"Big banks back Paulson's covered-bond lending plan" by Bloomberg News | July 29, 2008
WASHINGTON - Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., and Wells Fargo & Co. threw their support behind Treasury Secretary Henry Paulson's effort to spur covered bonds as a new source of mortgage financing.
"We look forward to being leading issuers as the US covered bond market develops," the banks said in a joint statement in Washington. The banks stopped short of revealing specific plans for issuing the bonds, illustrating how the market may be slow to take off in the United States in the aftermath of the mortgage meltdown. Even in Europe, where covered bonds are a market in excess of $3 trillion, investors are shunning the debt amid a collapse in appetite for investments in housing.
"Mortgage-backed securities investors are not in the mood right now to buy bonds with anything less than government backing," said Kenneth Hackel, managing director of fixed-income strategy at RBS Greenwich Capital Markets in Greenwich, Conn., referring to debt guaranteed by Fannie Mae and Freddie Mac.
Translation: TAXPAYER-INSURED!!!!
Paulson said the four US banks are "ready to go" and that sales by the largest banks can help encourage smaller mortgage lenders to proceed. "Covered bonds have the potential to increase mortgage financing, improve underwriting standards, and strengthen US financial institutions," he said.
Covered bonds offer greater protection to investors because banks keep the home loans on their books and must make up shortfalls if homeowners fail to pay. The Treasury's guidelines exclude riskier types of mortgages that contributed to the crisis of the past year.
Then WTF, hey!!????
Paulson said covered bonds will help provide financing to a US mortgage market that now depends on Fannie Mae and Freddie Mac and other government-linked institutions for more than 70 percent of funds.
Fannie and Freddie slid to their lowest levels in more than 17 years this month on concern they lacked sufficient capital to offset losses and write-downs. That forced Paulson to ask Congress for emergency authority to make equity purchases in them if needed. President Bush plans to sign the bill this week.
When it is war money or money for Israel, he gets to it right away!!!
Bank of America treasurer Jeffrey Brown said in a separate statement that "today's announcement paves the way to substantial growth in the US market."
Yesterday's announcement is part of Paulson's strategy of pushing banks to proceed with sales without waiting for legislation to be enacted by Congress.
Yup, we are STILL WAITING out here -- for the non-help the bank bailout bill is going to offer!!!
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And the banks will be benefiting, folks:
"Banks likely to benefit from housing rescue" by Associated Press | July 29, 2008
NEW YORK - A plan by Congress to allow people to refinance into more affordable mortgages won't just relieve thousands of homeowners - it's also expected to save the banks that issued the loans billions of dollars.
That's why the bill is being done!!!
What, you thought it was for you, average 'murkn!!!?
Most banks will end up losing much less money handing mortgages over to the government than they would if the loans defaulted and the homes went into foreclosure. Plus, it will be up to the bank to decide whether to allow the homeowner to refinance.
And GUESS WHO WILL BE LOSING $$$, American taxpayers?
"The banks should be thrilled with this," said John Vogel, professor of real estate at Dartmouth College's Tuck School of Business.
I'm sure they are, sir!
The legislation, which the Senate approved Saturday and which President Bush is expected to sign, comes after months of discussions between lawmakers and lenders.
That's why the bill is to their liking!!!
Banks and other mortgage holders will likely save some $16 billion if they let homeowners refinance into mortgages issued by the Federal Housing Administration, estimated Ladenburg Thalmann analyst Richard Bove.
The plans, however, are not seen as an ultimate panacea to the housing and financial market crises. First of all, if banks and mortgage servicers decide they don't want to allow their borrowers to get FHA loans, they don't have to.
The reason behind this rule is that it allows banks to be more flexible, said Bob Davis, executive vice president at the American Bankers Association. Banks can let customers refinance within the bank as an alternative.Yeah, you really got to contort yourself when you are picking taxpayers' pockets!!!!
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