I was browsing my home page (Washington Post) which led me to Politico which led me to this eye opener. Apparently the proposal Bernanke et al came up with for the Bailout would allow them to ’save’ or contribute to foreign banks. See the article on Politico here with quotes from Henry Paulson on a talk show this morning.
As a Cleveland Realtor® this troubles me and I bet it troubles a lot of you. Which is why I used Deutsche Bank as an example. They came into our market a few years ago after never doing business in NE Ohio before, and offered mortgage deals to thousands upon thousands of potential homeowners. Homeowners who probably shouldn’t have bought a home (in many cases) but for sure who wound up with mortgages on homes appraised at higher values than they should have been appraised. Now Deutsche Bank is one of the top owner of foreclosed properties for this very reason.
Since this Bailout is related to the mortgage and foreclosure issue, there is no reason to think that Deutsche wouldn’t be one of the banks trying to get aid from The Bailout.
And since Section 8 of the Bailout proposal says “Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency” every NE Ohioan could send a letter of protest and it wouldn’t matter.
We know that Britain is working out similar problems and issues with their banks. We know other countries are too. But seriously, there seem to be no checks and balances in this Bailout proposal that would keep our own leaders from assisting the foxes in the chicken coup.
What do you think? What is your opinion on Bailout money going into other economies? Do you have a good rationale as to why I’m wrong? I’m open to hearing your reasons.
Here is a quote from the Politico article:
“….The theory, according to a participant in the negotiations, is that if the goal is to solve a liquidity crisis, it makes no sense to exclude banks that do a lot of lending in the United States….”
And Paulson’s quotes from a CNBC article:
”Yes, and they should. Because … if a financial institution has business operations in the United States, hires people in the United States, if they are clogged with illiquid assets, they have the same impact on the American people as any other institution,”
What say you? Peace Out - 3C
Just went back in to find links to Callahan’s Cleveland Diary about all the foreclosed homes owned by Deutsche Bank and other issues surrounding them since this all began. Start here then go here and here.
Sept 22nd Update: according to various media (here is PD link to the bailout story) there is a bit of an agreement between The Admn and The Dems on a need for oversight, and a mortgage/homeowner component.
Secondly, here is the Democratic ‘working paper’ response to the three page proposal/draft Paulson sent out over the weekend.
4 responses so far ↓
1 Bill Callahan // Sep 21, 2008 at 11:25 am
Carole,
The point about foreign banking institutions is critical, but it’s not clear where Deutsche Bank itself fits. In Cleveland, Deutsche Bank has never been a lender. Their name is all over the foreclosure and property records because they’ve served as “Trustee” for a large number (most?) of the investment pools created by Argent (and some other big subprime loan peddlers) to “securitize” thei mortgages. Trusteeship is probably not one of the “mortgage-based assets” Paulsen wants to buy.
On the other hand, Deutsche Bank does hold billions of dollars worth of ownership shares, or “residential mortgage-based securities” (RMBSes), in the same kind of U.S.-based investment vehicles — maybe the specific vehicles they Trustee for, but probably others as well. These RMBSes have been cratering like everybody else’s, forcing DB to take multi-billion dollar balance sheet losses. Presumably they’d love to dump them on the U.S. government.
This is one reason why I think it’s so important for Cleveland that any bailout legislation says: If you want to sell us some mortgage-based securities, you must be able to give us control over the underlying mortgages as well. Otherwise, none of the important decision-making roles will change, only who eats the losses.
2 Do Clevelanders Want Their Bailout Money to Go To Deutsche Bank? | Virginia Modular Homes // Sep 21, 2008 at 11:25 am
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3 Free Real Estate Blog » - “Real Estate” news // Sep 21, 2008 at 12:03 pm
[...] Do Clevelanders Want Their Bailout Money to Go To Deutsche Bank? By Carole Cohen I was browsing my home page (Washington Post) which led me to Politico which led me to this eye opener. Apparently the proposal Bernanke et al came up with for the Bailout would allow them to ?save? or contribute to foreign banks. … Cleveland Real Estate News - http://www.clevelandrealestatenews.com [...]
4 Carole Cohen // Sep 21, 2008 at 2:09 pm
I think what you are saying Bill, is that Deutsche wasn’t the loan originator but people like Argent (probably mostly Argent) sold the loans to Deutsche afterwards? What I guess I don’t know as far as ‘trusteeship’ is concerned, did Deutsche Bank experience issues of serious economic crisis because they hold this paper? I don’t know how to evaluate that.
And from what you say regarding what their investment involvement IS, they could still be bailed out if at some point they went to us and said plz do.
I so agree with you on the control of underlying mortgages.
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