What do we do know? Home Mortgage and Financial Bail Out

[Eikon]

Another potential profit center to remember is the fact that the government will basically be inheriting a lot of foreclosures. Remember that all these loans are secured The loans that do default and foreclose are basically written off today as bad debt and straight losses. But in a year or two when the market comes back, the value of the foreclosed homes should increase as well. Thus another potential profit to our government from this venture.

I have no doubt the people putting this package together are smart cookies.

[mtcookson]

Ahh, I get it. Cool deal!

[wingFeather]

My biggest beef with the bailout is that we are socializing our financial industry.

I seem to agree with this train of thought...

it wasn't the left that put us there.

Oh, it was. They were the ones looking for handouts in the boom & now defaulting on these loans

[Eikon]

I also agree!

Basically what may happen is that the US government becomes the largest mortgage lender in the US - by far!

If the government does turn a profit on this venture.. what's to stop them from wanting to continue this deal? Do they start actually origination mortgages? Or do they just hold and service until they eventually all go away?

Does this new company continue to buy up bad loans in the future? Is it a ticket to abuse the system for our other bankers?

Can other banks compete with the US government in mortgage lending? Do they just quit and leave us with a socialist state-run mortgage company?

I hope the answer is that the government does a one time buy out of current bad debt. They do the best they can to break even on the deal by servicing and/or foreclosing on current defaulted loans. Then they sell the foreclosed homes back to needy borrowers with better credit in the future and get that revenue back. I hope they never originate a loan themselves and rather just exist with the single intent of minimizing the losses on this one time deal and hopefully over time they can put themselves out of business and dissolve and return our economy to what it was years ago.

[HashiriyaS14]

Hey Hash -

I already posted about this.

The Fed borrows at 2-3%, charges 6-8%, and in a resurgent economy, that translates to 10-12% return.

Love ya brotha.

Maybe I'm an idiot, but I'm not quite so sure I follow this.

If you're borrowing at 2% and charging 8%, then you're earning a 6% spread and thus a 6% return. This is of course not inflation-adjusted, as inflation would (minimally) decrease the real value of this 6% return.

Are we talking about two different things?

[telcoman]

This just in

McCain suspends his campaign to help resolve the Financial Crisis.bud

You forgot to mention that it took McCain 22 hours after making that announcement to finally get to Washington.

There was a deal prior to his arrival but no deal after he got there.

What a guy!

http://www.editorandpublisher....55117

David Letterman had some comments about the lie McCain told him

Telcoman

[96Qowner]

C'mon, telco. Let's not look to comedians for political policy opinion.

[telcoman]

C'mon, telco. Let's not look to comedians for political policy opinion.

If Obama told a flat out lie I'm sure some here would be rushing to post it

http://thecaucus.blogs.nytimes...t=cse

Although this is a serious problem it doesn't mean we can't get a few laughs.

After all some thought lipstick on a pig was a good line but as soon as that little gem faded out of the news and the campaigns are now focused on real issues what is the problem?

McCain made a poor decision and many are having a good laugh over it.If he ends up losing the election this mistake could very well end up being a deciding factor?

[96Qowner]

We'll see if it was a poor decision. It DID contrast the priorities of the 2 candidates. If it turns out that McCain accomplished absolutely nothing in going to Washington and talking to the House Republicans, then it will have been nothing more than a political stunt.

I DO like the idea that people are now seriously considering NOT throwing 700 billion at the problem and hoping it'll go away.

I'll be watching the debate tonight. See yas tomorrow!

[srellim234]

I don't profess to know all the intricacies of this whole economic mess but it appears in the instance of WaMu the system worked. FDIC stepped in, JPMorgan bought what was left. WaMu shareholders get killed, but that was the risk they assumed when they bought the stock. JPMorgan, a private firm, takes over the loans and the risk, while the Feds continue to insure the deposits. As long as JPMorgan runs the bank it doesn't cost the taxpayers a dime. That's the way it should work and the way it did work.

I do believe the WaMu board of directors should be held personally liable for their decision to give the new CEO a golden parachute worth over $13 million, for being on the job only 10 days. That's right. The WaMu CEO gets $13 million for being on the job less than two weeks and taking over a company going out of business. Make the board of directors pay him out of their own pockets as penalty for dereliction of fiduciary duty to the company.

[AZhitman]

Are we talking about two different things?

No, I just suck incredibly at math.

[AZhitman]

There was a deal prior to his arrival but no deal after he got there.

Words escape me.

How about this one: FALSE.