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I would like to interview Mr. Bernanke because I am scared!!!

By Jeff Belonger

Mortgage and Lending with Social Media - Infinity Home Mortgage Company, Inc

March 16, 2009 11:39 PM

Ben Bernanke

Mr. Ben Bernanke is considered the 4th most powerful man in the world in the banking sector and can at times operate independent of the President of the United States.

Not sure if you watched the 60 minutes interview of Ben Bernanke. I was impressed because he seems down to earth, humble, and caring about Main Street USA. - Mr. Bernanke grew up in Dillon, a small town in South Carolina. He remembers the culture of Dillon and applies it to his decisions. In the interview, they talked about his childhood home that was bought by another family, which is now in foreclosure. You could see that something of this magnitude has struck 'home' with him and he wants to do something about it.

As we know, when it comes to the media, no matter if it's news print, television, the radio, or online, the story in many cases seems to tell only one side of the issue and certain people and certain groups control what is discussed. This control was evident in the interview and I am not the only one that thinks this way. I called my parents last night and they both watched the video. My dad has been successful in business and has a good grasp of business and macro economics. He flat out told me that he didn't like the interview because it didn't tell him much and felt that important details were lacking. My mom thought there was too much fluff and that Bernanke seemed insincere (could see it in his eyes). And if you read the comments from the video, there were 4 or 5 others that felt the same. 60 minutes video - interview with Ben Bernanke -

economic recovery

So why am I scared after listening to the interview? After more than 16 years in the mortgage industry, having a very good understanding on how mortgages work and our current market situations. After talking to a few financial experts, my fears were confirmed.

Mr. Bernanke made this statement. "You don't get a sustained economic recovery as long as the financial system is in crisis." - I agree with this statement, but we need plans and to make this happen. We also need the political will to do the right thing. Bernanke goes on to say that he feels the recession will end this year and that we will have a recovery by next year. Is this to boost consumer confidence? Hey everyone, I am all for positive thinking and positive information. But I am also a strong believer in the truth, no matter if it hurts or not. I just think Mr. Bernanke skated around several questions with answers that were very vague and weak.

If the credit crisis was the most important issue then it should have been addressed first. Instead there was some money thrown at the problem and then came the stimulus and the bloated budget. Now there is nothing left (short of printing presses) to fix the real problem. Some say it could take a Trillion to stabilize the credit market.

He also made statements such as :

He stated that we were very close to a financial meltdown. (personally I think we are still on the brink of meltdown. My recovery prediction would be sometime in 2011. But I guess we have to define recovery, which Mr. Bernanke didn’t provide.)

Bernanke was asked why we were so close to a financial meltdown? Bernanke stated that we didn't regulate enough. How about this one. Shouldn't we have people watching over those that regulate? I have been screaming about regulating in regards to mortgages when it came to such things as : good faith estimates, APR's, and false advertising of interest rates and fees since 1994. We knew about this back then. Many were living it large, living it fat, all the way up to 2006, until the shit hit the fan. Our lack of regulations hit us square in the face, yet we found other excuses to place the blame on. Here is what I think about Government Intervention and regulations.

Bernanke stated that the Federal Reserve has pledged 1 Trillion dollars in spending which has supported :

-- money market funds

-- mortgages

-- auto loans

-- small business loans

-- student loans, etc, etc

This commitment has doubled the size of the Fed's balance sheet. He was then asked if this is tax payer's money. He said, no, it isn't. He went on to describe that banks have accounts with the Fed just as we have accounts with the banks. This method is akin to printing money, which the Federal Reserve is printing by the ton. Listen to the video on this part, about using computers to mark up the size of the accounts. The “black hole” was created when the government preempted the decisions a free market system – who wins and who loses.

Near the end of the interview, Mr. Bernanke was asked what would be one of the first signs of a recovery. He stated, "A large bank will be successful when it is able to raise private equity." This is so true in business, but how long will this take? Do many banks just feel that they can rely on the government to bail them out? Because Mr. Bernanke did make a statement that he will not let any banks fail. Hhhhhmmmm

Conclusion: Mr. Bernanke did say that a lot of mistakes were made. Well, that's good to admit, but I think we already knew this. He was then asked what could be done to also help in the recovery.

--Banks need to make loans, to find a way, and "to have a reasonable sense of humility." Wow, how daunting and daring is that statement. So as a bank, I should suck it up, and make it work, not knowing if I will be compensated if the borrower fails? Isn't that how the foreclosure mess started? Didn't the Clinton administration strong arm Fannie Mae and Freddie Mac, telling them to make more loans affordable, by lowering credit scores and raising loan-to-values. The biggest issue at the time was 100% financing, which is not for everyone and to push stated loans at such high LTV's, loan-to values.

--Reviewing banks practices. Okay, shouldn't this have been done in the beginning? And he went on to say, "to toughen regulations". hhhhmmmm - How tough? Tough enough to where people can't even get a simple loan? Wait, I thought he said for banks to make loans, to find a way.

Mr. Bernanke, my question to you is, which is it. I don't think we can have our cake and eat it too. That took place from 2003 to 2005 and look at us now. I am starving because not only I can't have my cake, but it's not there to be eaten.

Food for thought? How about slight change and dumping some money into the economy. And then letting the market work itself out... ???

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Diane Aurit

LKN Realty, LLC - Mooresville, NC

Lake Norman Real Estate

Jeff, I watch news, listen to NPR and read about this every day and yet I honestly still can't explain it to my clients. My gut is in agreement with you and Bill above...2011 we may start seeing some equity growth but that is just a guess! The scariest thing is to watch someone like Jon Stewart do a dig at all of the fianancial pundits showing how many times they were wrong over the past few years. Does ANYONE have a grasp of this?

Mar 17, 2009 09:30 AM

John Cannata

214-728-0449 http://TexasLoanGuy.com - Frisco, TX

Texas Home Mortgage - Purchase or Refinance

I tend to agree with others that he was holding back on his responses. Not sure I would be able to predict a time of when this recovery will really kick in. Until we see the bottom, I dont see how anyone can predict it. We can do some things and 'hope' it works. Ultimately, I agree that decisions were made poorly. I also agree that we must 'paint' a pretty picture for the consumer. If the CONSUMER believes we are going in the right direction, then we WILL actually go in the right direction. When someone yells FIRE we all stop and look. The media yelled fire for a LONG time and it will take a long time to get the confidence back into the people. Its interviews like the one with Ben that dance around and give a 'feel good' truth rather than spelling it out. Sure, its not completely true or accurate, but its what people want to here. We can throw all sorts of money into the economy, but that does not change how people 'feel' and ultimately people are what make the world go around. if you dont like a product, you dont buy it. Some can be said for our economy today. You think its a bad buy so you do not invest. Like I said, I cant not predict it. I wasn't born yesterday and I have not been in mortgages all my life, but I talk with people and they are still worried. Until that goes away or improves, we will get no where.

Mar 17, 2009 09:36 AM

Jamie Dumaine-Russell

RE/MAX Alliance - Branford, CT

Jeff - I missed the interview too. Thanks so much for posting it and your insights about it. I just think we are throwing good money after bad if we continue with these bail outs. Why we are rewarding those who have failed us is beyond me. I said from the very beginning to let the chips fall where they may and the strong would survive. Right now it's like a comedy of errors with no set plan in place to strengthen the housing and financial crisis we've been facing.

Mar 17, 2009 10:11 AM

Tom Burris

NMLS# 335055 - Baton Rouge, LA

Texas/Louisiana Mortgage Pro - 13 YRS Experience

Very messy problem we are in.

Too bad we don't have someone in charge who can get us out of it.

Mar 17, 2009 10:17 AM

Charles Stallions

Charles Stallions Real Estate Services - Pensacola, FL

850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

I think we all came from humble beginnings and I really don't care. What is going to take to fix the problem and when is it going to be fixed now that is what I am looking for.

All these PR moves and crap are just that and most Americans fall for it because

It doesn't effect them, because they are eating at the government trough.
They don't have a clue because they are too young to pay taxes or too old.

I think, which is why I don't work for the government but if you don't pay taxes you shouldn't have the right to vote because that is what congress does. They raise taxes because they don't pay them anyway.

Mar 17, 2009 11:14 AM

Patricia Kennedy

RLAH@properties - Washington, DC

Home in the Capital

Jeff, I missed this interview, so thank you for the link. I will watch it with great interest!

Mar 17, 2009 11:57 AM

Lisa Glowacki

Lisa Glowacki - Rhode Island & Massachusetts - Tiverton, RI

Real Estate Broker - RI & MA

Wow lots of thoughts here so I'll give it a go. Not convinced recovery is coming soon. I was thinking of renting an office now but Brien made me re-think. There is pent up buyers and sometimes when we are so careful with spending we tend to say screw it my situation can't get worse I may as well go for it- spend which I am not so sure is so wise right now. Bernanke didn't really do anything to make me think otherwise. Now Lewis on the other hand I think is an example of Main Street America right now. My loan person is telling me the same thing "turning a lot of people down". Lewis made me think when he said he is now turning down the very affluent and about Jeff never having a doom and gloom attitude "Jeff, if you are scared people better frickin take notice!!!!!!". Furthermore with all the aid being given I don't see the business practices changing ex:AIG for one. So sit back and use the savings for a rainy day (which is here) or take it and spend. That is the question? On a lighter note was there a dress code? Same suit, same tie. Sorry couldn't get pass this. I find it difficult to hear two sides from carbon copies.

Mar 17, 2009 12:04 PM

Anonymous

Jeff

Don't be scared Jeff. Everything will be ok. He's got one thing you don't, a PHD from MIT. But you have one thing he doesn't, an Activerain blog.

Mar 17, 2009 12:20 PM

#51

Kevin Comerford

Coldwell Banker Preferred - Media, PA

Jeff, Great post, I will watch the interview. I have two predictions for the next thirty days....changes to "mark to market" accounting for mortgage backed securities and a reinstatement of the "uptick rule" for selling shares "short".

I think these two issues are most to blame for our current situation. After all, why are securities that are colaterallized by mortgages worth pennies on the dollar? Well, currently the answer is: "Because that is what someone is willing to pay for them." and that is pretty good, if your a buyer. If you are a holder or would be seller, you might be more pursuaded towards the idea that the security is worth "at least as much as the net present value of the payments, less a premium for the associated risk of foreclosure". This is especially true for a holder as opposed to a seller of such securities. The only reason mark to market may not get changed is the "fairness factor" as in, "well, what about all of the writedowns that have already happened". This is a conundrum, I believe that this should change.

As far as the uptick rule, the repeal of this law in 2004 is generally responsible for the exceedingly sharp declines in securties over the past year. With the rule in place, the decline of 401k's/IRA's/Etc. would have been far less. It seems like a no brainer to put this one back in.

I think that Benny's jitters are mainly from the idea that the cookie jar has been raided and the kids are still hungry.

Best,

Mar 17, 2009 12:28 PM

Paula Reno

Astro Realty (Buyer Agency) - Cedar Lake, IN

Broker, Owner - Cedar Lake Indiana Realtor, Astro

Hello Jeff, yes I sat and watched every minute of the Interview. I had a feeling that this whole thing was being done to Boost the Stock market. Gee I think I was right..I don't know what will come of all this in the next few months. But one thing I am sure of is, Interest Rates will be going up (We need to pay for all this) and People will need to learn to save once they get out of the mess they are in. I am taking every extra penny I Have and Putting it into short term CD's. I know I will be making money when this mess is over. If people would of saved instead of spending we would all be better off and Not only the People but also the Corp. of this country. Personally I felt the Interview was all Staged... He is a smart man I give you that, but it will take more than that to get us out of this crisis.. Good Luck to us all in the next few years.. Paula

Mar 17, 2009 12:44 PM

Anonymous

Denise

Just a thought - were you a paticipant in the events that led to the "mess"? I dealt with many lenders who qualified people with the "in a yr or two we'll refi...." disclaimer. You are right YOU can't have your cake and eat it too.

Mar 17, 2009 01:32 PM

#54

Karen Stanley

RE/MAX equity group, inc. - Camas, WA

DMD, MBA, CRIS, TRC, ePRO, Residential & Investment Properties

I question the same things and am horrified at what I see Bernanke doing. I belive that he and Geighner believe you can just throw a lot of money and the situation and shout "go", and it will restart the lending. Well if many people are loosing jobs, have declining credit scores, banks are bumbling short sales and adding fuel to the declining house prices driving more people into an up side down position, they had better get ready to throw a considerable amount more towards the problem AGAIN next year when we have a newer and larger crop of properties labelled "toxic assets". I've never like that phrase-- they are not toxic they are just over-mortgaged.

I say if and until the priority is on incenting and providing means for homeowners to buy homes, and other mechanisms to stem the slide we will not be at START. If they had offered a $15,000 home owner tax credit when this started we wouldn't be in such a mess. If we continue focus first on flooding money into the institutions, we will be treating the symptom and not the cause. Our system is so ill we must treat both the symptom AND the cause. However, if our priorites are out of line, the entire financial system will crumble, until we get them in order.

I liked what you said about his sincerity. It probably is true. I just think he suffers from what we all do-- that we see things only from our narrow world. He is a financial economist, probably a genius at that--- but he isnt' a real estate economist or he would be focusing on that system first not just pouring money into the banks.

Banks by the way, who are now operating in even more detrimental fashion as they have realized that they can nationalize their debt and keep their profit without a modicum of accountability.

Mar 17, 2009 07:25 PM

Don Hawley

REIT Homes - Lindenhurst, IL

CDPE

THE HARD FACTS NOBODY KNOWS ABOUT The Federal Reserve and the National Debt.

FACT#1. The Federal Reserve is a private corporation, owned and controlled
mostly by foreign bankers.

FACT#2. How the Federal Reserve banks work (using a 10% reserve
requirement).

1. F.R. "creates" $1,000,000 worth of "debt certificates" with no assets
behind the creation, just the "OK" of Congress, and distributes it to banks.
2. The bank "Holds" the 10% reserve as operating capital ($100,000) and
loans the rest out at 10% interest.
3. The bank pockets $90,000 in interest, and accepts the $900,000 back as
a deposit.
4. The bank retains 10% of the $900,000 deposit as a reserve, and loans
out the $810,000 at 10% interest.
5. The process is repeated over and over, with "hard" assets pledged as
collateral for these "loans". Thus, it starts with "no money" and ends up
with houses, cars, land, silver, gold...real assets...and all it took was
some ink, some paper, and the cooperation of Congress.

FACT#3. The BIRTH of money #1...Congress authorizes the F.R. to purchase U.
S. Notes from the U.S. Bureau of Engraving for 2.5 cents per bill (no
difference between $1 and $1000 bills). The F.R. then issues an equal amount
of "debt certificate" Federal Reserve Notes which they use to purchase U.S.
Treasury Bonds. Taxpayers are, supposedly, obligated to pay off these bonds
at FULL FACE VALUE, plus the debt of the original currency purchased at 2.5
cents per bill!

FACT#4. The BIRTH of money #2...All credit is hypothecated upon the faith
and worthiness of the "United States". Congress authorizes various
corporations to extend the credit of the United States (as a privilege, not
a right) to finance mortgages and other types of credit. You and I could not
set up shop to extend credit to others, except we be licensed and approved
by the government. Thus, it is not the mortgage company, with whom you sign
a contract, who extends you credit...they are only an "agent"... it is the
United States who is the party with standing, and the only entity which can
sue or foreclose for breech of the contract. BET YOU DIDN'T KNOW THAT! Then
there is the credit contract itself...a fraud perpetrated upon the buyer
every time. It is another means of "creation" of money. There is no "money"
exchanged in the mortgage transaction. It is a book entry made by the
"agent" which "monetizes" the value of the real thing, the property
involved. No contract is valid except both parties bring something of value,
called "consideration", to seal the contract. You are bringing the property,
and the promise of future payments...they bring nothing but the ability to
create credit...a congressional "okie-dokie"...to the contract. Thus the
government fraudulently claims superior ownership rights to the property
involved, and the ability to charge the "tenant" rent (called property
taxes, bet U thought U owned that property, right?) for the privilege of
using paper credit.

FACT#5. The taxes paid by Americans never provide ANY services to our
country...all collected income tax money goes DIRECTLY to the F.R. Board
(check the back of ANY check sent to the IRS...it is true).

FACT #6. All U. S currency is "Federal Reserve Notes" of debt, owed to the
Federal Reserve, and is borrowed into existence. How can you pay the debt
when you have to "borrow" the currency to pay the debt, FROM THE GUYS YOU
ALREADY OWE? It is like paying off your VISA card using THE SAME VISA
CARD...the interest just keeps growing, and no principal is ever paid! It is
a ponzi scheme....a scam...and America is the mark!

Thus, the national debt can never be repaid. It is not meant to be repaid.
It is meant to bring Americans to ruin without bloodshed. It is the legal
takeover of the country, piece-by-piece, and the voluntary enslaving of the
sovereign people, who will ULTIMATELY be asked to accept the demise of the
Constitution, and their sovereign status under that Constitution, to become
"subjects" of the benevolent ruling class.

It is time that "we" ended the Federal Reserve.

Mar 18, 2009 12:05 AM

Debra and Scott Brooks

Brooks Prime Properties, Lake Conroe - Conroe, TX

Lake Conroe Real Estate and Luxury Home Specialists!

Jeff-you are right to be concerned. Since we are off the Gold Standard, our currency has no objective value. It is based strictly on our productiveness as a nation. The fed is just like the Bank in Monopoly. The rules of the game say that the bank never runs out of money because they can simply issue more on ordinary slips of paper.

Mar 18, 2009 04:38 AM

Robert Rauf

CMG Home Loans - Toms River, NJ

Not using our tax dollars for the bail out??? what a lie that is. the money is being borrowed... look at the record treasury auctions.... where is the interest payment coming from? US of course!

The big problem is the Government keeps saying one thing and doing the opposite. support mortgage markets, but step back and stop buying MBS...

Want rates to go lower, yet every action they take causese rates to climb.

Vow no pork.. yet the recovery bill is riddled with pork and not enough Beef.

We all know that there is more than enough cash to lend on the retail level for home owners/buyers to get mortgages. The problem is that banks are severely restricting corporate credit lines and that is stalling business. Once they figure out what is on their balance sheets and are sure they are covered they will stop hoarding cash. Most banks have the cash. They are just afraid of what "bad" may be left on their books.

Mar 18, 2009 05:33 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

LEWIS.... . wow, thanks for this in depth response. Yes, I agree, almost every single step to make mortgages easy has not worked. Sad, but yet so true. Someone mentioned in a comment that they should give each of us $300,000... now that would jump start the economy in my opinion. But yes, many of us will agree that there are a lot of smoke and mirrors. \

I will say this, I am not denying many, because FHA is still good if you have the credit scores. I think what is hurting your market are jumbo loans, because of the values out by you. But maybe many aren't calling me now, because they know that their credit scores are low. But they should still be calling, to get a professional to help them with their credit now, not later.

In regards to the 105% financing, you and I have talked about this. Again, smoke and mirrors with this one. What lenders are going to buy these? No credit scores? High LTV's? What about the MI companies that are even restricting 95% ltv's in many areas.

In regards to the banks that can charge high interest rates on credit cards, yet the gov't keeps an eye when it comes to mortgages. I agree with you, why not regulate the credit card companies. Especially the small print that says that they can change the terms on you. Ouch...

Overall, you make some excellent points. You are feeling it from all sides, because not only are you a mortgage broker, but a small owner. They talk about helping the small business, but where??? Which ones??? And yes, the media isn't covering this and I don't see them covering this.

Again, thanks for the detailed comment and for bringing up many issues that should be on the front lines and not tucked away on a cocktail napkin for small talk. And thanks for the kudos...

Mar 18, 2009 05:48 AM

Jeff Belonger

Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ

The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

JASON..... . I agree, they might get more heat if they didn't do anything. But with all those great minds on Capital Hill, well, so we think... they can't come up with anything better?

In regards to the current administration? Hands being forced or not, I plead the 5th on commenting on that one. ;o) But overall, we do need to take advantage of what is available and use it to the best of our ability. Thanks for the polite compliment and for your input.

MICHAEL.... . I don't have any more confidence than prior, after listening to that interview. And U understand that Mr. Bernanke couldn't say much, because it would have affected the stock market. But you can see and hear the fear in his eyes and voice throughout the interview. That at least tells me that he can't really lie, just skate around the issues.

TAMMY.... . lol... I just stated the same to Michael above. And my mom said of the same things. And yes, why should we think that it would be any differently, just as those in D.C. that never give us straight answers.

DARRELL aka Integrity..... . he was very cautious with his words and many of us have stated the same, that he had to be careful because markets do respond off his comments... thanks

KEVIN & MONICA..... . I just don't see how he can see that he hopes that he prays the recession will be over by the end of this year. Especially since he made this statement..."You don't get a sustained economic recovery as long as the financial system is in crisis."

How is the recession going to be over if the crisis will still be lingering. Does he know something that we don't?

ANN..... . yes it is scary stuff. And my pleasure.... thanks for stopping by.

Mar 18, 2009 12:16 PM

Joetta Fort

The DiGiorgio Group - Arvada, CO

Independent Broker, Homes Denver to Boulder

So the realtors are scared and unhappy - but the car dealers must be woo-hoo'ing. There's a noticeable surge of brand-new Hummers and luxury cars around here. I guess there will be plenty of complainers to interview when gas prices hit $4 per gallon again. We have such short memories.

Mar 18, 2009 05:41 PM

Anonymous

Perthaps the 1st step to correcting the national financal crisis to to go back in time and hold responsible ALL THOSE MORTGAGE ORIGINATORS AND BUILDERS who inflated the price of houses as to dump on excessive fees!

Let start taking back il gotten property and wealth from those who contributed HEAVILY!

and by the way IS CONTINUING!

Mar 22, 2009 03:42 AM

#62

aaa aaaaa

Plano, TX

Jeff,

I am not sure why does everyone has to be so negative. This crisis did not happen because of the few bad mortgages. It happened because of the credit swap AND because we keep hearing negative news from everyone. You hear everyday in the news that borrowers can not get loans. You do FHA Loans, You tell me if a borrower with less than 600 credit score can not get a loan? I can still show you companies where you can get 100% financing. It was five states which experinece large problems with Forclosures. Media started gloryfying that the whole country is in forclosure and no one can get a loan. What do you think a regular person will do when they hear these news. THEY STOPPED. They stopped spending. period. That is having the RIPPLE effect.

PLEASE BE POSITIVE. IT IS ALL OF US WHO CAN GET OUT OF THIS RECESSION. ENOURAGE PEOPLE THAT THEY CAN STILL BUY HOMES. THEY CAN STILL GET LOANS. PLEASE DONT BE NEGATIVE

Mar 24, 2009 04:17 PM

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