AngryRenter writes:
Ha, where was Blair during the bubble's growth? Keep your hands off our tax dollars! All of these bailouts will just extend the pain and postpone the necessary correction.
AngryRenter | Homepage | 05.16.08 - 1:15 pm | #

Cooking ramen in my percolator writes:
BTW, I wonder - are Friday bank failures about to become routine?

Seems like a good strategy by Fed to let the obvious be known on Friday since the following day would not be trading day...
Cooking ramen in my percolator | Homepage | 05.16.08 - 1:15 pm | #

no_vaseline writes:
First?
no_vaseline | 05.16.08 - 1:15 pm | #

no_vaseline writes:
Nope.
no_vaseline | 05.16.08 - 1:16 pm | #

Anonymous writes:
No it isn't, it's the banks problem. Mine are paid for and I have no intention or need to sell them. The being 3.
Anonymous | 05.16.08 - 1:20 pm | #

Anonymous writes:
Some needs to slap the crap out of her.
Anonymous | 05.16.08 - 1:21 pm | #

Bob Dobbs writes:
"Ha, where was Blair during the bubble's growth? Keep your hands off our tax dollars! All of these bailouts will just extend the pain and postpone the necessary correction."

Bailouts, no. Some way of stimulating the economy to grow in constructive directions (that isn't merely a buffet lunch for the financial boys), yes. That's not the Fed's job, however, or not the Fed's job alone.
Bob Dobbs | Homepage | 05.16.08 - 1:21 pm | #

Scott writes:
Well, I keep waiting for the other shoe to drop - the consumer spending numbers just really surprise me.

I expect most of the dollar offset to declines in purchase transactions are due to price increases (at the pump and grocery store) which consumers can't opt out of, but at some point that's got to come to a halt.

IIRC, earlier in the week, CR posted something about increases in CC spending for everyday living expenses - at some point (it seems to me pretty quickly), consumers will max out that credit (and new consumer credit will be even more scarce due to skyrocketing defaults). At that point do we get real demand destruction and real deflation?
Scott | 05.16.08 - 1:23 pm | #

Anonymous writes:
Why should anyone at all keep paying a mortgage when these same people are going to get bent over as taxpayers bailing out these bastards?
Anonymous | 05.16.08 - 1:26 pm | #

Jas Jain writes:
--
"Bair goes on to call for more government action."

I have watched her few times on TV. This woman is disgisting. American People who tolerate this form of govt guarantees from Crooks will pay dearly for the insurance.

Jas
Jas Jain | 05.16.08 - 1:26 pm | #

J. Bridges writes:
CR,

You know the drill: Trot out big bad Hank & Sheila to assure the markets will be fine. Then, AH Friday another bank fails, or billions in MBS get downgraded and marked to reality.

My money says we get both tonight...should be interesting!

Have a good weekend all,
J. Bridges | Homepage | 05.16.08 - 1:26 pm | #

Cooking ramen in my percolator writes:
...consumers will max out that credit...

Nah, someone would probably invent something to let people max out their retirement or children's IRA to consumer spending...
Cooking ramen in my percolator | Homepage | 05.16.08 - 1:28 pm | #

RayOnTheFarm writes:
You know the drill: Trot out big bad Hank & Sheila to assure the markets will be fine. Then, AH Friday another bank fails, or billions in MBS get downgraded and marked to reality.

I still wonder about that 'feel good' email I got this morning from that nice Mr. Pandit at Citi. You don't suppose ....
RayOnTheFarm | 05.16.08 - 1:30 pm | #

Mr. Beach writes:
Did I miss some news -- or am I missing a joke? Will someone explain the meaning of: are Friday bank failures about to become routine?

(And if we're taking bets, I'm betting on Downey (symbol: DSL))
Mr. Beach | 05.16.08 - 1:36 pm | #

barely writes:
Consumer confidence @ 28yr low on options expiry and no EMERGENCY RATE CUT? I'm disappointed.
barely | 05.16.08 - 1:38 pm | #

Anonymous writes:
I think we've gone from, it's a great time to buy a home.
To, it's a great time to skip a mortgage payment.
Screw'em, maybe June needs to be National skip a mortgage payment month.
Anonymous | 05.16.08 - 1:40 pm | #

eh writes:
Another admirable public servant serving the public. Right?
eh | 05.16.08 - 1:41 pm | #

Anonymous writes:
I'm disappointed.

Day ain't over yet.
Anonymous | 05.16.08 - 1:41 pm | #

12th Percentile writes:
Mr Paulson just stated that the economy will add 500,000 jobs by the end of the year. Perhaps it is a coincidence that Mr. Paulson will be looking for a new job around that time so he won't have to worry that he was off by 1,000,000 or so in the wrong direction?
12th Percentile | 05.16.08 - 1:42 pm | #

burnside writes:
It is remarkable how firm a grasp Ms. Bair possesses of present conditions and of those going forward.

One wouldn't have credited her with such foresight even a year ago, when exercising the prerogatives of her office would have blunted many of the effects she expresses concern for today.

Calling for government action is, in her case . . . what can one call it? She is the government!
burnside | 05.16.08 - 1:44 pm | #

Ministry of Truth writes:
Where is Bagdad Bob these days? Did he secretly take Karl Rove's job?
Ministry of Truth | 05.16.08 - 1:45 pm | #

J. Bridges writes:
Ray & Mr. Beach,

DSL sounds looks like it's got the pedigree to attract the FDIC's special attention. You're far more familiar with what their balance sheet looks like, but I think we're going to start moving up the food chain to slightly bigger fish this summer.

And, Ray, yeah, I wouldn't be a bit surprised to see a nice release from Citi about consumer credit contagion or some other cluster-uck they've parked at the Fed.

What did I buy/trade today? DUG to hedge a lot of oil longs, and TWM to capture some air coming out of the Russell-- now that options tomfoolery is just about through. I'll be really impressed with the market gnomes if they can paint this tape green.
J. Bridges | Homepage | 05.16.08 - 1:46 pm | #

Not writes:
It's Local

anrgyrenter.com

only 2% of homes are problems.. that ain't national
Not | 05.16.08 - 1:46 pm | #

tbgpalisades writes:
Burnside -
Agreed!

The time for action was during the crisis - that is, during the speculative run up. Now that we're in the early innings of a recovery, everyone wants to prevent the recovery from happening.
tbgpalisades | 05.16.08 - 1:48 pm | #

Anonymous writes:
"June needs to be National skip a mortgage payment month."

Maybe they could make it a national holiday, banker and politicans would like it to go along with their 17 other holidays.
Anonymous | 05.16.08 - 1:48 pm | #

BottomCallTabulatorMatrix writes:
Did paulson actually say we'd rebound!

#1997


anyone else wanna call bottom's?

this may be better than watching the dallas cowgirls, way more bottoms to come.
BottomCallTabulatorMatrix | 05.16.08 - 1:50 pm | #

Big Ed & the twins writes:
"Where is Bagdad Bob these days?"

I dunno. Found Bob's bag though.



http://www.naplesnews.com/news/2...-bobs-brouhaha/
Big Ed & the twins | 05.16.08 - 1:51 pm | #

BottomCallTabulatorMatrix writes:
add 500,000 jobs by the end of the year


Draft?
BottomCallTabulatorMatrix | 05.16.08 - 1:52 pm | #

Anonymous writes:
B.F.F. has it's new meaning...

Bank Failure Friday's

4 today after the close is my input

Ciao
MS
Anonymous | 05.16.08 - 1:55 pm | #

barely writes:
cashflow at the consumer level has been pretty grim. For years MEW was a source to keep the ship from taking on too much water. I think the present household operating cashflow boost has been simply not paying mortgage debt. It's the new black.
barely | 05.16.08 - 1:56 pm | #

J. Bridges writes:
MS,

I enjoy reading your remarks here and at B. Ritholtz's backyard, but I'll take the under on this one. And, you may be correct that four banks kick the bucket today, they could never allow that sort of reality to transpire all at once. Everything has to be stage managed just so...that is, until everything really starts to fall apart this summer.
J. Bridges | Homepage | 05.16.08 - 1:58 pm | #

million writes:
actually, Sheila was more prescient than others before she took the top job at FDIC. but she's one of those self-labled "progressive" types that believes the govt is the answer. too bad she's answering the wrong question.
million | Homepage | 05.16.08 - 2:01 pm | #

k harris writes:
million is getting closer to right on Bair. For those who want to blame, her, curse her or slap her, a question - When did Sheila take over at FDIC? Anybody?
k harris | 05.16.08 - 2:04 pm | #

FatalException writes:
Gov't is the answer. Just depends on the questions.

Who paves the roads? Who raises an army?

vs.

Who bails out speculators?
FatalException | 05.16.08 - 2:05 pm | #

Anonymous writes:
something is going on since they trotted out almost everyone to say "it's all fine now....really it is....strong dollar.....new jobs"

We had two banks last week and it nary had a mention by monday....anywhere other than here.

We return you to the race to become mexico.....

Ciao
MS
Anonymous | 05.16.08 - 2:05 pm | #

Taos writes:
If you were in charge of the agency that has to get ready to catch a zillion insolvent banks and make sure everyone's bank deposits were safe...wouldn't you say ANYTHING to stop the ship from sinking?
Taos | 05.16.08 - 2:06 pm | #

Anonymous writes:
taos-

at some point you have to stop denying it and abandon ship instead of handing out more buckets.

They are still handing out buckets.....

Ciao
MS
Anonymous | 05.16.08 - 2:11 pm | #

Mr. Beach writes:
From her speech: "limited or no cost to taxpayers....Not a bailout"

Bulls**t. Ever since "Reagan proved deficits don't matter", every Congress and President has systematically abused the national credit card. Charging current stupidity to future generations. This time will be no different and it will be very, very expensive.

Just don't let our fine lenders catch on (Ni Hao, Konnichi Wa, A salaam aleikom). They may jack up our rates.
Mr. Beach | 05.16.08 - 2:19 pm | #

burnside writes:
Ms. Bair took office June 26, 2006.

I see little enough point in belaboring opportunities lost, except as an indication that her tenure has involved a great number of fine quotations during times when active, effective management was in order - and that this pattern evidently continues into the present.

Saying things to stop a sinking ship is equivalent to, and about as effective as, saying things to stop a ship from sinking.
burnside | 05.16.08 - 2:21 pm | #

barely writes:
FFDIC said Arkansas should have 1 this week. If the 200 failing banks number is even close we should expect 3-4 per week for months and months.
barely | 05.16.08 - 2:22 pm | #

melidere writes:
Am i just getting dense, or does anybody else actually understand this proposal? Does she really propose to just hand the irresponsible lenders who should be at the whipping post CASH? 20% OF THE OUTSTANDING BALANCE?

Is anybody even pretending to make any sense?
melidere | 05.16.08 - 2:41 pm | #

charlie writes:
I don't think it's quite time for DSL. They borrowed over 200mm from FHLB in April to keep them going a little longer.

I suspect they'll have a bank run before the End of July and then it will be their time. I wonder who will assume ownership of them. My bet is Wells Fargo will be part of a FED bailout that will help them cover up some of their HELOC mess. AKA similar to JPM and Bear Sterns.
charlie | 05.16.08 - 2:49 pm | #

julia writes:
I'm reading a very similar proposal (writing down 15% principal in exchange of no future appreciation) by John H. Vogel on "Cleaning up the subprime mortgage mess".

He says that the gov. "will end up with an inventory of permanently affordable housing, for working people". That wouldn't be a bad idea since it might help to bring down prices, nice for the first time buyer!

I'd prefer letting the mkt work though till prices drop enough to catch up with incomes. But still, providing cheap public housing for public servants for example, is not a bad idea (i'm not a public servant... but i hate knowing that these guys commute 2 hours back and forth).

www.angryrenter.com rocks!
julia | 05.16.08 - 2:53 pm | #

julia writes:
charlie, hope you are right! my DSL puts expire on August.
julia | 05.16.08 - 2:55 pm | #

Shnaps writes:
For those interested, the report Greasy mentions at the beginning of her speech is here.

Nerd warning: it's 163 pages long.
Shnaps | Homepage | 05.16.08 - 3:19 pm | #

k harris writes:
So, Bair took office at just about a year after the peak in new home sales and about 5 months after the peak in starts. Given that, it is hard to see how she was a contributor to the bubble. The timing of hear arrival at FCID suggests that all she could hope to do is help clean up the mess.

Now, can anybody who is familiar with the limits of her authority identify a policy she could have undertaken to help clean up the mess, without congressional legislation or a decision at the White House, that she has failed to undertake? Can anybody identify an actual "opportunity lost" by Bair? I'm not saying she hasn't missed opportunities to help, but I am not familiar with any she has missed. I'd be happy to be educated.

On the other hand, I would like to discourage damning public officials just because it feels good. If we want better public policy, we really need to be discriminating in our damnation of public officials. As far as speaking goes, well, it comes with the territory. Agency heads, by and large, have to speak in public.
k harris | 05.16.08 - 3:36 pm | #

Uncle Ar writes:
"Remember the S&L disaster of the 1980s and 1990s?

Fortunately, we're in a much stronger position today. Banks are healthy, and we want them to stay that way."

Ha. Banks appear healthy only as long as they can move all assets to Level 3 or pawn them off on the Fed.


"We learned the hard way that early intervention always costs less, and is always better than a policy of after-the-fact clean-up."

I guess since they are getting involved before the median house price hit 20x median income it counts as early intervention.
Uncle Ar | 05.16.08 - 3:53 pm | #

JRB writes:
Is the America public really that stupid? My conclusion has to be that they must be. National rate is 2%? Let us do a little bit of math people. There are approximately 70 million homes in the US.

- Already 1.5 million REO's
- Another 2% are in the "process of foreclosure".
- Another 5-6% are 30-90 days behind on their mortgage payments.

So, conservatively, it's already more than double the number they're reporting. We're falling for this constant mis-information and it's sickening. Where are the good reporters calling these idiots on their crap? I know they're are some out there, but they just seems to be so few and far between.

At the current rate, and considering the ALT-A mess that's building steam, in about 6-12 months we're going to be in the 10% range.

To all the lethargic Americans out there - WAKE UP AND STOP LETTING YOURSELF BE LIED TO.
JRB | 05.16.08 - 6:04 pm | #

RMC writes:
Friend 1: San Jose - just bought a 2,400 sf 4/2 in top neighborhood for $1,150,000 and rec'd a $729,500 loan fixed for 30 at 5.875% with no points.

Friend 2: Saratoga - just refi'd into a 30 yr fixed at 5.75%

Where is the "crisis" and why is a tax payer bailout required? Yes these are both low LTV scenarios, but in both case they could have held this rate with up to 80% LTV. And please don't tell me we should use tax payer $'s to lend to people who can't save a 20% down payment, because with less than that, you're not an owner, you're a renter.
RMC | 05.16.08 - 6:22 pm | #

BG writes:
Anybody have an opinion, learned or otherwise, on FirstFed Financial Corp. (FED)? I put it in DSL land, but YMMV.
BG | 05.16.08 - 6:32 pm | #

Eric Dewey writes:
Hope the Presidential candidates are thinking about how to elevate Sheila Bair's presence in the next administration. She's been the straightest, clearest thinker about these issues since before they began.

(I would submit that commenters voicing contrary opinions above have not done their homework...)
Eric Dewey | 05.16.08 - 6:50 pm | #

waitinginPNW writes:
The housing "Crisis" did not start this year or last.

The REAL housing crisis was 1997 to 2007 when all these people at the top decided it would be fun to let crooks take control of the lending and RE markets and blow home prices out of the water.

THAT was the real crisis. THAT was the time to act.

It's too late now. Crisis has, or is trying to, pass. Now it's time for the resolution.

All of these attempts to keep us in crisis mode via bailouts does nothing but prolongue the turmoil.
waitinginPNW | 05.16.08 - 7:05 pm | #

dryfly writes:
Hope the Presidential candidates are thinking about how to elevate Sheila Bair's presence in the next administration. She's been the straightest, clearest thinker about these issues since before they began.

(I would submit that commenters voicing contrary opinions above have not done their homework...)
Eric Dewey | 05.16.08 - 6:50 pm | #

I would bet if McCain wins (likely outcome) that she gets an offer. I also bet she turns it down to go private & cash in.

dryfly | 05.16.08 - 7:13 pm | #

FinanceGuy writes:
No shit Sheila- or is that Sherlock?
FinanceGuy | 05.16.08 - 7:21 pm | #

Renterfornow writes:
dump sheila the bimbo before she adds billions and billions of additional debt..
Renterfornow | 05.16.08 - 8:06 pm | #

CathyG writes:
As you read the first posting by AngryRenter and the follow up postings by AngryRenter trolls, be aware that they have an agenda.

Follow the link posted to the right titled "Your Call: Does this Guy Look Like an Angry Renter?

http://latimesblogs.latimes.com/laland/

Angry Renter turns out to be a front blog backed by floor-of-a-New-Delhi-taxi-cab scum Dick Armey. Who is defintely NOT renting his $million plus crib.

These people wouldn't know honest if they choked on it.
CathyG | 05.16.08 - 9:10 pm | #

burnside writes:
k harris, Eric Dewey,

I'm wrong above about Sheila Bair.

Except in its capacity to advise, consult or warn, there's very little in the agency's mandate in the way of regulatory power until institutions fail. My error has been in presuming that, having pointed out areas of unacceptable exposure, she was also able to enforce a rational response.

So far as I can tell, the one mechanism available to her is to increase the premium (or broaden the classes of premium-paying banks) in response to elevated risks - and this she has done.

It's frustrating to me to hear early, correct assessments coming from within this administration without a corresponding adjustment of policy, or enforcement of existing policy, or pressure from the legislative side to act accordingly.

I picked the wrong target. She's doing what she reasonably can.
burnside | 05.16.08 - 9:26 pm | #

Emma Anne writes:
"Hope the Presidential candidates are thinking about how to elevate Sheila Bair's presence in the next administration. She's been the straightest, clearest thinker about these issues since before they began."

Heh - makes you wonder how she got her job, hm?
Emma Anne | 05.16.08 - 9:51 pm | #

Emma Anne writes:
"Angry Renter turns out to be a front blog backed by floor-of-a-New-Delhi-taxi-cab scum Dick Armey. Who is defintely NOT renting his $million plus crib."

LOL! No wonder it always felt kinda spammy. I'm glad I didn't sign the petition.
Emma Anne | 05.16.08 - 9:54 pm | #

Blitzer writes:
This is not a National problem it's a systemic global problem that started with The Bush HomeOwnership Society and out-of-control financial chaos linked to Iraq and boatloads of retarded people!
Blitzer | 05.16.08 - 10:37 pm | #

FFDIC writes:
Bair really should begin each of her rather boring speeches with an apology for FDIC's regulatory failure. The FDIC has a huge budget, plenary powers, and a new multi-million dollar headquarters in Arlington, VA. It basically gets whatever it wants from Congress. Yet, Americans will never hear an apology because of the potential legal liability an apology would invoke. Pity.
FFDIC | 05.16.08 - 10:51 pm | #

Regulatory Gal writes:
I'd make two comments

Bashing regulators is fun, but here are comments made by Bair back in Sept 2006.

"It is true that option ARMs have been around for a long time and some lenders and borrowers have used them successfully. However, their proliferation over the past couple of years is troubling for several reasons. First, while payment-option ARMS were previously used by financially sophisticated borrowers as a financial management tool, they are now being used by a wider array of borrowers.

The expanded use of these products raises concern from a supervisory perspective because they have, at times, been offered pursuant to relaxed underwriting standards."

Also, closing failing institutions on Friday is operationally efficient. Resolving a bank failure through sale or liquidation takes time and it is useful to be able to do that work over the weekend. Less disruptive to markets and depositors.
Regulatory Gal | 05.17.08 - 10:44 am | #

SurferDude writes:
k harris writes:
So, Bair took office at just about a year after the peak in new home sales and about 5 months after the peak in starts. Given that, it is hard to see how she was a contributor to the bubble. The timing of hear arrival at FCID suggests that all she could hope to do is help clean up the mess.

Now, can anybody who is familiar with the limits of her authority identify a policy she could have undertaken to help clean up the mess, without congressional legislation or a decision at the White House, that she has failed to undertake? Can anybody identify an actual "opportunity lost" by Bair? I'm not saying she hasn't missed opportunities to help, but I am not familiar with any she has missed. I'd be happy to be educated.

the opportunity lost by bailout bair was to purge the fdic of the senior executives that abdicated their responsibility to limit risk to the insurance fund. they were nothing more than industry cheerleaders while the biggest housing bubble happened and the largest c&d lending concentrations were put on insured institutions balance sheets. not only were the executive derelict in their primary duties they created a corporate culture resulting in a brain drain and significant morale problems. the fdic is still way behind the curve in executing its core mission -- limiting losses to the insurance fund -- as it does not have enough competent examiners/analysts. instead of focusing on the core mission or fixing morale, bailout bair is spending time telling servicers to rework mortgage loans, developing taxpayer bailouts, being the guest host on bubblevision (cnbc)arguing with private sector analysts, or flying around the globe delivering speeches.
SurferDude | 05.17.08 - 10:24 pm | #

linda writes:
I can't see this program working. From what I understand ...

The borrower is getting a very small break -- they don't have to pay the interest on 20% of their loan for 5 years. But they still make payments toward the principal.

In her example, after 5 years the payment is around 40% of gross -- and the person only makes $3500 a month. Yes people get raises but most people in that bracket get small increases and that DTI is not sustainable for most. Not to mention it completely ignores any other debt.

So the lender gets a benefit: they get 20% of the loan paid off and the hope that the borrower can pay (although now that there might actually be some equity, what do they care if they have to foreclose?).

But in return, they give up first position and now must be paid after the gov't, which keeps the possibility of loss alive (I'm not sure why the second liens wouldn't be involved; do they not have a say?).

And not only that, but the lender is paying interest to the gov't for that 20% for five years, which means they're not getting a full 20% at all (tho certainly it's better than nothing).

I would really love to see the entire plan, including what happens if the lender goes belly up 6 months later; where will the gov't get its interest then, from the borrower?
linda | 05.18.08 - 6:18 am | #

atlanta_renter writes:
"BTW, I wonder - are Friday bank failures about to become routine?"

You can watch it happen at http://bankimplode.com/
atlanta_renter | 05.18.08 - 11:27 am | #

k harris writes:
This Angry Renter is that Angry Renter? Our nice little gathering place infected by mindless, bought-and-paid-for, flesh-eating astroturf? Yuck.
k harris | 05.19.08 - 10:15 am | #