[StBernard] H.R. 3609: Lifesaver or Trouble?

[Westley Annis]

I don't know if it's such a good idea or not.  The guy, Charles Prince who
was responsible for Citi Bank going into the toilet got a 40 million $
separation package.  While this is what his employees get:



	Citigroup, Wall Street's largest financial services firms, is
planning its second round of large-scale layoffs in less than a year, CNBC
has learned.
	
	People inside Citigroup say the firm hasn't set a target number of
cuts from its roughly 320,000 employees. But people with knowledge of the
matter have described the pending job reductions as "massive" and "large."
The total number could reach as high as 45,000, these people estimate.

This comes on the heels of 17,000 people fired earlier this year.

Here's the info on his separation:

http://www.cnbc.com/id/21703819/site/14081545

Then there is this info:

NEW YORK (AP) - Credit rating agency Fitch Ratings said Monday it downgraded
the ratings on $37.2 billion in collateralized debt obligations that were
part of 84 transactions, potentially putting new pressure on investment
banks to write down the value of their assets.
Fitch also affirmed ratings on $6.9 billion worth of CDOs.
Fitch took the actions based on the continued deterioration of the
underlying collateral of the CDOs, which are complex financial instruments
backed by slices of various assets and other debt.
Many of the CDOs are, in part, backed by subprime mortgages -- loans given
to customers with poor credit history. As subprime mortgages have
increasingly defaulted, the value of the CDOs has declined.
Fitch updated its loss assumptions based on the increasing defaults of
underlying collateral like subprime mortgages before reviewing the CDOs
performance to determine if it would downgrade the debt.
Financial services firms, having already taken substantial writedowns
related to CDOs for the third quarter, are now starting to warn of similar
moves for the fourth quarter. Many have cited continued downgrades by rating
agencies negatively affecting their value.
Last Friday, E-Trade Financial Corp. said it would take an undisclosed
writedown on its portfolio, leading one analyst to predict the company has a
15 percent chance of filing for bankruptcy.
Citigroup Inc. said earlier this month it will write down between $8 billion
and $11 billion in securities during the fourth quarter, after already
posting more than $6 billion in writedowns during the third quarter. The
writedowns helped spur the exit of Chief Executive Charles Prince.
Fitch said ratings on 66 CDOs remain on negative ratings watch, pending
further review before Nov. 21.      http://www.cnbc.com/id/21758108/

And then this on SIV's   http://www.cnbc.com/id/21934828/for/cnbc/

I have a friend with a degree in finance and he's told me a lot of this was
triggered by the subprime mortgage market and the ARMs that people had.
Folks were assuming the values of their houses would continue to rise.  A
goodly number of these folks were not the most credit-worthy to begin with
and then when the mortgage interest rates started rising, they couldn't
handle it.  In the first place they were buying more house than they ever
should have thought about getting.  But the banks were putting these
subprimes together as investment packages to sell (the SIVs/CDOs ?).  The
essence of what he told me was the whole damned thing was a house of cards
and now it's starting to fall apart.  Remember the commercials for the
Quicken "interest only" mortgage payments? 

When I was searching thru CNBC's website on CDOs, subprime and SIVs I saw
that even Bank of America and Wells Fargo were going to be doing write-downs
on this stuff.

I don't know how this bill will affect all of this other than to possibly
save a few individual homeowners.  And I don't pretend to understand even a
small amount of all that's going on here. Folks like John Scurich probably
do.  I do know I'm glad I don't have any stock in any of the biggie banks
and I don't think we've seen the end of this mess at all.

Jim






	-----------------------------------------------------
	H.R. 3609: Lifesaver or Trouble?
	Kerri Panchuk | 11.26.07
	The National Association of Consumer Bankruptcy Attorneys (NACBA)
	distributed a press release Monday showing some of the positives
that could
	be derived from the passage of H.R. 3609-a house bill that, if put
into
	effect, will give bankruptcy judges the latitude to adjust the terms
of
	mortgage loans when trying to save distressed borrowers.
	
	In its report the NACBA quotes research from the Center for
Responsible
	Lending (CRL), in which the organization suggests that 600,000 of
the 2
	million loans scheduled for rate resets in the next year can be
saved with
	the implementation of H.R. 3609.
	
	The NACBA specifically highlights U.S. Rep Charles Melancon's (D-LA)
	district, which covers the Chalmette-Houma-Gonzales-New Iberia area
in
	Louisiana, as an example of a community where H.R. 3609 could
benefit
	borrowers.
	
	"In Congressman Charles Melancon's district, there are an estimated
9,104
	subprime mortgages of which about 1,696 are expected to go into
	foreclosure," the NACBA's report says. "Applying CRL's data on the
number of
	homes that can be saved nationally if Congress acts to end mortgage
	foreclosure unfairness, that means an estimated 628 homes in
Congressman
	Melancon's district could be spared from foreclosure."
	
	But, H.R. 3609 has its critics. In October, the Mortgage Bankers
Association
	(MBA) voiced concerns when the bill passed the House Judiciary
Committee's
	Subcommittee on Commercial and Administrative Law.
	
	In a statement the MBA said, "Giving judges free reign to rewrite
the terms
	of a mortgage would further destabilize the mortgage-backed
securities
	market and will exacerbate the serious credit crunch that is
currently
	hindering the ability of thousands of Americans to get an affordable
	mortgage," said Kurt Pfotenhauer, senior vice president for
government
	affairs and public policy at the MBA. "The current legislation gives
no
	guidance as to the proper parameters for judges to modify existing
loan
	contracts."
	
	
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