HaloScan.com - Comments

Chris writes:
Be a man and take you medicine, even if it kills you. Good advice.
Chris | 03.03.08 - 12:10 pm | #

Gort writes:
Don't walk...run!
Gort | 03.03.08 - 12:13 pm | #

Winston writes:
For some reason 50 Ways to leave your lover keeps running through my head after reading that.

Slip out the back, Jack
Get a new plan, Stan
No need to be coy, Roy
Just set yourself free.

But maybe that's just me.
Winston | 03.03.08 - 12:14 pm | #

Unsympathetic writes:
Paulson, of course, wants to be the one to write the definition of "afford."
Unsympathetic | 03.03.08 - 12:14 pm | #

Rob Dawg writes:
...not honoring his obligations.

Appeal to emotion, the mark of desperation.
Rob Dawg | Homepage | 03.03.08 - 12:14 pm | #

Bob_in_MA writes:
Oh, there's a threat. If you walk away you're a speculator! Egad!

Of course, when Paulson's friends on Wall St speculate, maybe at some municipalities expense, it's all a part of the efficient free market.
Bob_in_MA | 03.03.08 - 12:15 pm | #

Noble writes:
Good for you Paulson. A majority of tax-paying, glod fearing Americans would agree with you.
Noble | 03.03.08 - 12:16 pm | #

Bob Dobbs writes:
"For some reason 50 Ways to leave your lover keeps running through my head after reading that."

For me, it's "Walk Away, Renee:"

(Chorus):
Just walk away Renee,
You won't see me follow you back home
The empty sidewalks on my
block are not the same
You're not to blame
Bob Dobbs | Homepage | 03.03.08 - 12:16 pm | #

John Stark writes:
Hard to disagree with HP, but remember: What else can he say? Is he going to say, "Let's start a bucket brigade from the U.S. Treasury to the struggling banks, to save all my former Wall Street colleagues?"

Let's see what actually happens.

And if some reckless borrowers and lenders get "bailed out" in the process of saving the rest of us, that won't be too surprising and I won't have a problem with it. When the fire department arrives at the burning hotel, they save everybody--even the guy who started the fire by smoking in bed.
John Stark | 03.03.08 - 12:16 pm | #

NoVa writes:
Obviously, being underwater is not insignificant to homeowners in that position. But negative equity does not necessarily result in foreclosure.

No, but I am not used to eating Ramen and most of all, I don't think I should have to! By God, I am an American!

Most people buy homes as a long-term investment, as a place to raise a family and put down roots in a community.

And move every 5 years.

Homeowners who can afford their payments and don't have to move, can choose to stay in their house.

All 12 of you.

And let me emphasize, any homeowner who can afford his mortgage payment but chooses to walk away from an underwater property is simply a speculator – and one who is not honoring his obligations.

And you are un-Amerikan! It is your duty sir to suck it up and give your money to your social and financial betters! We know what is right! Behave damnit!
NoVa | 03.03.08 - 12:16 pm | #

Ministry of Truth writes:
People need to decide if they have an obligation to their families or the bank. Nothing illegal or immoral about leaving the bank with the asset.
Ministry of Truth | 03.03.08 - 12:17 pm | #

Janosik writes:
sounds great to me...I can't help but feel a little satisfaction to see the flippers in my area feel the squeeze.

Savers like me have been feeling the itch...I'd like to buy my first home right now, but I've just got this funny feeling that prices are still "adjusting"
Janosik | 03.03.08 - 12:17 pm | #

DannyHSDad writes:
Last night (Mar 2), ABC Evening News on TV had a blurb about You Walk Away. It was also covered at Good Morning America:

http://abcnews.go.com/GMA/Econom...=4369417& page=1

including their video.

I have a feeling people are more in tune with ABC news than Paulson...
DannyHSDad | Homepage | 03.03.08 - 12:19 pm | #

Chris writes:
Well Wall Street Execs walk away from their disasters all the time. Nobody tells them they shouldn't. Of course they get, like 40 million, for doing so. Makes a wee difference.
Chris | 03.03.08 - 12:20 pm | #

Anonymous writes:
when speculation is rampant who needs regulation?

regulation only needed when they should put on a good show
Anonymous | 03.03.08 - 12:20 pm | #

seminole83 writes:
I think that is actually a pretty good message, I'm surprised ...
seminole83 | 03.03.08 - 12:21 pm | #

AllenM writes:
Savers are unamerican!

You must have borrowed so much that you cannot save.

As one of the great Americans who is currently underwater, I want to say- Great Job Hank!

Nice to know that if I make a rational decision to walk away, I am a speculator!

Friggin stupidity by an elected official. Why not simply state- hey things got really screwed up, now we are going to offer everyone *who* really lives in their overpriced debt burg a screamin' deal on a very low interest loan that you can repay over the next 25 years?

At least that would be real.

Gee, is this a threat to the NCC's of the world:
"It is important that everyone who agreed to this protocol follows through on their commitment. I won't look kindly on industry free riders. My measure of success will be that a borrower who has made all the payments at the initial rate, but can't afford the reset and reaches out for help, avoids going into foreclosure."

Okay, I was dumb enough to put 20% down, now I want my free pony too, dammit.

Someday this war's gonna end...
AllenM | 03.03.08 - 12:22 pm | #

franz writes:
Here is my translation:

Please don't walk away as my friends need a new Aston (Benz... insert your model here) and they won't get a bonus if you walk away. So.. please don't walk away.

However, it doesn't matter. I think we are almost at the tipping point where people will assume that it is okay to walk away as they are just sticking it to the man and it is everyone for themselves.
franz | 03.03.08 - 12:22 pm | #

stealthwii writes:
Paulson said that? Really...?

Well he certainly writes better than he speaks...if he did write that.

I'll give him a bit of credit for that piece.
stealthwii | 03.03.08 - 12:22 pm | #

we are all screwed writes:
You silly little debtors you can't behave like big banks and investment firms that is immoral, you must first incorporate then you can walk away from obligations.

Paulsen please stop. If you don't want people to walk then change the laws so it isn't the correct economic decision.

Banks shouldn't have made the loans if they were so worried about people walking. Sure perhaps it isn't morally good for people to just walk away, but when that is the best economic option available based on the current rules of the game, don't act surprised when people make the decision.
we are all screwed | 03.03.08 - 12:23 pm | #

BSR writes:
"Today, 93 percent of American homeowners – 51 million households - pay their mortgages on time. Many are on tight budgets, sacrificing other things in order to make that payment. Only 2 percent are in foreclosure."

I am greatly interested in the remaining 5 percent; i.e. 2,500,000 households. Are they delinquent? Can someone help me?
BSR | 03.03.08 - 12:25 pm | #

Anonymous writes:
If people are walking because they cant refi at better rates, try this:

The level of the Fed's benchmark interest rates is lower than standard monetary policy rules call for and therefore must be transitory and reversed in due course or inflation expectations may become unmoored, said Philadelphia Fed Bank President Charles Plosser on Monday. Plosser said that the turmoil in financial markets is a good reason why policy is lower than implied by policy rules. "But such devisations should be temporary and limited and promptly reversed when conditions return to normal," Plosser said. Plosser is a voting member of the Fed's policy making committee this year.
Anonymous | 03.03.08 - 12:27 pm | #

Observer of Power writes:
Hum, the clowns that caused this mess are getting bailed out by TAFs (Fed loaning money to small banks based on bogus collateral), the government has tried to put the SIVs into a super SIV etc etc.

As usual the clowns including the FED by the way that casued this mess and also go rich from it are walking around with their hands out and they are or will get buckets of money from the government.

Privatize profits; Socialize losses only works if you are the powerful and well connected.
Observer of Power | 03.03.08 - 12:28 pm | #

w writes:
It would sure be fun to watch the reaction to a 25bp raise in the rate. "It's the end of the world..."

You go Plosser!
w | 03.03.08 - 12:29 pm | #

Bob Dobbs writes:
"Let's be precise: being underwater does not affect your ability to pay your mortgage, nor create a government responsibility for assistance."

It does, however, affect your ability to refi that mortgage into something you can afford after it resets.

Paulson is still putting all the blame on the drunk passed on out the street, not the crooked bartender who slipped that drunk a mickey , stole his wallet, and tossed him out on the street. No, no, it's all about personal responsibility. The system itself is fine, just fine, run by fine people. It's those nasty walkers who're all to blame.

I swear, did this guy get a scruplectomy or something?
Bob Dobbs | Homepage | 03.03.08 - 12:29 pm | #

NoVa writes:
Please don't forget my fellow Americans that no matter how tight things are make sure you go out and spend that $$$ we are sending you.

So please, make the payments but spend the check! It is all good!
NoVa | 03.03.08 - 12:29 pm | #

iceman writes:
This speech was known internally at the Treasury as "Operation Bended Knees"
iceman | 03.03.08 - 12:30 pm | #

Anonymous writes:
Another month goes by...

Ford Says February U.S. Sales Fell 7%, Cuts Output
http://www.bloomberg.com/apps/ne...wV4c& refer=home
Anonymous | 03.03.08 - 12:30 pm | #

Kevin writes:
after 9/11 it was our patriotic duty to spend money, now being in too much debt is unamerican
Kevin | 03.03.08 - 12:31 pm | #

w writes:
Edited from the first draft: "Those people walking away are fiancial terrorists. And you know what we do to terrorists."
w | 03.03.08 - 12:31 pm | #

x-man writes:
Whether or not to walk away isn't a choice after the ARM resets.

You walk. You have to. Why swim against the current and throw away a few months payment when the final outcome is assured?

Couching this as a 'choice' is flawed.
x-man | 03.03.08 - 12:31 pm | #

Zero writes:
It seems disingenuous for Treasury Secretary Paulson to assert that homeowners have a moral obligation to stay in their homes even if it's not best for them financially. The last time someone from Goldman and the other investment banks did something unprofitable for moral reasons was probably about 1952, and the guy was fired that same day.
Zero | 03.03.08 - 12:32 pm | #

Markel writes:
You're either with the banks, or with the terrists.

Someone explain how these two sentences fit together?

I oppose any bailout. I believe our efforts are best focused on helping homeowners who want to stay in their homes.

Or does he mean to say, "I oppose any bailout not disguised as helping homeowners who want to stay in their homes?"
Markel | 03.03.08 - 12:33 pm | #

BSR writes:
"The last time someone from Goldman and the other investment banks did something unprofitable for moral reasons was probably about 1952, and the guy was fired that same day."

Can you please elaborate?
BSR | 03.03.08 - 12:34 pm | #

Viewing with alarm writes:
The man does not get it. These people are up the creek and pouring good money after bad is not an option, particularly if your kids are hungry. My wife works at a school in a middle class neighborhood and the school breakfast program has boomed the last few months as well as the free and reduced hot lunch. Kids tell her that there are no groceries. Paulson does not understand what is happening.
Viewing with alarm | Homepage | 03.03.08 - 12:36 pm | #

las writes:
Paulson: "But negative equity does not necessarily result in foreclosure."

And smoking does not necessarily result in cancer or lung disease.
las | 03.03.08 - 12:38 pm | #

4runner writes:
For the 93% who are actually paying their mortgages-- you get a gold star!!!
4runner | 03.03.08 - 12:40 pm | #

threetorches writes:
Jeez, Hank, relax. It's nothing personal--just business.

A deal is a deal. You want money, or the house. I don't have money, so here's the house.

Get over it.
threetorches | 03.03.08 - 12:40 pm | #

crispy&cole writes:
Hope now - failure

Super SIv - failure

Begging by Treasury sec - failure
crispy&cole | Homepage | 03.03.08 - 12:40 pm | #

Shnaps writes:
Nice message, Hank.

BSR, pat yerself on the back.
Shnaps | Homepage | 03.03.08 - 12:40 pm | #

charlie writes:
Paulson and the other Bush cronies will stand against bank bailouts until the DOW drops below 11,000 on bank bankruptcy rumors. Then all bets are off.
charlie | 03.03.08 - 12:41 pm | #

crispy&cole writes:
I didnt see him say anything about Cerberus backing away from United Rentals or any of their other backouts???
crispy&cole | Homepage | 03.03.08 - 12:42 pm | #

ARW writes:
"Let me be clear: I oppose any bailout. I believe our efforts are best focused on helping homeowners who want to stay in their homes."

Any government solution is, by definition, a 'bailout'.
ARW | Homepage | 03.03.08 - 12:45 pm | #

Bob Dobbs writes:
"My wife works at a school in a middle class neighborhood and the school breakfast program has boomed the last few months as well as the free and reduced hot lunch. Kids tell her that there are no groceries. Paulson does not understand what is happening."

Everybody _he_ knows is fine. And if he did know, and did understand, he'd have to quit, because he could no longer do his job: front for the bankers.
Bob Dobbs | Homepage | 03.03.08 - 12:45 pm | #

w writes:
This message was just a sneaky way of letting the Chinese know that we will honor our financial obligations to them, come hell or high water.
w | 03.03.08 - 12:47 pm | #

mp writes:
OT

Conjure and I expected the PMI to print lower than consensus today, but it didn't happen. Oh well, back to the computers.
mp | 03.03.08 - 12:48 pm | #

Kirk Spencer writes:
A simplistic view goes:

==begin=
I can't sell the house. I can walk out now, or I can wait six months and get tossed out. Either way, I get a black mark on my credit.

Which will give me a better place to live 6 months down the road - getting a place now without the black mark, or hunting for one with the black mark?
==end==

Set aside whether this person shoodanode that they couldn't afford it after the reset. Set aside whether the bank coodanode the customer couldn't afford it after the reset. The reality for the customer is what they're facing - losing the home and getting a black mark. Their interest - of those 'walking away' - is in minimizing their pain and maximizing gain.
Kirk Spencer | 03.03.08 - 12:48 pm | #

Marcel writes:
Yeah, it's quite painful for the finest of GS to find out that "the people" are pulling some strings too.
Marcel | 03.03.08 - 12:49 pm | #

crispy&cole writes:
House parties are better when you walk away:

http://www.bakersfield.com/hourl...ory/ 378988.html
crispy&cole | Homepage | 03.03.08 - 12:50 pm | #

ac writes:

I'd love to see the polling data that had this kind of effect on Paulson.

ac | 03.03.08 - 12:50 pm | #

Cod Peace writes:
franz writes:
However, it doesn't matter. I think we are almost at the tipping point where people will assume that it is okay to walk away as they are just sticking it to the man and it is everyone for themselves.

Well, isn't that the message that's been drilled into us for 28 years? (yes, I peg the beginning of our current woes on the election of Reagan and the inauguration of the Greed is Good mantra). We can't depend on community, or Social Security, or employers, or unions, or welfare, or our own government (e.g. NOLA) to help us out when the going gets tough. Instead we get the mantra of "personal responsibility" to keep us warm at night.

Why are the Powers That Be now all of a sudden upset that Americans are now showing no loyalty to or consideration of the institutions and systems that have been f*cking them black and blue for decades?
Cod Peace | Homepage | 03.03.08 - 12:51 pm | #

Windowdog writes:
It would carry more weight if he'd given the same speech to the airlines that dumped their pension funds into the arms of an underfunded government agency.

If you can accept the hit to your credit score and feel it would be a better action then I don't see any shame in it.

Of course as someone who blew up their first credit card account in college, let me tell you that those seven years last for a f-ing eternity when you're trying to move on with your life.
Windowdog | 03.03.08 - 12:53 pm | #

Jack Staub writes:
Well put. Paulson's finally taking a clear and competent position. Hopefully he sticks to it.
Jack Staub | 03.03.08 - 12:54 pm | #

Quincy k writes:
"any homeowner who can afford his mrtgage payment but chooses to walk away from an underwater property is simply a speculator-and one who is not honorng his obligations."

In my experience, most Americans have little, if any, honor.

If Poulson is hoping that people are going to be honorable, accountable and not play the victim while blaming others for their misfortunes,
he seriously needs to wake up from the dream that he is having.
Quincy k | 03.03.08 - 12:56 pm | #

crispy&cole writes:
Well, well, well, the tables have finally turned.

Since the 80's WS and corporate America has been sticking to the middle class, now the shoe is on the other foot, doesnt feel too good Mr. Paulson does it?
crispy&cole | Homepage | 03.03.08 - 12:58 pm | #

Fair Economist writes:
I think all the discussion about how evil walking away is supposed to be is backfiring. Certainly YouWalkAway.com has gotten an incredible amount of free publicity, which will give a walkaway route to a lot of people who didn't know how to do it. And having this little sermon delivered by a past IB head just delegitimizes the position that borrowers should meet obligations greatly to their detriment. In any case, discussing walking away just shows underwater borrowers how many people are OK with them walking away in these circumstances and shows the social stigma is more manageable than many thought.
Fair Economist | 03.03.08 - 1:00 pm | #

John Stark writes:
When you take out a mortgage to buy a home, the lender gets something called a "deed of trust." The key word being "deed." So isn't the lender, in effect, agreeing to "buy" the house for the amount of the loan? The home "owner" then attempts to buy the house from the bank, month by month.

If the buyer fails in this endeavor, the lender gets what he agreed to accept in lieu of payment: the house. Why do people see the buyer as cheating someone here? (not, of course, counting the sham transactions with sham appraisals, where the buyer walks away the day of closing...)
John Stark | 03.03.08 - 1:00 pm | #

Puzzled writes:
Did Paulson and Goldman-Sachs have an obligation not to produce and spread financial toxic waste? Not only did they produce and spread toxins, he profited handsomely.
2003 $21 million
2004 $29 million
2005 $38 million.
The least he should do is keep his mouth shut.
Puzzled | 03.03.08 - 1:02 pm | #

blood boiling writes:
Oh, so now it is bad to be a speculator. By all means, let's make sure "speculation" is stopped, in all forms.
blood boiling | 03.03.08 - 1:02 pm | #

NC Jim writes:
"Walkaways with resources"

Where have I heard this line before?

I remember (raises hand - call on me)

"Welfare Queens in Cadillacs"

Place the "Big Lie" in the media and then use it to blame the victim and attack opposition policies.

Now we know the purpose of the WSJ article Tanta was up-in-arms about yesterday. Why the meme was being planted.

These people are very good at this (think Swiftboaters for truth or WMD).

Jim
NC Jim | 03.03.08 - 1:03 pm | #

Average Joe writes:
I think we need to define speculation in all activities.

It seems to me that everyone who buys a stock (unless it's an IPO) is speculating.

All you are doing is giving your money to someone selling that share of stock. Your money isn't being "invested" so to speak. It's certainly not as if you are putting your money "into" that company.

There sure are a great many jobs and a huge piece of the American experience, including the private sector investment device of the 401K, that depends upon speculators disquised as "investors".
Average Joe | 03.03.08 - 1:04 pm | #

homedad43 writes:
O/T but James Stewart of Smartmoney/"Den of Thieves"/etc was on CNBC this AM and on the warpath about IBs not honoring requests by investors to cash out on investments...altho I'm not certain what vehicles as was building legos with a 6 year-old.

Per him, he's not "singling out" ML but using that as an example of the abysmal behaviour of the Wall Street community.

And still HP wants everyone to honor his/her commitment to the financial sector.

Uh huh.
homedad43 | 03.03.08 - 1:05 pm | #

sdtfs writes:
"For some reason 50 Ways to leave your lover keeps running through my head after reading that."

For me, it's "Walk Away, Renee:"

Franki Valli, Walk Like a Man:

(I'm gonna) walk like a man
Fast as I can
Walk like a man from you
I'll tell the world to forget about it girl
And walk like a man from you
sdtfs | 03.03.08 - 1:06 pm | #

meltdown2008 writes:
I hate like hell to agree with the Bush (moron) Crowd but I do.

If you were tricked or defrauded into a bad home event-the legal system lets you sue.

If you had bad luck, bad health-there is bankruptcy.

If you chased the housing bubble and it popped--just too bad and the government should not bail you out. Many millions of people struggle to pay their bills and not get in over their head. If you choose a house you can not afford, why should I help you? I drive past thousands of modestly sized houses in good areas but THOSE aren't the houses people were chasing and over extending themselves to buy. If you wanted BIGGER and BETTER--well, hope you enjoyed it while it lasted.
meltdown2008 | 03.03.08 - 1:08 pm | #

donna writes:
So after all the years of "buy the most house you can afford" and then "buy even more house than you can afford" now it's "oh well, you got stuck in too much house, take your losses".

Yet the banks are supposed to get bailed out, while their CEOs and execs keep their big houses, their yachts and fancy cars, etc, etc...

And those of us who never bought into the "more house than you can afford" are supposed to get what out of this, exactly, for bailing out the banks?
donna | Homepage | 03.03.08 - 1:09 pm | #

Mostly Lurking writes:
Paulson:

Born in Palm Beach, Florida, to Marianna Gallaeur and Henry Merritt Paulson, a wholesale jeweler, he was raised in Barrington Hills, Illinois. Paulson attained the rank of Eagle Scout in the Boy Scouts of America.[4][5] Paulson received his Bachelor of Arts in English literature from Dartmouth College in 1968

*

Barrington Hills (the hills is important as it separates it from the paltry upperclass area of Barrington) is where you see Ferrari's and Bentley's just cruising down the street.

So I seriously doubt he knew what it was like to buy the slightly off-colored meat at the 'other' grocery store.

**

Btw, is it just me or is his background more of a power broker than a stock broker. I don't know much about him to be honest-- but he doesn't look like a finance wonk. I know he has a Harvard MBA, but so do 'others' in the administration...
Mostly Lurking | 03.03.08 - 1:09 pm | #

homedad43 writes:
So my question is, is it too late to continue shorting the financials or can these manage to go even lower?

After considering the desperation inherent in Paulson's plea and Stewart's story, I think that I just answered my own question.

And now back to the legos.
homedad43 | 03.03.08 - 1:09 pm | #

jag writes:
There is nothing "wrong" with walking away on a mortgage. Its simply a financial choice with attendent financial implications.

If this was solely a "moral" issue, mortgages wouldn't be legally enforcible contracts would they? They'd be loans from "moral" institutions to "moral" members who's belief system obligates them to pay such loans off. You have a moral obligation to pay off a loan from your family or a friend.

The moral part of a mortgage ends when the lender accepts hard collatoral in return. They aren't lending against your "morality", they're lending against a tangible asset.
jag | 03.03.08 - 1:10 pm | #

Quincy k writes:
BSR-

The other 2.5 million(five percent)are delinquent, but soon to be, in foreclosure.

And if you look at the ARM graph, most of the resets have not even entered the supply. In most states it takes a minimum of nine months before a foreclosure goes back to the bank. So, you can deductively reason that homes which started the process back in June of 07 have not even entered the marketplace.

Theoretically, Jan-May 07 pool is the only product that is curently for-sale bank REO.

Jan-May 2007.

This sh_t has barely even started.
Quincy k | 03.03.08 - 1:10 pm | #

sk writes:
My graphics art and aesthetic sensibilities aren't very good otherwise I'd design and print up a few T-shirts with the slogan:

"PROUD TO BE A SPECULATOR
F*ck U Paulson"

Any takers ?

-K
sk | 03.03.08 - 1:10 pm | #

Dirk writes:
Sort of like saying, 93% of Americans don't have cancer and only 2% are in the hospice...everything is fine.
Dirk | Homepage | 03.03.08 - 1:14 pm | #

ac writes:

Oh, so now it is bad to be a speculator. By all means, let's make sure "speculation" is stopped, in all forms.

It's bad when speculation gets out of control and everybody decides they're going to get rich by taking wealth from other people as opposed to creating it themselves.

That said, I think responsible monetary policy would have taken care of the speculation problem. I don't think it's necessary or desirable to go after speculators unless the situation gets completely out of control.

And there's no excuse IMO for ever letting it get that out of control.

ac | 03.03.08 - 1:17 pm | #

michael schumacher writes:
I'll second tha above:

F&*^ You Paulsen.....

They had no care when this started to unwind and now all the banks that are holding REO's are crying for help.

How much did you make over the last few years in bonus' that were tied directly to pushing this crap out the door???

Yea Effe you Paulsen.......Deal with it like we have to....
michael schumacher | 03.03.08 - 1:17 pm | #

homedad43 writes:
Damn.

I thought that it was supposed to be a good thing to be an Eagle Scout.

I wonder if the BSA can strip him of his rank? (picture drums rolling, and a downcast figure shuffling towards a podium on scarred linoleum in a church basement. He runs a silently accusing gauntlet of Cub Scouts, standing in their version of attention as they fidget with that verklempt neckerchief that their mother made them wear. He gets to the front and a bespectacled scout leader finally gets silence as he threatens the scouts with loss of their post meeting snacks and then reads the charges. After stripping off the Eagle badge (and the pocket as well), everyone breaks out in a cheer and rushes for the snack table).
homedad43 | 03.03.08 - 1:19 pm | #

blood boiling writes:
This is making madder than anything so far about this whole debacle. How dare Paulson pass judgement like that, how dare anyone? F*ck all of you who are passing moral judgment.
blood boiling | 03.03.08 - 1:19 pm | #

Average Joe writes:
"Sort of like saying, 93% of Americans don't have cancer and only 2% are in the hospice...everything is fine."

Or, saying that a gunshot wound to the head only damages 2% of the body. Or, if you are an optimist: after a gunshot to the head, 98% the person's body was unhit and undamaged.
Average Joe | 03.03.08 - 1:19 pm | #

homedad43 writes:
Average Joe:

LOL.
homedad43 | 03.03.08 - 1:20 pm | #

Windowdog writes:
"Fair Economist writes:
I think all the discussion about how evil walking away is supposed to be is backfiring. Certainly YouWalkAway.com has gotten an incredible amount of free publicity,"

I just noticed that www.youwalkaway.com offers a money back guarantee for their service. For reason that amuses the hell out of me.
Windowdog | 03.03.08 - 1:21 pm | #

Ed writes:
In business, if you invest money in something and the investment goes bad, the money you have into it is a sunk cost. You don't put more money into it and loose more, you walk away from it and don't look back. If you bought a house and the value of it has fallen so far that you'll never recover that investment it is just like a sunk cost in business.

There is also the concept of an efficient breach regarding contracts. If you are in a deal gone bad and it costs you less to breach the contract than to stay with it then you breach the contract and pay those costs.

So, for the owner of a house who is deeply underwater to walk away from it, even if that person can still pay the mortgage, is perfectly rational and well within the standard operating "morals" of business. In fact, staying makes no sense if you are better off in the long run by leaving.
Ed | 03.03.08 - 1:22 pm | #

omg writes:
such restraint MS...you get scolded?
omg | 03.03.08 - 1:24 pm | #

Cobradriver writes:
Theoretically, Jan-May 07 pool is the only product that is curently for-sale bank REO.

Jan-May 2007.

This sh_t has barely even started.
Quincy k | 03.03.08 - 1:10 pm | #

Quincy,
This all depends on where you are at. The local county courthouse here in SW Florida is backed up at least 6 months,if not longer. I can tell you that the number of homes for sale as REO is a very small percentage. The banks are just sitting on them.

I agree 110% that this shit has barely started.

Chris
Cobradriver | 03.03.08 - 1:25 pm | #

wheat detective writes:
And who is speculating with TAF and treasuries and allowing toxic waste to be used to pump up the yield curve; who is manipulating the monetary system and who is abusing power? Who appointed a 35 year old no nothing kid to be on The Fed Board and who started a speculative war, and who is a physcopath in denial in regard to the economy?? Its wrong to be a small person that takes a bet,but what of them??

Which of these government speculators has done more to destroy America?

Also see: According to the Wall Street Journal, the White House is proposing a six billion dollar secretive system that would monitor Internet traffic and collect personal data.
The proposal from President George Bush would be designed to protect US communications networks from attacks by terrorists, spies and hackers but is stirring controversy and could prove a hard sell to Congress and the American public amid divisiveness about other Government-run surveillance programs.
wheat detective | 03.03.08 - 1:25 pm | #

RayOnTheFarm writes:
Today, 93 percent of American homeowners – 51 million households - pay their mortgages on time.

Is that a mistype ? I would have thought it should read...

Today, 93 percent of American homeowners with mortgages – 51 million households - pay their mortgages on time.

I just can't believe that only 7% are fully vested with no mortgage debt.
RayOnTheFarm | 03.03.08 - 1:25 pm | #

Micberson writes:
What the HELL is the lowing of interest rates by the Fed if not a bailout of financial institions on a grand scale. This is costing savers trillions in lost interest. So, no bail out huh!!
Micberson | Homepage | 03.03.08 - 1:26 pm | #

Peter T writes:
I don't see Paulson remarks as negative as most here. When he talks to homeowners, his advice should be disregarded, but when he says: "We know that speculation increased in recent years; a resulting increase in foreclosures is to be expected and does not warrant any relief." then he speaks of publich policy, that activism against foreclosures in general is unwarrented. I agree with that.
Peter T | 03.03.08 - 1:26 pm | #

Mook writes:
Paulson : Wall Street :: Yun : Realtors.

Says everything that needs to be said, without needing so much as a verb.
Mook | 03.03.08 - 1:27 pm | #

Anonymous writes:
Bullshit! The taxpayer are going to get stuck with this stinking mess before this is over count on it.
Anonymous | 03.03.08 - 1:27 pm | #

wheat detective writes:
Paulson as Treasury Sec and then this rich boy (35) just appointed to The Fed last year!!! Did you people read this??

Jane Lauder is joining the migration of the well-heeled from their traditional breeding ground east of Central Park to the treeless precincts of Lower Manhattan.  She plans to occupy a newly purchased $12.63 million penthouse triplex with a terrace in a recently converted building in NoLIta.  Ms. Lauder, 31, the daughter of Ronald Lauder and the granddaughter of the cosmetics pioneer Estée Lauder, is vice president for marketing for the Estée Lauder brands American Beauty and Flirt! She is married to Kevin M. Warsh, 35, who works in the White House as a special assistant to the president for economic policy. Mr. Warsh has his primary residence in Washington, according to the White House press office.  The couple were married in April 2002 at Mr. Lauder's estate in Palm Beach, Fla. Two years earlier, Ms. Lauder gave an interview to Harper's Bazaar, in which she showed off her apartment on Park Avenue on the Upper East Side.  That article highlighted Ms. Lauder's collections of snow globes and modern art and described an apartment full of works by Ellsworth Kelly, Jasper Johns, Warhol, Matisse, Lichtenstein and de Kooning and furniture designed by Frank Lloyd Wright and Alvar Aalto.

Re:
Fed Nominees Pressed on Political Ties
Questions Raised Over Their Service in Administration, but Confirmation Is Likely
By Nell Henderson
Washington Post Staff Writer Wednesday, February 15, 2006; Page D03

http://www.washingtonpost.com/ wp...6021401909.html

President Bush's decision to elevate three former administration economic advisers to the Federal Reserve Board prompted questions yesterday about whether they would be able to steer the economy independently of the White House they have served.
"This is inevitably going to create the impression that the board is more political than in the past," Schlesinger said. "This creates more of a burden on Bernanke and company to prove they're not taking their cues from [White House Deputy Chief of Staff] Karl Rove."
Warsh, 35, who has served on Bush's National Economic Council for the past four years, is a special assistant to the president for economic policy.
wheat detective | 03.03.08 - 1:28 pm | #

Sippn writes:
Paulson - a little naive - and those 7% are calling you on it - speaking of obligations, wasn't the PHeD supposed to watch the place?

OH TECHNICALLY NOT.
Sippn | 03.03.08 - 1:28 pm | #

Maven writes:
If mortgage brokers are allowed to walk away from their obligations by securitizing loans, why can't Mr. 6Pack?
Maven | 03.03.08 - 1:29 pm | #

david_in_ct writes:
Anyone watching the thornburg disaster unfold? It is an extraordinary demonstration of the current lockup in the credit markets. Their loan portfolio is as good as it gets and hasn't even slightly deteriorated in the last few months and the stock is just getting hammered. It would be surprising if some bank didnt make a bid for the company at this price. The valuations of the portfolio must be silly.
They hold my measly mortgage so I am going to put in a call and offer to buy it out at 80 cents on the dollar. Probably more than it is trading for on the street even though my CLTV is about 15%.
I've been doing this financial stuff for about 25 years now and there is nothing that compares to the pricing craziness that is currently printing in all sorts of markets.
Wow.
david_in_ct | 03.03.08 - 1:30 pm | #

crispy&cole writes:
Cramer said buy TMA? LMAO. Who will go bust first TMA or FMT??

Thornburg Mortgage plunges on bankruptcy worry

http://biz.yahoo.com/rb/080303/t...nburg.html? .v=1
crispy&cole | Homepage | 03.03.08 - 1:33 pm | #

AllenM writes:
Hey david, why does CFC even have a bid at this point?

Why do the homebuilders still have equity when it is going to be years before we need to build houses?

Why is the dollar having a big crash now, when the writing has been on the wall for years?

Call them and negotiate a prepay discount, they will probably send a messenger to pick up your check so they can get some liquidity.

Geez, now you begin to see clearly after reading this site for how long?

Someday this war's gonna end...
AllenM | 03.03.08 - 1:34 pm | #

CalculatedRisk writes:
RayOnTheFarm, you are correct. Paulson was referring to households with mortgages. Something like 31% of household have no mortgage.

Best Wishes.
CalculatedRisk | Homepage | 03.03.08 - 1:34 pm | #

Bob Dobbs writes:
"If you chased the housing bubble and it popped--just too bad and the government should not bail you out."

I agree. But Paulson is painting a sort of black-and-white puppet show of angels who stay in their devalued homes no matter what, and devils, who could afford to pay but choose not to. When:

1) As many have stated, a mortgage is a business arrangement with a legal means of termination: the buyer can simply choose to stop paying and return the house. Nothing that doesn't happen in the business world.

2) There's no evidence for widespread choose-not-to-pay walkaways. People could easily have come to no longer afford their payments, through personal setbacks or an inability to pay the mortgage resets they never thought they'd have to contend with.

As somebody said, defaulting homeowners are being Swift-Boated as a class to protect the image of bankers.
Bob Dobbs | Homepage | 03.03.08 - 1:34 pm | #

homedad43 writes:
Question - At what point do the mortgage companies consider a buyout offer on a mortgage? I don't foresee mine having that problem - First Horizon - but at what point do they start getting nervous?

And how do you get past the teledrones to speak with someone in sufficient authority?
homedad43 | 03.03.08 - 1:36 pm | #

Shnapstafarian writes:
Since when is MS putting %#¥£* in his F-bombs?

How polite. Thanks, Mike.

I enjoy bustin' on ole Hank as much as the next CR fanatic, but I don't understand what part of that particular statement is bringing out all the 'Hank venom' today.
Shnapstafarian | 03.03.08 - 1:36 pm | #

crispy&cole writes:
"Their loan portfolio is as good as it gets"

I disagree, they hold a lot of toxic Alt-A mortages, that is as bad as it gets.
crispy&cole | Homepage | 03.03.08 - 1:36 pm | #

Average Joe writes:
There is some vindication for all of us here.

LET US RECALL.

Only six short months ago, as the DOW hit 14,000, Bernanke was telling us that the spillover would be minimal if at all, guys like Mike Norman on Fox were still laughing at claims by guys like Peter Schiff and Noriel Robuini of pending double-digit house price drops, Ben Stein was telling us how rediculous we were to be worried about such a "tiny segmant" of the market that was subprime, NAR was predicting and re-predicting the ever elusive "bottom" in house price drops.....etc etc etc.

NOW we have Paulson feeling the "need to plead" to Americans to not walkaway from their own homes that presumably they can afford!
Average Joe | 03.03.08 - 1:37 pm | #

Anonymous writes:
Re: defaulting homeowners are being Swift-Boated as a class to protect the image of bankers

Are you saying homeowners will be in subordinate positions?
Anonymous | 03.03.08 - 1:38 pm | #

homedad43 writes:
I have to go volunteer in a kindergarten class - no offense, folks, but it sure beats working with lawyers - and my question is whether I should talk to the teacher about inserting some appropriate talk to the kiddies about honoring their contracts. And the special word for the day will be "hypocrisy".
homedad43 | 03.03.08 - 1:40 pm | #

Anonymous writes:
Paulson has united this board into one of the most focused topics ever, do you think that America will wake up and react to these retards and start pushing for leadership from IMF or NATO or maybe London. Where will America get help from to save us from the likes of Bush, Paulson and The Fed?? This is like a civil war ready to start...
Anonymous | 03.03.08 - 1:42 pm | #

lawyerliz writes:
You don't get past the teledrones, alas.

Excuse me, but isn't 2% in foreclosure extraordinarily high. As well as 5% late?

I would imagine that people who took out mtges, say 4 or 5 years ago and did not heloc themselves into oblivian probably have close to the normal default rate of .5 to 1%. I imagine those mtges are also smaller in size. I would guess that means that the more recent vintages have a far higher foreclosure and default rate than 2%. And they are probably concentrated in newer subdivisions.

Anybody have any figures?
lawyerliz | 03.03.08 - 1:42 pm | #

AllenM writes:
I predict this will end when I can offer $50 in gold to get rid of a 75K heloc and have the bank take it fast.

As for the venom for Hank, how about all of the ridiculous bs the gov has allowed to persist in the markets, oh, yeah, the markets this guy made millions from during the gogo years?

I thought he was an absolute fool to take the SecTreas job, and this just about proves it.

Why did we see this coming here? Because we don't have huge investments that we are trying to sell the public knowing they are destined to fail. While the regulators were politically neutered.

Someday this war's gonna end...
AllenM | 03.03.08 - 1:42 pm | #

homedad43 writes:
O/T to RayontheFarm before I go.

Thanks for the link the other night to the FDIC Institution Directory.

It has been highly useful.
homedad43 | 03.03.08 - 1:48 pm | #

probert writes:
david,

Why don't you give us a specific examples of what is going on out there, and the scale? From recent rumblings it seems to be ALT-A... what about Jumbo? Can you really buy back your own mortgage?
probert | 03.03.08 - 1:48 pm | #

MattJ writes:
"This is making madder than anything so far about this whole debacle. How dare Paulson pass judgement like that, how dare anyone? F*ck all of you who are passing moral judgment."

I'll tell you how; many of us actually waited to buy a house until we had a 20% down payment, took out a 30 year fixed mortgage when rates were at historic lows, resisted the urge to increase our mortgage debt when the paper value of our homes went up, and manage to have savings rather than debt. Now, we are seeing our savings get crushed, and expect that we are going to be asked to bailout those who made bad choices.
MattJ | 03.03.08 - 1:48 pm | #

Bob Dobbs writes:
"I predict this will end when I can offer $50 in gold to get rid of a 75K heloc and have the bank take it fast."

How much are you going to pay your bodyguards? That's a Wild-West / Weimar scenario if ever I heard one.
Bob Dobbs | Homepage | 03.03.08 - 1:49 pm | #

Barley writes:
People are calling it financial Ebola

http://www.bloomberg.com/apps/ne...yuaA& refer=home
Barley | 03.03.08 - 1:49 pm | #

Geoff writes:
Dirk - decent analogy, but better if you change it to avian flu or something else that is contagious.
Geoff | 03.03.08 - 1:49 pm | #

ac writes:

Since when is MS putting %#¥£* in his F-bombs?

Personally I've changed all my f-bombs from

#@$!

to

#@€!

ac | 03.03.08 - 1:49 pm | #

michael schumacher writes:
It IS a monday morning folks....

can't be too vile too early....

But this administration's trot out of Paulson this morning ( and his "message") sort of crystallized it for me.

I see I am not alone.

Ciao
MS
michael schumacher | 03.03.08 - 1:51 pm | #

Anonymous writes:
Bush is Portillo:

Mr. López Portillo came to office amid hopes that he would steer Mexico back to prosperity and tranquility after the grave economic and political miscues by his predecessor and mentor, Luís Echeverría Alvarez.

At first, a combination of his engaging personality and the discovery of vast new oil deposits seemed to augur success. But soon his government overspent its oil revenues and overborrowed to cover deficits. Defaulting on its debt, Mexico set off a worldwide debt crisis.

By the time he left office, Mr. López Portillo was considered one of the most incompetent leaders of Mexico's modern era and his government among the most corrupt.

Still, this dark era forced the PRI, the party that ruled Mexico throughout most of the 20th century, finally to undertake painful reforms to modernize the economy and the political system.
Anonymous | 03.03.08 - 1:52 pm | #

michael schumacher writes:
very sly AC !!!

Ciao
MS
michael schumacher | 03.03.08 - 1:52 pm | #

Bob Dobbs writes:
"Now, we are seeing our savings get crushed, and expect that we are going to be asked to bailout those who made bad choices."

From my point of view, it's really about bailing out the people who _offered_ the bad choices, and the people who let them do it. As I've said before, banks wouldn't have _allowed_ this business even 20 years ago. That's basically the message that Tanta broadcasts on this board over and over.
Bob Dobbs | Homepage | 03.03.08 - 1:52 pm | #

AllenM writes:
Hey bob, who knows what you have in your pocket. Remember, that is just one coin. Further, safe deposit boxes are not going to vaporize due to a little hyperinflation.

After all, everything still sorta worked in Argentina and Brazil while they did the money printing trick.

Geez, a couple of gold coins does not make you rich. OTOH, a ton does. People lined up in Argentina to sell their gold and jewelry for $dollars to just pay the bills, and you think I would need bodyguards?

I am in the couple category. Maybe I should just start growing tobacco in the backyard instead. Addicts gotta have it. Corn and squash and chickens.

Someday this war's gonna end...
AllenM | 03.03.08 - 1:53 pm | #

Anonymous writes:
I say the SOB has figured out that the best way to engineer a bailout of his buddies is to declare: "Let me be clear: I oppose any bailout."
Anonymous | 03.03.08 - 1:53 pm | #

wally writes:
iceman writes:
This speech was known internally at the Treasury as "Operation Bended Knees"

Very nice!
wally | 03.03.08 - 1:54 pm | #

Anonymous writes:
Re: Dirk - decent analogy, but better if you change it to avian flu or something else that is contagious

I have always thought of this as Colony Collapse Disorder:

Humans have been responsible for the extinction of many different species; the next one on the list could be the bee. According to the Florida Department of Agriculture, "during the months of October, November and December of 2006, an alarming number of honey bee colonies began to die along the east coast of the United States."

The numbers of bees dying are not small either, as Cosmos Magazine stated.

"Across 24 U.S. states affected by the mysterious phenomenon, losses have ranged up to 90 percent."
Anonymous | 03.03.08 - 1:55 pm | #

Bob Dobbs writes:
"Hey bob, who knows what you have in your pocket. Remember, that is just one coin. Further, safe deposit boxes are not going to vaporize due to a little hyperinflation."

I just mean that I would expect society to be a little squirrely in general if things got that strange. They might not know or care what you've got in your pocket -- they just might want your shoes, and the rest is gravy.
Bob Dobbs | Homepage | 03.03.08 - 1:56 pm | #

Dirk writes:
Also (just to be mean and cruel, but also true) it is more likely that he said:

"er umm aan and And l le le let m m m me emphasize, er a a any homeowner who umm can af af afford his umm umm m m mortgage p p payment er but chooses to umm w w walk away fr fr from an un un underwater pr pr property is er umm simply a sp spec speculator – umm and one who is n n not honoring his ob ob obligations."
Dirk | Homepage | 03.03.08 - 1:58 pm | #

AllenM writes:
Bob, I have watched pawn shop owners walk into the coin dealer I frequent with a 100K worth of gold and no bodyguards.

100k in today's dollars, whatever they are. I watched the first shipment of gold buffalos being unboxed and they handed me one and said, wanna buy a sheet?

They do have a door buzzer, silent alarm, and multiple employees, but the folks coming into the store just walk in and out with their purchases.

So, if there is no problem today, why would there be such a problem tomorrow?

This country is armed to the teeth, and in my humble opinion, anyone robbing anyone at gunpoint outside of a few large cities that ban legal firearms is insane. Of course I live in a state where folks bring trunkloads of guns to buy, sell, and trade at huge gunshows.

Further, we have something like 50k CCW permit holders here. I *live* in the Wild West.

Someday this war's gonna end...
AllenM | 03.03.08 - 2:00 pm | #

Yearning to learn writes:
Dirk:
that is just wrong

Funny, but wrong.

As for Paulson,
I agree with basically everything that he says in his speech.

the problem: his speeches/actions to date (including those at helm of GS) color everything he's saying now.

teapot, meet kettle.
Yearning to learn | 03.03.08 - 2:01 pm | #

Anonymous writes:
The turn of the last century was related to change as well, like Einstein and relativity, a few wars, a depression, so perhaps we are just part of a dynamic of change which will reshape society in a few years? I just hope Paulson realizes how retarded he is in the scope of things and that he should resign immediately and then play golf with his buddies, versus try to cash in more chips for them. Why go down in history as an absolute retarded idiot that will be laughed at for ages???
Anonymous | 03.03.08 - 2:02 pm | #

Barley writes:
crispy&cole writes:
House parties are better when you walk away:

http://www.bakersfield.com/hourl...ory/ 378988.html

YOU are onto something....just go onto CFC website, get a house in the zip you want, text a few hundred friends...have a party!!
Barley | 03.03.08 - 2:02 pm | #

OB-GYN Kenobi writes:
Appeal to emotion, the mark of desperation.

What Mr. Dawg said.
OB-GYN Kenobi | 03.03.08 - 2:08 pm | #

yawp writes:
Wow Hank really stirred it up today with the shocking notion that a house should primarily be viewed as a residence and not a get rich quick scheme.

If your friend had made the mortgage loan to you would you have an obligation to pay them? Or would it be ok to give them the keys and say "Hey buddy I could pay but it wouldn't be profitable for me".

Of course now that the party is over (and you threw up on the floor) you want to find someone else to blame.

The drunk blaming the liquor store for selling them the booze.

I guess I can blame you for the years I had to rent because you drove the prices to ridiculous levels.
yawp | 03.03.08 - 2:10 pm | #

Anonymous writes:
Re: "We know that speculation increased in recent years"

Yes, they ignored it all-- and Greenspan called it a little froth and The Fed and every government agency from the very top to lowest bottom helped pump The Ownership Society and look away at no-doc loans and then look the other way on ratings agencies being un-regulated as they upgraded every stock, bond, derivative and financial conduit around the globe

Re: "People who speculated and bought investment properties in hot markets should take their losses just like day traders who speculated and bought soaring tech stocks in 2000"

>> The Fed should also be honest as well as people like Paulson for being party to this collusion and for allowing this bubble to explode and then inflate for YEARS! This was a game of collusion where these people in positions of power abused evrey position and these corrupt people should go to jail. Where are the investigations in this? Bogged down because of cash flow issues or a lack of interest? This is decay of a society and this F__ker acts as if he was not party to the collusion!
Anonymous | 03.03.08 - 2:12 pm | #

blogenfreude writes:
$125/barrel oil in 4, 3, 2 ...
blogenfreude | Homepage | 03.03.08 - 2:12 pm | #

Jim D writes:
Many are on tight budgets, sacrificing other things in order to make that payment.

Oh yeah, THAT will be good for the economy. Thanks for feeding the bears, Hank.
Jim D | 03.03.08 - 2:15 pm | #

Quincy k writes:
Ed-

You are entirely correct. As a former business-owner, it is hard to retain morals and ethics when everyone else fails to do the same. Especially when you are losing money.

There are currently no models available for a situation in which normal, hard-working and ethical Americans elect to walk away from their homes because they are too far upside-down regardless of their current ability to pay the loan.

And that is where genius fails.
Quincy k | 03.03.08 - 2:16 pm | #

Anonymous writes:
Re: Homeowners who can afford their mortgage should honor their obligations --- and most do.

Honor obligations, like SIVs, CDOs, SPEs, VIEs and honor all the off balance sheet synthetic snake oil garbage that floats in the toxic river of shame....those are your buddies Hank, those derivatives and hedges, they belong to you you retarded bastard!
Anonymous | 03.03.08 - 2:17 pm | #

Bob Dobbs writes:
"Why go down in history as an absolute retarded idiot that will be laughed at for ages???"

How many people know about the Teapot Dome scandal or the names of the people involved? How many know the names of the crooked stock speculators who made millions in the '20s (WR Hearst among them)? How many under the age of 35 remember the names of the Watergate conspirators, or the Iran-Contra goons?

Heck, ten years later Hearst was working with FDR to design a new and more transparent financial system. 20 years after Iran-Contra, the Bush Administration dragged John Poindexter back into public life. Dean, Liddy, and North are popular media figures.

Given all this, why should Paulson care? At worst, his sins will be forgotten by all but a few in ten or twenty years....
Bob Dobbs | Homepage | 03.03.08 - 2:18 pm | #

dissident writes:
http://www.youtube.com/watch?v=S...h? v=SBCKMTo210k
dissident | 03.03.08 - 2:20 pm | #

AllenM writes:
Well, Bob, we do remember Mellon and Fisher, now, don't we?

If you are going to be in the history books, might as well pick a nice part to do it.

Like whoever gets to be the financial savior by the time this team goes home.

Roosevelt's hundred days is starting again on 1/21/09 at this rate.

Whocoodanode?

Someday this war's gonna end...
AllenM | 03.03.08 - 2:21 pm | #

Anonymous writes:
Paulson said this Feb 12th, guess he is onto this honor thing, which must go back to his Cub Scout days; maybe he has dementia:

Of course, there will be homeowners who still take no action, and some will simply walk away from their mortgage – particularly those borrowers who put little or no money down and whose mortgage exceeds their home value. No program can bring every struggling borrower into the counseling and evaluation process, and we cannot help those who choose not to honor their obligations. But Project Lifeline has the potential to offer new solutions to responsible, able homeowners who want to keep their homes.
Anonymous | 03.03.08 - 2:21 pm | #

Anonymous writes:
Maybe Hank is one of "those guys"

"Scouts' Honor" tells the story that the Boy Scouts did not want you to read: How the Grand Teton Council leaders ignored multiple warnings and hired a pedophile to help lead a summer camp.

This series relies on public documents that two of Idaho's most powerful law firms tried to bury -- more than 1,000 pages, including sworn statements that spell out how the molester depended on church, family and Scout connections to get away with abusing at least two dozen boys from Idaho to Alaska.
Anonymous | 03.03.08 - 2:23 pm | #

sk writes:

I guess I can blame you for the years I had to rent because you drove the prices to ridiculous levels.
yawp

You can't fix the past - indeed you got priced out and being pissed about it is reasonable - but if you look to the future there is a bright side to this for you.

People walking away increases the supply of houses on the market and removes them from the buying cohort for a couple of years; the price of a foreclosed home is substantially lower than otherwise.

If you intend to oneday buy when prices have come down after renting through out the unfolding mess then people walking away is GOOD for you ! You should cheer them on !

Even if you continue renting, it oughtn't to increase rents - but I'm willing to be corrected on this.

-K
sk | 03.03.08 - 2:24 pm | #

Anonymous writes:
Yah,

The Ownership Societies Predator loans and the predators in The Whitehouse and all the banks and organizations that looked the other way as they got what they wanted, regardless of ethics, regulations or "honor" Screw you Paulson and friends!
Anonymous | 03.03.08 - 2:27 pm | #

Hong Kong Phooey writes:
could someone explain this?
http://www.bankstocks.com/articl...pe=1& id=9881669
Hong Kong Phooey | 03.03.08 - 2:30 pm | #

citizen writes:
There are currently no models available for a situation in which normal, hard-working and ethical Americans elect to walk away from their homes because they are too far upside-down regardless of their current ability to pay the loan.

This seems to me to be more about chaos than about someone being wronged. The chaos is at a far-gone point when the financial and legal system is losing control over these "marks" (the underwater home"owners")
citizen | 03.03.08 - 2:30 pm | #

Bob Dobbs writes:
"Even if you continue renting, it oughtn't to increase rents - but I'm willing to be corrected on this."

Rents are flat in Modesto and vacancy rates are high for apartments, duplexes, and other traditional residential income property. Modesto is one of the bubble ground zeros:

http://www.modbee.com/business/s...ory/ 212341.html
Bob Dobbs | Homepage | 03.03.08 - 2:32 pm | #

Quincy k writes:
"The Fed should also be honest as well as people like Poulson for being party to this collosion"

should be honest??

Uh, in case you forgot this is America we are talkin about.
Quincy k | 03.03.08 - 2:32 pm | #

jmay writes:
To those like Mostly Lurking who are casting personal insults at Mr. Paulson:

I grew up in Barrington, Illinois and went to grade school with his daughter. I can tell you that the man has a high degree of personal integrity.

According to my mother, Hank still owns a beat-up ten year old Honda. He is an ardent environmentalist (on the board of trustees of the Sierra Club) and has used a great deal of his personal wealth to buy up rainforest to keep it from being harvested and decimated.

He started as an entry level analyst at Goldman Sachs almost forty years ago and has gotten to where he is by hard work.

Yes, he took this job and yes, there is some hypocrisy in decrying speculators after all the shenanigans the banks have pulled.

But we can do better than slandering the guy.
jmay | 03.03.08 - 2:32 pm | #

Broker writes:
The 5% Paulson forgot to mention, had their phone service disconected.
Broker | 03.03.08 - 2:33 pm | #

Al writes:
jmay,

If Paulson is an okay guy, why is he doing bad things? I'm actually curious if you can provide any speculation because he does seem out to lunch.
Al | 03.03.08 - 2:34 pm | #

safe_as_apartments writes:
I usually skeptical of the argument that the "media caused this ."

However, in this case it might apply. As previously discussed on this board, it's really not clear how many people are indeed walking away from their homes, especially those who can afford not to.

Before all this hullabaloo with Hank and Mish and Good Morning America and Youwalkaway.com, I doubt it was in the forefront of the sheeple's minds. In this case, the media attention may indeed be the source of a significant portion of future walkaways (however many there end up being). Perversely, the media has both brought attention to the phenomenon and ironically made it legitimate.
safe_as_apartments | 03.03.08 - 2:34 pm | #

Anonymous writes:
Denial helps when your either a predator or physcopath, or both:

Stopping pedophiles requires the active participation of parents, neighbors, churches, schools and law enforcement. A key component in this process is information, and that's where we come in. It's why we've pursued sealed court documents and continue to do so, and it's why we published this series.

Also see: Profile of the Sociopath

This website summarizes some of the common features of descriptions of the behavior of sociopaths.

Glibness and Superficial Charm

Manipulative and Conning
They never recognize the rights of others and see their self-serving behaviors as permissible. They appear to be charming, yet are covertly hostile and domineering, seeing their victim as merely an instrument to be used. They may dominate and humiliate their victims.

Grandiose Sense of Self
Feels entitled to certain things as "their right."

Pathological Lying
Has no problem lying coolly and easily and it is almost impossible for them to be truthful on a consistent basis. Can create, and get caught up in, a complex belief about their own powers and abilities. Extremely convincing and even able to pass lie detector tests.

Lack of Remorse, Shame or Guilt
A deep seated rage, which is split off and repressed, is at their core. Does not see others around them as people, but only as targets and opportunities. Instead of friends, they have victims and accomplices who end up as victims. The end always justifies the means and they let nothing stand in their way.
Anonymous | 03.03.08 - 2:36 pm | #

energyecon writes:
jmay,

Actually I believe this is more of a libel thing as it is written, and slander if we were speaking the words - any legal eagles care to weigh in on this topic?
energyecon | 03.03.08 - 2:36 pm | #

dissident writes:
______________________________________
And those of us who never bought into the "more house than you can afford" are supposed to get what out of this, exactly, for bailing out the banks?
______________________________________

We stay in the game.
Both Paulson and the minority activists are bluffing.

Hey, they want to walk? Walk already. All these threats are Jackson/Sharpton style extortion fishing for free rides.
Let them walk, let the banks eat the loss and put a big old stamp on the walkers forehead "unfit to do business with"

The silent majority will be fine. Some banks will be left. If it takes Blackwater, then that's what it takes.
dissident | 03.03.08 - 2:38 pm | #

sdtfs writes:
Also see: Profile of the Sociopath

Wow, fits this group to a tee! Except that part about rage being repressed.
sdtfs | 03.03.08 - 2:41 pm | #

Anonymous writes:
Bush is a pussy for pushing this dope out to say these things. If we had leadership in this country, we would see it from the top, not the goop that is oozing out from the sides of the toxic waste drum!
Anonymous | 03.03.08 - 2:41 pm | #

Bob Dobbs writes:
"Yes, he took this job and yes, there is some hypocrisy in decrying speculators after all the shenanigans the banks have pulled."

In my industry (fund-raising) in which diplomacy is key, you hear a lot of personal observations like, "She's a wonderful person, but sometimes..." or, "He's a great guy, except for..."

In my personal experience, the "but" or "except" negate the compliment. At best, Paulson is a nice guy who's chosen to keep a high, honored, and privileged position in society by telling falsehoods to the people he supposedly serves. So...how nice a guy is that? How honest a guy is that?
Bob Dobbs | Homepage | 03.03.08 - 2:43 pm | #

visitor writes:
Also see: Profile of the Sociopath ... Anonymous | 03.03.08 - 2:36 pm | #

Did you just describe a lawyer?
visitor | 03.03.08 - 2:44 pm | #

Anonymous writes:
Re: xcept that part about rage being repressed.

I think that's a behind closed door thing and as you recall, they are into torture!
Anonymous | 03.03.08 - 2:44 pm | #

daveNYC writes:
There are currently no models available for a situation in which normal, hard-working and ethical Americans elect to walk away from their homes because they are too far upside-down regardless of their current ability to pay the loan.

They don't need a model. If people start walking away in enough quantity, the banks are screwed. They're just not set up to handle the huge number of REO that would result, and they probably don't have the liquidity to be able to pay the property taxes.

In the theory that there's no such thing as bad publicity, I can't imagine the banks are particularly happy with the current level of media coverage.
daveNYC | 03.03.08 - 2:46 pm | #

M.Z. Forrest writes:
Did the media cause all the foreclosures in Texas after the oil boom came to an abrupt end? Did the media cause the prior crashes in California? Certainly people have the ability to persist for a while. But at some point roofs need to be replaced, furnances need to be updated, yadda, yadda. Try getting a loan for these items when you are 120% LTV. Heck, if it was so easy to maintain a home 20% in the hole, lenders would be offering to do it. As Tanta and others have noted, homes aren't a one time expense. There was a time when financing was difficult to get at 65% LTV. There was a time when a note would only be gaurenteed for 5 years. Mortgage insurance and the rest have mitigated this, but these standards didn't come out of no where. It is a true idiot who after ripping out a fence wonders why the world stops behaving as if there is a fence. Similarly, anyone who expects an appeal to "morality", a dubious appeal at that, will cause people to maintain a situation they have no reasonable expectation of recovering from within a decade, let alone prospering, is simply deluding themselves. Thankfully we aren't at that point in most parts of the country.
M.Z. Forrest | Homepage | 03.03.08 - 2:47 pm | #

OB-GYN Kenobi writes:
If Paulson is such a great guy, then let him step down from his position as an Administration mouthpiece and prove his naysayers wrong with his words and deeds henceforth.

Otherwise, jmay, perhaps you should bear in mind that the First Amendment is a harsh mistress.
OB-GYN Kenobi | 03.03.08 - 2:47 pm | #

yawp writes:
"I guess I can blame you for the years I had to rent because you drove the prices to ridiculous levels."
yawp

"You can't fix the past - indeed you got priced out and being pissed about it is reasonable - but if you look to the future there is a bright side to this for you.
sk
"

I own a house now. I lived in Vegas during the bubble era (renting) and left at the peak specifically housing prices were laughable. I realized I would have to wait years for prices to come back down to earth and I wasn't that patient. I saw what was going on first hand (people buying $500k houses on tip income) and said I am not playing the game.

Has the house I live in now lost some value? Sure. Do I really care now? No. I bought a house to live in not to flip.

Walking away is just going to speed up the inevitable price discovery process. But that doesn't mean that the borrowers were naive victims.

Both the lenders and the borrowers have equal blame. Lenders for making loans to people without the financial understanding to grasp the consequences. Borrowers for overpaying for assets and borrowing money they could not reasonably repay over the life of the loan.

As far as I am concerned no bailouts for anyone (banks or borrowers). Let them work it out themselves. If you choose to walk then walk and accept the consequences. There are no debtor prisons. But there will be consequences.
yawp | 03.03.08 - 2:50 pm | #

Curmudgeon writes:
As someone who has been saving up for a house and begging my wife to wait on that house, I have two thoughts:

1) Sure, I'd recommend people that can't afford the mortgage to send in the keys. But, personally, I am really rooting for Paulson to run out the clock as long as possible on mass govt refis and other bailout elements. Let's get the worst elements (speculators, overleveragers, & fraudsters) into foreclosure and mop 'em up over the next year or two, before the bailout cavalry can ride in. I find it extremely awkward to be in the company of the GOP Senators on this score, but all I've gotta say is KEEP IT UP GUYS!

2) Everything is really going to be coming together inventory-wise for next year. We'll be looking at 17+ mos of inventory a year from now, assuming the govt doesn't put in a freeze.
Curmudgeon | 03.03.08 - 2:52 pm | #

Anonymous writes:
I have a solution:

We take most of the bankers and most of the lawyers, all the mortgage and appraiser people; everyone from The Bush Coup and that network of nepotism freaks and with this large army of humans, we set them to work building a wall between Mexico and The USA. This Hard Love Society will help build America into a better place with greater control over unauthorized entry from the south. In addition, we will take over Canada and all Canadians and Americans will become as one, united in peace. When the southern wall is finished, we will as a society learn math and then find ways to seek out and explore new ways to understand how to solve the mysteries of derivative manipulation and thus come to terms with The Great Depression ll and The Next New Deal.

Amen
Anonymous | 03.03.08 - 2:52 pm | #

Insurance Guy writes:
As head of Goldman Sachs, I wonder how long it would have taken Paulson to walk away from a losing position?

Even if it meant defaulting and sticking his counterparty with the loss?

About two and a half seconds?
Insurance Guy | 03.03.08 - 2:56 pm | #

yawp writes:
How exactly does a business "walk away" from a losing position?

"Walking Away" = lawsuit
Lawsuit = judgment
Judgment = damages
Damages = Money
No Money = Bankruptcy

I like how people on here hate begin called "speculators" but then they talk incessantly about leaving "a losing position" or "mortgage = housing put".

That is the root of this mess.
yawp | 03.03.08 - 3:03 pm | #

Anonymous writes:
As I have mentioned before here, the situation will become clear when "The Insider" discloses that this whole fiasco was planned based on people's tendancies to not walk away. There already has been plenty of statements from financial talking heads discussing this point. Russell Crowe will eventually star in the blockbuster movie as the informant.

Who was the mastermind, and who will play that role in the movie?
Anonymous | 03.03.08 - 3:03 pm | #

lawyerliz writes:
Just because P. seemed to be a good person when you knew him, doesn't mean that he was.

When he was at the helm of
GS, they were selling junk and shorting it at the some time. This, to me (a lawyer) seems to be immorality of the highest order.
lawyerliz | 03.03.08 - 3:04 pm | #

anon writes:
It's all political to these hacks! The Republicans in power borrow (no tax) and spend while pocketing all profits, in line with their trickle-down theory. The mess they left behind will be socialized by the Democrats who tax and spend and sending pork domestic projects to their cronies. In my lifetime I have witnessed the same sad story repeated twice already. We need to get out of this plundering cycle. Regarding Paulson, our Sec of Treasruy, how can a guy whose company shorted the very investments they just sold to investors have any credibility left in fixing the own mess they created? Disgusting!
anon | 03.03.08 - 3:09 pm | #

Insurance Guy writes:
yawp,

I have no problem labelling people "speculator". I just think Paulson's message is pretty rich.

If it is people's best interest to walk away, they should walk away. If it was ever in Goldman's best interest to walk away, you can bet they walked.

Its the moral tone to the message and the double standard that bothers me.
Insurance Guy | 03.03.08 - 3:12 pm | #

Quincy k writes:
There is a good chance that the System cannot handle a twenty-thirty percent decrease in home values without a complete systemic breakdown. That is why our current administration is trying so hard to stop it.

The last time something like that happened, we experienced a Great Depression.

Is that so hard to understand?
Quincy k | 03.03.08 - 3:16 pm | #

The CAT writes:
NEWS FLASH PAULSON! Your empty words have no bearing on reality. Time to suck it up, mark your losses and grow a pair loser!!

Face it, you and your band of useful idiots just got jacked!!! Now go do us all a favor and jump out a window like all the rest of your Wall Street loser friends will be doing soon, good riddance.........
The CAT | 03.03.08 - 3:16 pm | #

kis writes:
The reason banks change interest on loans is to cover their cost of capital and because they bear some additional cost of servicing and risk of default. And they enter into bilateral contracts with 'homebuyers', with the mutual understanding that use of the house is traded for a stream of cash flows. The default terms are spelled out for both parties.

There is no morality in this cold calculus. It's just business. Individuals need to realize that they need to act like businesses, because they certainly are not going to be given morality credits by the banks.
kis | 03.03.08 - 3:20 pm | #

rebel scout writes:
Denial and scouting go hand in hand.
http://findarticles.com/p/articl...06/ ai_n21144361

Enjoy!
rebel scout | Homepage | 03.03.08 - 3:25 pm | #

Anonymous writes:
If people really understood the bankers' massive profit potential given thru leverage that is provided by the fractional reserve system, everyone would walk until they shared the profits banks were making.
Anonymous | 03.03.08 - 3:26 pm | #

michael schumacher writes:
bank Sweeps is the biggest bunch of bullshit ever allowed to occur.

"oh we don't have the money????? let's just SWEEP it from another source-thus creating even more"

But they do oh so well at inventing valuation.......don't they?

Ciao
MS
michael schumacher | 03.03.08 - 3:30 pm | #

jmay writes:
Let me get this straight -- if Paulson is a man of integrity, he should step down to be replaced by... someone who is not?!

My wife also happens to know Dick Carmona, who resigned from his post as Bush's Surgeon General last year. Carmona saved her life as a surgeon in Tuscon twenty years ago, and is by all accounts a man of the highest integrity. He left in protest at what he saw as the politicization of medicine by the Bush administration. It's very possible that Paulson will run into the same problems and leave, eventually. Paulson certainly ran the risk of being scapegoated by taking the job in the first place. Clearly, Paulson is going to be pro-business and pro-finance and all that. But there's a difference between Capitalist ideology and corruption. Corruption is a cancer, and God knows we have enough of it. So we're lucky to have a guy who -- by my personal reckoning -- is not corrupt.

Thanks energyecon, I stand corrected. I meant libel, not slander. It's not really either, actually. I'm just calling B.S. on someone who claims to know that Paulson is a bad guy based on the fact that some people in his hometown drive Ferraris.
jmay | 03.03.08 - 3:32 pm | #

Anonymous writes:
Continue to watch major support next week at 12,150.

Day's Range: 12,161.05 - 12,281.37

11K and below ahead, with $100 gold and falling dollar, high wheat and idiots like Paulson and a very inexperienced Fed that has lost faith around the globe!
Anonymous | 03.03.08 - 3:34 pm | #

Anonymous writes:
rebel scout: Re: "This is totally out of character. From the bottom of my heart, I would bet my life on his innocence," said Fisher, adding he believes Evans' is being framed by the city of Berkeley because of his involvement in a lawsuit against the city.

"There's a history there in Berkeley that people don't like the Sea Scouts," Fisher said.

This is what's going on with Paulson, i.e, total denial of reality and the NAR-like hype that all is well, versus having DOJ go out and ut his friends in jail for false and misleading information and falsification of accounting records! These people all belong in the same prison, i.e, the child molesters and the financial fraudsters!
Anonymous | 03.03.08 - 3:40 pm | #

Canary writes:
Long-time lurker, usually barred from commenting by workplace restrictions.

Have found both CR & Tanta's posts very useful in understanding the drivers of the bubbles and the scale of the potential direct losses to lenders - not to mention to householders and communities. Debates also usually very good

My own background is in country/sovereign risk so I'm concerned about market volatility and the impact of the credit crunch on commercial and industrial firms as well what is happening to consumer spending both in the US and other bubble economies - UK, Spain among others.

Back (almost) On Topic, from the perspective of previous financial crises I've lived through I would put Paulson's comments and most of the rescue plans/packages as part of the process for stringing out the losses so that the banks and other financial institutions can make write-offs gradually. This is essentially what happened in the 198os third-world debt crisis, by 1987-90 the major banks were healthy enough to write down the debt by 30-50% (more for small, weak countries) and we could move on - until the next crisis!

Not sure that this will work in current conditions, problems are not the scale of the losses but uncertainty over which firm has them - not just banks but any financial institution, hedge funds, pension funds et.. So credit remains very tight for these (Thornburg margin calls may be an example) and the tightness may be starting to affect commercial and industrial firms - haven't seen stats but some anecdotes suggest it is. Market volatility may be both caused by this tightness and also blow up some trading stratagies.

All in all, interesting times.

Thanks for the helpful info - will continue to watch and enjoy the news & debate

Canary in the UK
Canary | 03.03.08 - 3:41 pm | #

linda writes:
I understand that a lot of people see walking away as their only option, and I see it as almost inevitable and necessary for the correction.

What bothers me, though, is that they face very little consequences. All those nonrecourse loans mean they don't have to worry about the bank coming after them. Even the ones with recourse are probably not going to get judgments, because it's costly and ineffective to sue someone who already is pretty much broke.

There's not even a tax consequence, thanks to Congress. So all those greedy people who lied and