took a nontraditional approach to banking. For a while, it operated branches in Wal-Mart stores. Now, it has 25 branches around Nevada and Arizona, and none is located in the discount stores.

The bank was active in making home mortgage loans, ranging from subprime to prime, during the housing boom of the early 2000s. It also made construction and land loans. Bankers described those as high-risk niches, which produced big profits that turned to losses with the Southern Nevada real estate bust.

At the end of March, First National Bank reported 11 percent of its loans were past due. The bank reported a $140 million first-quarter loss. The bank had been trying to raise $200 million in additional capital, but reported that was difficult to do.

The Office of the Comptroller of the Currency, which regulates national banks, said that First National was undercapitalized and had dissipated its assets "due to unsafe and unsound practices."

"In reality, most financial institutions (in Nevada) are pretty sound," said Robert Sarver, chairman and CEO of Western Alliance Bancorporation, which operates Bank of Nevada.

Western Alliance was an unsuccessful bidder for First National, but Sarver said he hopes to buy other struggling banks with FDIC assistance.

Contact reporter John G. Edwards at jedwards@reviewjournal.com or 702-383-0420.



Find this article at:
http://www.lvrj.com/news/25935354.html

Copyright © Las Vegas Review-Journal, 1997 - 2008



Even though everything is safe, it's a very nasty feeling driving up to one of your banks and finding the doors locked with a closure notice on it. I needed a Tums when I got home

of course a little fact is forgotten in the screaming headlines about banks falteding

Most people, after years of being lured feel secure in their home, knowing they can indeed always get a second mortgage if they need it

Now, they cannot

And their money is slipping away and they are getting desperate

But they have ahouse so they could always sell it at a gain from when they purchased it

except they can't

it's not like the CEOs of these banks aren't secure in their million dollar bankaccounts/salaries/pensions

Their bank accounts should be seized and given to the poor who have lost their money in these banks and schemes

Funny how the only CEO who went to jail was a democratic, that Dennis Kowalski, and that was for a few shower curtains
yet the guy from enron was allowed to claim he was dead, change his identity, and his family didn't have to pay one bloody cent

There will be more and more bank failures. All American banks are allowed to loan out the major portion of their deposits. That is how they make a profit, keeping numbers on your bank account as assets while giving your actual cash to a borrower. If enough borrowers go belly up, then that bank is insolvent.

This is the normal course of banking, and in hard times it accelerates. The key point here is that FDIC can handle individual bank failures - - no problem. What FDIC cannot do is handle a banking SYSTEM failure. That is what the FED is trying to head off.

I've been a follower of Thomas Sowell for a long time.. brilliant man, IMO. This is one of many good articles he's written in the past few months. He is totally against bailing any of them out - Including Freddie and Fannie.



Bankrupt ‘exploiters’

By Thomas Sowell

http://www.JewishWorldReview.com


In one of those front-page editorials disguised as "news" stories, the New York Times blames "the lucrative lending practices" of banks and other financial institutions for helping create the current financial crisis of millions of borrowers and of the financial system in general.

It must take either a willful determination to believe whatever they want to believe or a cynical desire to propagandize their readers for the New York Times to call "lucrative" the lending practices that have caused many lenders to lose millions of dollars, some to lose billions and some to go bankrupt themselves.


Blaming the lenders is the party line of Congressional Democrats as well. What we need is more government regulation of lenders, they say, to protect the innocent borrowers from "predatory" lending practices.

Before going further down that road, it may be useful to look back at what got us into this mess in the first place.

It was not that many years ago when there was moral outrage ringing throughout the media because lenders were reluctant to lend in certain neighborhoods and because banks did not approve mortgage loan applications from blacks as often as they approved mortgage loan applications from whites.

All this was an opening salvo in a campaign to get Congress to pass laws forcing lenders to lend to people they would not otherwise lend to and in places where they would not otherwise put their money.

The practice of not lending in some neighborhoods was demonized as "redlining" and the fact that minority applicants were approved for mortgages only 72 percent of the time, while whites were approved 89 percent, was called "overwhelming" evidence of discrimination by the Washington Post.

Some people are more easily overwhelmed than others, especially when they find statistics that seem to fit their preconceptions. But if we do what politicians and the media seldom bother to do— stop and think— an entirely different picture emerges.

In our own personal lives, common sense leads us to avoid some neighborhoods. If you want to call that "redlining," so be it. But places where it is dangerous to go are often also places where it is dangerous to send your money.

As for racial differences in mortgage loan application approval rates, that does not tell you much if you are comparing apples and oranges. Income, credit history and net worth are just some of the things that are very different from one group to another.

More important, in the same ways that blacks differ from whites, whites differ from Asian Americans. The fact that whites are turned down for conventional mortgage loans, and resort to subprime loans, more often than Asian Americans do is seldom reported in "news" stories about lending practices, even though such data are readily available.

Shocking as it may be to some, lenders are in the business of making money, and they don't much care whose money it is, so long as they get paid.

Politicians, on the other hand, are in the business of getting votes, and they don't much care whose votes it is— or what they have to say or do in order to get those votes.

It was government intervention in the financial markets, which is now supposed to save the situation, that created the problem in the first place.

Laws and regulations pressured lending institutions to lend to people that they were not lending to, given the economic realities. The Community Reinvestment Act forced them to lend in places where they did not want to send their money, and where neither they nor the politicians wanted to walk.

Now that this whole situation has blown up in everybody's face, the government intervention that brought on this disaster in is supposed to save the day.

Politics is largely the process of taking credit and putting the blame on others— regardless of what the facts may be. Politicians get away with this to the extent that we gullibly accept their words and look to them as political messiahs.

http://online.wsj.com/article/SB1217025668...=googlenews_wsj


McCain to Fannie Mae: Go Away
July 26, 2008; Page A8

In the rush to bulldoze the Fannie Mae-Freddie Mac and housing bailout bill through Congress this week, scant attention has been paid in Washington to how the U.S. system fell into this hole. Thus it was refreshing to see Senator John McCain step up and speak rude truth to his colleagues about the fiasco in an op-ed piece this week.

"Americans should be outraged at the latest sweetheart deal in Washington," the Republican presidential hopeful wrote in the St. Petersburg Times, stating the clear but all-too-often unspoken reality about this greatest of boondoggles. Yesterday 80 Senators voted to end debate on the bill. Only 13 voted against. That makes it all but inevitable that the bailout will pass today and go to the President early next week. Senator Jim DeMint has slowed the bill by requesting a commitment from his colleagues that sometime in the future, they would hold a vote on barring Fannie and Freddie from lobbying.

Senator McCain, who wasn't present for the cloture vote, also called for an end to their multimillion-dollar lobbying campaign. More importantly, he called for "making them [Fannie and Freddie] go away," as in, be no more. Receivership may indeed by the only option if a regulator can't get the far-flung activities of these two under control.

Politics today is endless self-calculation, but Mr. McCain deserves some credit for bucking the Washington consensus on this debacle. Barack Obama likely won't be in the Senate tomorrow for the vote on the bailout, but voters deserve to know whether he sides with the Beltway mortgage combines or taxpayers when it comes to Fan and Fred.
-------------------

Do people really not have attorneys review mortgages? Don't
they ask point-blank: is this a 30-year fixed rate? are there pre-payment penalties?

I'm no genius...but no one had to tell me this. Has America stepped up to receive the Darwin Award?

I agree with his conclussion but not with the way he got there. To me, this guy is the clasic example of, "Orreo." He is being cloned by the cheap labor conservatives to secure an army of black conservative talking heads as hit men (and women) to go after Barack Obama. Notice the cable news shows.

That has got to be a sight to behold ....

People milling around outside a bank, nervous about their money ...

And the bank is going down in flames ....

It certainly is a sight that I was told as a kid that we in our lifetimes would never see here in America, because of all these controls that had been put in place since the Great Depression to prevent exactly this from happening ....

And then I watched, as one by one by one the speculators and fast actors got each and every one of those controls removed, and now we are here ....

PANDORA'S BOX ....

You can be guaranteed that somebody will always come along to open it again ...

And now they have ....

And so ....

It's always about Barack, not.

One thing I can say for Obama he wasn't part and parcel of this problem...
unless that community organizing pushed for unqualified buyer approval.

The immediate problem is looking away - again.
Debt is eating us alive and more big government, big money programs
will only drive this train faster to the wreck.

http://online.wsj.com/article/SB1217027342...=googlenews_wsj


OPINION


Uncle Sam, Subprime Borrower
By JONATHAN GS KOPPELL
July 26, 2008; Page A9

The embrace of Fannie Mae and Freddie Mac by the federal government makes it official: Uncle Sam is the world's foremost subprime borrower.

Concern about the potential borrowing necessary to cover the two government-sponsored enterprises' obligations even prompted speculation in the bond markets of a lowered government credit rating. How did these two companies with the funny names get us into this most unfunny mess?

Not all by themselves, of course. Congress and the president are the primary culprits. And although the profligate spending of the federal government is obviously an issue, that is not the subject here. The root cause of the whole Fannie/Freddie mess is Congress's destructive unwillingness to treat risk seriously. There have been warnings about potential future liability associated with the ballooning balance sheets of these firms, which carry the implicit guarantee of the federal government. But these warnings have been largely ignored.

Should we really be surprised? For Congress, scouring the budget for funding that will take care of current needs (urgent or not) is hard. Turning a blind eye to an increasingly gargantuan potential liability is easy. Fannie and Freddie are a congressional dream come true. They offer a real benefit of central importance to millions of Americans, and they are completely free! At least that is how it felt until now.

And it gets even better. Like the oxymoronic "off-balance-sheet liabilities" that are plaguing the most hallowed names in American finance, the liabilities of the GSEs are off-budget. They don't count because the two companies are owned by shareholders, not the government. Indeed, one of the principal motives for the federal government selling Fannie Mae in 1968 was to move it off-budget. The peculiar status of the GSEs allows everyone to simply wish the liability away.

All one needs to do to understand the source of the problem is look at the bill likely headed to the president soon. In one remarkable piece of legislation, Congress has both provided the Treasury Secretary with government-financed life preservers to be used if the two companies are drowning, and also increased their borrowing powers, enabling them to purchase more and bigger mortgages than before. The House version calls for an assessment on Fannie and Freddie that would finance an affordable-housing fund and cover cost overruns of the Federal Housing Administration foreclosure bailout program. In other words, Fannie and Freddie are being encouraged to head for the deep end of the pool even as we wring our hands about their ability to swim.

How does this continue to happen? The S&L crisis of the 1980s showed that "costless" guarantees can turn into real on-budget expenditures -- more than $120 billion worth at that time. That chastened Congress, and led to the creation of a financial regulator for Fannie and Freddie with modest bite. But the years pass, the memories fade and all that "free" public policy is sitting right there for Congress's taking, like a freshly-baked pie temptingly perched on a window sill.

The management of the enterprises urges Congress to take the pie because more pie is more business, higher returns to shareholders, and rising stock prices. All the housing-related industries from mortgage brokers to realtors to construction companies to Wall Street financiers push along too. More loans equal more business. The housing advocates join the chorus. Grab the pie, they say. More loans -- provided they go to underserved communities -- means more units to be built for their constituencies (and, not coincidentally, the voters in each member's district).

And who is urging restraint, warning of the potential consequences of taking the pie, cautioning against allowing these two private companies to create obligations with the implicit backing of the U.S. government? No one. There is no constituency for prudence, no well-financed interest group to mobilize voters in the name of American creditworthiness. It isn't even a fair fight.

Congress is not the only institution challenged by the management of risk. The whole financial crisis can be seen as the product of individuals and institutions discounting risk. From the homebuyer who agreed to an interest-only loan, assuming that the appreciation in two years would allow a painless refinance, to the highly leveraged financial institution that put itself at the mercy of unknown counterparties, each player either discounted or wished away the risk associated with their actions.
Some kind of intervention in this case is good public policy. Allowing Fannie and Freddie to falter -- with the collapse of the global economy as a plausible side effect -- would be an act of dubious risk management in itself. Moving forward, however, we need to ask whether Congress is capable of utilizing these powerful instruments responsibly. The regulatory reforms included in the bill may bulk up the enterprises' oversight. But they do not alter the essential dynamic described here.

The current situation shows just how ingenious and useful the GSEs can be. The creditworthiness of the federal government is employed to prod the market in socially valuable directions. But when the use of this tool endangers the very creditworthiness it relies upon, one must contemplate putting this invaluable tool behind glass, to be used only in the event of an emergency.

There are many proposals to fundamentally alter the relationship between the federal government and the GSEs. The current crisis opens a window of opportunity to make a change. Sadly, Congress seems to see it as an invitation to grab more pie.

Mr. Koppell, an associate professor at the Yale School of Management and director of the Millstein Center for Corporate Governance & Performance, is the author of "The Politics of Quasi-government" (Cambridge University Press, 2003).

This makes sense and puts us on common ground. Debt is the bugger man. Republicans since Reagan have pushed for privatizing what was government and in the common good and govermentalizing what was private (risks).

FISCAL IRRESPONSIBILTY COMES TO WASHINGTON, D.C. BIG TIME ...

FISCALLY IRRESPONSIBLE CHILDREN DOWN THERE IN THE WHITE HOUSE AND CONGRESS ARE PLAYING ROULETTE WITH OUR FUTURE ....

AND THEY ARE STICKING US WITH THE BILL FOR BAILING OUT A SPECIAL CLASS OF 400,000 POLITICALLY-CONNECTED PERSONS WHO ARE MORE EQUAL AND PRIVILEGED IN THE EYE OF THE LAW THAN THE REST OF US ARE ....

THEY ARE ALSO MAKING SOME SELECT AREAS OF THE COUNTRY MORE EQUAL IN REPRESENTATION THAN OTHERS ...

AND THE DEMOCRATS HAVE RAISED THE STATUTORY DEBT LIMIT HERE IN AMERICA, WHICH MEANS THAT THEY CAN NOW BORROW AN ADDITIONAL $800 BILLION IN OUR NAME AS THEY CONTINUE LOOTING OUR TREASURY AND STICKING US WITH THE BILL ....

And so ...

"Homeowner rescue awaits President Bush's signature"

By JULIE HIRSCHFELD DAVIS, Associated Press Writer

26 JULY 2008

WASHINGTON - Congress approved mortgage relief for 400,000 struggling homeowners Saturday as part of an election-year housing plan that also aims to calm jittery financial markets and bolster the sagging economy.

President Bush said he would sign it promptly, despite reservations.

The measure, regarded as the most significant housing legislation in decades, lets homeowners who cannot afford their payments refinance into more affordable government-backed loans rather than losing their homes.

It offers a temporary financial lifeline to troubled mortgage companies Fannie Mae and Freddie Mac — pillars of the home loan market whose losses have sparked investor fears — and tightens controls over the two government-sponsored businesses.

What began as a showdown between the White House and the Democratic-led Congress over how far the government should go in rescuing homeowners evolved into a bipartisan effort that could be the last such compromise before Bush leaves office in January.

In a rare Saturday session, the Senate voted 72-13 to send the bill to the president; the House passed it Wednesday.

Bush had withdrawn his veto threat earlier in the week over $3.9 billion in neighborhood grants.

He contended the money would benefit lenders who helped cause the mortgage meltdown, encouraging them to foreclose rather than work with borrowers.

"Because of the Democratic Congress' delays and the need for action now, President Bush will sign this bill when he receives it, despite our concerns with some provisions, including nearly $4 billion to help lenders, not the homeowners this legislation is intended to serve," said Tony Fratto, deputy White House press secretary.

Many Republicans, particularly those from areas hit hardest by housing woes, were eager to get behind a housing rescue as they looked ahead to tough re-election contests.

Treasury Secretary Henry M. Paulson's request for the emergency power to rescue Fannie Mae and Freddie Mac helped push through the measure.

So did the creation of a regulator with stronger reins on the government-sponsored companies, as Republicans long have sought.

Democrats won cherished priorities in the bargain: the aid for homeowners, a permanent affordable housing fund financed by Fannie Mae and Freddie Mac, and the neighborhood grants.

"This is far more than sending a bill to the president's desk for his signature."

"It's sending a message to the American people that the Congress of the United States — despite an alternative reputation — can actually get things done, and can work together to achieve a good result," said Sen. Christopher J. Dodd, chairman of the Senate Banking, Housing and Urban Affairs Committee.

Still, Republicans weren't eager to celebrate.

Bush was not expected to hold a White House signing ceremony, and Senate GOP leaders didn't mention it at a news conference following the vote.

In the House, more than three-quarters of Republicans voted against the bill.

Dodd, D-Conn., said he had summoned administration officials to his office next week to demand that the foreclosure rescue program be put into place quickly.

The legislation takes several approaches to curing the ailing housing market.

It aims to spare an estimated 400,000 debt-strapped homeowners, many of whom owe more their houses are worth, from foreclosure by allowing them to get more affordable mortgages backed by the Federal Housing Administration.

The FHA could insure $300 billion in such mortgages, which would be available to homeowners who showed they could afford a new loan.

Banks would first have to agree to take a large loss on the existing loans in exchange for avoiding an often-costly foreclosure.

The plan also is designed to relieve a broader credit crunch that has taken hold because of rising defaults and falling home values.

To free up safer and more affordable mortgage credit, the bill permanently would increase to $625,000 the size of home loans that Fannie Mae and Freddie Mac can buy and the FHA can insure.

They also could buy and back mortgages 15 percent higher than the median home price in certain areas.

The measure tries to prevent blight in areas hardest hit by the housing crisis, where waves of foreclosures have left properties sitting abandoned, dragging down property values and ruining neighborhoods.

It sends $3.9 billion to such neighborhoods to buy and fix up foreclosed properties.

It goes far beyond addressing the current crisis, however.

The legislation overhauls the Depression-era FHA.

It requires lenders to show how high a borrower's payment could get under the terms of his mortgage.

It provides $180 million in pre-foreclosure counseling for struggling homeowners.

The Treasury Department gains unlimited power, until the end of 2009, to lend money to Fannie Mae and Freddie Mac or buy their stock should they need it.

The Federal Reserve takes on a new "consultative" role overseeing the companies.

The measure includes $15 billion in tax cuts, including a significant expansion of the low-income housing tax credit and a credit of up to $7,500 for first-time home buyers for houses purchased between April 9, 2008, and July 1, 2009.

Democratic leaders, recognizing that the measure could be one of the last items to become law during what's left of their abbreviated election-year schedule, tacked on an $800 billion increase, to $10.6 trillion, in the statutory limit on the national debt.

Conservative Republicans were vehemently opposed to the bill, particularly the help for Fannie Mae and Freddie Mac.

Critics charge the companies enjoy lavish profits in good times and wield their outsized political clout to resist regulation while depending on the government to bail them out should they falter.

Sen. Jim DeMint, R-S.C., delayed the final vote because Democrats refused to allow him a vote on a proposal to ban the companies from lobbying or making political donations to lawmakers.

"We can't have the people who are supposed to watch over these organizations getting money from these organizations," DeMint said.

"At least if we're going to ask the American taxpayer to be on the hook for billions, possibly trillions of dollars, let's stop this."
___

On the Net:

Information on the bill, H.R. 3221, can be found at http://thomas.loc.gov/

Fractional reserve banking is, by definition, a Ponzi scheme.

Mortgage lending is no different. However, in the past, there was a CAREFUL check made on the borrower's ability to pay as well as an UNBREAKABLE rule not to lend more than 80% of the value of the home. That way, the lender was protected two ways: one, there was a 20% cushion before the loan was underwater; two, the owner had the income to keep making the monthly payments even if it was underwater. In other words, the house and loan could survive the periodic downturns our economy has always experienced.

Under the new "no-rules" rules, ANY LITTLE GLITCH becomes a major crisis.

It is NOT about lending to blacks.

It is about lending to ANYBODY for the sake of making big sales commissions.

And not caring whether anybody is getting screwed.

I just heard Harry Reid say on the radio that Congress is extending THE AMERICAN DREAM to a select group of special people with this housing BAIL-OUT bill....

Soooo ....

The role of Congress has just been re-defined by itself so that now it is the provider of a DREAM to certain select people in America ....

We are not all equal ...

Some are much more equal than others ....

Some get to have a DREAM ....

The rest get to pay for that DREAM ....

But they don't get to have it for themselves, no matter how much they shell out ...

And so ...

I agree generally...but why is Detroit among the most foreclosed cities in the US?
And, don't get me started on their thug mayor who will lead them in the repurchase of
forclosed homes when Bush signs this bill including $4 billion for local governments
to buy up and rennovate foreclosed housing. It's not just the industry (although they
are a big part), or the buyers, now it is also Congress and The White House...and soon to be mayors
and governors. What every happened to personal responsibility?

why? Because America hates blacks and keeps blacks down by a 8 to 1 margin over white people.

the blame is on the man who for the last 28 years has brought down the poor to the level it is now (thanks Bill Clinton-it is YOUR fault
for enabling it...
Bill Clinton hated the poor and did everything he could to make them poorer, then professed to not even know what he was doing, how
incompetent was that? Not really, just doing things according to plan).

Why is the AMERICAN automobile industry doing so bad?
D'uh- they make sheeety cheaply made cars that breakdown every 2 years and charge way too much for their shoddy work.

while the Japanese make super great cars that last a decade and even more
It is the big boys fault the auto industry sucks so bad in America.

Go Japan!!! (and hope the Americans lose in the Olympics!)

I think the answer is YES, it has ...

Unfortunately, lawyers do not always do their job either.

And when times are going good, the mortgage papers are just routine

How possibly could indianhead once again be blaming the poor victim instead of the crooks at the top...
seems to me that is like blaming a woman who is raped for causing it.

Mortgages are the biggest scam perpetuated on citizens
You are told, get one, its a great tax write-off
They forget to tell you one only gets at the most 1/3 back in tax relief (IF you use itemized deductions), and that the first how many years just pays interest on top of interest
while bank gets rich, and the CEOs of those banks get richer
They should outright ban them.

This is America, the land of the AMERICAN DREAM ....

You can go out and club some old lady over the head and steal a dollar from her, and buy a LOTTERY TICKET in New York State and win a MILLION DOLLARS with that dollar, and then you can buy a mansion and live like a KING!

Every day the State of New York tells people this ...

They spend thousands of dollars on advertising to tell people this every day ...

They never tell people anything about personal responsibility ...

Personal responsibility is not in vogue in America, anymore ...

Just like it wasn't in Rome when their republic went crashing down in flames ....

Only a few preferred LIBERTY ...

As for the rest, all they wished for was a kind master ....

And they have one here in the U.S. Congress, which now grants DREAMS to people like this was some kind of TV quiz show ....

"C'MON DOWN!"

"OUR NEXT WINNER IS __________"

And so ...

Probably because they aren't really "the poor victims" at all ....

Or if they are "victims" of anything, it was their own GREED and STUPIDITY, graham ....

They are over 18, afterall ...

And so ...

An elderly aunt in our family in the 70s and 80s and 90s (and this could unite the article I put up on the Preacher Ken Copeland too), was always getting mail from religious orgs to donate money (for her salvation of course).
Or sending in for magazine subscriptions that Dick and Ed advertised on tv so they could win the big sweepstakes and collect all
the dough
Greedy? Stupid? Well I guess yes
But then people tens of millions of them, (not me) play the lottery for their pie in the sky that they never achieve
(though I personally know someone who won a fortune, I think they were happier before)...

Yes, they are over 18, or are they?(sometimes it is hard to tell).

Also being that the public itself is to blame for what has happened.....

I would advise everyone, if you ever have the money, instantly pay off your house, your credit card bills and live bill free, (just awaiting the next months bills)...if you pay off your house, all you gotta come up with is the tax money 4 times a year, makes it
harder for them to take away your house


(edit to add- I just AFTER I wrote the above see you wrote about the lottery yourself...)

Out here in the country, graham, you deal with mice in your house by giving them the AMERICAN MOUSE'S DREAM ...

FREE CHEESE ...

Or peanut butter, which works better than cheese ....

How you give them this AMERICAN MOUSE'S DREAM is by putting the peanut butter on the trigger of a mouse trap ...

WHAM!

"HEY!"

"LOOKA THERE, THAT MOUSE JUST WON THE GRAND PRIZE!"

"THROW IT OUTSIDE!"

The MONKEY TRAP, graham ...

Have you ever heard of it?

Some more primitive people in the world eat monkeys ....

How they catch the monkeys is by observing what fruit the monkeys are eating ...

And then they take a choice piece of that fruit and they put it in a woven bag with holes in it big enough for the monkey to put its hand through, to grab hold of the fruit inside ....

Once the monkey has its hand on that fruit, it can't get its hand back out of the bag, and so it is "caught" there ....

Of course, it really isn't caught, because if it would just let go of the fruit, it could easily slip its hand back out of the trap and run away ....

But they don't ....

They won't let go of that prize ....

"IT'S MINE, IT'S MINE, IT'S ALL MINE!"

WHAP!

"NOW YOU ARE MY SUPPER!"

Psychological studies demonstrate that if you place something highly valued by a primitive person in plain sight, they will stay away from it ....

It doesn't belong there, and they know that ....

Since they eat by trapping other living things, they understand the concept of bait ...

Take and place something highly desirable in front of what is called a "civilized" person, and they will rush for it, pushing everyone and everything out of their way ...

That is how the Viet Cong used to kill Americans in Viet Nam with booby-traps ....

BAIT THEM ....

And it was highly effective ....

Are they really over 18, graham?

I am forced to have to agree with you here ....

It is almost impossible to tell ....

And so ...

I used to go to a coffee shop in Troy, New York that had as a big part of its business the selling of all kinds of LOTTO tickets and scratch-offs ....

And you would see three generations of a family in there, all scratching away ....

Right on down to the small kids ....

You would see tables in there covered with worthless scratch-offs, and some of them are $5 or $10 a piece ....

There could easily be $80 to $100 worth of scratch-offs on a table when people left there, all worthless ....

And it is common, when trying to pay for gas at the local convenient store up here, to have to stand there for several minutes, while someone in front of you gets over $100 dollars worth of scratch-offs and LOTTO tickets in all kinds of varying combinations ....

I listen to these people as they tell the clerk what combination they want on their next LOTTO, and I have to wonder at how many hours of their lives they devote to figuring out all these various combinations ....

I get $150 per week on disability to live like a KING here in America ....

I'll be damned if I am going to squander even a dime of it on GAMBLING ....

"HEY, SPORT, YOU LOOK LIKE A WINNER TO ME, C'MON DOWN HERE AND TAKE A CHANCE!"

"SHOW THE FOLKS WHAT A REAL WINNER LOOKS LIKE ..."

Yeah, right ....

And so ...

In New York State, graham, the "job" of the lawyer is to FLEECE people ...

Or if the lawyer is a gummint lawyer, their job is to "keep the playing field level" so that their private-practice breathren can continue to FLEECE people ...

So I would say that the lawyers up here are in fact doing their jobs very well ...

And so ...

I think that a good starting place would be for Congress to pass a simple law which says that
no worker can get less than 1/100 th of what any other person in the Organization gets in
total pay and benefits. This ratio could be adjusted upward or downward with a 2/3 rds.
majority vote in Congress.

I'm going to put this here, rather then the health care thread because it dove tails
into the national economic picture (IMO). It's something that keeps coming back
to me...it did with Clinton and it does with Obama. I'm not convinced we can afford this:

http://www.barackobama.com/issues/healthcare/

Barack Obama's Plan
Quality, Affordable and Portable Coverage for All
Obama's Plan to Cover Uninsured Americans: Obama will make available a new national health plan to all Americans, including the self-employed and small businesses, to buy affordable health coverage that is similar to the plan available to members of Congress. The Obama plan will have the following features:
Guaranteed eligibility. No American will be turned away from any insurance plan because of illness or pre-existing conditions.
Comprehensive benefits. The benefit package will be similar to that offered through Federal Employees Health Benefits Program (FEHBP), the plan members of Congress have. The plan will cover all essential medical services, including preventive, maternity and mental health care.
Affordable premiums, co-pays and deductibles.
Subsidies. Individuals and families who do not qualify for Medicaid or SCHIP but still need financial assistance will receive an income-related federal subsidy to buy into the new public plan or purchase a private health care plan.
Simplified paperwork and reined in health costs.
Easy enrollment. The new public plan will be simple to enroll in and provide ready access to coverage.
Portability and choice. Participants in the new public plan and the National Health Insurance Exchange (see below) will be able to move from job to job without changing or jeopardizing their health care coverage.
Quality and efficiency. Participating insurance companies in the new public program will be required to report data to ensure that standards for quality, health information technology and administration are being met.

National Health Insurance Exchange: The Obama plan will create a National Health Insurance Exchange to help individuals who wish to purchase a private insurance plan. The Exchange will act as a watchdog group and help reform the private insurance market by creating rules and standards for participating insurance plans to ensure fairness and to make individual coverage more affordable and accessible. Insurers would have to issue every applicant a policy, and charge fair and stable premiums that will not depend upon health status. The Exchange will require that all the plans offered are at least as generous as the new public plan and have the same standards for quality and efficiency. The Exchange would evaluate plans and make the differences among the plans, including cost of services, public.


In fact, it sounds like something that was pushed in the housing industry to make affordable housing
avilable to all, which (IMO) had a large part in the over-looking of financial decisions for entitlement
decisions. Are we to do the same thing with health care? I keep wondering who will want to work
in a system that standardizes costs, numbers specific tests treaments and dumps an additional 47
million (and that number includes illegal aliens) onto a system that will be financially restricted?

I believe the federal government sent mortgage companies signals that they could write dangerous mortgages.
I believe the federal government would have to lend the same federal financial gaurantees they did to Fannie
and Freddie...without an idea of how much it will cost...and without the ability to make that gaurantee.

It's called the American dream
Only the dream is as fixed as a Vegas or Atlantic City gaming room
Where they let you win the first time you enter, to make sure you had fun and come back (And bring the relatives and friends next time, why we even have stuff for the kiddies...)

then they take your dreams and squash them

Ever wonder why I say America sucks? (maybe because what it has become does???)

thanks to the people themselves.

I think a good place to start is saying to a CEO they get 1 % of the profits
(and not phony book keeping either...

Just 1%.

For a look at the fleecing of America- see what ebay has become under the now retired (and John McCAin groupie who wants in on his admin. and possibly a California governorships)
leadership
Fair and equal??? We could start a book about it. Pierre if he were dead should have been rolling in his grave, but he is still alive and pezzing'

If you care to read about what National Health Care MIGHT do in the overall economic picture you might have time to read:

McCain vs. Obama on health care

Although I am a long-time supporter of Labor and Unions, the UAW has been so unreasonable for so long that Detroit can NEVER compete with the Japanese whose factories are right here in Murrikka, but they are not UAW shops.

I think the people who work for Honda in Marysville Ohio are happy workers. But I'll bet you they earn half what comparable Ford worker get (till they are laid off) in Detroit

I'd like to know how McCain's plan will help me with my $2900 a month health insurance which quite soon I won't be able to afford.
And its people like him that have made it rise over the last 28 years

Looks like neither will get to that.
If McCain wins he'll give ya $5,000 a year write off,
Obama promises that sometime (probably at least 2010,
if he can get Congress to pass A PLAN) you will get on a list.

But, more details are required. If it's a catastrophic illness requiring chemo,
transfusions etc. then catastrophic health insurance (something different from
broad National Health Insurance) seems the answer. But without detail, I can't say.
Why is it $2,900 in New Jersey, which has reasonable rates?

"Doubts still dog housing remedy - Senate passes the measure 72-13, but many experts think it won't have a significant impact on the mortgage crisis"

By LORI MONTGOMERY and PAUL KANE, Washington Post

First published: Sunday, July 27, 2008

WASHINGTON -- Even as a huge bipartisan majority in the Senate voted Saturday to send a sprawling housing bill to the White House, economists, consumer advocates and other analysts said the package of programs for cash-strapped homeowners and shaken mortgage lenders is unlikely to relieve the foreclosure crisis that is driving the nation toward recession.

"This is not the end of the housing crunch," said Jared Bernstein, a senior economist at the Economic Policy Institute.

"Housing prices have already fallen 15 percent and they need to fall 10 percent more."

"This bill isn't going to change that equation."

The Senate voted 72-13 to approve the bill, which seeks to halt the steepest slide in house prices in a generation, rescue hundreds of thousands of families from foreclosure and restore confidence in the nation's largest mortgage-finance firms.

White House officials said President Bush is likely to sign it by midweek, despite his opposition to nearly $4 billion in aid to local communities.

The office of Sen. Charles Schumer, D-N.Y., said New York would get $117 million in new funds from a provision in the bill to help communities buy and fix up foreclosed properties.

A Capital Region breakdown wasn't available Saturday.

According to the U.S. Census Bureau's American Community Survey, the region has more than 13,850 vacant properties, with Albany County leading the counties with 4,800 vacant properties.

During Senate debate, Sen. Christopher Dodd, D-Conn., one of the bill's lead sponsors, cited a litany of grim statistics about the mortgage crisis, including that an estimated 8,500 families a day are falling into foreclosure and that one in every eight homes is projected to enter foreclosure over the next five years.

"The American dream has become a nightmare for countless families," Dodd said, urging his colleagues to vote for a bill that is "not perfect ... and will not perform miracles."

Both presidential candidates, Sens. John McCain, R-Ariz., and Barack Obama, D-Ill., expressed support for the legislation, but didn't attend Saturday's vote.

Republican lawmakers have blasted some of the measure's key provisions as bailouts for irresponsible borrowers and risk-addicted financial institutions that could wind up costing taxpayers hundreds of billions of dollars.

Last week, the House approved the bill 272-152, with three-quarters of GOP lawmakers voting no.

With elections looming in November, many lawmakers felt compelled to respond to a crisis that has pushed more than 1.5 million families into foreclosure.

The legislation was hammered out in bipartisan negotiations between lawmakers and Treasury Secretary Henry M. Paulson Jr.

Paulson's request for authority to prop up faltering mortgage giants Fannie Mae and Freddie Mac lent a final burst of urgency to legislation that had been proposed in March and propelled by crisis, starting with the collapse of investment bank Bear Stearns.

The measure grants Paulson's request for authority to extend an unlimited line of credit to Fannie Mae and Freddie Mac, a move aimed at reassuring global markets that the firms, which back nearly half of all outstanding mortgages in the United States, will not be allowed to fail.

The package also contains provisions long-sought by the Bush administration, including a strong new regulator for Fannie and Freddie and an overhaul of the Federal Housing Administration, the nation's largest provider of mortgage insurance.

After Saturday's vote, Sen. Jim DeMint, R-S.C., said the authority given the Treasury "crosses the line into socialism."

While congressional budget analysts have concluded that the firms are sound and unlikely to need any government help, they said there is an outside chance the companies could call upon the Treasury for more than $100 billion.

The centerpiece of the legislation is a plan to prevent as many as 400,000 foreclosures by authorizing the FHA to help families who, due to falling home prices, owe the banks more than their homes are worth.

If lenders agree to forgive a portion of the debt and write new loans worth no more than 90 percent of the home's current, lower value, the FHA will insure the new loans and agree to pay off the lenders when borrowers default.

Even if the program works, its goals are modest compared with the scope of the problem, said Mark Zandi, chief economist for Moody's Economy.com.

He estimates that 5.5 million loans will default by the end of 2009, with about half those families losing their homes.

"If we're lucky enough to help 400,000 households," said economist Bernstein, "I'm afraid it's a drop in the bucket."

hey friend, what the hell good is a write-off, if one doesn't make enough to need a write-off?

That is like the mortgage deduction...only good if it results in an actual cash refund.
Add up that amount x 12 for a year.

You call $2900 reasonable? That is on the high side but in line with plans that are not paid for by a company
and is not a HIP or HMO, but the old fashion go to any doctor, anytime, anywhere with no lifetime cap at all
(but still a deductable that adds to that price anyhow).
That is any doctor, anywhere, without prior permission.
This year may actually not even need itemized, just standard, so all in all, there is no deductable at all, and McCain's won't get me crap.

I don't buy Hillary's plan, McCain's plan or anyone's plan, if it isn't like France or Germany or England or Canada.
And even then, one will still have the option for higher insurance if one wants it...

It would be better if it is totally free.
And raise taxes elsewhere to pay, and when you work, you pay, when your ill, you don't, when you have no job, you
don't.
That is the insurance everyone should have. Same for all, pay it forward for when you need it.

The worse the economy, the more out of job people there are, the less McCain's or anyone's plan will help.

And I for one am still waiting for my stimulus check...where did it disappear to???

So, you'll pay $2,900 a month to go to any doctor any time...but want everyone
to pay for you to go to an assigned doctor at an assigned time? Hell just drop
the premium policy and get a restrictive HMO.

But, if your idea (bolded above) comes to be...I certainly will benefit...I'll totally retire...
drop to a very low taxable income rate...and not have to pay but a little more for the
national heath care tax...allowing me to still buy private insurance to get the treatment I want.

But...WE really won't benefit...because while I'm milking the system...the system takes
a beating...and eventually will collapse under it's own weight...and all those young
voters are take it right in the keyster. Yes, I vote on what is good for ME, but I'm also well
read enough to know you don't kill the goose that's laying the golden eggs...because you're
hungry and don't want to plant or hunt.

http://www.bloomberg.com/apps/news?pid=206...&refer=home

U.S. Deficit to Reach Record $490 Billion in 2009 (Update2)

By Roger Runningen

July 28 (Bloomberg) -- The U.S. budget deficit will widen to a record of about $490 billion next year, an administration official said, leaving a deep budget hole for the next president.

The projected deficit for the fiscal year that begins Oct. 1 is far higher than the $407 billion forecast by President George W. Bush in February. The official also confirmed a report in USA Today that the deficit this year will be less than the $410 billion estimated in February.

The bigger shortfall for fiscal 2009 may reflect dwindling tax receipts because of the U.S. economic slowdown, the cost of payments distributed under the $168 billion economic stimulus package and the cost of the wars in Iraq and Afghanistan.

``We've already seen a pretty sharp cooling in tax receipts, and it's just going to continue into next fiscal year,'' Stephen Stanley, chief economist at RBS Capital Markets, said in a telephone interview.

The deficit projection injects another element into the fight over future U.S. economic policy between Republican John McCain and Democrat Barack Obama, the presumptive presidential nominees of the major political parties. Both may find their economic proposals constricted by red ink when the next president is sworn in on Jan. 20, 2009.

Plans and Proposals

McCain will have a tougher case to make for extending all of Bush's tax cuts, which are projected to cost $4.2 trillion over 10 years, while Obama will confront the risk that his proposals for government programs will widen the budget gap.

Everybody wants to hide behind the federal government (Treasury).

http://www.bloomberg.com/apps/news?pid=206...&refer=home

Banks Throw Weight Behind Paulson Covered-Bond Plan (Update4)

By Rebecca Christie and Jody Shenn

July 28 (Bloomberg) -- Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. threw their support behind Treasury Secretary Henry Paulson's effort to spur covered bonds as a new source of mortgage financing.

``We look forward to being leading issuers as the U.S. covered bond market develops,'' the banks said in a joint statement in Washington. They applauded Paulson's release today of guidelines for issuers of covered bonds, which detail the types of loans that should go into the securities and how their payments ought to be made.

The banks stopped short of announcing specific plans for issuing the bonds, illustrating how the market may be slow to take off in the U.S. in the aftermath of the mortgage meltdown. Even in Europe, where covered bonds are a market in excess of $3 trillion, investors are shunning the debt amid a collapse in appetite for investments in housing.

``Mortgage-backed securities investors are not in the mood right now to buy bonds with anything less than government backing,'' Kenneth Hackel, managing director of fixed-income strategy at RBS Greenwich Capital Markets in Greenwich, Connecticut, said in an interview, referring to debt guaranteed by Fannie Mae and Freddie Mac.

While the market is ``not yet'' ready for covered bonds, ``the concept is certainly more interesting now than it has been in a very long time,'' he said.

`Ready to Go'

Paulson said the four U.S. banks are ``ready to go'' and that sales by the largest banks can help encourage smaller mortgage lenders to proceed. ``Covered bonds have the potential to increase mortgage financing, improve underwriting standards and strengthen U.S. financial institutions,'' he said.

Covered bonds offer greater protection to investors because banks keep the home loans on their books, and must make up shortfalls if homeowners fail to pay.

The Treasury's guidelines exclude riskier types of mortgages that contributed to the crisis of the past year, including loans made without documenting the borrower's income and those involving higher debt compared with property value.

Bank of America, based in Charlotte, North Carolina, and Seattle-based Washington Mutual Inc. are the two U.S. issuers of covered bonds so far.

Take Time

``We will look to amend our program to make sure it's fully compliant'' with the guidelines, Paul Baalman, a structured finance executive at Bank of America, told reporters at the Treasury in Washington today. He declined to comment on when the bank may next sell the bonds, adding that it will take some time to adapt to the new regulations.

Shannon Bell, a Citigroup spokeswoman, and Melissa Murray, a Wells Fargo spokeswoman, declined to comment beyond the statement. Joseph Evangelisti, a JPMorgan spokesman, didn't return a call for comment.

Paulson said covered bonds will help provide financing to a U.S. mortgage market that now depends on Fannie Mae and Freddie Mac and other government-linked institutions for more than 70 percent of funds.

Fannie and Freddie slid to their lowest levels in more than 17 years this month on concern they lacked sufficient capital to offset losses and writedowns. Fannie Mae and Freddie Mac buy mortgages and package them into securities sold to other investors. They also borrow to invest in home-loan debt.

Higher Ratings

Covered bonds achieve higher ratings than regular notes by augmenting the issuer's pledge to pay with a group of assets such as mortgages that can be sold in a default. The extra security allows lenders to pay less interest.

While the securities are backed by loans and bank assets to get AAA ratings, most are valued, on average, as if they were three levels lower.

The Treasury's guidelines spell out a formal definition for covered bonds. The bonds should have maturities of at least one year and no more than 30 years. Home loans in covered-bond pools would have a maximum loan-to-value ratio of 80 percent.

Today's announcement is part of Paulson's strategy of pushing banks to proceed with sales without waiting for legislation to be enacted by Congress. In Europe, which has a covered-bond market of more than $3 trillion, many countries have laws spelling out the ground-rules for issuance.

Collateral at Fed

Federal Reserve Governor Kevin Warsh backed Paulson's plan to support covered bonds, highlighting that the central bank would accept them as collateral at the discount window for direct loans to commercial banks.

``Highly rated, high-quality covered bonds would generally fall within that broad range as eligible collateral,'' Warsh said in a statement.

The Federal Deposit Insurance Corp. already has issued new regulations on how covered bonds would be handled in the event of a bank failure. FDIC Chairman Sheila Bair said Paulson's best practices augment the FDIC's efforts to lay out clear guidance for the industry.

``Covered bonds can be a useful tool to help restore confidence and stability to the housing industry, as well as to the mortgage finance system,'' Bair said today.

The success of Paulson's strategy of pursuing issuance without legislation depends on how well the guidelines prove to have been written, said former FDIC general counsel John Douglas, now with the law firm Paul Hastings in Atlanta.

`Plenty of Comfort'

``Certainly a law is better than a regulation, but regulation seems to be plenty of comfort in a lot of areas,'' Douglas said. ``The real issue is if it's substantive enough for the market, not the form in which it comes.''

Treasury officials held discussions with almost 60 market participants, including investors such as Pacific Investment Management Co., Blackrock Inc. and TIAA-CREF, the retirement annuity provider.

In Britain, Prime Minister Gordon Brown's government this year put in place legislation on covered bonds, joining Germany, France and Spain among European countries setting rules on how the securities are issued.

``It needs a very strict and very clear legislation. Otherwise I don't think the investors will buy it,'' said Louis Hagen, executive director of the Berlin-based Association of German Pfandbrief Banks. Covered bonds are known as pfandbrief in Germany.

Europe's covered market was started by King Frederick the Great of Prussia in the 18th century to help rebuild after the Seven Years War, according to the Web site of the German association of pfandbrief banks. Rules for the securities differ by country, including the amount of capital required to back the bonds.


All the financials, all the Bushies, all the Euros want to hide behind the fed...are y'all buying this?