After reading the news stories and listening to the speech, it took awhile to figure why this did not smell right. Reading Fox News, the plan seems straightforward. Then, after reading, NewsMax and doing some ruminating, the problem became quite evident. None of these numbers add up!
According to Newsmax:
The initiative is designed to help up to 5 million borrowers refinance — if their mortgages are owned or guaranteed by Fannie Mae or Freddie Mac. It also provides incentive payments to mortgage lenders in an effort to convince them to help up to 4 million borrowers on the verge of foreclosure.
Another part of the plan is as follows:
“Headlining Obama's plan was a $75 billion Homeowner Stability Initiative, which would provide a set of incentives to lenders to cut monthly mortgage payments to sustainable levels. It defines this at no more than 31 percent of a homeowner’s income. Funding would come from the $700 billion financial industry bailout passed by Congress last fall.”--NewsMax
Seems ok, so far. BUT…
“Of the nearly 52 million U.S. homeowners with a mortgage, about 13.8 million, or nearly 27 percent, owe more on their mortgage than their house is now worth, according to Moody's Economy.com.”--NewsMax
Uh-oh, this does not add up, because the plan, according to Obama, is to help only 9 million people, and we know that number will be declining in the next few weeks. He always lowers expectations. So, what about the 4.8 million that the plan does not help? Who is exactly covered and not?
Also, if you simply divide the $75 billion by 9 million borrowers, each borrower would receive $8333. That seems it would help if you owned a lower priced home but what about the high priced homes. $8333 is not going to help anyone who has lost substantial value in their homes, such as $20,000 to $100,000.
Michelle Malkin discusses other aspects of what is wrong with this plan.
Now, there are some major questions based on principle here. First, is this plan going to help the real estate investors that were risking money on the purchasing a home, sitting on it, and then selling it for a profit when the value increased. This is called flipping. Many people were caught in the flip when housing market crashed and the house was worth less than what they bought it for. Are we helping them? What about rental properties are they covered?
Now, the key problem with this bailout. What happened to personal responsibility in this country? It must have died and is buried next to common sense. These people are adults. They read these contracts. They know what they were doing. The interest rates went up. The value of the home went down. That is life. Why are we using taxpayer’s money, OUR money, to pay for their mistakes? I understand it is not this simple, but they did sign these contracts and should be held responsible for their actions, not us or the government.
Finally, it is very odd that Freddie Mac and Fannie Mac are going to assist in the refinancing of these loans. The same company with their unscrupulous lending practices that caused the housing and banking crisis in the first place. The same company ran by Franklin Raines who is one of Obama’s unofficial advisers. The same company that Rahm Emanuel was on the board of. This is beginning to smell real bad at this point.
It will be interesting to see how Christopher Dodd and Barney Frank play a part in this plan.
Obama said he wants to fundamentally “change” our country. Well…by doing the same old lending practices with the same companies and people is a nice start, I guess.
Showing posts with label Freddie Mac. Show all posts
Showing posts with label Freddie Mac. Show all posts
Wednesday, February 18, 2009
Tuesday, February 17, 2009
“Turning Japanese”
I can hear the one hit wonder from the Vapors now, “we are turning Japanese” oops Swedish? Yes, Obama is now leaning toward changing the American banking system into a Swedish system and steering away from the Japanese model of the 1990s to rebuild our banking system.
Good thing. Japan still hasn't recovered from their recession of the 1990s and we should steer clear of anything they did, like high, wasteful governmental spending, buyouts, and nationalization of industries. Wait…we are doing that!
On Wizbang, Obama eyes Swedish model for US banks, there is more detailed explanation of the Obama/Geithner plan (oh…hot picture of Swedish models too!) Basically, the government would buy up the banks until they recovered and created enough assets to buy themselves back. Sounds good, expect for the government being involved and them owning a prime American institution of Capitalism. Worst part is in the following link Bank nationalisation gains ground with Republicans from FT.com. Yes, the same Republican suspects, not Specter, Snowe, and Collins this time, but Graham and McCain from illegal amnesty fame. These politicians don’t get it do they? They do not understand that the People know best. Free markets know best. We can fix it, if you would just let us.
GET OUT OF OUR WAY!
Now, the U.S. government cannot do anything right or efficiently. Also, the citizens cannot trust the government that they would own the banks temporarily. They don’t do anything temporarily. So, they are only going to make it worse and do it permanently.
To make matters worse, if the government owns the banks, what power would they have over the citizens? Who would control what interest rate you would get for a loan? Who controls which businesses get credit and which doesn’t? What interest rate would a wealthy person receive compared to a middle-class person? Who would control who does or doesn’t get a loan? Would they continue giving loans to people who cannot afford them? Are they going to continue to give loans to illegal immigrants who cannot verify their identity? Who monitors and guards all that private information of the citizens?
Answer. Why the United States government, of course. The same government that created the Freddie Mac and Fannie Mae debacle that created the whole economic downturn in the first place.
Careful…your head is about to explode.
Who in the esteemed, all knowing government would have all this control. How about Barney Frank and Christopher Dodd. Yes, the same wizards of smart that are responsible for the bank collapse by saying that Freddie Mac and Fannie Mae were stable and suggested we need do more of the same policies, all of which are at the heart of the banking crisis.
So, they are only going to make it worse and do it permanently. At least, Dodd can still be getting his sweetheart loans. Hey, maybe Frank and Dodd could loan some of OUR money to some Democrats to pay some of their past taxes. I have heard that list is getting quite long.
Good thing. Japan still hasn't recovered from their recession of the 1990s and we should steer clear of anything they did, like high, wasteful governmental spending, buyouts, and nationalization of industries. Wait…we are doing that!
On Wizbang, Obama eyes Swedish model for US banks, there is more detailed explanation of the Obama/Geithner plan (oh…hot picture of Swedish models too!) Basically, the government would buy up the banks until they recovered and created enough assets to buy themselves back. Sounds good, expect for the government being involved and them owning a prime American institution of Capitalism. Worst part is in the following link Bank nationalisation gains ground with Republicans from FT.com. Yes, the same Republican suspects, not Specter, Snowe, and Collins this time, but Graham and McCain from illegal amnesty fame. These politicians don’t get it do they? They do not understand that the People know best. Free markets know best. We can fix it, if you would just let us.
GET OUT OF OUR WAY!
Now, the U.S. government cannot do anything right or efficiently. Also, the citizens cannot trust the government that they would own the banks temporarily. They don’t do anything temporarily. So, they are only going to make it worse and do it permanently.
To make matters worse, if the government owns the banks, what power would they have over the citizens? Who would control what interest rate you would get for a loan? Who controls which businesses get credit and which doesn’t? What interest rate would a wealthy person receive compared to a middle-class person? Who would control who does or doesn’t get a loan? Would they continue giving loans to people who cannot afford them? Are they going to continue to give loans to illegal immigrants who cannot verify their identity? Who monitors and guards all that private information of the citizens?
Answer. Why the United States government, of course. The same government that created the Freddie Mac and Fannie Mae debacle that created the whole economic downturn in the first place.
Careful…your head is about to explode.
Who in the esteemed, all knowing government would have all this control. How about Barney Frank and Christopher Dodd. Yes, the same wizards of smart that are responsible for the bank collapse by saying that Freddie Mac and Fannie Mae were stable and suggested we need do more of the same policies, all of which are at the heart of the banking crisis.
So, they are only going to make it worse and do it permanently. At least, Dodd can still be getting his sweetheart loans. Hey, maybe Frank and Dodd could loan some of OUR money to some Democrats to pay some of their past taxes. I have heard that list is getting quite long.
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