From The Ramparts
Junious Ricardo Stanton
Taxpayers Get Shafted Again
“The US Treasury’s rescue plan for Fannie Mae and Freddie Mac could cost taxpayers $25bn, congressional researchers said on Tuesday as evidence mounted that turmoil at the two companies is helping push up interest rates for homebuyers. US mortgage rates have hit their highest levels in about a year amid rising Treasury yields and growing fears among investors that Fannie and Freddie will cut back their purchases of home loans and mortgage securities. Hank Paulson, Treasury secretary, on Tuesday said he was “confident” Congress would complete work on approving his plan to give the Treasury authority to increase its credit line to Fannie and Freddie and invest in their equity, if necessary. The plan has faced criticism on Capitol Hill for exposing taxpayers to potentially huge losses, but is seen by most lawmakers and administration officials as necessary to prevent mortgage rates from climbing even higher.” US housing rescue ‘could cost $25bn’ By James Politi in Washington and Nicole Bullock and Michael Mackenzie in New York Published: July 22 2008 17:58 | Last updated: July 23 2008 00:32 http://www.ft.com/cms
The corporate mind control apparatus is predicting George W. Bu$h will sign the recently proposed Housing Bill which the Congressional Budget Office says may cost US taxpayers upwards of twenty-five billion dollars. As with most government statistics/figures we taxpayers ought to be extremely cynical about this figure. With the rampant mismanagement, corruption and fraud going on in Washington, the final payout will probably be much higher. I warned you some time ago dear reader, the Wall Street crooks, con men and hustlers would call in the chits and bribes they pay to the crooks in Congress to finagle a way to make Joe and Jane Sixpack pay for Wall Street’s avarice, larceny and criminality. Of course this latest corporate welfare, socialism for the rich rip off is being spun in the corporate media as a necessity. The media is saying this has to been done to “save” the housing industry. Save? In case no one has noticed the US housing industry is toast! What they really mean is they are doing this to save Wall Street, the big investment banks and put the onus for paying for this humongous bailout on the hapless taxpayers. This is a redo of the 1980's Savings and Loan rip off.
“The housing bill is expected to be approved by the House of Representatives on Wednesday, before moving to the Senate and the White House for the signature of President George W. Bush possibly later this week. As well as the Fannie Mae and Freddie Mac provisions, the legislation also includes language allowing the government to guarantee up to $300bn in mortgages refinanced at more affordable rates through the Federal Housing Administration, the federal housing insurer for low-income Americans.” Bush drops opposition to housing bill By James Politi in Washington http://www.ft.com/cms/s/0/ The so called Housing Bailout is not designed to help struggling homeowners stave off default and remain in their homes. It is a straight up example of corporate welfare, socialism for the rich, a total scam where the taxpayers foot the bills and make it easier for the banks to eventually foreclose on homes in the future. “So when it comes to workers' pain, we are told that there really is nothing that can be done. What about the pain of incompetent bankers? Well, we can't let incompetent bankers suffer. Congress, the president and the Fed will move heaven and earth to make sure that the bankers are not allowed to sink just because of their bad business decisions. That was why Fed chairman Ben Bernanke was so quick to tell the creditors of the major investment banks not to worry that that Lehman Brothers or Citigroup might be following Bear Stearns in going belly up. He promised that the Fed would throw out as much money as was necessary to make them whole. There was little concern for moral hazard or the incredible waste of taxpayer money to bail out the extremely rich. (Guarantees are real money – if anyone ever tells you otherwise, ask them to sign a guarantee note for your mortgage or student loan.) The guarantees, plus the below market loans from the Fed's discount window, was just round one. Round two is the bailout package that is about to pass Congress. This bill is being sold as a bailout of homeowners. The big problem with that story is that the government guaranteed checks go to banks, not homeowners. Furthermore, the banks get to decide which loans get placed in the programme. This is simple Econ 101. Banks are sitting on several hundred billions of dollars of really bad loans. They can go through with the foreclosure process, but this is costly. In addition, house prices have fallen so much, and the market is so glutted in many areas, that they will get be able to recover relatively little of the original value of their mortgage through foreclosure. So, along comes Congress with a big bag of taxpayer money and offers to guarantee new mortgages that will allow the banks to recover a much larger share of the original value of their mortgage. Who knows, with an exaggerated appraisal (ever hear of exaggerated appraisals?), they may even be able to recover most of their money. Of course Congress sells this as a bailout of homeowners. And we all know homeownership is the American Dream, so anyone who raises questions must be some sort of al-Qaida loving communist.” Help workers, not Wall Street Loan guarantees will help the bankers responsible for the housing crisis, not the homeowners suffering from it www.guardian.co.uk/commentisfree/2008/jun/30/
What the article doesn’t say is that because many of these mortgages were chopped up, bundled with other loans (auto, student, commercial etc) and repackaged as bonds (what they call securitized debt), the bank that issued the original loan doesn’t hold the lien and cannot foreclose on the properties anyway. So not only are the banks out of the money for the loans, they cannot legally foreclose because they don’t hold the liens or title to the property. All this scrambling by the Fed, the Treasury, Wall Street and Congress to get Fannie Ma and Freddie Mac solvent and get FHA involved in the refinancing of these loans is the bankers’ scheme to get either get the government to pay the loans or get the liens loans back so they can foreclose on them later. They know the economy is going to get worse and many of the borrowers won’t be able to afford the refinanced/restructured loans. The fix is in, the legislation is written so that in a worse case scenario, the government will step in and guarantee the newly refinanced FHA loans and the Wall Street bankers will get off Scott free. It is not about helping the people!
To glean a better idea of how all this happened and who was behind this colossal rip off read: Status Report on the Collapse of the U.S. Economy by Richard C. Cook at http://www.globalresearch.ca/index.php?context=va&aid=9596 Suffice it to say the creators of this crisis could care less about the harm and massive damage they are causing to millions of ordinary US citizens. All they care about is recouping their money. And as usual, they will call on their stooges and puppets in Congress to make sure they recoup their losses while passing the costs on to the befuddled and bamboozled taxpayers who are being lied to and taken to the cleaners one more time.