Posted on 06/20/2008 5:14:47 PM PDT by SE Mom
National Review Online has obtained an internal Bank of America "discussion document" (pdf here) on the subject of the FHA Housing Stabilization and Homeownership Retention Act of 2008, a.k.a. the Dodd-Shelby mortgage-lender bailout bill.
Yesterday, Tim Carney reported that the prevailing sentiment on Capitol Hill is that the Dodd-Shelby bill "is exactly what Bank of America and Countrywide wanted." BofA is in the process of acquiring Countrywide. Countrywide is currently embroiled in a scandal over its V.I.P. program, under which several powerful politicians, including Sen. Chris Dodd, got preferential loan rates.
This discussion document (dated March 11, 2008) would appear to support the contention that BofA essentially wrote the bailout section of the bill. Almost all of BofA's preferences are mirrored in the Dodd-Shelby legislation. The BofA document even offers PR tips, such as "We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bail-out of the bond market."
The president has threatened to veto Dodd-Shelby because it would "unfairly benefit lenders who made bad loans." The Senate will resume debating the bill on Monday.
The BofA doc is worth posting here for a couple of reasons: First, the similarities between BofA's ideal bill and the bill before the Senate are obvious even to the layperson — read the document, then read David C. John's analysis of the bailout and see for yourself.
Second, we'd invite our readers with some expertise in this area to look over the document for things we might have missed. Opponents of the bailout are lucky that a few tenacious Republicans (Kit Bond, DeMint et al) were able to hold up the bill and keep it from passing as quickly as expected. The fight resumes next week, so take a look at this document and keep digging.
Click the clockwise tool
I was only commenting on the specific issue of the bill, involving Countrywide bailout by BoA, and touched on similarities and differences with non-bailout of Bear by JPM and Fed, not larger overall picture or origins of bubble, easy money, “spreading the risk” by bundling and reselling CDOs/MBSs etc.
Bear’s and CFCs falls showed that they were not big enough to fail, along with dozens smaller financial institutions (Century21 and bunch of others) who thought they just might be “big enough” and are not even footnotes to industry’s history now.
Unfortunately, and not magically, it IS my (and your) problem because we are “in the market”, including many people who think they are not but whose 401(k)’s and pensions are tied in mutual funds or money markets. Psychology is one, if not primary, of several factors that determine the value of “the market”. So bailing out “the system”, not particular institutions or their investors is necessary for all us. Whether some people will suffer the consequences of their (or other people’s) bad decisions which may have seemed like great decisions at one time, is another issue and is not related to the task at hand of keeping the “system” functional and possibly improving and/or stabilizing it in the future.
Besides, in neither BS or CFC case there is a “bailout” of investors or management and neither will depend on taxpayers funds.
“sauce for the goose”.
I agree with some of your statements - but I DEFINITELY believe that the Democrats are extremely hypocritical about how legislation can be created.
Recall that in 2001 - 2002, Vice Pres. Dick Cheney had a group review energy policies, and there were high level company officials who came in and met with Cheney’s Energy Group. For years, the Dems have shrieked that the companies were writing legislation, and they claimed that the Cheney/Bush people were “in the tank” for the energy companies. But, as you stated, “If you want legislation concerning a complex industry (oil, banking, etc.) you’re going to need someone who understands the business to do the drafting. Where else to find them but on the payroll of corporations in that field?”
And as Cheney and Bush sought information on how to improve our energy policies, where else to get input, than from the industry. (The Democrats wanted the policy to be established by Greenpeace, Sierra Club, ZPG, etc. and all others were to be excluded.)
Now that the shoe is on the other foot, perhaps it is time to point out the hypocrisy of the Democrats, and at the same time, to show the potential for the Democrats to be “on the take”. Maybe the Democrats might be a willing to notch down the shrill voices that they are so quick to use!
Good points, especially about Wachovia and expansion in the West. There were rumors that she might be interested in certain Western bank which is now, interestingly, involved in Laura Richardson mortgage fiasco.
http://www.freerepublic.com/focus/f-news/2033208/posts - Group seeks probe of CA congresswoman (California Rep. Laura Richardson)
Nothing to see here with Chris Dodd. I’m sure its all just a coincidence. He is a Democrat, so he has the best of intentions. Richard Shelby should be investigated, though!
I’m not a banking & finance person but I do know from inside experience that California’s state & local child “s’port” program is contracted BofA to collect & distribute support payments @ the old Meclellan AFB in the “State Disbursement Unit.” Therefore, BofA has the 411 including but not limited to social security #’s, case details, etc., on all active child support cases. FYI. I left BofA after more than a decade primarily for this reason - they have too much info and they’re assisting the hefty bureaucrats make FAT BANK in the name of (all together now) “For the Chid’ren!” In the meantime, these bureaucrats regularly attend conferences at resort hotels and in swanky diggs in Washington, DC; create more and more regulations, engage with other agencies (DMV, TANF aka Welfare, etc.) and basically, we proletariats get to finance this without ever voting on it. It’s extremely shady; BofA is all in it and without a doubt, would love to get their hands into the till’s of the other states, tribes and territories. FYI.
Different angle you’ve got there.
With Wells Fargo, BofA, and Wamu well established on the west coast, I don’t see Wachovia moving in anytime soon to seriously compete.
Wachovia is going to be in survival mode right now, along with the rest of the major banks. That means maintain cash reserves and going with what is working right now. Retail banking and credit cards. Home loans is dead for at least another year or longer. The whole secondary market for home loans is dead as well.
Puhleaze. BofA did not buy countrywide to save the stock market or to earning brownie points with capitol hill. It didn’t care how crappy the loan portfolio was. What it wanted was the crown jewel, countrywides mortgage servicing division which was the best in the business and services over 1.5 trillion worth of loans. Its a massive revenue generator. BofA will come out of this deal smelling like a rose.
The JP Morgan deal was a whole different thing and I agree with you totally. The fed was heavily involved in that deal to cool the panic.
If you have Adobe Reader 7 there’s a button on the bar that comes up that rotates the document sideways.
Now there’s a different angle- the corrpution is mighty and wide it seems.
I really could go on and on with this, but I am getting to depressed.
Commentary - Bank of America PAC money behind Dodd's Countrywide loan
BTW, guess the names of two candidates to receive more of Countrywide's PAC money than Dodd this election cycle....
And guess who got just bit less than Dodd...
Answers at the link.
And a pox on all of them.
Quite the laundry list, but not much activity lately. Don't know if that's due to a reporting lag and/or if Countrywide's changed the name of its PAC.
Someone needs to send this to Cavuto.He is the man who can sort this out.
From your linked piece:
~snip~
Bank of America stands to profit most from a bailout. It will take on Countrywide’s bad loans, and under Dodd-Shelby, it could shift the worst ones onto the shoulders of taxpayers, via the Federal Housing Authority. Basically, Uncle Sam will buy Countrywide’s stinky loans off of Bank of America.
Bank of America is kind of like an investor trying to “flip” a house: they buy a run-down property (Countrywide) for a discount, shell out some campaign contributions and earn some “sweat-equity” through lobbying. If Dodd gets his way, it will be a good investment for Bank of America.
~snip~
bump.
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