The Continued Crony Banking and Housing Industry Bailout: Foreclosure Scams, Japan Subprime Loans Coming Back, and Generally Bad Advice for American Consumers.

It is amazing that those who have been wrong predicting the housing collapse are now the folks guiding policy.  As I discussed in the last article regarding Alt-A loans and the California Foreclosure Prevention Act, all that is being done is the state is institutionalizing option ARMs which is flat out insanity and would make anyone feel like they took crazy pills.  Why is this nuts?  The so-called modifications include freezing the interest rate, negative amortization, 40-year terms, and gimmicky teaser rates.  However, you can forget about lenders knocking down the principal balance since this will actually eat into their delusional profits (and would most likely make them explode like a piñata).

I love how some people to fit their own agenda (i.e., those in the real estate industry or deeply connected to it) have now taken it on their behalf to use our argument about the coming Alt-A tsunami for further government bailouts!  Dear readers, as I warned you back before TARP became the utter monstrosity that it is for the crony bankers, this kind of thinking will lead to more taxpayer waste.  I recently saw this argument floated but want to address it as quickly as possible:

“(LA Times) One proposal for a debt-forgiveness program was floated this month by the Milken Institute in Santa Monica. The plan, authored by institute President Michael Klowden and regional-economics director Ross DeVol, would refinance existing mortgages of underwater homeowners with new loans from the government.

Klowden and DeVol call it the “homeowner principal forgiveness vesting plan.” Here’s how it would work:

Say an owner’s mortgage is worth $400,000 but his house is valued at $300,000. The government would refinance the $400,000 loan with two new loans. Fannie Mae, the mortgage financier now under government control, would provide a first loan for the market value of the house, in this case $300,000. The Treasury would issue the second loan, in this case for $100,000.

This is a bad idea.  Since some people are misconstruing what many of us who have been warning about with the Alt-A and option ARM tsunami let me be clear about my position:

These homes should be taken back in foreclosure.  Banks must eat their losses.  If it is game over for them, so be it.  We have a healthy rental market.  People won’t be out on the streets.  To take a loan from an irresponsible gambler (aka lender) and convert it to a government loan is absolute insanity.  It is a scam.  A swindle.  I bet many of you are seething and probably have the desire to punch your monitor now that you know how this housing casino works.  But guess what?  This plan is much more of a crony bailout:

“They estimate that the cost to Treasury (and thus to taxpayers) of saving 1.5 million homes from foreclosure or abandonment with this plan would be between $75 billion and $100 billion. That assumes the government wouldn’t jeopardize the original lenders’ balance sheets by forcing them to share in the cost via haircuts on their loans.”

Oh really?!  We wouldn’t want to jeopardize all those crony banks and Wall Street right?  So let me get this straight.  The purpose of this plan is to:

(1)  Bailout lenders who made irresponsible loans?

(2)  Give over leveraged homeowners and speculators an easy way out?

(3)  Put the toxic waste onto the taxpayers’ bill?

(4)  Expect lenders to walk away with no serious repercussions?

I know many of you are against the prospect of nationalization when I tossed it out many months ago.  These kind of “plans” and additional workouts are actually going to cost us more than simply going in with a strong arm and gutting the system.  That ship alas has sailed politically so fear not.  But take a look at those banking and Wall Street stocks.  Guess who won?  It wasn’t the average American.  However, these are the consequences of allowing the corrupt banking system to guide bailout policy.  Seriously folks, here in California many people should lose their homes and become renters.  Enough with the renting stigma and the notion that everyone should own a home.  If you make your payment and are prudent then you have nothing to worry about.  Yet if you over leveraged yourself and took a HELOC to put in a pool with faux rocks and a waterfall or bought at the peak then why should the government bail you and your lender out?

Some people are making the comparison to the S&L crisis and the Home Owners’ Loan Corporations during the Great Depression.  Here are some facts about the HOLC:

-At the peak it was massive employing some 20,000 people

-HOLC received 1.9 million applications for home loans with 1 million being approved

Even with favorable terms and conditions, 20 percent of these loans failed!  With that kind of rate most banks would sink.  And by the way, the HOLC did file 200,000 foreclosure auctions and this experiment never revived mortgage lending which remained anemic for another decade.  Why?  Because the nation was in something called the Great Depression!  Our housing obsession started nearly a century ago.  If you have a weak economy chances are, you are going to see problems with housing.  The solution isn’t to give more loans to people who can’t afford them.  The solution is to focus on creating a sustainable economy with a laser focus on job creation.

By the way, as crazy as the housing market was during the Great Depression and the S&L crisis, we have never seen the amount of toxic garbage like Alt-A and subprime loans like we have in this market.  So those that use those past experiences have no reference because we have never scorched the Earth with so much toxic waste that we once called “creative financing.”

The ideas being proposed are as bad as the loans that got us here in the first place.  If you want an idea of how this is going to play out you should really examine what Japan went through with their double bubbles just like we did.  In fact, Japan has a tsunami of their own giving us a Scrooge like glimpse into our Ghost of Christmas Yet to Come if we don’t change course:

“(UK Times) A housing loan default problem is looming and likely to begin in the next few weeks. It amounts to the detonation of a ten-year time bomb that, researchers at the Tokyo Foundation say, started ticking around 1999 in the immediate aftermath of the Asian financial meltdown. This is the result of flawed government policy, whereby the state housing loan agency offered mortgages to families that they knew were unable to pay. According to the think-tank, those loans were made on the assumption that the traditional staples of Japanese corporate life – seniority-based pay increases, constantly rising bonuses and lifetime employment – would remain as fixtures.

The impending meltdown, which the Tokyo Foundation believes could affect some hundreds of thousands of households, will be focused initially on the country’s industrial heartlands, where corporate bankruptcy rates are rising. The residential zones around Toyota’s home territory of Nagoya could become ghost towns, Kazuo Ishikawa, the think-tank’s senior research fellow, said.”

Can things get any clearer?  With Americans losing some $13.87 trillion in household wealth, we have seen our own lost decade yet people keep refusing to examine the lessons of Japan.  Now Japan is seeing their own horrific policies of propping up a failed banking system.  No bank should be too big to fail.  And foreclosures are necessary to reach a bottom quicker.  The CFPA for example is merely a kicking of the can down the road policy.  Don’t you find it ironic that whenever cram-down legislation is introduced into Congress the banking industry shoots it down but once the government is involved in sucking up those toxic loans, the lenders come out of the woodwork?  Cram-downs don’t work when lenders need to eat the principal but when they use the taxpayers’ dime, then they are all for it.  The banking industry is still operating under similar terms that caused the bubble and we keep funneling money into this sector.  Are people not outraged anymore?  I remember back only in September of 2008 people were calling up their representatives and mounting quixotic battles for a few billion dollars in proposals.  Now, we are days away from the worthless public-private investment program and the public seems in a daze.

There is now an industry leaching on those in financial trouble:

“(LA Times) David Berenbaum, vice president of the National Community Reinvestment Coalition, called on newspapers to stop running ads by “for-profit racketeers who charge on average $2,900 to consumers for poor advice.” Examples he cited included counsel to not pay the mortgage or contact the service provider. HUD-approved counselors will help consumers for free.”

This is another problem with running programs like the CFPA or any government sponsored help.  You will have these shady operators pop up to scam folks and take any money left from those who really need a call that goes something like, “unfortunately, you are insolvent.  Here is what is needed to file for foreclosure.”  It is that simple financially but I know emotionally, it is difficult.  But don’t you think it will make it harder when you prolong the suffering with gimmicks and scams?  If we kept a simple message and didn’t compound this problem further, we’d have a tough couple of years but now we are risking the fiscal sanity of our country because the banking system has our government in some form of deep capture.

Think for a few minutes.  At the end of the day, someone is going to have to realize those losses on all these toxic mortgages.  The only question is who is going to take the brunt of the fall?  Many borrowers are losing their homes yet somehow, the big banking centers are still up and running and supposedly turned a first quarter profit thanks to the taxpayer bailout.

These bailouts have compounded the mess.  In fact, it has clouded sound judgment.  I think most Americans would have been even okay with say a bailout that went like, “the median home price in America is roughly $150,000.  If you have a mortgage below that, we can take a look.  Anything above that and sorry.”  Instead, we are trying to game the system to unload the gambling happy California and mega-mortgages to the rest of the country.  Need I remind you that the state has 643,000 Alt-A mortgages with an average balance of $420,000+?  Sound policy involves foreclosure but you’ll never hear that from the pundits since they have their hand too deep in the bailout cookie jar.

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28 Responses to “The Continued Crony Banking and Housing Industry Bailout: Foreclosure Scams, Japan Subprime Loans Coming Back, and Generally Bad Advice for American Consumers.”

  • I have a modest proposal for helping to clear the shadow inventory in foreclosed homes. If the statute of limitations to quiet title in California were reduced to say, 3 years, then many homes in default could be subject to adverse posseession. There are probably some squatters who got into abandoned homes in 2006 who could qualify for adverse possession now if the law were changed and they brought the taxes current. Knowing they could lose the properties altogether, I’d wager the banks would finally get off their moribund behinds and begin doing what they should have been doing all along.

  • Word. Doc wrote: “At the end of the day, someone is going to have to realize those losses on all these toxic mortgages. The only question is who is going to take the brunt of the fall?”
    Another question is: And when?
    Cronyistic “solutions” so far have focused on deferring the reckoning, rather than looking at what it will cost whom. It’s a way of buying time and getting enough power so that when the costs hit those who must pay, they’ll be too weary and beaten down to revolt. The ultimate serfdom scam, as Michael Hudson so often has pointed out.
    Again, I salute anyone trying to make hard, clear decisions about their housing, rather than running on emotions. Outside of the rare sources like DHB, it is so hard to get clear information about what is going on, what’s best to do, and how to imagine and plan one’s own prudent and responsible path when that more and more each day seems like the ultimate sucker’s game.

  • PS–Anyone who thinks that a 40-year loan makes any kind of sense has never run the full amortization tables nor compared the total interest curves of a 40- to a 30- or a 15-. It should be illegal to amortize loans for more than 20 years, in my view. This is just one more example of how the basics of life have gotten so out of whack with income. Doc is absolutely right: jobs, jobs, jobs. But I don’t see that happening, because as we all know there is nothing wronger in our society than workers making enough to live on without being either wage slaves or bank serfs. To the bottom, everybody! There’s some lovely filth over here!

  • Right on.

    It’s a game of musical chairs, hot potato, etc… Except the damn banks are the ones over at the boom box, while we (taxpayers) are competing for the final chair.

    Stop. it. Just stop it. If you can’t afford your home, it’s time to go. Home ownership is not a right. We don’t “need to keep people in their homes.”

    I need to keep a 60″ HDTV in my house and a Ferrari in my driveway. No? Why the hell not? I thought getting & keeping things you couldn’t pay for was the game we’re playing?!?!?

    Family or not, elderly or not, unemployed or not…. sorry, you wanna stay, you gots to pay.

    Otherwise, rent, let the housing prices return to a normal, healthy, sustainable level, and lick your damn wounds.

  • What do we do Doc?? I feel tears almost as I think of the scam that has been, and is being run on normal folks like me. I feel like our government has been taken over by self serving politicians who are looking out only for #1. What else could explain the rationale behind what is being proposed and acted on. What is the time, date, and location of the revolt??

  • How’s this for bad advice? The scumbags at Bank of America are lying to an underwater borrower about 1099s to try to make him keep paying instead of walking away:

  • As best I can tell, the purpose of this proposal is to have the government pay to reduce mortgages of underwater home owners to current “market levels” in order to limit foreclosures, prop up housing, and “hopefully” allow these same home owners to sell at re-inflated prices sometime down the line, thus pocketing the difference.

    Or, to put it another way, it would transfer hundreds of billions of dollars (or more) from the pockets of responsible taxpayers to the most irresponsible among us, thus validating their insane home purchases via liar loans at the peak of the bubble.

    Have we completely lost our minds?

  • Hi Doc

    “Are people not outraged anymore? I remember back only in September of 2008 people were calling up their representatives and mounting quixotic battles for a few billion dollars in proposals. Now, we are days away from the worthless public-private investment program and the public seems in a daze.”

    For the love of God, we just lost 2 American icons in one day, how on Earth can we focus on such trivial things? – Or can it be that in Sept when we were calling and voicing our outrage, it did no good AT ALL.

    As for people that are underwater, I just don’t get it. I do understand the emotional struggles but let’s be logical for a moment and look out long term – I know this will be difficult as most people {that got us in this mess} live for today and don’t plan for the future – but if you are underwater and your payments are more than you are comfortable with then walk away. Your credit will be messed up for a couple of years but after that, hopefully you have saved for a downpayment AND you will then be able to buy another house that only will cost probably 1/2 of what you’re paying now. No brainer folks – give in – it’s time to start starting over – rebuild for your future and the future of your kids or your golden years won’t be so shiny


  • We have completely lost our minds. Actually this country lost its wits a long time ago. Right now, I’m listening to the discussion of the plight of CA muni bond holders, and you just know that the PTB are trying to build a case for a bailout of CA on those grounds. Wel

    Well, if we bail CA with Federal tax dollars, we will have to bail about 6 other insolvent states.

    And we will have to do it with tax revenues that are already sorely stretched. At this time, the U.S. Treasury collects about $1 Trillion yearly in income taxes, to service a debt load of $12 trillion and a yearly deficit of $1.8 trillion. THESE INCOME:DEBT RATIOS DO NOT WORK! At what point will the U.S. buckle under the load and default on our soveriegn debt? An attempt to bail out CA and every other insolvent state government so that they can continue to spin out costly bailouts and mod programs for underwater borrowers, will push this country right over the edge into total insolvancy and complete collapse of our currency.We will not be able to run our economy at all. We will not be able to ship, pay our employees, or collect on our debts at all. We will not be able to buy the OIL that we import and on which we are dependent for our day-to-day survival.

    We will be effectively dead if we don’t reverse the insane policies, federal and state, designed to rescue failing financial institutions and fucked borrowers. We will collapse the country completely to line the back pockets of the people who set this debacle up….. and who brainless Obama has placed in charge of the recovery.

    We are insane.

  • fed up with the fed

    well…you have convinced me that my wife is a smart gal.

    short story:

    1. in this 28 yr. old CMU house for 11 years ( was offered 625k for it in 5/06, FWIW)

    2. refinanced for 60% LTV in 10/07, took the cash and re-invested it into it:

    a) new systems upgrades: 5T-HVAC, copper plumbing lines, 88g. Solar WH, r-54 ceiling insulation

    b) new landscaping, including 35k Salt-Ozone self cleaning 9k gal Pool with a waterfall, low-maintenance-high density artificial (fescue) lawn rear yard, xeriscaped front yard with Sedona red-rock boulders and gravel (this stuff isn’t on the common market)

    c) new interior upgrades incuding Turkish Travertine stone floors, Brazilian Tigerwood T&G floors, Italian ceramic tile, 2 full bath remodels, master has a 6 function imported Danish steam/rain shower with 18 shower heads, a cd/radio and a telephone in it.

    d) new exterior finish +/- 1400 sf. cultured carolina ledgestone facing on a +/- 2400 s.f. dwelling.

    problem: I’m an architect in a devastated profession, thanks to all of this. laid off 2 times in ten months, and this last one is six months and counting. no jobs anywhere. thousands of resumes sent out, three interviews and all say the same thing: “There are so many to choose from…”

    so… foreclosure is set for 09/01/09.

    I’ve had dozens of contacts from agents wanting to assist me, in dozens of ways, (among them short-sales or 3-6% commisions to sales agents, or deeds-in-lieu)

    … how, exactly, since I have NO JOB, is unclear until it comes down to this in our conversations:

    THEY say… “YOU, mr. mortgagee, will make NO money from this.”

    THEY say… ” WE… will…. sorry.”

    My wife says: “To hell with them, it’s just a thing.”

    I say… “what the hell, my credit is shot anyway, thanks to all of this twenty-year long festering bad lender policy.”

    As far as I’m concerned, the U.S. Gov’t and Bank of America (among others) have ruined and destroyed my profession and my pursuit of happiness is a meaningless phrase on a “…god-damned piece of paper”.

    They can all go to hell.

  • Long time reading, first time commenting.
    Thanks Doc for the great posts over the years.
    What should we do? Those greed, irresponsible people who are laughing in our face over and over again since they keep getting rewarded for being…well, financially irresponsible.

  • The Case-Shiller report came out today indicating that home prices are still falling but that the pace of decline has moderated.
    I wonder how the “lame stream media” will spin this one?

  • OK, lets see: Mortgage: $400K; current market value iof house: $300K. Bank makes new 1st for $300K; government makes 2nd for $100K.
    Now what happens if either, a) the owners sell the house for $280K; or b) the market value of the house falls to $250K; or c) they can’t pay the 2nd and/or the 1st mortgage??

  • greggp

    Assuming California operates under the common law system as applies here in Ireland, then your solution wouldn’t work. Anyone who buys a house, even subject to a mortgage, becomes the legal owner of the house.The mortgagee (lender) has only an equitable interest. Therefore the idea that the mortgagor in is adverse possession is misconceived. Adverse possession is when you have no title to the property at all, you use the property for the required period, in Ireland 12 years, and at the end of this period you extinguish the title of the legal owner.
    The system for repossession I think is different here in Ireland, where the lender goes to court to secure an order for possession for non payment. We don’t do NOD’s and I’m not fully up to speed on how they work. However, although i’m not sure about this, I believe that if a lender, having secured an order of the court for possession, and then does nothing to execute it for the statute of limitations period, which I think is three years, then it seems to me that the lenders right to enforce it will be extinguished.

  • Why don’t they create a program to allow us renters to bid on that $300,000 valued house with that same low-interest government loan? The Gov won’t have to eat/forgive equity. The two persons in charge of the debacle (consumer & bank) take the hit (consumer via credit ratings and costs to find his rental – he can have mine & bank obviously the equity bath)…
    I’ll tell you why our government doens’t do it.
    BECAUSE IT MAKES SENSE, but does not make money for the banks…

  • I’d have to agree with “fed up with the fed”. I’m also an Architect and my profession has never been so decimated. I know so many people looking for work. I have several friends whose business has one job or no jobs….

    Again… we’ve allowed the Financial gurus to destroy our economy and are sitting by watching them still get their bonuses. It’s ridiculous!!!

    Oh…. and this whole deal with the Case Schiller data…. Wouldn’t it be terribly manipulated considering all of the foreclosure moratoriums???? Everything is just manipulated.

  • Laura Louzader said…
    Right now, I’m listening to the discussion of the plight of CA muni bond holders,

    I dumped my CA munis a while back. Sad thing is that I was a believer in modest, safe, long-term gains, rather than trying to hit home runs. To think that municipal bonds could create terror. I sleep much better now, without them.

  • By Jove I think she’s got it! Laura is dead to rights. We are insane.
    It has been happening for a while now – decades perhaps – but it really sped up since the new century began –
    B of A is now adding cash and/or promissory notes as “required contributions”
    from borrowers doing short sales – even purchase money in CA – so no more
    saving the borrower from foreclosure – just let them foreclose – they’ll take so
    long in the end you’ll get more time anyhow – why get the lender a better price
    with a short sale if the only thanks you get is a kick in the ass and judgment that is illegal under CA law? Countrywide is B of A so they are on the same bandwagon. Since the people have no rights or laws to protect them and the bankers and servicing companies violate all the laws with impunity – what’s the point? Maybe everyone in the whole damn country should just stop paying their mortgages all at once and tell the banks to cover the payments with that tax money they already got – and tell the stupid bank owned government to shut the banks down now that they got no payments coming in… I kinda like Karl Denninger suggestion that we Starve the Beast Maybe he’s right… no one is ever going to force them to mark to market and take the damn loss – no instead all the people keep taking the losses and being told they have to keep paying. Why on earth would you pay for something that is worth half what you are paying on? Or pay some freakish loan mod that will return to the jumbo payment you cannot afford in five years or less? What and then we do it all over again??? Why doesn’t anyone look at the statistics – loan mods almost always FAIL – no matter if they are the new fangled ones or the ones of the past – “forbearance” or “workouts” – they always give the lenders more money and strip the borrowers of more rights – Nuts. Insane. Oh, right – we already agreed that we are all insane.

  • Fed up with the fed said: I say… “what the hell, my credit is shot anyway, thanks to all of this twenty-year long festering bad lender policy.”

    Bad lender policy…WTF! So some bankster broke into your home with a shotgun and forced you to borrow money for a pool, etc. You must be a victim. Have you ever heard of contingeny planning…as in what happens if everything goes wrong and not just perfect. Look in the mirror…get real…and get out of my pocket.

  • As soon as the rest of America finds out that they can dump their properties and walk away we’ll have a huge implosion. The cycle is feeding on itself now, and there’s no stopping it unless the banks take the hit on the bad loans.
    We all know that won’t happen….their bonus’ are based on profit.
    So, my prayers and thoughts are with all of us, because in the end that’s all we are going to have. We won’t have a currency, and we WILL have super inflation and desparately poor wandering in the desert. I suppose this is the ultimate karma for being swine about “things”.

  • Remember, friends: what’s good for The Fed is good for America.***
    ***C 1913, Reg. U.S. Pat. Off., all rights reserved by the central bankers and their corporate tools, all use of the term “America” subject to intellectual property litigation. Relax. Go shopping.

  • Razor Edge – I’m not certain my understanding of it is 100% on, so perhaps if this is incorrect, someone else can chime in.

    The foreclosure process starts with unpaid bills. The amounts of these bills along with penalty fees will be added as the amount to bring the loan current. If this does not happen, a notice of default is filed declaring the situation and beginning the process which can lead to foreclosure. If the default remains for another 90 days and foreclosure is pursued, then a notice of trustee sale can be filed and an auction date set for the property. Usually the NOTS will be accompanied by a sheriff’s eviction order. Then, if the house fails to sell, the bank behind the loan will take ownership and attempt a private sale (usually at a significant loss).

    Historically, this would take 6-9 months (usually 90 days before NOD, legally required at least 90 days from NOD to NOTS and a another 20 before auction), although nowadays, things seem to be different with all this shadow inventory, foreclosure moratoria, and and just plain massive workload in the loss mitigation departments of mortgage banks.

    And this is all in reference to California. It can vary from state to state.

  • Yes, Tyrone, the Righteous are dying just like the Wicked. My elderly mother is hurting badly on her defensive CDs because the interest rates are so low. Punish the savers and reward the spendthrifts, by all means. I have had my hours and salary reduced, much reducing my ability to save for my retirement. Two wealthy individuals of my acquaintance have been gutted- one being hammered to death on his stocks, and the other losing a business after shoveling the last $2MM he had into it to keep it afloat- several hundred jobs lost there
    I used to feel good about offering wealthy clients and/or those who could get the benefit of the tax exemption, municipal bonds. I used to put my faith in solid GOs from places like Los Angeles or Chicago or San Fran. No more. Chicago has a mayor who is pushing this city to the brink of insolvency with his White Elephant Vanity projects, and CA has been living way beyond its means for decades.
    Now all I feel like recommending to anyone, rich or poor or in between, is that they lay in a 6 month supply of food, water, and essential medications, and lots of coats, blankets, and good walking shoes

  • Hey Doc,

    What’s your opinion on the new up to 125% financing just announced?

    This is just another in the growing list of things that are changing the out come.

    The Federal Government is making the foolish spend thrifts look pretty darn smart and making the prudent saving looking like a Jackass.

  • fed up with the fed

    nodhannum said:

    “You must be a victim.”

    …pretty smug words… good for you to be so-o secure, but it won’t last.

    I bought this house for 160k when I could have afforded triple that much.
    I could’ve cashed out with that 150k refi and split for the hills, so don’t pull your snark w/ me. I know of plenty who have done exactly that, … is it your idea as well?
    I’m not the criminal here and I don’t have my hand out to anybody, least of all a bitter piece of scum like you. I don’t give a crap what you think, but I do resent your high and mighty attitude.
    Not that it matters, but this house is worth more than you could possibly know and it isn’t my opinion that establishes that fact. Putting the cash into the house and investing 100% of the effort and labor was what anybody would have called pretty sound contingency (and don’t deny it for yourself, either, liar) until that “bankster with a shotgun” showed up last September and begged off the United States Congress.

    It wouldn’t have made a difference if I had refi’d or not, jerk. I still would have lost my job.


    I _ DIDN’T_.

    Read that again, because it is where you went right off the rails.

    10% loan to income or 40% loan to income doesn’t make any difference IF YOU CAN”T GET A JOB!
    The only act that WOULD have made a difference would have been for me to rent instead of buy until I had the cash to pay for it.

    Is that the world you live in?

    Are you so stupid to fail to understand that point and instead bite me while you “think” I’m out to get something for nothing? From YOU? I don’t even know you. You should be glad I don’t.

    …and then there’s this boneheaded comment:

    “Bad lender policy…WTF!”

    How long have you been asleep?

    I’ll tell you WTF, so pay attention… it may be your last chance to learn. Get in touch with your nation’s fiduciary history and the laws that have been manipulating it. Start with recent events like the Community Reinvestment Act…, add Congressional pressure on lenders to abdicate common sense lending practices and minimum 20% down payments… only to replace them with liar loans, ALT-A’s, No-Doc loans, 125% LTV’s on Jumbo’s and everything else this weblog has been screaming foul about.
    THAT is what this rant is about.
    Now you come along and try to piss on me.
    Just wait.. it’s coming for you too.

    Hide under your rock and watch while the same crooks that caused this crap, white collar scum like Mozillo, Frank, Dodd, Waters,et al., and their buddies down at FHLMC, FNMA, and the rest of the GSE’s,with the help of Goldman-Sachs and the Federal Reserve Board, rape you and the rest of the world until you bleed…

    Are you REALLY that blind?

  • Wow Doc. In addition to your spot-on reports you have some readers/posters who just blow me away. AnnS and Laura Louzader come to mind first but there are others here too. If it’s ok I’d like to ask you and your readers about the following:

    As someone who has owned property in CA and TX for decades and travels back and forth several times per year I see how the crisis so far is being felt differently in each area. (LA vs Dallas specifically).

    I don’t feel good when I travel back to Dallas and see new hotels and highways being built all over the place. Neighbors putting in $50,000 pools and new cars everywhere. It’s as if nothing has changed. It’s crazy…..

    I guess some would say TX is the place to be but I cannot help but feel that people here are living in denial. If you talk to them they seem to think TX will skip through this whole thing unscathed. Maybe the state is feeling it less for now but I feel like I’m watching the beginnings of disaster unfold before my eyes.

    Just what do they think is going to keep the state roaring as usual? Just because TX never had a real bubble does not mean the fallout won’t fall on their economy too. Any thoughts?

    P.S. I love both of these states and don’t mean to sound critical of either.

  • Robert Cramer

    Well, if you want to get wealthy, and retire worry free, become a worker for the State of Calif.
    There are over 5,000. retired state workers, getting over $100,000. in retirement pay, not including lifetime medical coverage.
    For a list of your friends and neighbors living the life of a millionaire, go to:

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