And You Thought 800 Billion Was a Lot of Dough…

09 Feb

Holy Toledo Ohio

If you keep track of the news through Bloomberg you might have caught this headline:

“U.S. Taxpayers Risk $9.7 Trillion on Bailout Programs (Update1)”

In the article Bloomberg reporters disclose how they are tracking the funds laid out by the Federal Reserve (mostly from the New York Fed from which the new Treasury Secretary hails) It’s some pretty scary stuff.  And the Fed isn’t talking – Bloomberg has filed a lawsuit to get the details to be divulged -

This is a court case and story the American people can not afford to miss – so read the story:

And keep an eye on the court case – perhaps we’ll see just who Mr. Geithner is paying off – if not why…

The idea of “holding up” these financial institutions at a time when they a re all coming off rampant earnings from bad loans and front loading at the expense of the American people seems not just poor business judgment but outright thievery to some of us – especially those of us actively engaged in negotiating short sales and loss mitigation solutions with lenders who seem incapable of simple business negotiations, never mind clear or direct business practices.

While lenders continue to balk at perfectly sound solutions to their loan catastrophes, their Fed and Govt connections seem determined to shield them from their own, self wrought implosions.

Since when was the government in the business of bailing out lenders whose own bad business practices and outright greed brought about their demise? Perhaps if the Fed would lay off and let them feel some of their pain they’d more inclined to admit when their loans are two and three times higher than the current market value of the underlying asset and play fair instead of forcing thousands of homeowners into unnecessary foreclosure…

Just my .02 but as someone who deals with lenders every day who cannot even keep track of documentation on negotiations they are supposed to be conducting in good faith it seems obvious their incentives are simply not high enough to actually play fair. Or eve bother to play at all.

Ask anyone involved directly in lender negotiations on loan modifications or short sales and you’ll hear the same things over and over: They say they never received faxes sent to the numbers THEY insist you fax to – even after you’ve sent in a dozen copies – They can’t deal with email so they insist on faxing of all documents – they lose HUD 1′s; contracts of offers; and all kinds of documentation on a more regular basis than they are able to keep track of them and they fail utterly to even staff their loss mitigation departments with staff capable of conducting a proper negotiation.

As the market continues to drop, they lose paperwork and bungle their end so often as to make the standard negotiation take six months – by which time the market drop has cost them thousands of dollars more and still they cannot manage to properly communicate or negotiate.

If any private business were run this way it would be out of business in a matter of weeks – not months or years – weeks. And the local customer base would be reporting them to every known government agency for malfeasance, ineptitude and outright fraudulent practices.

It will certainly be interesting to see what the Bloomberg case reveals – or if the courts allow the facts to BE revealed.

All we can say is, it’s way past time – and it’s time to stop handing the banks money as if they were the unwilling victims in this entire fiasco when their own policies and procedures created it in the first place.

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