Mortgage modification program contains new Wall St. bailout

[jeanpalmer]

It didn't take long for Wall Street to figure out how to game Obama's new mortgage modification program, did it? The plan was hyped as help for "struggling homeowners", but it turns out, it's just another stealth bailout for pudgy bank-execs....already, bigtime speculators are rifling through their filing cabinets looking any garbage paper they can find to dump on Uncle Sam.

Subprime securitizations, which had been worth next to nothing, are now the hottest trade on Wall Street. It's a subprime bonanza! The investment sharpies are scarfing up all the crummy MBS they can get their hands on, because they know they can trade it in for Triple A FHA-backed loans when the program get's going. It's another swindle cooked up by Treasury Secretary Timothy Geithner to keep the brokerage clan in the clover. Here's how a Wall Street veteran explained it to me:

"It looks like the investors in securitizations will be swapping underwater real estate for govt-insured paper... I think the scam here is just to provide some cover so the hedge funds and other high net worth individuals can trade their low grade paper for Triple AAA mortgages insured by the FHA at the taxpayer expense."

This is how it works: The new program offers incentives to banks and other deep-pocketed investors (in mortgage-backed securities) to slash the principal on underwater mortgages which keeps people from strategic default or foreclosure. Sounds good, right? But here's the catch: When the mortgage is refinanced, it's converted into a FHA-backed loan which provides an explicit gov-guarantee. So, for a slight loss on the face-value of the MBS, the investors (ie--investment banks, hedgies, etc) are able to resuscitate their moribund securitizations (MBS) and reap hefty gains.

http://www.smirkingchimp.com/thread/mike_whitney/27724/timothy_geithner_is_a_sniveling_scamster

[SwampG8r]

1. i wish i could figure out this financial stuff

cause it looks like someone is trying to fuck me

knock it off wall street no means no dammit!

[Teaser]

2. boring article.

.

[Citizen Kang]

3. Yes

The raping and pillaging of America by Bernanke, Tim Geithner and the Wall Street banksters is very boring. Just go watch ABDC or American Idol, it's less boring.

[truedelphi]

4. Very good point. And one that is expressed to me often by fellow Dems

as this:

"Well, I don't care to worry my pretty lil head about the economy - it's too complicated.

"And Obama is so smart, with good people appointed for important positions, so let's have them handle this."

And so on and so on...

[ClarkUSA]

5. Well, what do you expect from a trusted source called Smirking Chimp?

:rofl:

[dionysus]

6. a heap of ass-hattery?