Comments on: Michael Capuano: Why Are We Using the FDIC in the Bailout? And Why Do We Trust Ratings Agencies?

By: justcowboyway

justcowboyway — Thu, 26 Mar 2009 11:09:49 +0000

Just a dog and pony show. Makes good sound bites.

By: damagedone

damagedone — Wed, 25 Mar 2009 17:36:42 +0000

I meant $90000 from the hedge fund. Anyway, if underlying transactions like this are a significant percentage of the total in the bundle, then the math will not workout. Someone at the top of the mortgage company mess(es) needs to be indicted as well as some others who allowed it to go on.

By: constantweader

constantweader — Wed, 25 Mar 2009 16:29:21 +0000

Thanks for capturing this. Capuano’s points were important & effectively went unrefuted. I’m with Krugman — this is “an awful mess.”

The Constant Weader at www.RealityChex.com

By: 4jkb4ia

4jkb4ia — Wed, 25 Mar 2009 12:42:10 +0000

I missed that to shoot my mouth off, but Capuano is always good. And he was on to the bloviating by that part in the hearing.

By: albertchampion

albertchampion — Wed, 25 Mar 2009 05:50:23 +0000

let’s get very clear, here.

geithner, bernanke have known what has been going on in this market for years.

they are not greenhorns.

yet, listening to the hearings today, i thought that the congress treated them as if they had just landed from pluto…and were just trying to ameliorate the system as if they had no historical involvement[just men from mars].

but, that is a fiction. both of them know everything about how this trainwreck was created. and both of them want to refrain from repairing the tracks. why is that? is it because they don’t want to upset their friends?

barry obombya is a fraud. just a more mulatto george walker bush. oh, he speaks better. his baritone is more pleasing. but, he is just another actor. fronting for the banksters.

By: kimmy

kimmy — Wed, 25 Mar 2009 05:08:29 +0000

I have a question. There are hedge funds that made money on this. They knew what was going on. Why don’t we use these people to help us out of this quandary. They seem to know more than the execs at these big bank/insurance companies.

By: Hugh

Hugh — Wed, 25 Mar 2009 04:44:39 +0000

They are using the FDIC as a front because Geithner and Treasury don’t have the cred to do it on their own. And they figure that because FDIC insures depositors and so is very popular with most Americans the Congress won’t leave it to twist in the wind when things go south in the Geithner plan.

As for the ratings agencies, they are a sign of how bankrupt both government and Wall Street are in an intellectual sense. Again these are some of the major villains in this piece. Their credibility should be completely blown but instead both government and Wall Street continue to cite them as if their ratings still had meaning. And importantly the Obama Administration has gone out of its way to avoid reforming them.

By: damagedone

damagedone — Tue, 24 Mar 2009 23:53:51 +0000

Ok, so some of the underlying properties have already been foreclosed or may be close to foreclosure. There should be a pretty good idea of the cash inflows that would result. I assume at the point of foreclosure the banks would have a loss on their books and future projected cash flows for that particular piece of property would be known and the hedge funds would have a good basis for a bid, if the were just one piece of property rather than a bundle. There is likely to a difference between the what the banks would like to receive 60% and what the the hedge funds would like to pay 30%. Therefore, if someone, who earns only $20000 per year and who did not just graduate from med schoool, bought a house for $300000 with $0 downpayment and an adjustable rate mortgage (SCREAMS Fraud) and the house now has a market value of 20% – $60000 and the bank would like $180000 and the hedge might be willing to pay $30000 does the math work out? From what I hear from various sources this is typical situation?

By: readerOfTeaLeaves

readerOfTeaLeaves — Tue, 24 Mar 2009 22:35:40 +0000

The ‘patina of impartiality’ seems to be coming off a lot of institutions these days; no wonder some people are flipping out. It’s tough: the pedophile priests gave the Catholic Church a bad name, the ‘unnamed sources’ and Judy Millers who were corrupting public information have nearly sunk the media (as we knew it, which is a shame for good reporters everywhere), and so on some levels it’s kind of as if ‘the market’ is being revealed as a place where economic pedophilia ran rampant.

The bad part is that it’s so disgusting and infuriating.
The good part is… since that’s how bad it was, at least now if we can unload the death grip of market fundamentalists, the DC/NY axis, and Wall Streeters, maybe a more functional system can be put in place.

I think Wall Street wants to rewind and use taxpayer bailouts to save its ass — Goldman at the front of the move to use this ‘crisis’ to become even more powerful. That could happen unless people articulate their insistence to electeds; no matter how corrupt the markets, they still have to follow laws.

A lot depends on political will and street smarts, IMHO.
But anyone who thinks we can go back is just not thinking clearly at all.

By: wohjr

wohjr — Tue, 24 Mar 2009 22:23:10 +0000

Exactly. I forget the exact figure and will look for a cite, but at one point in 2007 there were TENS OF THOUSANDS tranches of this MBS crap rated AAA. And guess how many corporations? Less than fifty! If that doesn’t point to a f*cked up rating system, then I don’t know what does.

The agencies are a joke– they had this patina of impartiality that has been stripped quite bare. I’m with you, rotl, I say bury them- the sooner the better.