Make It Stop

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.

To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

The banks are not stupid.. they know that if it looks like it's simply a tax payer funded bailout for the banks, it won't fly.. so they make it look like they're somehow saving "millions" of homeowners from being foreclosed on. It's all so much bullshit.

Either way you slice it, it's an insult and slap in the face to every single person who bought a house they could actually afford, got a good mortgage, and actually pay it every single month.

Millions of people out of their homes? Fuck.. let's buy some rental properties. It's going to be a hot market. Economy.com is predicting that housing prices will bottom out this spring.. but they might not be aware that the banks are claiming that the shit hasn't even hit the fan yet.

The bottom line is that Americans need to get a fucking grip. I've asked for ages and ages who all these people were, that had all this money to afford all these houses.. sub-division after sub-division of hundreds and thousands of these expensive as shit houses in the Dallas metro.. and it's probably exactly the same in other big metros.. and the answer has been, all along, virtually nobody.

I have zero sympathy for the ego that it takes to buy things you cannot afford... and I have zero faith in any politician, of any party, to challenge the banks and let it all default. The banks control this country and the Fed is a financial syndicate. They will not allow it.

/update

And again, in the interest of full disclosure, John does sell foreclosed houses for banks.. so the more foreclosures there are, the more money he makes.. and he's making a fucking killing right now. That has nothing to do the roll of government in "fixing" business or individual bad decisions.

But looking at the flip side.. while John may get people booted out of their homes for not paying their mortgage, he does help new families (who do things correctly) get into those homes.

The whole idea is market stabilization. Prices were artificially inflated.. fraud was rampant (and probably still is).. and doing things the wrong way was rewarded. If the government just leaves it all alone, the banks will learn an expensive lesson, and borrowers will learn that you have to live within your means. Eventually housing will reach a point where new contruction meets market needs, and home prices will generally track close to inflation.

Ultimately, there are two causes for the sub-prime/real-estate disaster. Most of the people associated with a real-estate transaction are paid on commission. Their incentive is to game the system and process as much paper as possible and make a lot of money. The amount of mortgage fraud is astounding, and it reaches into the all the supporting businesses. Appraisal fraud.. inspection fraud.. mortgage broker fraud.. bank fraud.. builder fraud, real-estate agent fraud. All of these people get paid by the number and size of the transactions, and they have no morals.. because at their core they are salesmen.. and Gordon Gekko rules their world... and law enforcement has (it seems) zero interest in white collar crimes of these relatively small sizes.

The other cause is, of course, American's need to live large.