Who Will Fix the System?

Are the key players in Washington’s finance and mortgage lending issues up to the task of reforming our system. Do they even see the need?

10 Fuchsia   Irvine, CA 92604  kitchen

Asking Price: $479,000
Address: 10 Fuchsia Irvine, CA 92604

Was a long and dark Decemberbarney-frank-tim-geithner-ben-bernake
From the rooftops I remember
There was snow
White snow

Clearly I remember
From the windows they were watching
While we froze
Down below

When the future’s architectured
By a carnival of idiots on show
You’d better lie low

Violet Hill — Coldplay

Who is the architect of our system for financing real estate? We know our current system enabled a massive housing bubble. Is that the system we want to keep in place?

If we reform this system, Christopher Dodd (shown below), Barney Frank, Ben Bernanke and Tim Geithner are the men we must to rely on to get it done right.


The Three Stooges

I suppose, it could be worse…

I have outlined both A Free-Market Solution to Prevent Housing Bubbles and Regulatory Solutions to Prevent the Next Housing Bubble. I am not holding my breath…. Neither is Paul Krugman:

In the grim period that followed Lehman’s failure, it seemed inconceivable that bankers would, just a few months later, be going right back to the practices that brought the world’s financial system to the edge of collapse. At the very least, one might have thought, they would show some restraint for fear of creating a public backlash.

I was startled last week when Mr. Obama, in an interview with Bloomberg News, questioned the case for limiting financial-sector pay: “Why is it,” he asked, “that we’re going to cap executive compensation for Wall Street bankers but not Silicon Valley entrepreneurs or N.F.L. football players?”

That’s an astonishing remark — and not just because the National Football League does, in fact, have pay caps. Tech firms don’t crash the whole world’s operating system when they go bankrupt; quarterbacks who make too many risky passes don’t have to be rescued with hundred-billion-dollar bailouts. Banking is a special case — and the president is surely smart enough to know that.

All I can think is that this was another example of something we’ve seen before: Mr. Obama’s visceral reluctance to engage in anything that resembles populist rhetoric. And that’s something he needs to get over.

Without leadership from the administration and a desire in Congress, reform has little or no chance.

Christopher Dodd is Democratic politician currently serving as the senior U.S. Senator from Connecticut, according to Wikipedia. Most importantly for this issue, he is Chairman of the Committee on Banking, Housing, and Urban Affairs. According to Michael Moore, Christopher Dodd is in Countrywide’s pocket. His involvement with the housing bubble is less well known than the other players. I do remember his idiotic populism appealing to homedebtors during the presidential campaign. He doesn’t seem to get it.

Now, Christopher Dodd wants to put the Federal Reserve in charge of out entire financial system. That doesn’t sound like a good idea to me, nor does is sound like a good idea to Calculated Risk. Imagine how bad Alan Greenspan could have screwed up our financial system if he would have been in charge of the whole thing.

Barney Frank is the United States House Representative for Massachusetts’s 4th congressional district since 1981 and a member of the Democratic Party, according to Wikipedia. He is also noted for his complete cluelessness concerning the housing bubble (great video BTW). He does not use a computer. Perhaps he is a good legislator, perhaps not. As chairman and of the ranking Democrat on the Financial Services Committee, he is one of the most powerful men in Washington when it comes to mortgage finance.

Both Christopher Dodd and Barney Frank are the ranking Democrats, and their party has a secure majority in both houses. If these two men can get the members of their own party to agree on legislation, it will get passed, and the President will sign it (This is true of anything the Democrats want to do between now and 2010).

According to Wikipedia, Ben S. Bernanke is the current Chairman of the Board of Governors of the United States Federal Reserve. Bernanke succeeded Alan Greenspan — the chief architect of the housing bubble — on February 1, 2006. He is just as clueless as his predecessor and Barney Frank. Perhaps he is a good central banker, perhaps not. He is arguably the most powerful man in Washington, and he certainly is the most powerful banker in the United States.

Timothy Geithner is the 75th and current United States Secretary of the Treasury, serving under President Barack Obama. He was previously the president of the Federal Reserve Bank of New York, according to Wikipedia. He is a classic crony who worked his way through the banking system. Is it likely that he will work to impose draconian regulations on the banking industry? I doubt it.

It is easy to criticise our government’s stooges from afar. They may really understand the problem and know the best solutions and recognize that it isn’t politically feasible to get the reforms past. That is giving them the benefit of the doubt. I think they lack the understanding and the desire to fix the problem.

Nothing will be changed.

When 100% financing comes back next time around, will you take the free money the banks are giving out?

10 Fuchsia   Irvine, CA 92604  kitchen

Asking Price: $479,000

Income Requirement: $90,688
Downpayment Needed: $95,800

Purchase Price: $335,000
Purchase Date: 3/19/2002

Net Gain (Loss): $115,260
Percent Change: 43.0%
Annual Appreciation: 5.7%

Address: 10 Fuchsia Irvine, CA 92604

Beds: 3
Baths: 3
Sq. Ft.: 1,495
$/Sq. Ft.: $320
Lot Size: 1,495 Sq. Ft.
Property Type: Condominium
Style: Townhouse
Stories: 2
Floor: 1
View: Greenbelt
Year Built: 1974
Community: El Camino Real
County: Orange
MLS#: S589143
Source: SoCalMLS
Status: Active
On Redfin: 5 day

This is a beautiful home with 3 bedrooms 2.5 baths, formal living room with fire place, dining room, kitchen with granite counters, extra room off kitchen that is great for eating area or many have used this area as a family room with sofas and TV area, upstairs family room and office area, this home has a nice patio that leads to a 2 car garage. Close to great schools and shopping!

10 Fuchsia   Irvine, CA 92604  giraffe

The HELOC abusers at this property did well during the bubble. They paid $335,000 back in March of 2002. They used a $268,000 first mortgage, a $50,250 second mortgage, and a $16,750 downpayment.

These owners periodically added to their HELOC, and finally in November of 2004, they refinanced their first mortgage for $448,000 and opened a HELOC for $100,000.

Total property debt is $558,000 assuming they maxed out their HELOC. Their pattern suggests they did.

Total mortgage equity withdrawal is $239,750.

Is this the kind of life we want to enable as a culture? Are these owners entitled to an extra $80,000 in mortgage equity withdrawal each year for spending money?

I suppose it is a good gig — if you can get it….

60 thoughts on “Who Will Fix the System?

  1. winstongator

    If Timothy Geithner is as bad at handling the economy as he is at picking bathroom tiles, he won’t need to sell his house.

    Geithner obviously did not acknowledge the housing bubble with his wtf pricing of his own home.

    The fact that those in charge were so blind to the growing crisis is disheartening. I would have liked to see at least one person with a track record calling the bubble, but they’d also probably be critical of the Fed or other gov’t involvement.

    Larry Ludlow isn’t a small mispelling is it?

    Here’s another market based improvement that would help.

  2. MalibuRenter

    If they had maxed out their heloc, I think they would have asked for more. Their asking price minus 6% takes you to the value of their first mortgage.

    I’m guessing this will pop back up later as a short sale.

    Regarding the politics, remember that homeowners outnumber renters, and are more likely to vote. Ever notice any renter’s credits in your Federal taxes? Yep.

    1. winstongator

      The mort interest deduction phase-out at higher incomes has been floated. That is the first step toward fully elminating it. That would dovetail with possibly excluding interest payments as deductions for corporations.

      1. Chuck Ponzi

        The problem with this approach (please don’t ignore this because I disagree) is that it still unfairly favors landlords over homeowners. Landlords would still be able to deduct the full amount because it is a legitimate business expense.

        However, the real elephant in the room is not the interest deduction, but rather the depreciation of real property. Explain this, if you can! If several hundred years of history, and millions of people’s accepted wisdom tells us that houses only go up in value, why does the tax code tell us that housing only goes down in value? Indeed, that depreciation deduction is far more nefarious than the interest deduction. Not only should we take that away, we could perhaps make landlords pay unrealized gains on property each year, or within a specified time frame. And, get rid of 1034 rollovers. That’s absolute rubbish. In addition, we could fund a renter’s credit which would more favorably value housing prices. It would have a two-fold effect, higher housing prices (relatively) AND higher homeownership. Instead, landlords are in a favored tax class. Renters would enjoy the fruits of what they are actually paying for. (unfortunately, rents would increase by the same amount over the long term)

        Which brings me to the conclusion, if interest payments are a “cost of doing business” for a landlord and a homeowner, why is it not the same for a renter? Indeed, the renter is often paying the interest payments for the landlord. Passing the credit down to the renter would end the double-counting of income.

        From an economics perspective, government has already gotten involved in the free market with the tax code. We should at least make it more fair.


        1. MalibuRenter

          The tax code says structures go down in value through depreciation. Homes are composed of land + structures. What you have seen over the long run is a small amount of appreciation above inflation. That appreciation might, or might not, imply a positive return on investment. The costs of maintaining a house might mean it has a negative return, both before and after taxes.

        2. T

          There is a tax deduction for being a renter. Its right there in the CA state taxes book. The instructions are simple. Ok, so I don’t qualify for it – because my income is too high, but it does exist. What do the feds care about what CA does in its own little playpen?

          Trade was one of the things that helped make this country great – and we have the Quakers to thank for leading the way on that. Their word was their bond. They could be trusted to do as they said they would or there would be consequences. Others imitated them, because it was profitable. And now the wheel has turned and we’ve come to a ‘I’ve got mine, screw you’ attitude to the world and biz dealings with each other. Why would I want to do biz with someone I don’t trust? Why should any bank lend to any typical home purchaser mortgage money in the current corrupt environment?

  3. granite

    “…will you take the free money the banks are giving out?”

    You betcha. I want a free Beamer in my driveway like everyone else.

    Go ahead Timmy, Benny, and Barney, make my day.
    Crime does pay in America.

  4. travis

    Why does the government need to “fix the system”? You had a bubble on the left coast, so did FL, NV and AZ. Here in TX we did not. Why should the whole country be involved in fixing your markets? The lenders lent money, sure. Some creative financing to pay for your ridiculous real estate prices. It’s the buyers who agreed to the price they paid and the terms of the loans they signed. The government is not here to make sure people make sound decisions. Common sense should have played a role in the buyers decision process. I know it did for me. I was there from 01 to 04. Thought about buying a house. But it did not make sense to me. When the normal white collar salaried person cannot afford to buy a starter home without negative am loans or teaser rate arms, that’s a sign your market is over priced.

    Again its not the government’s job to make sure people understand the financing they are getting, its the borrowers job to understand that. Read the Note. Its not too difficult to do. Ask the loan officer questions. If the loan officer does not understand the loan terms, then maybe its a good idea to avoid that loan.

    Your bubble markets created opportunities on the way up and more on the way down. Its a normal cycle of real estate. The same thing happened in the stock market. People get involved in things they know little about because Johnny next door maybe 40K in profit doing it in 3 months!

    I welcome the bottom of your market coming quick, then maybe the rest of the country can stop having to worry about everyone else’s mistakes.

    1. tonye

      If only it were so easy.

      The bubble affects everyone, including those who lived in not so bubbly places and those who did not participate in it, because the banking system affects all of us.

      Perhaps you had money in your 401K or stock funds or stocks last year?

      Perhaps your credit cards shot up to 26% in the last few months?

      Maybe you have been laid off or won’t get a raise this year because the economy sucks and/or your employer can not access its credit lines?

      The entire country is affected by the irresponsible lending practices of the last few years.

    2. LongTime Reader

      I agree, the government doesn’t need to fix the system. Instead they need to let people who make bad decisions face the consequences. The government shouldn’t be trying to hold up the market.

      1. Lee in Irvine

        I agree with this to a point, however there without a doubt needs to be some rational reworking and new regulation of our finance/capital markets.

        Number one rule change should be NO more allowing the CEO to sit on the Board of Directors, then allowing him to cheery pick the compensation committee, to determine his pay as CEO. (What a fu*king scam that is). Or allowing the CEO to make risky leveraged bets, and reap huge rewards on the way up, then walk away with hundreds of millions from a bankrupt institution, with nothing to lose other than a soiled reputation.

        This Ponzi scheme has made me question my previous position that markets are rational, and money is efficient. There are crooks who know how to work the system, fatten themselves with lots of money, then use that money as consideration to influence politicians.

  5. tonye

    “…will you take the free money the banks are giving out?”

    I think this time around, once the kids get out of college I will indeed take as much money as I can get my hands on.

    Then I’ll put it into a corporation that builds my retirement home in Big Bear (fully paid) and parks a bunch of cash in euros in some EU bank.

    When the crunch comes, we’ll walk away from Irvine and our great credit into retirement at our nice home in the hills and our corporate cash kitty.

    Hey, it’s the American Way.

    1. IrvineRenter

      I hate to admit it, but that is a good plan.

      If a lender really wanted to, they could probably go after you through the corporation and get the cash, but if you are one of ten million people who default, the odds of them going after you are not good. Plus, even if you caught their attention, when they examine the cost of piercing the corporate veil and fighting for the money, they would quickly realize the cost-benefit doesn’t make any sense.

      One thing that I may do differently next time is that I may try to time my sale at the top, get the cash, and avoid all the other complications.

      Its the IHB Way.

      1. tonye

        LOL… if you remember, I was thinking of blowing out my house during January of ’08. About the same time that we parked our 401Ks into bond funds.

        We didn’t do it because of the hassle and because the kids are at Uni. We had(have) too many other things to worry about and using our house as an investment was(is) not all that high in our priority list.

        OTOH, once the kids are out of the house, hopefully with their Bachelor degrees or in the Army/Marines then all bets will be off.

        So long as I have enough room to keep my LPs, stereos, cigar and computers (I think my wife has stuff of her own) I’ll be fine.

        Maybe you should do a “Take the money and run” column. (Steve Miller).

        BTW, instead of Big Bear, maybe the Pyrenees? Good luck getting my Corporating there, Countrywide…

  6. Anonymous

    I think the bank pay reform push seems like a good idea. Under the current system, if a bank employee doubles down if he wins get get a huge bonus, and if he loses, he loses nothing the taxpayers-bank take the losses. Total short term thinking with nothing to lose encouraged.

    The new rules make the bank employee’s interests more aligned with the taxpayers (ex. deferred comp – which you lose if the bank loses money in the long run). Better though would be Buffets long touted idea that people would have to put their own hard won savings in – and if they lose it, they lose their savings too.

    1. norcal

      I wonder if there are any politicians who would look clean if you checked out their top contributors? I know in Silicon Valley most companies paid big bucks to candidates from BOTH parties – CYA investment.

      We just have to hope that our representatives can vote against their funders -pretty forlorn, eh?

      Or we can have publicly financed elections. Just like the U.K. and N.Z. – think about it: politicians all have the same $ from a central source and only 2 weeks to campaign.

      That would be a world-changer. It would give all the pols a chance to actually stop fundraising and read the bills they’re working on.

      1. LC

        $836,625 for Pasadena? What more do you need to know about these crazy prices? I know that I must sound like a broken record — actually I really sound like a drunken sailor on this end!

  7. IrvineRenter

    WSJ: Delayed Foreclosures and “Shadow” Inventory

    From Ruth Simon and James Hagerty at the WSJ: Delayed Foreclosures Stalk Market

    … Legal snarls, bureaucracy and well-meaning efforts to keep families in their homes are slowing the flow of properties headed toward foreclosure sales, even when borrowers are in deep distress. … some analysts believe the delays are … creating a growing “shadow” inventory of pent-up supply that will eventually hit the market.

    Ivy Zelman … believes three million to four million foreclosed homes will be put up for sale in the next few years. The question is whether the flow of these homes onto the market will resemble “a fire hose or a garden hose or a drip,” she says.

    … “We are going to see a spike from now to the end of the year in foreclosures as we take people out of the running” for a loan modification or other alternatives, says a Bank of America Corp. spokeswoman. Foreclosure sales had dropped to “abnormally low” levels in response to government efforts to stem foreclosures, she adds.

    The foreclosures are coming. How many and when is the question. But based on the comments from the BofA spokeswoman, it sounds like foreclosures will “spike” in Q4.

    BTW, Ivy Zellman is the woman whose research makes up the ARM reset chart.

  8. E

    I have a solution.

    For all the people who lose their homes due to option-ARMs or HELOC abuse, the men should be chemically castrated and the women should be sterilized. Same goes for their children regardless of age.

    Stamp out stupidity.

    End the bloodline permanently.

    Think that’s too harsh?

    Too bad.

    1. norcal

      But it’s the culture that produces stupidity, not the bloodline. So as long as there’s a culture of kool-aid and free money you’d have an unending supply of idiots, even if you implemented your scheme. That’s IR”s whole point.

      So change the culture!

  9. IrvineRenter

    Buy now or be priced out forever…

    Home prices creep higher

    But the values of US homes aren’t as high as expected.
    Posted by Elizabeth Strott on Tuesday, September 22, 2009 10:49 AM

    Prices for U.S. homes rose by 0.3% in July from June, the Federal Housing Finance Agency reported today, the third monthly gain in a row.

    The first-time homebuyer tax credit helped lift prices in July after June prices were revised down to a 0.1% gain from a previously reported 0.5% increase. Economists had expected a 0.5% gain in July home prices.

    Prices were down 4.2% from July 2008 and were down 10.5% from the housing market’s peak in April 2007. Prices in July were at the same level as March 2005.

    Five of nine regions in the U.S. saw price increases, with a 1.6% gain in the Pacific region leading the way. On a year-over-year basis, that region saw prices fall 9%.

    The biggest monthly drop was in the East South Central states, which include Kentucky, Tennessee, Mississippi and Alabama. That region saw prices fall 0.9% in July.

    “Mortgage rates have come back down, and demand for homes remains high,” Brian Bethune, the chief financial economist of IHS Global Insight, told Bloomberg News. “There are a lot of positives in housing right now.”

    The index is based on repeat sales financed through Fannie Mae (FNM) or Freddie Mac (FRE).

    1. ConsiderAgain

      “Buy now or be priced out forever…”

      I’ve heard that recently. Also “You missed the bottom, prices are on their way back up”.

  10. IrvineRenter

    As if on schedule, I found this article in the New York Times:

    White House Pares Its Financial Reform Plan

    WASHINGTON — As a senior House Democrat announced an ambitious schedule to complete legislation overhauling the nation’s financial system, the Obama administration on Wednesday abandoned a symbolically significant provision in the face of widespread political and industry opposition.

    At a hearing before the House Financial Services Committee, Treasury Secretary Timothy F. Geithner announced that the administration had dropped one provision in its plan for a consumer financial protection agency — a requirement for banks and other financial services companies to offer “plain vanilla” products, like 30-year fixed mortgages and low-interest, low-fee credit cards.

    Mr. Geithner’s decision followed a wave of criticism by Democrats and Republicans, some with close ties to the industry, that the plan was the first step toward a new regulatory regime in which the administration would be handing new powers to government bureaucrats approving and disapproving a wide array of financial products. Republicans in particular had embraced that line of attack and said it is similar to the flaws in the administration’s health care program of giving government too much power.

    Among those who had said the provision stood no chance of passage was the committee chairman, Representative Barney Frank, a Massachusetts Democrat, who announced on Tuesday evening that it would not be part of the legislation.

    “There has been a lot of concern that if you invest the government with the ability to decide what’s appropriate here and there, that will lead to less competition and choice,” Mr. Geithner said. “The chairman’s proposals, which I’ve had a chance to quickly read, provides a better balance of choice and protection.”

    Consumer groups offered a measured response to the changes, expressing some relief that a stand-alone consumer-protection agency had not been scrapped altogether.

    “I don’t think anything here is intended to weaken or eviscerate this in any way,” said Ed Mierzwinski, consumer program director at the United States Public Interest Research Group. “The agency will still have a primary role of protecting consumers, and it will still have authorities.” Mr. Frank said he intended to draft the legislation with the committee in the coming weeks in the hope of getting it to the floor of the House as early as November.

    “Media reports that it is dead for the year are inaccurate,” Mr. Frank said. “This will be a very busy schedule.”

    In the Senate, the chairman of the banking committee, Christopher J. Dodd, Democrat of Connecticut, has also said he intends to introduce comprehensive legislation soon after further consultations with committee members.

    Hoping to move the legislation along, Mr. Frank disclosed important limits on the administration’s proposal intended to remove the political obstacles that had stalled that plan. Mr. Frank’s version restricts the scope of the proposed agency, but still leaves it significantly more powerful than the banking industry would like. Since the administration proposed the creation of the agency last June, the industry has mounted a major lobbying campaign to kill it.

    Mr. Frank announced that the legislation he was drafting would exempt a variety of businesses — merchants, retailers and providers of retirement plans, among others — from oversight by the new consumer financial protection agency. The agency was proposed by the administration to protect consumers from deceptive or abusive credit cards, mortgages and other kinds of loans.

    Mr. Frank said the legislation would provide for a way to resolve disagreements between regulators at the new agency and those at the other agencies that examine banks.

    The proposal by Mr. Frank was an effort to address the widespread criticism of the new agency by banks, while trying to assure that the new agency has some regulatory teeth. While narrowing the agency’s authority, the Frank plan would give the agency both the authority to write and enforce regulations.

  11. gld42

    Are we out of The Housing bubble yet? Any other wave for housing price going up?

    I don’t think we are out yet, however it seems that GOV would love to create another bubble.

    1. Geotpf

      Other places don’t have HOA dues of $1,126.97 a month. Hell, fair market rent on such a place is less than twice that. Factor in taxes, maintenance, and insurances, and these things have an actual value of damned close to zero.

  12. Kelly

    Obama is the president of USA! So he is in charged to rescue this mess Ironically, whenever he bases Wall St. at the mean time he give more $ to them.

    Yes, he knows that without the help from Wall St. there is no 2nd term. With his invisible hands to bail out Wall St with US dollar and get the election machine to run for his 2nd terms.

    My point is there are too many Chris Tuckers, and we just elected one of them to rescue us, maybe this is so called redemption.
    At the end, US dollar will be trashed by the world.

  13. asdf

    FED says we bottomed

    Fed slows $1.45 trillion mortgage program to Aid Housing Market; says economic activity ‘picked up’

    1. IrvineRenter

      I am glad you caught the double meaning. I think even more people will be gaming the system in the future.

        1. HydroCabron

          I cannot explain why anyone watches HGTV. It was insufferable during the boom, and is doubly so now. At best it’s extremely boring.

          I won’t do heroin or meth, but I understand why people try them. I don’t understand the appeal of HGTV, however. HGTV is just a channel you accidentally see for a moment while passing through to a higher or lower channel.

          1. Bitter Renter

            Well put, but I can understand the appeal of watching a show about buying a house. I’ve actually been sucked into watching these before. Since this is such a huge and important transaction and one that many people would never have an opportunity to monitor someone else going through, there is an appeal to such a show. This is not to say that HGTV’s shows are a wonderful source of useful and unbiased information on the process, of course.

            I can also see the appeal of the home decorating / renovating shows, for people who are into such things. (Not sure if HGTV shows any of these, but several times I’ve been sucked into those shows that show you how to do home repairs and renovations yourself, just to educate myself a bit more on construction techniques and proper tool use.)

          2. Geotpf

            I kind of like the House Hunter-type shows. It’s kind of fun looking in other people’s thought process and seeing all the different houses (some nice, some not-so-nice).

            Real Estate Intervention is good too, although it’s a bit predictable: House seller can’t sell house. Bald realtor dude shows couple nicer house that recently sold for less, and nicer house that is on the market for less. Realtor tells house seller to lower their price. Either they do and then they sell their house, or they don’t and it doesn’t sell. The end.

  14. Naive

    The people that bought homes at the peak are really hurting but there are some who seem to want more. Yesterday, I saw an article about the “accidental” landlord. These are people who bought a second house but could not sell the first. So they have decided to rent out the first home. The kicker is that the rent is several hundred dollars less than the mortgage payment. Add to that the real estate taxes and maintenance and it just makes me wonder what these people are thinking. I guess its a gamble that the bubble will be back soon.

    1. HydroCabron

      Tell me about it. Moving house right now, from a condo in an old Victorian to a high-rise condo downtown.

      Old landlord was accidental – had to move because of the kid, but couldn’t sell. The rent was nearly enough to cover the mortgage payment, but not taxes and maintenance. It was clear that the owner and his wife were both extremely uncomfortable being landlords.

      New landlord bought in early 2008, and has had to lower the rent considerably since his last tenant lost her job and left town. Getting $1500/month from me for 1230 square feet – is clearly glad to have a tenant. The problem is that, unless the mortgage was less than $250K – doubtful, given the $350K purchase price – there’s little hope of my payment cover the mortgage plus $280 association fee plus property taxes.

      He will probably be underwater within the next two years, since the consensus price for these units seems to be around $300K.

      Uh oh.

      I really like this place. I hope the banks offer tenants a shot at purchasing foreclosed units they inhabit.

      1. MalibuRenter

        Back in 2006 I envisioned a great business idea. I have absolutely no idea why it hasn’t happened.

        You have a bunch of renters sign on with a surety company, putting up bonds which guarantee they will vacate on 30 days notice and not trash things. The renters would get nice places at discounted rates. If the places sold, they had to move fast. The landlords would know they would actually move, because otherwise it would be quite expensive for the renters.

    2. MalibuRenter

      People who do this can have reasons beside waiting for the market to rise. I know someone who leased out their old house and used the lease documents to get a mortgage workout.

  15. Bitter Renter

    That’s pretty disturbing that the chair of the Financial Services Committee doesn’t use a computer. How can you not be out of touch in such a scenario?

    1. Geotpf

      This is not unusual. The Republican Party candidate for president last year doesn’t use a computer either.

        1. Bitter Renter

          Thanks for searching for that. I was a bit bothered by IR’s lack of a cite on Barney Frank, but given how it sounded sadly plausible I didn’t take the time to do a search.

          I’d say arguably it’s worse for the chair of the Financial Services Committee to not use a computer than a presidential candidate, just because the financial industry is so much more thoroughly computerized than government, so far.

          1. Bitter Renter

            No, I don’t think ability to drive would have any significant bearing on ability to serve as chair of the Financial Services Committee. If the head of the U.S. DOT didn’t know how to drive that might be a different matter.

  16. newbie2008

    The regulators all appear to have a vest interest in pumping up WS. They are usually ex-WS and going back into WS after office.
    As for BO non-response.

    If players in the NFL doesn’t score enough the bonus/salaries are docked and if it happens again they are given their walking papers without severance pay. They actually must earn their high pay or get traded or kick out on to the street. American public companies are the only place that reward bad performance with resetting option prices and then huge severance package. Consistent average performance is essentially punished. The so-called great and horrible CEO are rewarded.

    As for BO, BF, et al., follow the money.

  17. Richard Stabile Bergen County Real Estate

    The name of the came must be that the lender must always have skin in the game. The originator must keep money in and cannot sell 100% of the paper. It also should be weighted to be most of the first loss money. If this was to happen the banks would all of a sudden know how to make loans again. Look at the Jumbo’s right now it is a tight and strict credit market. If there was my system more capital would loosen it a bit but the loans would be prudent..

  18. Conan

    I don’t know whether this is really fair to Frank. There really was not much of a bubble in housing prices here in Massachusetts. And while he’s in the majority now, he certainly wasn’t at the time of that video. From what I’ve seen lately, he is on top of things.

    Chris Dodd and my father went to Providence College together, where they collaborated in the Freedom rides together, so he’s kind of an old family friend, but, be that as it may, I neither think he is soulless, paid for, nor a stooge.

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