Posted on 02/11/2011 4:41:29 PM PST by FromLori
It has been a few weeks since the last attempt to extend the Build America Bonds program, even as muni bond prices continue to stagnate. Which means it is time for another valiant try, this time possibly using the post-revolutionary chaos in Egypt as a smoke screen.
Bond Buyer reports that Rep. Gerald Connolly, D-Va., has introduced a bill extending the Build America Bond program through 2012 at subsidy rates of 32% in 2011 and 31% in 2012. Since we are certain that Bill Gross is lobbying about as hard as one can to get this bill passed due to his massive latent muni exposure, this last ditch attempt to subsidize the muni market just could pass. If it doesn't, that could be the bottom of the muni market.
More from Bond Buyer:
The program, which was authorized by the American Recovery and Reinvestment Act in early 2009, expired Dec. 31. It allowed state and local governments to issue taxable bonds and receive federal subsidy payments from the federal government equal to 35% of their interest costs.
The Obama administration had proposed making the program permanent.
But Sen. Chuck Grassley from Iowa, the ranking minority member of the Senate Finance Committee, and other Republicans criticized the program for generating high underwriting fees for investment banks and for rewarding issuers with poor credit by providing them with higher subsidy payments from the federal government.
Connolly’s bill has been referred to the House Ways and Means Committee.
Since Bernanke's debt monetization QE3 program will need a uses of funds, we are fairly confident that this bill won't pass and the muni space will be left to Bernanke to salvage. Although on the other hand, don't forget: it's not the size of the Newport beach bond manager in the fight that matters, it is the amount of corruption in the financial system, the kickbacks and bribes, and the potential loss upside/downside analysis that determines what laws are passed.
PrezBo certainly proves, time and time again, exactly how over his head he happens to be. His amateur status is secured after this White House gig.
He needs to read “Atlas Shrugged”....
The House should investigate and audit Fannie Mae and Freddie Mac and the management of them, break these entities up or privatize them or eliminate them altogether.
“The House should investigate and audit Fannie Mae and Freddie Mac and the management of them, break these entities up or privatize them or eliminate them altogether.”
Well this article is actually about bailing out the states but did you see the latest on Fannie/Freddie looks like the plan is to continue to bail out the banks for years.
http://finance.fortune.cnn.com/2011/02/11/fannie-debt-fears-wont-die/
Unlimited credit for GSEs seen as backdoor bailout
http://www.reuters.com/article/2010/01/05/us-usa-housing-bailout-idUSTRE6044YU20100105
Is Fannie bailing out the banks?
http://finance.fortune.cnn.com/2011/01/03/is-fannie-bailing-out-the-banks/
Not going to happen.
Spend.
Bury
Kick down the road.
Make crisis to expand power
Rinse, lather, repeat.
This year is going to be very interesting ,, China just crammed their own real estate down 30% and they will likely stop buying our “full faith and credit” BS just as soon as the new (lower) tax revenue numbers are put out... The middle east is turning sour and O is hitting us HARD with EPA regs to kill all sources of domestic energy...
Yes actually I posted an article yesterday about that very thing one of China’s big shots is telling them to get rid of GSE debt. A couple of different sites are reporting on it.
Chinese Analyst: Sell Fannie & Freddie
http://www.cnbc.com/id/41511496
Prominent Chinese Economist Advises Country To Sell Its $500 Billion In GSE Holdings Before QE2 Ends
But after geithner/obama said today they would continue to guarantee all the debt I guess now China is denying it.
“We will make sure these institutions have the resources they need to meet their commitments,” Geithner said. “The world understands we will stand behind so these institutions can meet their commitments.”
http://finance.fortune.cnn.com/2011/02/11/fannie-debt-fears-wont-die/
Don’t Look Now, but the Obama Administration Just Proposed Creating Fannie Mae All Over Again
http://www.cnbc.com/id/41536712/
And you know who really picks up the tab we do the taxpayers the banks dump it on us through the GSE’s.
Unlimited credit for GSEs seen as backdoor bailout
http://www.reuters.com/article/2010/01/05/us-usa-housing-bailout-idUSTRE6044YU20100105
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