The reluctance of banks to refinance mortgages that are going south still puzzles me. Banks don’t want to maintain foreclosed properties and they don’t want to be in the real estate business. These homes provide no revenue stream. Not all of the mortgages could be turned around but those than can should be. There are foreclosed homes and condos in my area that are just sitting and rotting, their value decreasing with every day that passes.

This is welcome news as one who find himself in this position very shortly ,this is comforting news!

Rumor has it that there may be the creation of another entity with powers not unlike a bankruptcy court to force renegotiation of mortgages, too. I’m wondering if a fine reading of the legislation might reveal this — might explain why Citigroup signed on. You see, a court might have broad powers for discovery, but an entity with subset powers limited to mortgage renegotiation might not.

Senate Democratic leaders have got financial giant Citigroup to agree to back legislation allowing bankruptcy judges to change the terms of troubled mortgages to help borrowers avoid foreclosure:

That is just wonderful news! The senate was able to get Citigroup’s permission to act! I’m so grateful, and thankful, to citigroup for allowing the Senate to make these little changes in how people go into financial ruin.

I feel so fortunate to live in such a wonderful country, with such wonderful, public-spirited companies and public institutions.

Exactly. What I like about this legislation is that it does what the bailout money was supposed to do: Compel banks to stop being stingy.

I wrote an Oxdown post suggesting that ,refinancing sub-prime mortgages would help restore the economy ,and provide the liquidity the bank needed!

You wouldn’t believe how hard the banks have fought this, CO. Even now, Citigroup’s competitors are screaming bloody murder over this. Tough bounce, dudes — we gave you a ton of money specifically to inject back into the economy, and instead you’ve hoarded it. Now we’re going to have to start forcing you to to do good with it.

Exactly.

Yup. Citigroup saw the handwriting on the wall.

I have zip sympathy for these organizations; they perpetrated these lies with Paulson to get the bailout money in the first place knowing all along that they never had any intention of doing what they said. If this makes them upset…GOOD.

This is a start….. and then they need to look at all the other reasons for bankruptcy….. including medical debt…..

The other day they reported that bankruptcies were up 87% last year in Phoenix…..

Pheonix,

Sorry, but when the ‘good news’ is that the Senate had to get a green light frim Citi in order to do its job for American citizens, I’m somehow less than uplifted. We’ve barely just begun this congress, but I’m already thinking that this senate will be even more disappointing than the last one. And the last one was the worst I’ve ever seen. I have a shade more hope for the house though.

bankruptcies were up 87% last year in Phoenix…..

holy crap

Digg it.

How could it be otherwise with the same “leadership”?

I note that Reid’s name was not mentioned anywhere near this legislation, that I could see. I think that’s telling.

Exactly. :-)

I’m beginning to think of Reid as the obstructionist in the Senate.

You have probably revealed what is afoot. Citibankgroup are not run by teenage fools, like the congress. /s

Wonder if the financial institutions who received billions were given the impression by Paulson that it will business as usual and go right ahead and give those outrageous bonus’s with a wink and a node……

I’d take that impression to the bank. *g*

Yes, the corporations are gaming the system big time. But my primary blame goes to congress, for crafting such a turd of a bailout bill. The bill could have specified how the money was to be used. the bill could have put enforcement measures in place.

has legislation been introduced? is there a bill i can read?

The funny thing is that both Democrats and Republicans here in AZ are PO’ed about it….. it is the one thing that everyone pretty much agrees on …. ya might as well as found a toilet and just flushed all that money down the sewer …… oh maybe that is what they did figuratively…. *g*

Give ‘em help Harry.

‘em being the Bushies and obstructionists.

OK, my take on why banks would be reluctant to do this and why Citigroup is bucking the trend. It all goes back to the fact that banks are insolvent. They are all holding a bunch of crap assets. As long as they can reference the stated or face value on these, the banks can maintain the fiction that they are solvent. But if the government through a cramdown foreclosure mitigation program forces them to revalue these assets, they have to admit that they are underwater themselves. So why would Citi be any different? Well, because it has received guarantees on some $300 billion of its assets valued at about 90% of their face value. A cramdown for other banks if it is realistic would result in their assets being revalued at about 60% of their face value (putting them more in line with pre-bubble prices). That’s a big difference and puts Citi at a competitive advantage. So in short, the government will pick up most of Citi’s losses while other banks will have to essentially eat theirs and risk their underlying insolvency becoming public.

Just my guess.

Don’t know how to link to specific post read Market Meltdown

… http://oxdown.firedoglake.com/diary/author/7769 ….

For historians and their Greatest Hits List this money famine will displace Ireland’s 19th-century single-crop (potato) disaster. US households (asset value + liquidity) account for 70% of GDP. Households get and spend, nothing tangible is manufactured, produced, or grown at a household (unless you count real estate ‘value’), so I figure our economy has been farm-raising consumers, and since around 1980 the consumer has been the US economy’s single crop.

It’s the same legislation of Durbin’s that the banks got torpedoed in 2007. This time around, Citigroup’s broken from the pack to back it — likely for a combination of the reasons Hugh and Rayne have stated.

I think questions of insolvency are hard to dispel when banks refuse to lend money, their primary function.

Well said.

Sheets up top!

http://emptywheel.firedoglake……s-madness/

2 A HOLES – http://www.youtube.com/watch?v=WefgvNdF9cQ

I think questions of insolvency are hard to dispel when banks refuse to lend money, their primary function.

It is the difference between people suspecting your broke and people knowing your broke.

Ironic considering stagnant wages.

linky?

not entirely OT – i just listened to a talk james galbraith gave a few days ago (at the 2009 ASSA meeting) on what he thinks should be done wrt to current economic crisis. just over 20 minutes, but jam packed (i’m going to give it another listen now). here’s the link for anyone who might be interested:

http://utip.gov.utexas.edu/

it’s a .wav file available for download. i’ve converted it to mp3 and will post it for streaming if anyone on dial up is interested.

I have a copy, but it isn’t numbered. If you will send me an e-mail to masaccio68, which is a gmail address, I will send it to you.

I understand that the American Bankers Association intends to oppose the bill, even though it only applies to existing mortgages, and not mortgages dated after the bill.

For an explanation of the reasons this is a good bill, I have an Oxdown Gazette diary.

There are some changes from last year’s bill, one or two of which are important technical improvements, and one, the limitation to existing mortgages, which is very important.

Could we please get back or “re-direct” the $400 million Citicorp is paying for “naming rights” to the new Mets stadium?

Every time I saw Citi’s logo @ the Rose Bowl, and thought of how many of our tax dollars went to putting it there, I screamed. [I screamed a LOT.]

I’d be interested to have some Congress-critter ask for a list of all such rat holes that Citi and the other Wall Street welfare whores poured our money down.

I understand that the American Bankers Association intends to oppose the bill, even though it only applies to existing mortgages, and not mortgages dated after the bill

.

Based on their fabulous track record of success, why is ANYONE listening to the American Bankers Association?

So far the entire economic meltdown is on the backs of the individual and, basically, we didn’t do nuthin’ wrong. I just heard a caller on the Hartmann show from yesterday saying that the American taxpayer should be sent an illustrative tax bill for the cost of this bailout. That would cause some sleepless nights.as if we need any more of them.

Congress needs to repeal Bush’s “bankruptcy reform” in it’s totality, not just ask the banks nicely to give US a break. That one law, passed right after he stole ‘04, has caused most of this housing mess, and gave the banks unbridled license to steal and create those mortgage backed derivatives, putting American’s homes up as collateral for their schemes. god knows who owns our homes and property now?

If Americans were still allowed to take bankruptcy and the banks had to take the hit instead of US, things would be quite different now.

Actually, it was a pretty good bill, albeit with huge loopholes. But the ones which weren’t there were ignored by the tycoons and Paulson, Bernanke, etc. Lawlessness reigns supreme in thsi country now and if Obama thinks he can work with these people without handcuffs, he’s got a rude awakening coming

Wonderful. So now the senate needs the support of the companies it regualates to pass legislation regulating them?????

Does anyone not see how absurd that is?

As I’ve long said, big corporate America is running the country, The elected official have become their beards.

Fuck Citigroup, The government regulates them!! Not the other way around!!

Such bullshit.

Japan had a major, over a decade long recession because of their real estate boom. The Taj Mahal was worth more than all of California combined. Their government stepped in and did bailout after bailout and restructured mortgages because it was so disgraceful to allow one’s people to suffer through foreclosure. This has lead Japan into the longest and slowest to recover depression/recession ever and if we continue to try to help everyone the same way we will do the same to ourselves. Like a band-aid on a wound, if our government slowly continues to take it off one hair at a time it will extend this crisis for a long time. Rip the band-aid off, let people suffer in the short-term. Yes it will be drastic and hurt but it won’t be for so long. The American people could be well severed to remember or learn what it is like to struggle. We have been so spoiled that many have no idea what it is like to work every single day for months on end just to get by or trying to get just a little bit ahead. Maybe if we went through a Great Depression type time we could take more time to understand money and be as cautious as the last generation that went through it . Handling money and your own personal finances is not that difficult. How many people actually do a budget and know where their money goes. This is so simple anyone can to it. It sure beats the hell out of waiting for the government to force our debt to be forgiven.
The banks are hoarding their money because they too where greedy and didn’t understand their finances. But now they seem to have seen the light and are trying to be more conservative, but it doesn’t help until all the people become more conservative. These are also only a few large mega-banks. Local banks and credit unions for the most part are in a much better condition and have suck more closely to the right priorities to remain truely solvent

If Americans actually read the 50 sheets of paper they signed when buying a house and asked questions to fully understand then I don’t believe we would be in this crisis. The real estate boom would not have been inflated as it got because people would have made more intelligent, well-thought out decisions. All the derivatives and CDO’s and everything would all be safe products backed by one of the safest investments in the world, real estate because if people understood the obligations they were signing up for it would not matter where their payments where all getting split up to. Yes there is coruption all the way to the top but all we can realistically do is bitch about that. If people focus on what they can truly control, themselves then many things would take care of themselves.

Excellent and terrifying link………..

Alot of people didn’t understand the tricky language in those 50 page contracts. Alot of people aren’t educated anymore and that made it easier for the swindlers.

Hell, alot of people don’t even know how to READ anymore, thanks to the crappy public schools Reagan and friends gave US. And alot of real estate agents who not protecting their clients, they just wanted to make the bucks too.

It’s called GREED; one of the truly 7 deadly sins or psychopathologies if you will.

The government got Citigroup to AGREE? WHO’S IN CHARGE?

Senate Democratic leaders have got financial giant Citigroup to agree to back legislation allowing

There is something terribly terribly wrong with this phrase. Terribly wrong. If this isn’t an out and out indictment that we’re living in essentially a soft-fascist state I don’t know what is.

The government doesn’t need to get support from corporate entities to perform their legislative function, in fact they should almost explicitly deny the practice of doing so in order to perform their duties to the public-trust judiciously.

Our education system is in shambles but we do have the highest scores and such for schooling up to the 4th-6th grade area. Our young children our doing good but I see once they start the rebelling years it gets much more difficult because of family relations or parents just not caring. I don’t think early childhood that Obama is pushing is the right answer. I believe stressing and driving-in home the basics of financial skills from little on will benefit much much more. It could quite possibly increase the graduation rate by showing kids financial realities or at the very least give kids the knowledge needed to make educated decisions once they get to the real world.

There is a fine line between greed and a burning drive to succeed. Greed is definitely pervasive in our society. I agree many people where taken advantage of but also people need to ask for the tools to figure out these things themselves. It is not difficult or hard to figure out but people need to take it on themselves to accomplish this not just take someones word for it and say well if it doesn’t work out I can blame others. If a person asks their parents or grandparents how they bought their first house or how they would go about it. Many would say save up for a as long as it takes to get a sizable down payment and then do research, look at lots of houses and make the best decision for your family. It’s so much easier today to do much of the work that the Realtor did in the past because of the internet. People just need to take it on themselves.