Obama’s HAMP failed, so what does Obama do? Force banks to ‘modify’ delinquent homeowners mortgages at taxpayers expense

Obama first shakedown didn’t work and it cost taxpayers billions. So, Obama is trying a second shakedown and it will cost taxpayers billions. Redistribution of wealth from the responsible to the irresponsible.

It’s basically H.AM.P. Part II. Obama’s $75 billion ‘homes affordable modification program’ failed by its own standards and Congress decided to end the tax wasting program last week. The Inspector General, for over a year, reported the program was an absolute failure, yet the Democrats continued to waste billions as Obama smugly nods.

Obama promised his H.A.M.P. program would save 3 million homeowners from foreclosure. It only helped around 640,000 since only 1 out of 4 applicants were approved. Banks foreclosed on over 1 million homes during this Obama ‘economic recovery” and it is predicted to be even worse in 2011.

To make things worse, more people dropped out than those who were approved.

So Obama is going to force banks to forgive individual who are delinquent in paying their mortgages. If the banks agree to this strong-arm manuever, they will lose billions. How will they recoup their losses? They will pass it back down to the consumers and those responsible individuals who pay their mortgages as required.

From Huffington Post:

NEW YORK — The Obama administration is seeking to force the nation’s five largest mortgage firms to reduce monthly payments for as many as three million distressed homeowners in as little as six months as part of an agreement to settle accusations of improper foreclosures and violations of consumer protection laws, six people familiar with the matter said.

Described as a “shock and awe” approach, the deal would accomplish the four goals set out by state and federal policy makers and regulators as part of their multi-agency investigations into abusive mortgage practices by the nation’s largest financial firms: punish banks for violations of state law and federal regulations; provide much-needed assistance to distressed borrowers; stabilize a deteriorating housing market; and dissuade firms from abusing homeowners in the future.

The modified mortgages could cost the five financial behemoths — Bank of America, JPMorgan Chase, Citigroup, Wells Fargo and Ally Financial — as much as $30 billion, according to sources. Combined, the five firms handle three out of every five home loans, according to newsletter and data provider Inside Mortgage Finance.

It also could lead to reduced mortgage payments or lowered loan balances for nearly two-thirds of the 4.7 million delinquent homeowners who have yet to fall into foreclosure, according to data provider Lender Processing Services.

The aim is to ensure the number of assisted borrowers is spread throughout the country, and that banks modify both expensive and inexpensive mortgages, people involved in the talks said. Banks also would likely forgive mortgage principal in situations where a pre-determined formula dictated that it was the best way to modify a home loan. Balances on second mortgages and home equity loans — of which nearly half of all outstanding loans are owned by BofA, JPMorgan, Citi and Wells — would also have to be written down.

Since Freddie Mac and Fannie Mae insure half of the mortgages in America, the taxpayers are on the hook to pay these banks for their losses.

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Six Banks Got Over 98% of the Fed’s PDFC Money

The Federal Reserve continues to be exposed. Let’s all hope, for the taxpayer’s sake, that the Fed will be audited by Ron Paul in 2011.

CNBC.com reports:

After you crunch the Primary Dealer Credit Facility (PDCF) numbers, you can see through the noise. What is revealed is this: The Fed’s overnight lending to primary dealers concentrated staggering sums of government cash in the hands of a tiny circle of financial institutions. The story of PDCF lending is the story of those few financial institutions that went on to become just six banks.

Over the lifecycle of the PDCF program, The Federal Reserve lent a total of about $8.95 trillion to primary dealers of government securities. (This group is already a very small club: Currently, the New York Fed lists a total of 18 institutions authorized to perform this function.)

But the concentration of the vast majority of PDFC funds was far narrower than that. Institutions that ultimately went on to become just six banks—Bank of America, Citigroup, Morgan Stanley, Barclays, Goldman Sachs, and JPMorgan—received at total of about $8.78 trillion through the PDFC program.

That $8.78 trillion figure represents over 98 percent of the funds lent by the PDFC program.

While the numbers are dizzying, there are two important qualifications.

First, PDFC lending totals represent the aggregate amount of overnight borrowing by the banks —not the amounts outstanding at any one time.

(For more information on that topic, see my piece posted yesterday.)

Second, it’s important to note that my analysis rolls up the overnight borrowing by Lehman Brothers under Barclays—and both Countrywide Financial and Merrill Lynch under Bank of America.

Anybody notice that all of these banks and mortgage companies are tied to Democrats. Chris Dodd is tied to the Countrywide ‘sweetheart deals’ and is the same crook who wrote the finance reform bill along with corrupt Barney Frank. Who was Goldman Sachs’ biggest donation recepient? Barack Hussein Obama.

Since PDCF loans were lent on overnight terms, it might seem reasonable to suspect that once a bank was acquired it borrowed under the name of its new parent.

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FDIC Probes Further Into ShoreBank

A Chicago community bank with close ties to Obama, and a host of other Democrats, just happens to receive bailout money. I’m sure it all was just a coincidence.

I’ve written about the ShoreBank scandal here and here. Notice that the liberal media isn’t reporting about this corruption at all because Obama and the Democrats are involved.

Charlie Gasparino reports, via Fox Business:

The demise of the politically connected ShoreBank has sparked yet another investigation — one that could spell trouble for FDIC chief Sheila Bair.

The FDIC Inspector General’s office has launched a wide-ranging probe into the failure of Chicago-based ShoreBank earlier this year, including the role played by Bair in prodding Wall Street’s biggest firms, from Goldman Sachs (GS: 158.45 ,0.00 ,0.00%) to JPMorgan (JPM: 37.26 ,0.00 ,0.00%) to Morgan Stanley (MS: 24.21 ,0.00 ,0.00%), in donating tens of millions of dollars to prevent the bank, with close ties to the Obama administration, from failing.

ShoreBank did fail in August, with the FDIC taking over $2.16 billion in faulty assets, including risky investments in urban real estate, from the bank. But the Wall Street money raised during the summer wasn’t returned. Instead, it used by ShoreBank’s management with the approval of the FDIC to form a new bank that will take over some of the bank’s better-performing assets and its deposits under a new name, the Urban Partnership Bank.

Officials on Wall Street have told the FOX Business Network that they felt political pressure from the Obama administration to contribute a total of about $150 million to recapitalize ShoreBank and the new institution. Valerie Jarrett, the president’s senior economic adviser has close ties to the bank, and the president himself has singled out the bank for praise for its community lending and for financing environmentally friendly green jobs. Jarrett has adamantly denied any involvement in the matter.

But now the FDIC’s IG is looking at what, if any, improper political pressure was put on Wall Street executives in trying to bail out ShoreBank, and in funding the Urban Partnership Bank, which could mean big trouble not just for senior administration officials but also for Bair, since she was on the front line in trying to convince top banking executives to cough up the money for the bailout during summer.

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Obama’s Energy Secretary, Steven Chu: “BP is Going to Save the World.” (Video)

I’m generally not a conspiracy theorist but the Obama, BP, cap-and-trade connection smells worse than the dead fish washing up on the Gulf coast beaches. The Obama administration wants folks to believe they have a ‘boot on the neck of BP.’ At the same time, the administration wants to hide the facts that they have strong ties to the oil industry, BP in general. Obama was, after all, the top recipient of BP campaign cash.

Recall Obama’s speech from the Oval Office where he continuously mentioned his Nobel Prize winning Energy Secretary Steven Chu? Obama put Chu in charge of a team of scientists and engineers to look into technology to stop the leak.

What Obama didn’t tell us is that Steven Chu accepted $500 million from BP and proclaimed “BP is going to save the World.”

The connections continue to smell fishy.

Let’s look at the facts. Obama wants to pass his cap-and-trade energy tax which will cause energy costs to skyrocket. Everyone thought the energy bill was dead-on-arrival. The BP oil rig exploded, sending millions of gallons of oil into the Gulf. Obama sees an opportunity to push his cap-and-trade scheme and takes advantage of this crisis.

What a lot of Americans don’t know is that the Obama administration, through emails sent from BP to the Mineral Management Service, knew about BP’s struggles to seal cracks in the well back in February. Two months before the explosion. Obama wants Americans to believe the explosion and spill happened due to deregulation of the oil industry and it’s close ties to MMS. The truth is the government should have shut down BP’s Deepwater Horizon oil rig before the explosion.

Another angle that few are questioning is BP’s support of Obama’s cap-and-trade scheme. Who would benefit from this energy tax? Correct-o-mundo. BP!

You also have to take into account others who support cap-and-trade. Remember those evil ‘fat-cat’ bankers Obama portrayed as an enemy? These ‘fat-cats’ also want Obama to pass cap-and-trade. Why?

Banks like JPMorgan Chase, Morgan Stanley, and Goldman Sachs already have active carbon trading desks that deal in instruments connected to Europe’s cap-and-trade system and voluntary markets here. But business will explode if a cap-and-trade system becomes law. So it’s no surprise that the financial industry has taken an intense interest in the fine print of the Waxman-Markey bill. According to data compiled by the Center for Public Integrity, the financial services industry has 130 lobbyists working on climate issues, compared to almost none in 2003. They represent companies like Goldman Sachs, JPMorgan Chase, and AIG (before it was shamed into temporarily halting its lobbying activities last fall). The industry “wants lawmakers to create a brand-new revenue stream for its bottom line, and cap and trade would do it,” says Tyson Slocum of Public Citizen, who is a member of a Commodity Futures Trading Commission (CFTC) advisory committee considering how carbon trading should be regulated.

Big Oil and Wall Street will benefit from Obama’s cap-and-trade energy tax. What is that old saying about the company you keep? Big Oil, Wall Street and Obama support the fleecing of Americans through this scheme.  

Things are just too convenient wouldn’t you say?

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