The House has passed and the President has signed the massive bailout. The bill had been rejected by the House this past Monday. The Senate passed the bailout bill that is now law, but with over $100 billion in tax and other addons.
Credit markets are crashing.
California is going bust.
Car sales hurting for credit tightening.
Unemployment is scary.
Foreclosures are still going up.
I do not think the $700 billion bailout addresses these issues. There is no explicit means to address troubled mortgages in the bill. It is hoped that when the Treasury owns the notes then loan modifications can be more easily worked out.
I trust that hope. It may very well work. And if it does not work, then the Treasury will still own real estate assets that should limit losses, that is if the securities are purchased at a true market price.
Is it just hoped that the thought of $700 billion will ease credit strains with the banks and money markets. Will it simply improve the mark to market valuations?
The economic problems have moved beyond the mortgage crisis. This bill might help with remove some non perfoming mortgage assets, and that may help somewhat with liquidity and with market confidence.
The problem for me is the addons to the bill. I would not support the 450 page monster. I would pull my vote for the bill, because of the addons.
If Congress did not think the bill was good without the addons, why is the bill good with the addons?
The essential problems in the economy are not addressed - foreclosures, credit markets, unemployment.
Will this new law restore the markets and revive the economy? Congress passed this bill because they felt they had to do something - good or not so good. And evidently they passed the bill because it was loaded with addons, politely called "sweeteners" in the press.
Just like the Housing and Economic Recovery Act in July.
Rushed bad legislation is not the proper response to bad economic news.
Just my opinion.
My recommendation is to vote out the incumbents. The more I think about it the more it seems to me that Wall Street could get out of control because of the very cozy relationship with Congress. They try to blame greedy bankers, but the greed is just as well found in Congress' love of lobby money.
Richard Smith
American Acceptance Mortgage, Inc
Toll Free 888-474-9920 Cell 423-280-0345
Home financing in Tennessee, Georgia, and Alabama.
Experience matters when it is your home loan.
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FHA, VA, Rural Development, Reverse Mortgages, Construction Permanent, Renovation, FHA Renovation
Mortgage lending offices located in Chattanooga, TN
rsmith@aamonline.com
You took the words right out of my mouth!!!! Happy Friday!!
Lori Isaason
Richard,
Thanks for the post. I too have reservations about the new law to assist wall street.I am not convinced that there will be increased growth in employment, which is what is needed to stimulate the economy.
You make several great points as usual Richard. It seems to met that the key problem that needs to be adddressed is that of the struggling home owners.
Lori,
From the beginning it bothered me that there would be a lot of addons. The House resisted it, but the Senate came through in full color.
Richard
William,
The law does not seem to do much for the economic ills - foreclosures, unemployment, gas prices, growth. Not sure what it will do or how it will work.
I do think that taxpayer loss will be minimal, but $700 billion has to impact inflation. It would be good to know how they plan to modify mortgages to prevent foreclosure.
The H4H program will not help many.
Richard
Justin,
Thanks for the compliment. You are correct in my mind - no mechanism to help struggling home owners.
Richard
I wrote you a log a comment and after 2 paragraphs it just simply dissappeared. I guess rather than recopmpose it, know that I agree with the thinking here.
I was about to add this link if you haven't already seen it.
youtube.com/watch?v=1RZVw3no2A4&feature=iv&annotation_id=event_986162
(Richard, add the http://www. before the address I added here to complete the link.)
Since we can't add links here, you will have to cut and paste.