Saturday, September 20, 2008

Bail 'Em Out? How About String 'Em Up Instead?


Ken started the ball rolling earlier and Ian has been doing yeoman's work at Firedoglake, as has Glenn at Salon, and we'll be covering the proposed Wall Street bailout more tomorrow. Meanwhile, though, I turned to Alan Grayson, our congressional candidate in Orlando. Why Alan? He's been busy for the last several years, as an attorney, working on war profiteering cases and he knows exactly how untrustworthy the Bush Regime is around large sums of money that has no strings attached. Please take a look at his perspective on the proposed bailout:

Fannie Mae, like every other public company, has to file quarterly reports with the SEC. If you look at Page 78 of the most recent report, dated August 8, 2008 (8/8/08), you will find this very interesting Table 39:
Nonperforming Loans
Table 39 provides statistics on nonperforming single-family and multifamily loans as of June 30, 2008 and December 31, 2007. The increase in the nonperforming loans during the first six months of 2008 reflects the increase in our serious delinquency rates.
Table 39:  Nonperforming Single-Family and Multifamily Loans
please click to enlarge

(1) Troubled debt restructurings include loans whereby the contractual terms have been modified that result in concessions to borrowers experiencing financial difficulties.
(2) Represents total unpaid principal balance of first-lien loans associated with unsecured HomeSaver Advance loans, including first-lien loans that are not seriously delinquent.
(3) Represents unpaid principal balance of nonperforming loans in our outstanding and unconsolidated Fannie Mae MBS held by third parties.
(4) Represents total unpaid principal balance of loans that are seriously delinquent as of June 30, 2008.
(5) Recorded investment of loans as of the end of each period that are 90 days or more past due and continuing to accrue interest include loans insured or guaranteed by the U.S. government and loans where we have recourse against the seller of the loan in the event of a default.
(6) Amounts reported for June 30, 2008 relate to the six months ending June 30, 2008. Amounts reported for December 31, 2007 relate to the twelve months ended December 31, 2007.
(7) Forgone interest income represents the amount of interest income that would have been recorded during the period for on-balance sheet nonperforming loans as of the end of each period had the loans performed according to their contractual terms.
Represents interest income recognized during the period for on-balance sheet loans classified as nonperforming as of the end of each period.

Here's the link to the actual filing

As Footnote 7 points out, the total amount of unpaid interest on all nonperforming Fannie Mae loans during April, May and June of 2008 was... $192 million. That's "million", with an "m". And if you look at Table 32, on Page 59, you find that Fannie Mae has CASH totaling $13.7 billion. That's "billion," with a "b." Can someone please explain to me how a business that loses out on $192 million of payments, and has $13.7 BILLION in CASH, can be considered bankrupt? No? I didn't think so.
Now consider this interesting sentence, from Page 85: "The outstanding notional balance of our risk management derivatives increased by $255.4 billion [with a "b"!] during the first six months of 2008, to $1.1 trillion as of June 30, 2008." I ask you, which is more likely to have caused some financial discomfort on the part of Fannie Mae: loan losses of $192 million, or an increase in $255.4 BILLION in derivatives?

 Any way you look at it, the actual loan delinquencies, in dollars, were a tiny, tiny fraction of Fannie Mae's $3 trillion portfolio. But under the Bush Administration, Fannie Mae wasn't in the mortgage business. Fannie Mae was in the derivatives speculation business, while it dabbled in mortgages. Under Bush, Fannie Mae was to housing was Enron was to energy. That's why it failed.
You want a comment on this? OK, here is a comment: "String 'em up."


When Alan looked over the proposal it was bad enough. But now the Wall Street Journal has published the whole thing. It's outright economic fascism. Section 8:
Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency.

Bush has transformed our country into what we have fought against overseas: Nazi Germany and Communist China.

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At 9:32 PM, Blogger The Littlest Gator said...

excellent. srsly

I really can't even believe they are trying this shit. it boggles.

At 5:35 AM, Blogger The Mad Bomber said...

I don't think I've read a post with which I agree more. We should be spending this money on rooting out the massive corruption within these industries and prosecuting the esteemed "business leaders" who let this situation develop. Viva the free market.

Here's a thought. At the same time that they weren't minding the store, the corporate elites were earning big bucks - not only salaries, which are high enough, but stock options and various other "fringe benefits", cash and otherwise. IN ADDITION to prosecuting these lechers criminally (which should but never will happen), how about suing these parasites civilly and soaking up some of these bloated fortunes?

Great post.

At 6:33 AM, Blogger Thingumbobesquire said...

For the Congress to vote for a bill which abrogates the constitutionally mandated separation of powers is prima fascie treason.


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