Bank of Amerika wants a $739 billion Federal bailout

[Ichingcarpenter]

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.

To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

http://www.nytimes.com/2008/02/23/business/23housing.html?_r=3&ref=business&pagewanted=all&oref=slogin&oref=login

[marmar]

1. There go those corporate welfare queens again, begging for a handout....

:argh:

[Robbien]

2. That $739B ended up in pockets of CEO's and hedge fund managers

and the whole parade of fraudulent mortgage brokers.

If BoA wants its $739B back, they are begging at the feet of the wrong people.

[Egalitariat]

19. How do you figure?***

nm

[The Straight Story]

26. History

Having worked in the banking industry, and running a data center for a home finance center, I can assure you that the people who will benefit the most are the people within the bank who get paid to reduce the losses (ie, some will go to and save home owners, but a big chunk will pay off the people who save the bank some money - ie, they will still lose money, but less than normal, and the folks that manage the funds given the bank will get a good chunk of that money.)

[nookiemonster]

3. Didn't see that comin'!

:sarcasm:

:mad:

n/t

[Ichingcarpenter]

4. I should add this point and you tell me if its a bailout?

"We believe that any intervention by the federal government will
be acceptable only if it is not perceived as a bailout of the bond market,'

the financial institution noted. In practice, taxpayers would almost certainly view such a move as a bailout.

http://latimesblogs.latimes.com/laland/2008/02/banks-want-an-e.html

[samplegirl]

5. Hey, I've got an idea...

the government can buy up all the 4 billion vacant houses and use them as subsidized housing. Every homeless person, each welfare recipient, those among us who do not choose to work, wish to be taken care of, decide to retire at an early age, anybody who can sneak across the borders. . . What an idea! What a compassionate society!

[annabanana]

9. ?

I was with you with the homeless and welfare recipients... What exactly caused you to go over the cliff? (or did you confuse this board with someplace else)

[DS1]

36. i think they forgot the sarcasm smiilie

and the point was that while we're busy giving out money to a bank which has utterly failed, let's just reverse it and give it to everyone the banker types hate.

[annabanana]

6. ooh! ooh! ME TOO!!

I wanna $739 billion bail-out too!!

[Popol Vuh]

7. I am sick and tired

of having to surrender my money to bail out these assholes (big corporations) who have billions of dollars while I don't even own my home yet.

And also, while I am someone who's all for helping out the poor with contributing to social services and what not because I think its important we help out the needy, however, I swear my money better not go to help some idiot who bought into a house they couldn't really afford. I ain't helping pay off some one else's home when I don't have my own home myself.

:argh:

[Robbien]

10. This money isn't going to help homeowners. It is going to help banks

If a homeowner can't pay his mortgage, it still will be foreclosed but the bank won't be left holding the bad mortgage because we the taxpayers are being asked to reimburse the bank for its loss.

[Ichingcarpenter]

11. Yep, and it is secretly being pushed in Congress

I think it needs to known by the public.

[BlooInBloo]

23. If it's such a secret, how do you know?

[Popol Vuh]

12. Yes that is correct,

this is why my post is a two part post. My first point is pertaining to bailing out these banks losses. My second point is pertaining toward any future proposal which might result in the bailing out of homeowners who are in over their head.

:pals:

[Yavin4]

8. F*ck Those SCHIP Kids, BofA Execs Need Their Bonuses

Do you all realize how expensive summer homes in the Hamptons are? Well, do you?!

:sarcasm:

[ixion]

13. cracks me up how these "free market" capitalists run crying to the government

when it's THEIR ass that's on the line. When it's the working class, though, well, then those people don't deserve a bail-out. :eyes: :puke:

[Yavin4]

15. And If These Sub-Primes Had Made Them Money

They'd be crying for a tax break on their gains.

[sarcasmo]

14. No more Bailouts. Bank of America we paid off our credit card and now it's time for you to go

Bankrupt. If I ran up a debt and couldn't pay it off, could I get a bailout, I think not. Kick and Nom.

[dysfunctional press]

16. and in return: complete and total permanent re-regulation of the banking industry

well...until a generation after all the people who would remember this episode have died, anyway...that's how "permanent" is generally done in this country.

[LeftCoast]

17. Fine. IF it's paid for exclusively by a tax on those making over $10 mil per year

Seems fair to me.

:shrug:

[Heywood J]

22. Yep.

Roll back the high-earning taxes back to the fifties - a 90% tax on income and capital gains earned beyond one million dollars, both for individuals and artificial entities like corporations and trusts. Dividends, salaries, deferred payment, payment in shares, etc. are also subject - any way a corporation could see to pay its directors and officers. Toss in a 90% inheritance tax for all officers and directors of corporations and their trusts, then combine that with bending them over the re-regulation knee and it starts to sound like a winning proposition.


Let other corporations see how the banks fucked them and traded them in when the going got rough. I have a feeling business might dry up.

[Canuckistanian]

18. A good default will be character-building

Teach a few of them how to pull themselves up by their own bootstraps. How to stop depending on hand-outs. Maybe even some learn some financial accountability.

The party's over, boys. Time to work for a living.

[TexasObserver]

20. Corporate Welfare. Let's save the homeowners, but let the lenders lose their owner's equity.

Same thing happened during the Reagan second term. Big banks got bailed out. Borrowers and small lending institutions got "free market" treatment, meaning they were told "tough shit, eat it."

[Doc_Technical]

21. Bank of America probably thinks they deserve this bailout.

After all, they "took one for the team" when they
bought Countrywide home loans.

[skywalkerjlp]

38. If Bank of America made a lot of bad loans AND STILL OWNS THEM then....

they should go bankrupt and the government is stuck covering all the money in every account up to $100,000. AND I'D much rather see it handled that way, and have the owners credit ruined too, then to bail them out !!!!

[salin]

24. I just checked the national debt clock - we all owe 30K, how much

more would this add? The big thing is that the individual debt obligation (per the national debt) has climbed 10k in the past five years. So this bailout would cost each of us how much? And the benefit to us will be what? And we won't clamp down with new regulations to prevent this cost from coming to us again in the future because of what?

[eppur_se_muova]

25. Some history: BOA was the first large bank to request a bailout during ...

the FDR administration, under a law which FDR had intended to help small businesses about to go bankrupt. He had wanted big banks -- which he saw as the cause of the Depression -- to be excluded. And BOA knew it perfectly well.

[OneBlueSky]

27. aw, they're just startin' high to establish a bargaining position . . .

betcha they'll gladly accept $50 billion . . .

[laylah]

28. Wasn't it recently announced

BOA was buying out Countrywide? :wtf:

[jtrockville]

29. Will taxpayers get a share of the profits they pocketed too?

If we're going to share the risk, we should also share the benefits.

[high density]

30. I'd love $739 billion as well

Where do I sign up to get my bailout?

It's not the government's role to insure these banks against their own insane risk taking.

[Aviation Pro]

31. Go Cheney yourselves.....

....

[ruiner4u]

32. Nonsense...

Let the banks take a hit...

Let the "flippers" take a hit...

Let those who should have never been allowed to buy a home they could not afford take a hit. Not to sound mean, but let go of the cable, and other unnecessary sundries and rent until they can afford to buy within their means.



No one will become homeless overnight as long as everyone is rational. Including new homeowners who could have never realisticly afforded their McMansion.


So no sympathy from me.

[DaveJ]

33. I don't think they should have to rent

My heart is not so cold that I would sentence anyone to renter's hell. That is what we should be trying to avoid. Definitely, if they are living above their means, they should be permitted to downsize though. But since we are not living in a free country, they can't do this unless the banks allow them. The banks though prefer to see everyone suffer, just for their own pleasure.

[ruiner4u]

35. banks are out to make a buck..

like businesses, and landlords, and employees...

And when I say "let them pay rent", I mean that if they can not afford a normal and stable mortgage on their home then they should A> pay rent for something smiler, or B> downsize.


Since when are banks charitable organizations?

And why should taxpayers subsidize people who are in homes they can not afford?

[hunter]

34. Nah, let's just nationalize 'em and sell off their assets.

No more Bank of America, kill the corporation, ban the use of the name, and escort all bigshots from the building before they have a chance to shred the evidence of their malfeasance.

[skywalkerjlp]

37. oh sure our government is going to bail out speculators who GAMBLED AND SHOULD LOSE the banks ..

the banks don't OWN these mortgages, they were packaged in lots and bought by speculators....RICH PEOPLE WHO GAMBLED AND LOST OR AT LEAST THEY BETTER

[Ichingcarpenter]

39. Taxpapers will also pay for BOA's purchase of Countrywide.

Brace yourselves, taxpayers of America. You're going to help Bank of America finance its $4 billion buyout of Countrywide.

By Allan Sloan, senior editor at large


NEW YORK (Fortune) -- Guess who's helping Bank of America pay for its $4.1 billion purchase of Countrywide Financial? Answer: The taxpayers of the United States.

That's because Bank of America (BAC, Fortune 500), which is solidly profitable, will be able to use some of Countrywide's losses to offset its own taxable income. The tax break could total about half a billion dollars over the first five years, according to an estimate by tax guru Robert Willens, who left Lehman Brothers Friday after a 20-year run and will be in business as Robert Willens LLC starting next week. The losses could be worth considerably more to Bank of America starting in the sixth year, depending on how big Countrywide's losses are when Bank of America formally acquires it.

At this point, of course, no one knows how much in losses Countrywide has run up since the junk mortgage market began souring and defaults accelerated. Countrywide (CFC, Fortune 500) itself probably doesn't know. But it seems almost certain to ultimately be in the billions.

In tax circles, Bank of America is famous for its 1988 purchase of the failed FirstRepublic Bank of Dallas, which was being auctioned off by federal regulators. Bank of America, then known as NCNB Corp., the parent of North Carolina National Bank, discovered a way to structure the deal to save $1 billion of taxes, using a convoluted strategy that none of the other bidders knew about. That allowed NCNB to outbid its rivals for the bank, and still come out way ahead.

The Countrywide tax break isn't in that league, but it would still be worth a lot of money. Willens estimates that Bank of America will be able to deduct $270 million of Countrywide's losses annually for the first five years it owns the firm.

That's based on a $6 billion purchase price - $4 billion to Countrywide's common stockholders, plus the $2 billion of preferred stock that Countrywide sold to Bank of America in August. Willens says that you multiply that $6 billion by 4.49 percent - the so-called "long-term tax-exempt rate" - to calculate how much of Countrywide's losses Bank of America can deduct annually for five years after the purchase.

A $270 million annual deduction would save Bank of America something more than $100 million a year in federal and state income taxes. The long-term tax-exempt rate, which is based on Treasury rates and other things so complicated that they make my teeth hurt. The rate changes each year, Willens says, but not by much. When I asked how it's calculated, Willens, a master of tax arcana, threw up his hands. (Metaphorically, of course.) "It's like the formula for Coca-Cola," he said, "no one outside the circle knows it" and it's so complicated that, "no one else wants to find out."

So over the first five years, Bank of America can use a total of $1.35 billion of Countrywide's losses to shelter its income. (That's five years of $270 million annual losses.) If Countrywide's embedded losses when Bank of America buys it exceed $1.35 billion, Willens says, the bank will be able to deduct the rest of the losses, without limit, starting in the sixth year.

Isn't life fun?

http://money.cnn.com/2008/01/11/news/companies/sloan_co...

[Hawkeye-X]

40. 739 billion?

For that fucking much money, they should pay off everyone's BoA's credit card

[AzDar]

41. Not just NO, HELL NO!

:mad:

[fascisthunter]

42. Conservatives Economics FAILED?????? (nt)