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WH and Fed sleeping together
For me, the most significant development from the Fed’s announcement is a change in policy where the Fed will re-invest proceeds of maturing MBS securities in new issues of Agency MBS paper. Prior to today, the Fed re-invested principal repayments in Treasury bonds.
I wrote about the possibility of a mega mortgage ReFi by Fannie and Freddie (here and here). I (and many readers) pointed to an obvious flaw in the ReFi story. If a Trillion or so of mortgages were rapidly prepaid, then who would buy all of the new (much lower coupon) mortgage paper?
Now we have the answer. The Fed will put the new MBS paper back on its Balance Sheet, $ for $. There will still be many bondholders outside of the Fed who will get prepaid much faster than they had assumed. Most of that is in pension/bond funds. No one cares about them.
I think that Treasury will announce the plans for a Mega Refi in the not too distant future. It could come this weekend or next week. Obama will wait just enough time after the complex Fed decision so that 99% of all people don’t connect these two dots.
In that 1% will be Republicans. They are going to be mad as hens tonight that Bernanke ignored their last minute plea not to play more monetary games. The authors of that letter, McConnell, Boehner, Kyle and Cantor are really going to be peeved. Not only did the Fed step further on the gas, they greased the skids for an Administration's plan to ReFi mortgages.
It’s not at all clear that the Fed’s latest move are going to accomplish a thing. I’m not sure that the Big ReFi is going to be such a success either. But that doesn’t matter.
What’s important about this is that the Republicans will respond. They will not give Obama another leg up with his one-year stimulus program. Any chance of that went up in smoke with the Fed’s VERY political decision on MBS today. Can you say, "Collusion"?
This is a real circus now. In this one the bears aren't dancing. They’re fighting. The claws are out and it’s going to get bloody.
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"Nothing like a refi to clean up bad titles/assignments."
I wouldn't be too sure about that - any title search into the future could have a cloud until they determine if MERS can rightfully assign title to the party that refinanced the loan. If a step was missed in the chain of title, the only way to fix it is go all the way back to the last holder of the financial instrument that conveys ownership and record of obligation. In other words, the loan initiator, if they are still shown on the county courthouse records.
Yep - one REALLY BIG BROOM and sweep it all under the proverbial carpet.
Such B.S. - We need to see some people hung out to dry for mortgage frauds. If our own government cannot take appropriate regulatory action then I guess WE THE PEOPLE should just start lighting the torches. Seriously though, if they try to "make this okay", it'll be the biggest and most successful crime spree ever.
Just like they did with the S&L crisis, except this time they'll need a bigger broom.
Free Houses? Why pay for anything? Let Barry pick up the tab for all the credit card bills, hospital bills, new cars, cell phones and I-Pads.
Hey, might as add free food, medical care and how about t trip to Hawaii ...all thanks to Barry?
Mighty Fine...
Buy now, never pay later!
These policies will lead to a housing depression for 30 years instead of correcting in 5 years. I hope I don't need to move (and thus, sell my abode) for 30 years, cause housing ain't coming back any time soon with these policies.
Bruce is corect. The big turd in the punch bowl however continues to be Europe. As it goes so will the global financial system.
"What’s important about this is that the Republicans will respond. They will not give Obama another leg up with his one-year stimulus program. Any chance of that went up in smoke with the Fed’s VERY political decision on MBS today."
So Bruce believes that the Repubs were willing to vote for Obama's jobs plan and would have --- except now they won't because of Bennie's monetary games? As others above have said, Bruce is either a bit too partisan here or he is politically clueless
I can certainly buy the idea that this is now a partisan scrap - by the way, did you notice Barney Frank's conveniently-timed new interest in Fed reform? But bluntly, if it is a shameless partisan scrap then couldn't one just as well blame the Republicans (willing to tank the economy in 2012 in order to make sure of getting Obama*) as the Democrats (willing to do crazy things with the Fed to give Obama* a bounce)?
* and the other Dem incumbents up for re-election in 2012, of course.
Mr. Bernanke is trying to have his cake (Twist) and eat it too (MBS - MBS) but I don't think he is particularly trying to push back on the Republicans. I think he is trying to keep his powder dry (a large amount of intervention) until we can all see the whites of the E.U.'s eyes when the reality of the E.U. collapse occurs.
When he intervenes by doing LSAP of European assets at par .... that will be when the Bear Cavalry is turned loose!
barliman
winner
Bonus points for mentioning bear cavalry
With the stroke of the legislative pen they are going to legally absolve all mortgage fraud banksters while making it look like "it's for the people" legislation. They'll have everyone refinance their dirty mortgages and when they do that the banksters fraud liabilities go away. Same old same old. The administration, legislature, courts, DOJ, lobbyists, corporate/political pontiffs and the rest continue to collect fat salaries, perks & dirty money deals for protecting government and corporate fraudsters from penalities.
What's the penalty?
Change all of them, start over and start prosecuting and jailing people at the top.
Yes, a waiver of rep and warrants on the existing mortgages will be part of the refi plan, the old underwriting issues will disappear with the old mortgage.
Jail, my ass. The crimes of these scum go way past jail time.
Won't do one damned bit of good. Only their blood on the floor will make any difference:
http://www.youtube.com/watch?v=FeLLR3LWtv4
"McConnell, Boehner, Kyle and Cantor are really going to be peeved"
You mean they're going to ACT peeved. Politicians at that level are too cynical to be caught by surprise.
I take a more cynical view - Dems & Republicans are two sides of the same coin (or FRN). Who funds the guys in Congress & the White House, if it isn't the Wall streeters who also shape the Fed policy?
Mere political smokescreen posturing to cater to their constituents so they keep thinking their views are being represented & their interests protected while they continue to sleep at the switch & ignore what is really going on behind the scenes - namely the Wall Street banks are raping America for their own personal gain while the country goes to hell in a handbasket.
As for the Republicans, they'll fire back with Solyndra to extract their pound of flesh from Obama & the Dems, but in the end that won't change a thing. Wall Street will still be in charge
A legit 3rd party is what is needed to put an end to this game.
No. A First and Only Party. A Nationalist Party. Liquidate Fed, closed borders, Fair Trade not free trade, bring the Troops home, and hard money. Probably have to deal with the JP as well.
Left unsaid by the Fed is WHICH MBS they will be buying.
My bet is it is high coupon stuff on the secondary market + Fannie/Freddie's balance sheet. That way there will be less pain felt by the private market when the mass refi event kicks off.
You are correct that the Fed will roll MBS to MBS (instead of UST as per QE Lite), but you probably assume that prepayment rates willl pick up, because at the current one of just $15 billion per month in MBS/agency, buying $15 billion in MBS won't have much if any impact.
Reality check. The White House does what the poweres behind the scenes want - as does the Fed. Matters not if there's a Democrat or Republican in the White house. The false dichotomy is an illusion to give people the believ=f that they have a choice, that elections matter.
We've been exporting jobs - to the detriment of this Nation, and its the Middle and Working classes - for decades. Clinton was as bad as HW or W. Obama has said NOTHIING on the subject.
Be real. W screwed things up SO bad there was not going to be a Republican in the WH in 2008. Rove got his math wrong in 2006 and didn't steal enough votes to keep the House. You got some firebrand dems in who got Freddie and Fannie audited. Bush looked like a deer in headlights when the mess exploded early on HIS watch.
Obama was chosen to provide a 'hope andf change' alternative to Hillary - to deflect the rising anti-DC tide of outrage that might have gone to a real progressive like Feingold or Kucinich. Couldn't have that happen. The plan was for Hillary to get into the WH - have the financial mess blow up on her and then blame the Democrats and take all back in 2012 and continue the overt pillaging. When Hillary - more than willing to play along with the establishment (hell Murdoch had a fund raiser for her) lost control and Obama got the nomination, no big deal. He was owned lock stock and barrel too. Grandparents with CIA ties, Mom worked for USAID... don't look too closely into Barry's background - though it's not cause he's a Muslim Liberal - quite the opposite.
Be real.. Obama has been Bush III - with a few bones thrown to the masses for PR sake. Same generals running the never ending wars in the Middle East. We even notched up Libya - another on the neo-con hit list. Syria is less and less stable as well. NO talk at all of cutting the Pentagon budget - a logical course for a real liberal given the current economic situation - even some conservatives are fed up with Iraq and Afghanistan. Obama left the same financial types running things when the expected course was a complete broom sweep. NOBODY was held accountable for fraud. indeed Obama's Justice Dept has pushed for 'get out of jail free' settlements. Oh.. and NO investigations into BILLIONS unaccounted for in Iraq and Afghanistan, no investigations into war profiteering and shoddy work.... no prosecutions for violations of US and International law and NO changes in Patriot Act or other expansions of Executive power.
'Hope and Change?' - be real - we got 'more of the same' with a side order of distractions. REAL health care? bwahaaaaa.... more hand outs to Insurance and Pharrma.
You think the Kabuki Play in DC matters? you're dreaming - and distracted - just as those really running things want.
The Tea partiers are throwing a wrench in things by actually DEMANDING that representatives listen to them.... they're tools - bought and paid for by the Koch Brothers - but they're not following the script. Gridlock in DC is NOT what anyone wants - they want to keep the government bucks flowing. Where would ...oh, say Halliburton , be without them (bankrupt and liable to prosecutions for massive violations of the clean water act - thanks Uncle Dick!) And remember - all that TARP money was paid out under BUSH.
Absolutely spot on. Bruce is correct that Repubs will cry foul. The only problem is these are the very same idiots who cheered when Greenspan lowered rates so the the private mortgage market could do the same thing: levitate home prices. The only difference here is that Ben will be assiting the public mortgage market because there is no private market left.
There is another difference: 2012. By all appearances, the Republicans want this one so bad.
They want everything.
Sure, but their jones for a big result in 2012 seems visibly stronger than their motivation levels in, say, 2008 or 1996. Partly because it's so close they can almost taste it, I'm sure.
Frankly, I can't see why ANY sane person would want the Presidency. Who WANTS to be Captain of a ship that's sinking? Only logic I can see is that they figure they might as well loot and pillage while there's still something left to loot and pillage - it may buy them a place behind the Castle Walls at the Lord's table instead of leaving them toiling in the fields as serfs like the rest of us.
The Republic is dead and the Empire is falling apart but that doesn't seem to deter those seeking power. But when the Visigoths enter Rome the aristocrats are the ones that lose their lives.......
Pretty much agree with it all, except that the Tea Partiers are total tools whose movement was created by TPTB.
They only extant threat to their system is Ron Paul.
karl says he founded the tea party and that he was the first one to send teabags to his congressman
or was i dreaming
If memory serves me here, Karl claimed to be 'among' a small group of individuals who went to DC in an attempt to explain what needed to be done but they were not listened to by the politicos. Anyway, he was definitely making his voice heard early on and sent teabags to his rep.
I always find posts like narapoiddyslexia a bit odd. I'm registered with the Tea Party, I attend Tea Party events, so I'm about as much of a Tea Partier as you'll ever meet and I can tell you that it's BS to say that TPTB created the Tea Party. The Tea Party is not some centrally organized party where our agenda is dictated to us by some higher authority. We don't look at anyone as having created our organization. We don't have any loyalty to anyone unless we feel they are upholding our basic principles. There are a lot of us that support Ron Paul and there are a lot that don't quite get the big picture of what's going on that support people like Bachmann or Perry. Our power lies in holding politicians accountable - thus the huge backlash that Boehner and other RINOs experienced when they gave in to the Neo-Communists. The Tea Party isn't perfect but it's not been hijacked either - that's just plain ol' BS. I'm glad we have the Tea Party otherwise there would be a whole lot less "education" about the snake oil that the Neo-Comms are trying to sell the nation.
Sure a bunch of regular pissed-off people started the Tea Party movement, but they aren't the ones keeping it going with the funding. Follow the money, back to the Koch brothers. If you don't think TPTB could be involved in any political movement that gets this kind of media attention, wake up and smell the coffee. TPTB will exploit any popular movement.
+ another tea partier
Amen, from a fellow teapartier.
Well said, totin.
Follow up!
Some two months ago, Bruce SOLD his MCP, arguing that he had a great run-up and did not need to pick up any more pennies.
GREAT CALL, Bruce! Made a public call and got it right.
+++++
In BED together? really? warren, the fed, the WH?
Reuters: Warren to headline Obama campaign event Chicago
http://finance.yahoo.com/news/Warren-Buffett-to-headline-rb-3046657273.h...
dance held at the Chicago house taxathon;
video of the FED Twist Bernanke, spinning records...
http://www.youtube.com/watch?v=LVQ0MXp-8ds&feature=related
In real life or his dreams, Bernanke could not get past the velvet rope at the Peppermint Lounge, showcase for the Twist. On the other hand, Bernanke has the world by the balls and is twisting the night away.
Fuck Buffett - can't believe I once upon a time looked up to this POS.
Ham, anyone that has bilions is by definition a liar, thief and crook. No way can you make that kinda money legit. Even the vaunted Steve "Messiah" Jobs got caught up in stock backdating thievery. Just like you can't win the NCAA football championship w/o being dirty, same with wealth. NO EXCEPTIONS!!!!!!! Sad....but true.
Couldn't the chairsatan buy up all of BAC's bad mortgage debt that's bringing them down with all the MBS money? I mean, a $150 billion can go a long way.....
Seems like a backdoor attempt to clearn up mortgage fraud.
Absolutely. This is all about reaffirming debt. The old loans aren't enforceable because of MERS, lost paperwork, missing assignments and outright fraud on the part of the banks. This is a bank bailout pure and simple. If the govt wanted to bail out homeowners they could have done this in 2009 when they put their first mortgage plan (fannie mae-refi plus, freddie mac-open access) into play.
Correction. "Seems like a backdoor attempt to cover up mortgage fraud." Now, if there was any doubt before, Ben is aiding and abetting. What a wonderful paper trail Ben is leaving for the prosecutors.
And any leftover liabilities can be paid off with all that bailout money that was allegedly supposed to be loaned out to borrowers by the banks.
the pocket of last resort for the $7 trillion of GSE & AIG guaranteed MBS paper is the Fed. they are going to own this stuff whether they do something or nothing.
they'll either move to purchase this stuff at close to par and allow for a new round of record bank bonuses, mark the stuff to market & wipe the TBTF & a bunch of pension funds off the map & hold the remainder in the form of Treasury securities issued on behalf of the FDIC, or something in between.
bo-nus, bo-nus, bo-nus.
As the FT reported about UBS's rogue trader wiping out the year's profits, the worst part was the effect on banker bonuses from what was otherwise looking like a ho-peful year.
Sorry, have that first line wrong, s/b: bone-us. Again.
Are we just going to be observers or game changers?
Observers, by necessity. Individuals don't play at this level. Can you manipulate markets? Can you swing elections? You can't even swing your neighbor in an argument on anything fundamental. The system is managed and maintained by corporations with more money than you can even imagine with more influence than God -- they are in absolute control and are going to stay in control until this machine rattles itself into ruin.
Apart from being observers, and student of these times, we can control only our own destiny.
But this is no small thing. It is probably the most important thing in the world right now. We are no longer a collective moving toward greatness. We are individuals swirling around the devouring blackhole of suckness. Those of us can stay as far away from the suckness as possible will be the ones putting the pieces back in place after the suck is gone.
Observe. Learn. And decide what comes next. For the future is out there like it or not, and someone is going to have to survive and that someone will have to know what the fuck went wrong.
Have to get back to you on that. Judge Judy is on.
The bread and circuses are still working. Only reason you don;t have people selling apples on the street corner is endless unemployment and foodstamps. We're setting records in poverty levels. Cut off that tap and you'll have a revolution - and the Republicans know it. I suspect some are hoping for it. Like Nixon thought during the oil crisis - might give him an excuse to have a dictatorship. And you've got way too many of the same people running around at the top of the Republican Party still..... explains a lot of the Bush excesses. You KNOW they expect problems - repeal of Posse Comitatus - training Troops for civil unrest, the increasing militarization of police forces and the development of more 'non-lethal' weapons......... look at the OVER response to non violent demonstrations.
Fuckin A, they'll just use the funds to sop up the bad MBS of their friends so they can be saved and get into either new, clean US Bonds, or they can start buying the stock market or (heavens no), gold. That chairsatan is a clever dude.
Bullish!
When in the hell are WE going to get a NEW fucking government, from the information desk lady at the Library of Congress, to the President of the USA, and EVERYBODY in between? This joke isn't even comical anymore....................