It's not secret that H.R. 3221 is about to move on to the president for signing.    What's less understood is that a section entitled "Hope for Homeowners Act of 2008" was written by Bank of America.  The effect of the bill is to offload from lenders some $300,000,000,000 of some of the worst performing loans to taxpayers.

Senator Dodd (D CT) introduced the bill stating there would be no investor bailout, but a reading of the bill shows clearly that's what it is.

Dodd has been in the limelight  more recently for improprieties related to preferential treatment he received from one of the main beneficiaries of this bill  Countrywide Financial.  Furthermore the bill, was written by the other main beneficiary, Bank of America Corp.

This bill threatens to extend a housing crisis and the economic recession in that it harms prudent investors and prevents those less prudent from bearing the full consequences of their actions.

The section of the bill that provides for the bailout, and Bank of America internal documents can be found here.

Senators Kit Bond (R MO)and Jim DeMint (R S.C.) seem to be the only ones raising any concern about the bailout portion of the bill.

Update: From an Associated Press Article
Rep. John A. Boehner, R-Ohio, the House minority leader, called on Rep. Barney Frank, D-Mass., to hold a hearing investigating allegations that Dodd and Sen. Kent Conrad, D-N.D., got preferential mortgages at the behest of Countrywide Financial Corp. CEO Angelo Mozilo. Countrywide, a leading subprime lender that has been blamed for helping to cause the mortgage meltdown, is among those that could benefit from the housing rescue.

"Democrats who receive sweetheart deals from their campaign contributors shouldn't be pushing legislation forcing taxpayers to bankroll a $300 billion bailout of scam artists and speculators, and the American people have every right to demand answers if they do," Boehner said in a statement.

Again I don't think this is partisan, it's a problem on both sides, but I'm glad to see someone making a fuss about this.

 
Posted by Caleb Mardini on 07/07/2008 03:44 PM   Comments (6)   policy, banks  
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6 Comments on Privatized Gains, Socialized Losses

JUL
07
2008
208,738 Points 6 Featured Posts Outside Blog

Caleb,  I've been writing about this bill myself.  One of the things that I'd wanted to show, but haven't as of yet, was whose pockets are these legislatures in.  If you look at finance and banking and you'll see where the money is coming from for these committees.  So how can we expect them to be working for us, the common man?
3:54pm • #1
865,945 Points 18 Featured Posts Localism Sponsor Attended Rain Camp Called Shot Master

Caleb, I am going to take a look at these links.  It looks like this would be something NAR would do a call to action on.  Do you know if they plan to do so?
4:02pm • #2
1,048,677 Points 397 Featured Posts Outside Blog Attended Rain Camp Called Shot Master

Hey Caleb, How are you? I clicked over but saw I needed to read 30 pages so I'll have to go backl ater when time permits. Of course I don;t even need to read it to know you are right. They don't just throw 300bil out there for us peons. It's without a doubt a bailout of big biz.
4:30pm • #3
121,522 Points

The whole situation is such a double edged sword.  If they do bail them out it's not good, if they don't bail them out it's not good either.

I don't see any easy answer here.
4:55pm • #4
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Hi Caleb!  Well, I suppose we all have our opinion on this .... and it'll be interesting to see how this all plays out. Corporate America.
5:35pm • #5
51 Featured Posts

Marc, leading up to this crisis it seems that the finance industry has put a lot of money into campaigns.  I find it unfortunate and frustrating to see things like this.

 

Joan, I think the NAR supports 3221, but for the tax credit for new homebuyers, and raising FHA loan limits.  The NAR (as far as I can see) doesn't mention anything about this portion of the bill that I'm discussing.

 

Broker Bryant, I'm doing great thank you.  It's frustrating to see this kind of thing for sure. I was really frustrated about the $29 billion dollar Bear Stearns/ JP Morgan Chase bailout, but this takes on much greater proportions.  IMHO we need efforts to create greater transparency in finance (and ultimately stabilize housing) so we can bring investment into credit markets, not this.

 

Kevin, I understand where you're  coming from, but I think this is a huge moral hazard issue.  I think we need to restore confidence in credit markets, and this convolutes the issue.  More responsible investors are harmed, and the more reckless ones don't face the consequences.  While work need to be done to stabilize things, this isn't the right way to do it IMHO.

 

Thanks Sally.  There are a lot of opinions I'm sure.  Of course I love to see disagreements, because I can learn something from them.

 

Incidentally I see this as bipartisan issue.  It's some times referred to as the "Dodd-Shelby Bill."  For Senators Chris Dodd (D CT) and Richard Shelby (R-AL).  Dodd is just the one who's been in the spotlight over it more.
6:01pm • #6


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Caleb Mardini

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