The housing bubble is back. It actually never went away. Now lets go back in time, and trace in easy terms what happened.
Now, in certain areas of the country, a lot of homes got built. A closer look at those builders is warranted, as a lot of additional things happened to cause them to build those homes at warp speed. The loans were facilitated in a way to get people to sign those mortgage contracts fast, easy and cheap. It did not matter if they could pay for them, it did not matter if they were American citizens, had verifiable income, or would live in them very long. Just so those loans went through.
I have been following this story for 4 years, just on the housing side, and it is horrible for the people that are left in these neighborhoods as they now owe twice as much for their homes as what they are worth, because the people that sweetly sold them their “dream homes” never mentioned that half or more of their neighbors, would not be around long.
They knew what they were doing. They knew someone was going to allow those loans to go through. Who are the key people that set up this arrangement ? Who are the builders, and who are the financiers?
There are people in other countries demanding to be reimbursed for bad loan bundles too. Not just the homeowners are mad. A really grand scheme, gone really bad.
I love houses. I love developments. I love pretty streets, well planned with the required landscaping, nearby shopping, businesses, schools and churches. I am the last person to put down development or building. I love it, but within reason. When your city starts looking like one big grid, over and over with the same businesses on every corner, it gets boring, predictable. Like no imagination or variety is being utilized.
When I think of a quaint, American city, I think of a place with individual owners of interesting restaurants, bakeries, businesses, dress shops and gift shops. I do not think of a taco chain, and drug store chain stores, next to the same old bank on every intersection. I do not think of every house in a city being one of 12 floor plans and accepted colors either. It is odd and unimaginative. Why would anyone build like that ?
The answer is rather obvious. It was fast, easy, cheap and profitable. For whom ? Again, follow the money. Now new developments are seeping out daily on TARP, and we have not even come to discuss the current commercial real estate situation.
Jan 31,2010 from FOX Business;
Sunday, January 31, 2010
TARP Inspector General Investigating ‘Suspect Trades’ by TARP Investment Management Firm
By Peter Barnes, Senior Washington Correspondent, FOX Business
A government watchdog is investigating “suspect” securities transactions made last year by an unnamed investment management company that partnered with the Treasury Department in a program under its $700 billion bank bailout.
Treasury, which detected the trades through its own internal monitoring system and brought them to investigators’ attention, denied any impropriety by the firm.
In a new report to Congress, Neil Barofsky, the Special Inspector General of the Troubled Asset Relief Program [TARP], said he launched an investigation into “a series of unusual trades” undertaken by the investment company, which he declined to identify. He also did not disclose the value of the transactions.
The firm is one of several financial companies that partnered with Treasury in the “Public-Private Investment Program” [PPIP], which the department launched last year to purchase billion of dollars in toxic assets from banks, including securities backed by souring mortgages. Together, the firms and the department have set up eight public-private investment funds [PPIFs] to buy bad assets; Treasury has already invested nearly $20 billion in TARP resource to the ventures.
In his report, Barkosky suggested taxpayers may have been cheated in the flagged transactions.
“A series of suspect trades…has already occurred within one of the (funds),” Barofsky wrote. “A portfolio manager directed the sale of a security from a non-PPIF fund under his management to a dealer after the security had been downgraded and then, minutes later, purchased from that dealer the same security at a slightly higher price for the PPIF.” [Italics added by Barofsky.]
Providing additional details, Barofsky said the “series of unusual trades” were made by a firm that “operates both a PPIF and one or more non-PPIF funds that invest in similar securities [i.e., mortgage-backed securities [‘MBS’]]. In the case of this fund management company, the same person is the portfolio manager for both the PPIF and (a) non-PPIF fund. In late October, the portfolio manager directed that a particular MBS from the non-PPIF fund be sold after the security…had been downgraded by a rating agency.
According to the company, multiple bids were received, and a quantity of the security was sold to a dealer. Within minutes of the sale, however, the same portfolio manager purchased, for the PPIF, the same amount of the same security from the dealer at a slightly higher price. Later in the day, the portfolio manager bought more of the security for the PPIF from the dealer at the original price.”
The report said the investment management company involved in the PPIF “asserts that there was nothing inappropriate about these trades, and Treasury has concluded that the trades did not violate PPIF rules.”
Barofksy said, however, that “the facts…give rise to difficult questions. Was the initial purchase really arm’s length, or was the dealer aware that the portfolio manager was prepared to repurchase the securities immediately? How can a manager conclude that it is wise to sell a security at one price but then almost simultaneously repurchase the same securities at a higher price? Were these trades designed to push the risk of this downgraded security from the private, non-PPIF fund onto the taxpayer supported PPIF? SIGTARP will seek the answers to these questions as part of its ongoing investigation.”
Barofsky disclosed the probe as part of his effort to push Treasury to adopt stricter conflict-of-interest rules in PPIP, including barriers or “walls” between investment managers – in effect, requiring separate managers for PPIP funds — within participating financial firms.
In a letter to Barofsky, Herbert Allison, the Treasury’s assistant secretary for financial stability, said PPIP compliance rules designed to monitor trading activity “effectively protect taxpayers without the need of segregated investment teams.”
Allison said separate teams “would be detrimental to the program because it would reduce our ability to retain experienced PPIP fund managers and as a result would reduce performance of PPIP funds.” He noted Barofsky “initially became aware of the circumstances of the trading activity…because Treasury discovered them through its PPIP compliance surveillance program.”
Some of the investment management firms in PPIP include Blackrock, AllianceBernstein and Wellington Management.
Now, we have not even discussed pre-owned real estate loans, or commercial loans, but those are probably part of the TARP loans also, although I have not looked into what they actually are, or the breakdown.
Where is Fannie and Freddie in this ? Who forced these banks to take these loans? This is a stable. Too many scams. Too much corruption. Too much “phony” money, and homeowners and taxpayers on the hook, not to mention scammed investors. I hope Barofsky, or SOMEONE, can actually do this right, and clean out this stable. Grab a shovel. Doesn’t it feel like someone did this on purpose ? How could educated people be this greedy, or stupid ? How do they sleep at night ?