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If we dont get this out we are fools, I dont want bi-partisan I want dems OUT

If the rep party cant defend itself what are we doing contributing to you? And I and my gal contribute every election. This is nonsense, bi-partisanship is over. The dems own this financial crisis and if we dont get that out, rescue the reputation of our president, show the folly of extreme socialistic programs and get these koolaid drinkers to understand the problem is over zealous socialistic programs we have betrayed this country. It isnt an issue how well intended they are, intentions were good when we built projects in big cities also. These became gang-drug emporiums and prisons for low-income families these programs are just another form of slavery, but now the dems are the masters.
This money needs to be spent building industrial parks, businesses in these communities not hand-outs.
You have let the dems finance their party with organizations like ACORN with our tax dollars. You are absolutely DUMB.
There are tons of data that Dems own financial crisis due to their 15 year support of fannie/freddie and continuous effort to lower the bar on mortgage loans. This is documented on cspan TV. http://www.youtube.com/watch?v=_MGT_cSi7Rs 1,500,000 people have viewed this video. http://www.foxnews.com/story/0,2933,431209,00.html This is a statement from Artur Davis that admits Dems were slow in seeing problem. We need to make public aware of how often they tried to reform Fannie/Freddiee and how dems always voted 100% against it, and with a vicious attack on regulators as well.

Democrats Unveiled conclusive evidence of ownership of financial disaster

http://www.youtube.com/watch?v=_MGT_cSi7Rs

CSPAN video of Democrats chastising republicans trying to regulate Fannie/Freddie. Disgusting attacks accusing republicans of lynching Raines etc.

Acorn and other Liberal nonsense

If the Republicans let any bill pass giving ACORN and it's like maybe billions of dollars, Conservatives will never win another national election, these people stole Wisconsin in 2004 and will defraud us of any fair election for decades. Bush should veto it if it passes with these provisions and let wall street collapse. 10 years of depression is better than 300 years of socialism. He'll be hated for ever anyway. At least he would be a hero to Conservatives after a time.

Republicans have an airtight case this is a democratic socialist problem. After this deal is settled they should pound that home to the American public. MY GOD A SOCIALIST USA, I CAN BARELY BREATH.

I pray for Bush, no doubt the job has overwhelmed him. I don't know if anyone will be able to perform in this GOTCHA environment.

Hopefully, after 2 years of Barack we wiill have had enough and elect a republican congress to keep them in check. There will be so many handouts that everyone will be celebrating right up to the time we start having 30% a year inflation.

2008 Financial Crisis

In 2005 McCain and banking committee tried to regulate Fannie/Freddie. All Republicans voted for it, All Democrats voted against it. The Republicans couldn't get the bill out of committee. McCain gave speech on senate floor, Obama Remained silent. (Usual pose for Obama) DODD, Pelosi and Obama are LYING about this being due to Republican deregulation, this is about Democrats trying to socialize home ownership.

http://online.wsj.com/article/SB122212948811465427.html?mod=googlenews_wsj

In 2005, the Senate Banking Committee, then under Republican control, adopted a strong reform bill, introduced by Republican Sens. Elizabeth Dole, John Sununu and Chuck Hagel, and supported by then chairman Richard Shelby. The bill prohibited the GSEs from holding portfolios, and gave their regulator prudential authority (such as setting capital requirements) roughly equivalent to a bank regulator. In light of the current financial crisis, this bill was probably the most important piece of financial regulation before Congress in 2005 and 2006. All the Republicans on the Committee supported the bill, and all the Democrats voted against it. Mr. McCain endorsed the legislation in a speech on the Senate floor. Mr. Obama, like all other Democrats, remained silent.

Now the Democrats are blaming the financial crisis on "deregulation." This is a canard. There has indeed been deregulation in our economy -- in long-distance telephone rates, airline fares, securities brokerage and trucking, to name just a few -- and this has produced much innovation and lower consumer prices. But the primary "deregulation" in the financial world in the last 30 years permitted banks to diversify their risks geographically and across different products, which is one of the things that has kept banks relatively stable in this storm.



By MARK LANDLER and SHERYL GAY STOLBERG
Published: September 19, 2008

EXCERPTS:

To some extent, Mr. Bush was simply following a deregulatory pattern set by his predecessor, President Clinton. Perhaps the most significant recent deregulation of the banking industry — the landmark act that allowed commercial banks to expand into other financial activities, like investment banking and insurance — was signed into law by Mr. Clinton in 1999.

To his credit, Mr. Bush accurately foresaw the danger posed by Freddie Mac and Fannie Mae, and began calling as early as 2002 for greater regulation. But experts say the administration could have done even more to curb excesses in the housing market, and much more to police Wall Street, which transmitted those problems around the world.

The White House and Congress wanted to make housing affordable to more Americans, and freeing up the lending markets was a way to do that. As Mr. Rogoff said: “It was a market-based way to help poor people. There was an incredible belief in free markets.”

http://www.nytimes.com/2008/09/20/business/20prexy.html
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An Attempt to understand the financial crisis

I found the above article to be a very good presentation, I have used a few paragraphs here, and encourage you to read the full article.

I will try to explain this in layman terms.

During the Clinton administration banking deregulation was signed into law in 1999. This deregulation allowed banks to enter into investment banking and insurance.

During this era Fannie and Freddie were formed. These were originally Government sponsored corporations formed to allow more liquidity in the mortgage markets. Mortgages were bundled into groups and sold on the security markets as mortgage funds. This allowed banks an automatic way to sell off their mortgages, thus freeing up their own assets. This scheme allowed a bank the ability to transact an almost unlimited number of mortgages. Rather than being in the mortgage business to gain income from interest received, the banks now gained income from closing costs and an override which they gained when they submitted mortgages to Fannie/Freddie.

Originally certain prerequisites were set for a mortgage to qualify to be transferred to a Fannie/Freddie fund. These were qualifications such as 20% down and employment/salary requirements.

During the years, for a number of reasons, Fannie/Freddie continued to lower requirements. Mortgages meeting a higher requirement have been termed “PRIME” mortgages. Mortgages below traditional standards have been termed “SUB PRIME”. Unfortunately one of the reasons was that the gentlemen running Fannie/Freddie were paid based on the growth of these funds. This was accomplished by continuously lowering the guidelines of what was a Fannie/Freddie acceptable mortgage.

In addition, certain cooking of the books, by transferring millions of dollars of expenses to future years, allowed these managers to qualify for larger incentives. Fannie/Freddie directors made tens of millions in bonuses while this deluge of “bad paper” continued to flow. The mortgage “lenders” wrote paper they knew was questionable, but as long as Fannie/Freddie would buy it they shrugged their shoulders.

Many of these mortgages were written as interest only loans for a limited period, or initial low rate loans with a market APR kicking in 3-5 years later.

When the interest only period expired the mortgage payment doubles. The adjustable mortgages faced rising interest rate which could easily add $300+ to the monthly payment.

In addition, most people are not too alert to the fact that their home will be reassessed for real estate tax purposes. So when they look at last year taxes, say $4000, but home is assessed at $200,000. Then next year at $400,000 they face a $4000 a year increase in taxes. For example in Florida real estate taxes are capped at a 3% increase a year, regardless of increase in home value. This cap is removed when the home is sold, after 6 years or so you could have a 50% to 100% increase when home is sold.

In addition, rising energy costs would add $100 per month to the utility costs of running your home, and perhaps another $200 a month to the cost of driving your car.

A home owner, in his house for 3-5 years could easily be facing a $1000 a month increase in the cost of home ownership.

When the value of real estate starts to decline:

1) Assessed value seldom comes down, if fact taxes probably keep going up.

2) Even if interest rates come down, you can’t refinance because your home has no equity due to lower value.

Add other cost of living increases such as food, health care and others and most families couldn't survive a $1000 a month plus increase.

The result is default in mortgage payments. A home owner that owes more than his home is worth suddenly has little incentive to struggle to keep it.

Summary:

Congress and Presidential ideologies which were strongly biased toward expanding home ownership were reluctant to stop the stream of questionable mortgages. Banks were reluctant to advise clients that perhaps they shouldn't make the commitment that stretched their client’s resources to the limit.

President Bush and John McCain raised the issues but did not pursue them, for political reasons. No one wanted to appear to be aggressively anti-home ownership.

So we went from record home ownership to record mortgage defaults and foreclosures. Perhaps a foreseeable sequence of events.

STEP 2

After the viability of Fannie/Freddie was questioned the stock value of these funds dropped. These had been considered investments with good returns and many financial institutions were invested in them. Not only were these stocks dumped but short selling forced them even lower than their real value. Example Fannie May went from $43 to $2.65. Any institution investing in these was at risk. The Government has taken over these companies. They have about 14billion in loses over last two years. No one can estimate the real value at this time but it is probably much greater than the $2.65. These companies have $5.3Trillion in mortgages of the $14Trillion in this country. My understanding of the bailout is the Government reimbursed stockholders at market value and that the stockholders took the brunt of the decline but the slide was stopped. There is a fair opportunity that the Government will actually make money on the deal. Once the questionable mortgages are weeded out and good funds re-established their will be a good opportunity to resell some good-interest rate funds.

The Government wants to give everyone who has a reasonable opportunity to keep their home a reasonable way to refinance and bring down their monthly costs.

In time, the value of these funds will regain a reasonable market value and the government will start auctioning them off into the market.

AIG is largets insurer in world. But that is not where AIG got into trouble. The company's downfall comes from a decision to insure investments in the subprime market. As subprime mortgages started to default, AIG was on the hook to pay out more money than it had ever expected, and it didn't have enough cash on hand to continue operating.

"They called it insurance, but they were gambling," said Nobel Prize-winning economist Joseph Stiglitz. "In a market economy, there has to be a sense of accountability. You can't come running to the government every time you have a problem."

The government has paid 85billion to AIG in return for 80% of it's stock. Solving the mortgage delemna solves AIG problem as well. AIG went from $72 to $3.00.

Without that money, AIG would have defaulted on its obligations and the buyers of its insurance — such as banks and other financial companies — would have found themselves without protection against losses on the debt they hold.

The interests of taxpayers are protected by key terms of the loan. The loan is collateralized by all the assets of AIG, and of its primary non-regulated subsidiaries. These assets include the stock of substantially all of the regulated subsidiaries. The loan is expected to be repaid from the proceeds of the sale of the firm’s assets. The U.S. government will receive a 79.9 percent equity interest in AIG and has the right to veto the payment of dividends to common and preferred shareholders.

Step 3

Fannie/Freddie only hold 1/4 or so of united States mortgages. Many other institutions are going to be subject to a percent of failure in sub-prime mortgages. The government is considering buying up all sub-prime motgages and bailing out the rest of the financial intitutions. This will be a less viable investment than bailing out Fannie/Freddie because Fanne/Freddie had 90% prime mortgages.

SUBPRIME:

A subprime lender is one who makes loans to borrowers who do not qualify for loans from mainstream lenders. It's a market that has evolved to permit borrowers with poor credit history and an unstable financial situation the opportunity to get home mortgages.

The catch is they pay a higher and typically an adjustable rate mortgage (ARM). Encouraged by the housing bubble, easy credit, along with the expectation housing prices would continue to appreciate, many subprime borrowers took out mortgages they could not afford in the long run, particularly if interest rates rose and housing prices depreciated.

Here's what's going on, as explained by Caroline Baum of Bloomberg.com:

"During the housing boom of the last five years, people with bad credit histories, many of whom lied about their income and nature of employment, got mortgage loans they weren't qualified for to buy houses they couldn't afford. Now that house prices have stopped rising, and the house can't be refinanced or sold at a profit, Congress wants the taxpayer to subsidize the mortgages so these folks can remain in their unaffordable houses. "

The SubPrime bailout details are not announced as of Sep 20 11:00 Am. If this includes SubPrime only, the default will be high and the chance the taxpayer will come out whole is less likely than with Fannie/Freddie and AIG.

I will post after these details are released.

Opinion:

I am essentially against government intervention, but these are scairy times and the total collapse of the financial system cannot be allowed. This would precede a 20 year depression. The issue here is that the liquidity of our markets allow them to collapse in a rabid panic. This dosnt necessarily reflect any true value. No one is sure where the value of AIG or Fannie/Freddie will end up. Reluctantly, I agree with the bailout. If we go down, let's not do it without some ultimate effort.

President Bush said he had acted after fearing that the troubles engulfing Wall Street would spread to Main Street. “We’re going to work with Congress to get a bill done quickly,” he said.

“I found a common understanding of how severe the problem is and how it’s necessary to get something done quickly and I think we will. The risk of doing nothing far outweighs the risk of the package, and over time we’re going to get a lot of the money back.”