patrick.net

Bernanke (politely) brushes off Senator 'Bailout please' Schumer with a "Dear Chuck" letter:

http://blogs.wsj.com/economics/2007/08/29/text-of-bernankes-letter-to-schumer/

The short version via the 'ol bullshit-filter:

"Yeah, those FBs and hedgies sure are in a pickle, huh? Must suck to be them...

Oh, wait, a lot of reckless, irresponsible subprime lenders 'n hedge funds are based in your state, aren't they? And a lot of your buddies are up for re-election next year, aren't they? Damn, it must sure suck to be you too!

Hey, maybe you bleeding hearts in Congress can turn the FHA into some kind of subprime borrower payment-reset refi squad or something... I mean, assuming the borrowers are like "creditworthy" 'n stuff (most obviously aren't). As long as it's off *my* plate, I could give a rat's patoot.

Oh, and btw, I'm *still* not lowering the FF rate or encouraging Fannie/Freddie to start buying more Alt-A toxic waste. But you have nice day anyway, m'kay?

Peace out,
Ben"
XOXOX"

I'm gaining more respect for old HeliBen day by day.

I’m gaining more respect for old HeliBen day by day.

Same here.

I do think the 417K FHA limit is too arbitrary. It should be 0.

The real victims in this crisis are the millions of borrowers who followed the rules, whose only crime was taking out mortgages lenders told them they could afford.

It's the house FBs can not afford. I really object to this language that it is the loan that is a problem. There is a minority of borrowers whose problem is the loan but that' is not the common case at all.

Normally these borrowers could avoid foreclosure by refinancing their mortgages or selling their homes.

I fail to see to how being forced to sell your house because you can't make the payments and being foreclosed on is really any different when FB put 0% down. They have nothing to lose. Yes, their credit will be foobar but that's an accurate reflection of their ability to handle credit. The biggest problem foreclosed FBs have is the 1099 from the bank for the loan forgiveness amount. But Obama concerned about that, no. He'd prefer a massive intervention in the mortgage market by the federal government.

Perhaps Obama thinks the natural order of things is that asset prices only go up which would make him a President who is very dangerous for the economic health of this nation.

Too bad Ron Paul makes so much senses that it is difficult for him to get elected.

A housing bust will be good for the environment. A massive shutdown of home equity will reduce surely carbon emission.

Any bailout will directly or indirectly contribute to global warming.

Normally these borrowers could avoid foreclosure by refinancing their mortgages or selling their homes.

No. Normally, these borrowers could avoid foreclosure by being financially responsible. The past few years were not normal.

FYI: Right on target for this thread, SLATE is co-sponsoring a candidate Q&A forum and taking questions via email:

http://www.slate.com/id/2172924/nav/tap3/

My Question for Senator Obama (Wild Card):

"Senator,

You recently expressed interest in proposing some form of federal bailout program for distressed mortgage borrowers who took out subprime or "liar loans". I have a 2-part question for you on this subject:

1) Do you really think that all subprime or "liar loan" borrowers were really "victims", or just victims of their own greed and overconfidence?

2) Should all taxpayers, including responsible people who did NOT participate in the housing bubble, be forced to subsidize the irresponsible people who made large, reckless gambles and lost?

Thanks,
(HARM)"

Obama doesn't stand a chance of getting elected, America is not ready for a black President yet. His name sounds like Osama, a bad sign. Case closed.

Can we talk about more likely candidates? I don't think Hillary stands a chance either, she provokes too much dislike in non-supporters (myself included), and I don't think she has a Karl Rove behind her.

What is Edwards' stance on this? Romney's? Plus, whoever is going to be the next President is almost doomed from the very beginning, an one-termer most likely. Let's concentrate on the likely candidates for 2012.

His name sounds like Osama

And his middle name is Hussein.

“all Americans — no matter what their income level — should have the power to reach for that dream.”

With the overbuilding, recession, and threat of better border patrol, there will be PLENTY of places to squat, regardless of your income level. For the first time in years, no homeless people.

I got a call from Obama's fundraising team (Yah, I donated to Gore/Kerry at different times, I'm a marked man) who hit me up for campaign donations. I told them flat out I wouldn't be making a donation because of Obama's stance on FBs needing a bailout. I told her it was fiscially irresponsible, a moral hazard, and made me think Obama wasn't fit to be in charge of the US's budget. I told her the good news was Hillary was just as bad, so she wouldn't be getting any money either. The bad news was her call convinced me to donate to Ron Paul's campaign.

She said "Who's Ron Paul?"

Yup... he's got no chance. Too bad. With a demo congress, there'd be no chance that his socially backwards ideology on women/gays/etc would get implemented, but MAYBE he could get some real reform done on the Fed, FHA, Fannie/etc.

I may have missed this (yesterday?) if posted earlier, but we are now getting reports on the Chinese exposure to MBSs. Bank of China has about $10 billion sitting in its vaults, but never fear:
Yan said sufficient liquidity available with these banks will ensure they're able to hold their investments in subprime-related assets "until maturity, and so won't be forced to realize mark-to-market losses in a forced sale."
Nice to see we are just as good at producing cr@p as they are. I can't imagine this is engendering good feelings abroad.

Ron Paul is the best candidate. But he has as much chance as Ross Perot had. :(

I do believe in miracle.

Al Gore should run. At least he has good condo taste (SF St. Regis).

his socially backwards ideology

Can you explain?

Slightly off-topic, I read somewhere this morning that lenders are more and more reluctant to give our jumbo loans (> 417,000) because they are not guaranteed by the FMs (and no one else wants to buy these securities anymore).

With that being the case, in areas like the bay area where the median house price is higher than that, will we start to see increased downward pressure on home prices?

He's actually moderated the anti-gay angle for the campaign, but he's still firmly anti-abortion to the point of being anti-morning after pill. And honestly, that's the ONLY thing about him that bugs me. I would vote for him over any other candidate I've seen out there. He even supports the seperation of church and state, which is death to 'conservative support' from the bible belt.

I think Al Gore will run in 2012.

He is a smart man. Only half smart arsses will run for 2008. If you want to be the next Roosevelt, why would you place yourself in a seat that is set up for failure? My biggest hope is all this mess will blow up right in Bush's face when he is still in the white house, unfortunately it is quite impractical for things to unravel that fast.

Sriram, (BTW, I have a good friend named Sriram... but he's a Ganapaty, so I know it's not you.)

What it means is that those loans will have to be held on the books. Local banks/CUs/etc that engaged in sensible lending would still be able to make these kinds of loans as their balance sheets will not be imploding with foreclosures.

The question is... how many banks are going to be in that condition?

If investors continue to refuse to buy these loans, the rates will go up and up until you CAN sell these loans on to WS, which will have an impact. If loans for 417 are at 6.5, and loans above that are at 9-12%, there will be a big push down on all the middle-to-lower-upper areas. Areas where a large percentage of houses are bought by ACTUALLY wealthy as opposed to people who have to borrow money will not really drop. Woodside proper, maybe Atherton... Anybody who leveraged to get IN there is screwed if they can't make payments, but most of those houses were probably bought for mostly cash, and don't go on the market all that often.

The rest of the Alt-A Bay Area could be in SERIOUS trouble. One of the reasons sub-prime collapsed first is those buyers typically have very little reserves. Alt-Aers that bet and overleveraged will usually have more reserves to deplete before they are foreclosed and punted. They will hold out for 'break even' as long as they can, but without loans, no dice. And cash only buyers are NOT going to shell out 1.2 million to buy a house in Cupertino. (unless they're retarded and rich, like Forrest Gump.)

He’s actually moderated the anti-gay angle for the campaign, but he’s still firmly anti-abortion to the point of being anti-morning after pill.

There is nothing wrong with being pro-life. Although I believe the Federal government has no business in this issue, I think that abortion is wrong. It is vile to consider it as a "woman's choice." However, the option should remain open because the society will be worse off if abortion is illegal.

Alt-Aers that bet and overleveraged will usually have more reserves to deplete before they are foreclosed and punted.

Alt-Aers are just subprime people with slightly higher income.

Remember, the middle class is simply the lower class but with assets to lose.

sfbubble, I have a good friend named SFBubble... but he's a Seller, so I know it's not you :)

Sorry, couldn't resist making that lame joke. Thanks for the explanation, that makes sense.

I really hope something like this triggers panic and real downward pressure in the peninsula and south bay.

Peter P :
I don't mind him being anti-abortion, I mind the fact that he shows every indication of supporting legislation banning it should it hit his desk. His waffle on it is that he wouldn't support putting women to death who had an abortion. However, he mostly manages to fall behind the "Keep the federals out of it" shield on most of the issues that I really dislike his stance on.

Let's not get sidetracked on abortion or other standard fare divisive pseudo-issues. Arguing about shit like that is *exactly* what the election engineers thrive upon.

Let's stick to making it crystal clear what responsible, thinking, tax paying American citizens and legal, tax paying residents have to say about this issue.

So far, I've found very little to disagree with in every comment on this thread. That is powerful given I know that many of us have very different "ideological" perspectives. But the common ground we all share is that irresponsible, corrupt and outright stupid treatment of the US housing market has left the most responsible US Taxpayers at least a little poorer, and quite a lot pissed off.

But the common ground we all share is that irresponsible, corrupt and outright stupid treatment of the US housing market has left the most responsible US Taxpayers at least a little poorer, and quite a lot pissed off.

Rest assured that the solution to this problem will make us even more pissed off.

Singling out Obama among all the populist, "I'm for the middle class" platitude-filled democrats is probably unfair to Obama. He's no better and no worse in ideology. Like everyone else, he panders to interest groups, and frankly he is more disappointing than say, Hilary, who you knew was going to turn out just as she has.

It's a sad day when the French leader (Sarkozy) sounds more reasonable and free-market oriented than almost any viable US presidential candidate.

Dang Peter, that makes me upper-low class ….. down from lower-mid class ….. crud!

My point is that there is no differences between the two. :)

It’s a sad day when the French leader (Sarkozy) sounds more reasonable and free-market oriented than almost any viable US presidential candidate.

Sarko is my Hero. He is not just any French leader.

I wanted to donate to Ron Paul too but I can't because I am not a citizen.
But that makes me think... maybe I only want to be a U.S. citizen if Paul or someone like him gets to lead this nation.

You know that Sarko is not excessively free-market minded, nor is he anywhere near as meritocracy-friendly as us Anglo-Economy types would wish to believe.

For one, Sarko is trying to bully the ECB into putting monetary control under political guidance. For another he's very protectionist. All in all Merkel is more free market compatible, even with the annoying German corporate governance system.

I’m gaining more repspect for old HeliBen day by day.

Same here.

Me three. But I am reserving the praise because the show has just began. Ben is going to face much stronger demands for rate cut as time goes on. Past one year where he kept the rates unchanged will be nothing compared to what's going to come at him in future.

Has anyone seen the Bank of America ARM Reset Chart. It makes the Credit Suisse ARM chart look like a walk in the park. Resets peak in March '08, just in time for the primaries. The REO Speedwagon ("Keep the Fire Burning") should be going full tilt around the time of the Presidential election. I imagine they will just mount the election placards above the For Sale-Foreclosure signs dotting everyones lawns. I will vote for the first candidate who brings up the CAR ARM affordability index/scam.

You know that Sarko is not excessively free-market minded, nor is he anywhere near as meritocracy-friendly as us Anglo-Economy types would wish to believe.

I know. But there is only so far right the French can go. And that will still be way left of what is possible here.

I wanted to donate to Ron Paul too but I can’t because I am not a citizen.

IIRC, a permanent resident can donate too.

See "Confirm Your Eligibility" on

https://www.ronpaul2008.com/donate/

On the topic of politicians from other countries. When I look at India's finance leadership, they look more capitalistic to me and I find it extremely ironic. Because India was a socialistic country for the longest time and only recently have taken some anti-protectionist, open currency and free market measures.

The so called "dream team" consists of a prime minister who is an economist and has been a good Reserve Bank Governor and a finance minister who for a change knows a thing or two about finance, among others - a capable current governor for Reserve Bank and another good guy as a planning commissioner.

The mortgage rates in India have gone up significantly as Reserve Bank has increased their rates. This has killed RE speculation and put a damper on stock market gains. But the policy makers are far more concerned with fighting inflation, managing growth and economic health. My impression is they don't care about some specuvestors loosing their shirt.

The RBI may reduce rates now to prevent Indian Rupee from gaining too much. Exports are a major support for economy. But bail-out of specuvestors would be the last reason on their mind. Govt bail out is not uncommon in India, so I find their current stance a pleasant surprise. Especially when I contrast that with current US politicians.

I thought I'd share some of this lovely anonymous email I got a couple hours ago:

[Consider the entire thing one big [sic]]

Mr. "Randy H", or should I say Randolph. Now that I know who you are I'm gonna to tell you that you are a hippocrit. the only reason you don't wanna buy and call home owners disgusting names is cause your mad you can't buy their houses cheap. Your nothing but a hippocrit. That's right you made money buying a house and then selling it but now you wanna make more money buying so cheap and putting the owners out on the streets. I've been helping honest people buy their dream home in Mill Valley for almost 5 years and still never to come across such an asshole like you!!!!!!!! If you and your pathatic internet friends get your way only assholes like you all will own the beutiful houses in mill Valley. We hope that good men like Barak Obama or Hillary will put taxes on you to teach you all a lesson for wishing to hurt so many people. These people are my clients and what you write makes me mad and sick and I really hope the worst for you like you lose your job because of this.

I hope your happy. "Linda the Licensed Realtor"

Probably found me while searching for Obama stuff. Two messages I'd send:

* Barack, Intelligent bunch of supporters you have there. Bravo.

* "Linda". Might I suggest you learn to first spell "Barack Obama" before voting for him?

* “Linda”. Might I suggest you learn to first spell “Barack Obama” before voting for him?

Yeah. What if she votes for Osama instead?

Peter P Says:
Which button looks better?
http://www.buttonsonline.com/2008/paul.html

The more I read/hear/see what Ron Paul has to say, the more I like the idea of RP for prez... but why do over 50% of his mugshots make him look like Stanley Laurel?

SP

I don't think we are "hippocrits." What does that mean anyway? Hippo critics?

but why do over 50% of his mugshots make him look like Stanley Laurel?

He needs a better photographer. He needs one who used to do realtor mugshots.

Peter P.,

Realtor mugshots are always from the Realtor's peak looks year. Ron Paul needed the photographer about 35 years ago.

"One point for Mr. Obama: APR is not the same as EAR. You might want to get get someone on staff who actually knows something about markets, finance and economics before you go making a fool of yourself in the Financial Times."

Not sure I understand this comment, at least in the context of Obama's comments in the FT. His statement concerning APR is correct, relating to mortgages, as an apples to apples comparison for rates/fees being charged by the broker.