What’s in the bailout bill?

Was Not a Rush Job

1. Home sale exclusion rule was modified

“Under the new rule, the owner only gets a percentage of the exclusion based on a ratio of how long the property is their primary residence divided by how long they owned the property. This prevents people from moving into vacation homes or rental units for two years and then obtaining the entire exclusion.” [Calculated Risk]

2. Fed Loans to Failed Banks Made Easier by Fannie-Freddie Rescue

“In the rescue signed into law by President George Wanker. Bush yesterday, the Fed will no longer have to pay penalties on loans it makes to institutions taken over by the Federal Deposit Insurance Corp.” [Bloomberg]

Hidden in the housing legislation, down in the small print, is a provision that removes penalties on the Fed for loans it makes to FDIC dependent banks. In sum, it gives the Fed latitude to prop up the US banking system with its balance sheet. This would be scarier if the Fed’s balance sheet hadn’t already been riddled with toxic waste from Wall Street. [Some Assembly Required]

Anticipating another big bang are you, Mr. Bukkake?

See also Commentary at Market-Ticker Forum

3. All credit card transactions are to be recorded by the IRS
Nothing like a bit of surveillence to brighten your day – Forever and ever and ever and ever and ever.

4. Freddie Mac and Fannie Mae, will be given unlimited access to the U.S. Treasury without requiring any further approval from Congreff.
An unlimited line of credit? Isn’t that the same as a blank checkbook? You don’t suppose they’ll ever use it to the same extent the people supposedly being bailed out did, do you? Huh?

5.  Number of households targeted to be saved by this legislation: 400,000. Number of households likely in trouble: 3,000,000.
You know what they say, he who panics first gets his money.

6. The U.S. national debt ceiling will be raised by $800 billion, which suggests that the bailout is expected to cost a lot more than the country was being told or the media was reporting. Oh, so there is a theoretical limit as to how much Congreff can spend. Until they need to raise it. Duh.

7.  As Sen. Jim DeMint (R- SC) points out (here, above), FNM and FRE will not be retstrained from lobbying Congress for favors, etc. (“campaign contributions”).
Which is partly what got us into this mess in the first place.

For a deeper look into the baiout bill’s entrails, see Dr. Housing Bubble. Be sure to check out the income disparity chart (Gini Coefficient) at the end of the post- quite an eye-opener.

*UPDATE*
This bailout bill won’t help homeowners much, according to Lou Barnes [hat tip]. When a homedebtor’s APR is resetting, the “new payment under the federal program (a 30-year fixed with mandatory FHA insurance) would be … (b)etter than the reset, but still a big increase. (Peter Viles)”

Who does the bill help? Ask MER, JPM, GS, WB, BAC, WM, IMB, et al, who will be able to take advantage of this bill’s new conforming cap of $600k to “sell” all the fucked CDO’s (a.k.a. “toilet paper”) on their books to US bagholders (a.k.a. “raping the taxpayer”, i.e. you and me).

Will add as found… check back often!

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The repugnant bailout nation – Commentary

It’s at times like these that makes me wonder: What does Fleckie think?

“The Fed’s money-printing apparatus has been checkmated by roaring inflation. None of Paulson’s cockamamie schemes, from super SIVs to bailing out Fannie and Freddie (after Bennie and the boys at the Fed bailed out Bear Stearns), will help the economy. Yet we must continually endure the cheering by stock market operators every time this country, the supposed bastion of free enterprise, “successfully” takes another step in its move to nationalize all losses that are inconvenient to those in power.

“That brings me to an absolutely brilliant — though nauseating, for what it revealed about our government — article written by Paul Gigot in July 23’s Wall Street Journal: “The Fannie Mae gang.” This ought to be mandatory reading for everyone in America. It detailed the hardball thuggery, arm-twisting and insidious interlocking relationships among, for example, former Fannie Mae Chairman Franklin Raines, former Countrywide Financial CEO Angelo Mozilo and House Financial Services Committee Chairman Barney Frank that have helped create the monsters called Fannie and Freddie” [Bill Fleckenstein]

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Plaudits for Hanky Panky?
It was pointed out to me yesterday by someone with cable that on CNBS yesterday Hank Pankyulson was called, and I believe this to be correct, a “Capitalist Hero.”

Okay, I’m back, I suddenly had to vomit, but I’m okay.

From the always relevant Market-Ticker [Forum], let’s put this little exercise in mutually beneficial cock-sucking into the proper perspective, shall we?

His leadership of Goldman Sucks qualifies him as one of the creators of the entire housing market slash debt debacle. That they are patting him on the back for fixing this mess he had a hand in creating is all the more absurd.

“CNBS lauding Hank Paulson as the savior of our economy.
They seem to forget that he ran the firm that created the majority of the worthless crap which has now been foisted on the American Taxpayer.
Hank was the guy who called the problem “CONAINTED” AT $50 Billion. Hell, Merrill alone has written off more than $50 billion.
Who amongst us couldn’t solve the ills of the world if they had an open checkbook to the American Taxpayer?
And finally, lest we forget, that shit that Hank and his buddies foisted off on the Fed is, if you use Merrill’s pricing, worth about $.20 on the dollar…or about $320 Billion less than what they are telling the people it is worth.
And that is before we spend another trillion dollars to bail our Freddie and Fannie.
Or deal with the shit from Bear Stearns.
Yup.
Great job Hank.
You truly are a notorious American.”

-TBear

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When Dr. Doom speaks, we should listen [Globe and Mail]

“The government doesn’t have the balls to raise taxes. It’s going to print the money. It’s going to destroy the currency,” he says.

During the Depression of the 1930s, at least people who held cash made out okay. Because prices were falling, their money actually bought more. But if Mr. Schiff is right and the U.S. is heading into a period of hyperinflation, then even the most prudent savers will see their wealth eviscerated.

Well, he has been right so far…

Didn’t Ben Bukkake say something about helicopters dropping dollars (“Federal Reserve, Inc. Notes”) into the economy to fight deflation?

Banana, meet Republic…

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“Thankfully, in a fiat money system, the lender of last resort doesn’t have to worry about running out of money to lend. Do they?” -Tim Iacono

Whas happenin’?

A seller financed sale is still a sale…

“Merrill will provide financing for about 75 percent of the purchase price”

& at $0.22 on the dollar … or to extrapolate, 30.6 B of CDO’s for 1.68 B isn’t this more like $. 055 on the FRN? IOW, a plum nickel?

Smells like desperation to this flared nostril.

Goddamn bloggers have ruined MER by making them sell before they wanted to. [/sarcasm]

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Mervyn’s biggest closeout sale ever [WSJ]

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Our Rant du jour comes from Barry Ritholtz’ blog The Big Picture:

“There is no doubt as to who foisted these losses on Merrill: Rumor-mongers, Short-sellers, and al-Qaeda. Management obviously had nothing to do with this. Hence, the SEC should be spending most of its budget, manpower, and time investigating those issues.” [Merrill's $5.7B Write-Down]

It’s an embarrassment that the people we elected have placed cronies in appointments that aren’t serving the people, or the country, just a few special interests.

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More Merrill by Mish:

That $2.5 billion is because of ratchet provisions. Mother Merrill is really only raising $6 billion.

The market cap of Merrill Lynch is $23.97 billion. Mother Merrill has raised $30 billion since December. It is taking herculean capital raising efforts to keep the good ship Merrill afloat.

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Today in No good deed goes unpunished … [MSNBC] [WaPo]

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“The good news is the worst is behind us, the bad news is it’s gaining on us.”

Here’s how to get your bailout bucks

Be a name player (Wells, BofA, Wachovia, WaMu, IndyMac, Cuntrywide), not some fly-by-night mortgage brokerage (Ameriquest Mortgage Co., New Century Financial and Fremont Investment &Loan R.I.P.).

Potential "Buyers"

Get your players (Broker, Escrow officer, Appraiser, all helpfully speaking Spanish and able to spot a straw buyer at 30 paces) lined up and ready to take advantage of the newly re-constituted entities which purchase the mortgages you’ve underwritten without scrutiny (“GSE’s”).

Have your team offer the marks:

to pay the first three mortgage payments

a 52″ flat screen TV

cash back at closing !

Have a fresh script of lines prepared should anyone ask about the validity or of such loans, e.g.:

“It sounds to me like the seller helped out,” she said. “If someone gave them $125,000, what’s the problem? That’s a beautiful thing, if you ask me.”

Sell the loan to the taxpayers via the newly Federally backed Phony or Fraudie (erm, sorry, that’s Fannie and Freddie).

Watch your earnings grow as you sell more and more ‘distressed’ properties far above market to an unending supply of dishwashers, garment workers, day laborers, etc. … meanwhile the debt burden pushes the country into recievership- but hey, that’s not your problem!.

You’ve won! Time for your team to collect. What’s that? The money you’ve managed to scam earn is now worth less than the paper it’s printed on? You want to know who you can sue?

[OCRegister]

Ever get the feeling you’re being raped?

[More]

Blood boiler

and no I don’t mean the Alp d’Huez (that was a pretty great race by Carlos Sastre though).

The gang's all here

The Fannie Mae Gang [WSJ]

Supports my contention that one man, an Orange man, brought down not only his two houses, but that of two of his neighbors as well.

“Angelo Mozilo was in one of his Napoleonic moods. It was October 2003, and the CEO of Countrywide Financial was berating me for The Wall Street Journal’s editorials raising doubts about the accounting of Fannie Mae. I had just been introduced to him by Franklin Raines, then the CEO of Fannie, whom I had run into by chance at a reception hosted by the Business Council, the CEO group that had invited me to moderate a couple of panels.

“Mr. Mozilo loudly declared that I didn’t know what I was talking about, that I didn’t understand accounting or the mortgage markets, and that I was in the pocket of Fannie’s competitors, among other insults. Mr. Raines, always smoother than Mr. Mozilo, politely intervened to avoid an extended argument, and Countrywide’s bantam rooster strutted off.”

Mozilo a short arse? That explains so much.

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“My position was (and, to be honest, largely remains) one of complete ambiguity.”

How to be a hero

Role model

Listen up, congresscritters, if you want to break free of your self-imposed mediocrity and save this country from the jaws of the sharks that want to steal our childrens future wealth- before they are even born.

Filibuster. Filibuster with all you got. Don’t let up. Drink Red Bull if you must. Just do not let the FNM/FRE “bailout” bill pass.

Or come November (or whenever your term is up) we the people will take it out of your hide, metaphorically speaking. Prudent Bears wills see to it that you have no chance of being re-elected.

Congress goes on break Friday. You only have to hold up until the weekend.

But watch out for “emergency seesions” being called Saturday, once everyone of you blow town to district turf. Don’t leave right away, hang around a week or so, just in case.

And here’s the deal, we only need one or two of you to step forward and receive your claimcheck for historical relevance.

If that doesn’t feed your ego, then you aren’t in the right business.

The “Fannie/Freddie, housing, mortgage, Treasury, Fed, Wall St, Washington, rich investor and foreign Gov’t bailout plan” is bad news. The numbers don’t work, the CBO is lying, and read this to learn more.

It’s time to man/woman up, goddamit, and do the right thing. Otherwise the biggest theft in the history of this country will occur on your watch. I bet you probably didn’t even realize it was happening.

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“It’s not like we really NEED a middle class.”

A tell

Question Why we gonna be bailing out a buncha drunk bastards?

Do not let a gaggle of lame ducks ruin your country. They’ll soon be out of office and ensconced in cushy jobs in the same sector they served (while pretending to serve the people), or in lavish retirement in South America… and we’ll be left holding the bag. Don’t be a bagholder— Sign the petition!

Pretend-O-Rama

“So, what the SEC action really demonstrates is the the utter lawlessness reigning on Wall Street, and the SEC’s singular unfitness as an enforcer of the laws, not to mention the criminal irresponsibility of the clearing authorities who only pretend to go through the motions of certifying the sales. What’s more, the companies cherry-picked for immunity against shorting were some of the very companies believed to be most active in profiting off naked short sales against other companies.

“Thus, the credibility of all the authorities in American finance, including the Secretary of the Treasury, Mr. Paulson, the head of the Federal Reserve, Mr. Bernanke, the director of the SEC, Mr. Cox, takes on the aroma of week-old dead carp, while the affairs of American banking and business as a general proposition look to the rest of the world like a simple looting operation, reflecting poorly on the paper certificates that we use as “money” in the land of the free. The odor of blood and desperation around these activities must be sending a strong signal to those offshore who hold American dollars in some form or other.”

[James Howard Kunstler, ClusterfuckNation, Pretend-O-Rama]

Isn’t it obvious?

Retread

Being very careful not to wake the American public from their snoozefest of complacency, behind the scenes, Bukkake, Hanky, his new ward Robin (Ken Wilson), set in motion their diabolical plan: the corporate takeover of takeovers that will become the United States of Goldman Sachs.

You heard it here first.

Danger! Red Alert!

Somebody has to point out the fact that the US is effecively bankrupt, and every move to bailout private enterprise with public money is just to keep the wolves (our creditors) from knocking down our door and having their way.

Sure, Ambrose Evans-Pritchard is becoming known as the Oracle of Imminent Collapse, and if people point and snicker at his persistent message, recall it is often the case there is some truth that perhaps those ass clowns don’t want to face.

Wakey wakey, eggs and baccy

Excerpts:

“Its ‘mean-reversion’ model misses the entire point of this crisis, which is that central banks have pushed debt to fatal levels by holding interest too low for a generation… True ‘mean-reversion’ would imply debt deflation on such a scale that would, if abrupt, threaten democracy. “

“No doubt the rescue of Fannie Mae and Freddie Mac — $5.3 trillion pillars of America’s mortgage market — stinks of moral hazard. The Treasury is to buy shares: the Fed has opened its window yet wider. Risks have been socialised. Any rewards will go to capitalists.”

“IndyMac will deplete a tenth of the $53 billion reserve of the Federal Deposit Insurance Corporation. The FDIC has some 90 ‘troubled’ lenders on watch. IndyMac was not one of them.”

“Fed chief Ben Bernanke thought the US could always get out of trouble by monetary stimulus ‘a l’outrance,’ and letting the dollar slide. He has learned that the world is a more complicated place.”

You owe it to yourself to read the full text. I link to Jesse’s Crossroads Cafe rather than the original Telegraph article because I like Jesse’s remarks that accompany the full reproduction of AEP’s text.

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“A nation of sheep deserve a gummint of wolves.”