Is Obama about to forgive billions in mortgage principal?

James Pethokoukis hears rumors of an August surprise coming from the White House, one that will attempt to win backs the hearts and minds of voters dismayed at the failing economic policies of the Obama administration. With the government fully in control of Fannie Mae and Freddie Mac, Barack Obama may issue an order to forgive portions of underwater mortgages processed through the GSEs, where negative equity approaches $800 billion overall. Some financial houses have begun quietly preparing for the possibility:

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GM, Ford and Chrysler Sales All Lag Estimates

Bank Bailout Is Potent Issue for Both Parties in Fall Races

Cit Group $2.3 billion Tarp loan lost to bankruptcy

CIT group, America’s leading specialist lender to small business, filed for Chapter 11 late last night in the fifth biggest bankruptcy in US history.
The collapse of the 101-year-old Utah-based lender, which trails behind only those of Lehman Brothers, Washington Mutual, Worldcom and General Motors in size, will leave US taxpayers with a $2.3 billion (£1.4 billion) bill.
It is believed the board of the lender, which has $71 billion of loans, approved the filing after its creditors agreed a pre-packaged plan designed to ensure it emerges from bankruptcy with the core of its business intact.
Only last year, US financial regulators judged CIT sufficiently well-capitalised to survive. While the lender was given access to $2.3 billion of funding under the Troubled Asset Relief Programme (Tarp), the Obama administration refused the bank’s subsequent pleas to give it further cash injections.
The bank’s collapse will be a blow for its million small and medium-sized customers, many in the retail sector, for whom sources of debt are scarce. Experts believe that, even if CIT can emerge intact from Chapter 11, its lending capacity could fall by 20 per cent.
The entire $2.3 billion Tarp loan is expected to be wiped out by the bankruptcy process, but the bill could have been signficantly bigger. While the US Government helped other big non-bank lenders, including GMAC, General Motor’s finance arm, it rebuffed CIT’s subsequent bailout requests in July, concluding that its demise would not threaten the broad financial system.
CIT narrowly avoided bankruptcy in the summer, but its troubles have since been exacerbated by customers who, fearing that the bank is about to go out of business, have been drawing down on credit lines, using up its remaining cash.
On Friday, the company ended a fight with Carl Ichan, the billionaire activist investor, who had previously wanted to push CIT into liquidation. Mr Icahn instead agreed to back the prepackaged bankruptcy plan and in return has been allowed to provide the company with a lucrative $1 billion loan that will help to fund it through Chapter 11. SEC filings also show that last week the company secured important agreements to aid the plan, obtaining another $4.5 billion loan from investors.
Crucially the bank also hammered out an agreement with Goldman Sachs to preserve its bank funding throughout the bankruptcy process. The investment bank will pocket a $285 million termination fee for the restructured deal, which will see CIT’s credit facility cut from $3 billion to £2.13 billion.
However, under the original deal, which was sealed in 2008, Goldman would have been entitled to an automatic $1 billion termination fee when CIT entered bankruptcy. The deal will see the unsecured bondholders cut the company’s debts by 30 per cent and in return receive shares in CIT.
Preferred shareholders, including the US Treasury, which received preference shares in return for the Tarp bailout money, will be repaid only if there is money left over after paying the bondholders; ordinary shareholders will be automatically wiped out.
In a statement the company said: "None of CIT's operating subsidiaries, including CIT Bank, will be included in the filings. As a result, all operating entities are expected to continue normal operations during the pendency of the cases."

700 Bail Out Bill too include Bicycle Benefit, Why !!

SEC. 211. TRANSPORTATION FRINGE BENEFIT TO BICYCLE COMMUTERS page 207 of the Bill.

This is part of the reason we need to recall our U.S senators and House Representatives and start all over, these folks just can't stop from adding any pork to any Bill. How is this going to help the country get through the mess were in!!!!!! the Bill is located on my website on page 206, Why hasn't McCain named the person who put this in the Bill and Why isn't obama said something about this and ask for it to be removed. Both of these two are part of the problem in Washington neither one of them have a clue.

QUALIFIED BICYCLE COMMUTING
REIMBURSEMENT.—The term ‘qualified bicycle commuting reimbursement’ means, with respect to any calendar year, any employer reimbursement during the 15-month period beginning with the first day of such calendar year for reasonable expenses incurred by the employee during such calendar year for the purchase of a bicycle and bicycle improvements, repair, and storage, if such bicycle is regularly used for travel between the employee’s residence and place of employment.

3 Steps to Change the Nations Future without spending $700 Billion of your tax Dollars

Years of bad decisions and stupid mistakes have created an economic nightmare in this country, but $700 billion in new debt is not the answer. As a tax-paying American citizen, I will not support any congressperson who votes to implement such a policy. Instead, I submit the following three steps:

Common Sense Plan.

I. INSURANCE

A. Insure the subprime bonds/mortgages with an underlying FHA-type insurance. Government-insured and backed loans would have an instant market all over the world, creating immediate and needed liquidity.

B. In order for a company to accept the government-backed insurance, they must do two things:

1. Rewrite any mortgage that is more than three months delinquent to a 6% fixed-rate mortgage.
a. Roll all back payments with no late fees or legal costs into the balance. This brings homeowners current and allows them a chance to keep their homes.
b. Cancel all prepayment penalties to encourage refinancing or the sale of the property to pay off the bad loan. In the event of foreclosure or short sale, the borrower will not be held liable for any deficit balance. FHA does this now, and that encourages mortgage companies to go the extra mile while
working with the borrower—again limiting foreclosures and ruined lives.

2. Cancel ALL golden parachutes of EXISTING and FUTURE CEOs and executive team members as long as the company holds these government-insured bonds/mortgages. This keeps underperforming executives from being paid when they don’t do their jobs.

C. This backstop will cost less than $50 billion—a small fraction of the current proposal.




II. MARK TO MARKET

A. Remove mark to market accounting rules for two years on only subprime Tier III bonds/mortgages. This keeps companies from being forced to artificially mark down bonds/mortgages below the value of the underlying mortgages and real estate.

B. This move creates patience in the market and has an immediate stabilizing effect on failing and ailing banks—and it costs the taxpayer nothing.




III. CAPITAL GAINS TAX

A. Remove the capital gains tax completely. Investors will flood the real estate and stock market in search of tax-free profits, creating tremendous—and immediate—liquidity in the markets. Again, this costs the taxpayer nothing.

B. This move will be seen as a lightning rod politically because many will say it is helping the rich. The truth is the rich will benefit, but it will be their money that stimulates the economy. This will enable all Americans to have more stable jobs and retirement investments that go up instead of down. This is not a time for envy, and it’s not a time for politics. It’s time for all of us, as Americans, to
stand up, speak out, and fix this mess.

Great plan Provided by daveramsey.com

We Need Ethics Reform legislation not a $700 Billion Bail Out

$700 Billion Bail Out bill is wrong for the country in its present form, the government Needs to put together Ethics Reform legislation to include limiting Pay for CEO’S, we need an outside panel to over see spending, accounting, and ethics to insure that the reforms are taking place. The current senators sitting on the banking Committee need to remove themselves from any oversight of this legislation and any Bill put into law due to there failures of oversight. Ceo’s getting 90 million dollars over this mess is outrages and the FBI should open an investigation against all current and past CEO’s that are still benefiting in income from current and past service. In 1979 the government gave loan Guarantees for Chrysler, which was then on the brink of bankruptcy. Though frequently referred to as the Chrysler "bailout", the government basically acted as a co-signer on loans to Chrysler. If memory serves, the infusion of cash helped saved Chrysler, Chrysler re-paid the loans early, and the deal didn't cost the Fed any money. So why aren’t we looking at something similar to that were the government could loan the different agencies the money at a 2% premium. A poll released by the Los Angeles Times and Bloomberg showed that 55% of Americans oppose government aid to failing financial firms, in a sign that treasury secretary Henry Paulson is struggling to sell the scheme successfully. So why aren’t our senators listening to the americans who oppose this deal. All I hear on CNN and other News Agencies is that we must just vote yes and give away the money, and who cares what the taxpayers think. This bill is wrong and the senators who are wanting to just sign off on this should be recalled. When did the Democrats start trusting this adminitration after what they call miss management of the Bush Administration of the Iraq war. For this reason alone we should Limit Senators Terms.

Just say no to a 700 Billion-Bail Out we need Real Reform

This 700 billion bailout is not the right course of action, the White House is wrong and John McCain and the democrats are again on the wrong side. Bailing out corporations that have failed with taxpayers money is the wrong steps to be taking when fixing this problem. Rushing bills through congress without taking the time to analyze the situation is not the right course of action. The White House putting together a 3-page fix with no thought just to save their ass is not the right course of action. Why is it that we have to pass this bill so quickly? Has the White House Given the American taxpayers all the information, not even close! This Crisis has been long time coming with everybody in Washington not caring enough to make the changes needed, these folks have buried there heads in the sand for so long. There have only been a few who have spoken up over the years, with the rest of them saying things like this:

Statements in 2003
''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''
Representative Melvin L. Watt, Democrat of North Carolina, agreed.
''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.

Charles Schumer
http://www.nysun.com/editorials/schumers-loan/77169/
The extension is of the maximum income to qualify for this program, from 100% of the region's area median income to 165%. Mr. Schumer's press release on the matter states that "Raising the eligible income level slightly means a substantial number of struggling, hard-working families previously ineligible but no less deserving, will be able to get help in buying homes." This is the "buy-them-off" approach that Mr. Schumer also favors with respect to college tuition aid, expanding subsidies once reserved to the poor straight through to the middle class.
I can’t help but wonder where their heads were when pushing for programs that weren’t good for Wall Street.
WASHINGTON, July 22, 2008 -- U.S. Treasury Secretary Henry Paulson said Tuesday that the U.S. banking system is sound and the long-term fundamentals of economy are strong.
"I believe that the United States is on the right path to resolving market disruptions and building a stronger financial system," said Paulson in a speech delivered at the New York Public Library.

How can we as Americans believe anything these folks say regarding the bail out even better how can we trust them to make the right decision when so many times before there decisions were not in the best interest of the Americans.