The next bailout: Homeowners

Discussion in 'Wall St. News' started by TraderC, Mar 26, 2008.

  1. TraderC


    Federal government help for Bear Stearns and other Wall Street firms increases the chance that assistance for those facing foreclosure will be approved

    NEW YORK ( -- The federal government is keeping Bear Stearns out of bankruptcy. Are you next?

    Momentum for federal assistance to struggling homeowners, a non-starter with the Republican administration and many members of Congress only a few months ago, has picked up steam in Washington.

    The tipping point came March 16, when the Federal Reserve agreed to back up to $30 billion in Bear Stearns (BSC, Fortune 500) losses as part of JPMorgan Chase's (JPM, Fortune 500) fire sale purchase of Bear Stearns. (The Fed cut its guarantee by $1 billion earlier this week when JPMorgan boosted its offer for Bear.)

    "I think there's a growing populist feeling that if you're going to bail out Bear Stearns you better bail out individuals," said Greg Valliere, political economist with the Stanford Group, a Washington think tank.

    And some consumers clearly are in an uproar about the bailout. According to a Reuters report, about 60 protesters entered the lobby of Bear Stearns's New York headquarters Wednesday and made a fuss about how consumers needed more help from the government than Wall Street investment banks.

    The Bear Stearns deal isn't the Fed's only direct exposure to the problems in the financial markets either.

    The Fed also announced earlier this month that it would make billions in loans directly to Wall Street firms at the Fed's so-called discount rate, a right previously reserved for commercial banks. In addition, the Fed has said it will now accept troubled mortgage-backed securities as collateral on up to $200 billion in loans to Wall Street.

    But some economists think the Fed's moves are only the beginning. Mark Zandi, chief economist with Moody's, said he thinks the Fed is telling the presidential administration that more needs to be done to fix the mortgage mess.
  2. Goldman Sachs
  3. S2007S


    this is far from over, who knows how far they will go to stop this crisis......
  4. wave


    The FED is in deep shit. It has opened Pandora's box, and is finding it impossible to close it.

    The protests at Bear Stearns are just a hint of what is on the horizon if the FED doesn't act in fairness. When you have people out of work, living with their kids in shelters and in their cars, and their 80 year old parents are being kicked out of their homes and they have nothing left to lose and all the time on their hands, this is when it starts getting scary.

    I can bet that groups such as these (Red Brigades) are forming and meeting as I write this. The people are fed up. People working at the Wells Fargos, etc and Bear Stearns of the world will start working from home or be afraid to go to work.

    They did it in Italy (Red Brigades, Brigate Rosse in Italian), France, and Spain. The FED has no idea what it has triggered. Human emotions can't be predicted nor controlled.
  5. jd7419


    These idiotic protests are directed at the wrong place. Most BSC employees will be fired due to business overlap and the severance JPM has proposed is shit. My wife works there so I know. The real people who got bailed out here are the bond holders. This is where the anger should be expressed if you are into the productive endeavor of putting a red cap on your head and shouting at buildings.
  6. wave


    I agree, but what do the protesters know. They just want bodies and when emotions are running high they will shoot first and ask questions later. Sad and scary as it sounds. I am super bearish on this market down to under 1200, I just hope and pray we don't get there by an act from a Timothy McVeigh copycat.
  7. wave


    I've even heard that employees in foreclosure departments of the banks and mortgage companies are refusing to reveal their real names for fears of revenge or retaliation against them. This is unreal. What a mess.
  8. SteveD


    The Fed did exactly what is supposed to do...protect the system..

    Bailout....go ask Joe Lewis if he is "bailed-out"...Jimmy Cayne...etc etc......

    Foreclosures are still less than 5% of mortgages....

    A 5% pullback in the dow is nothing.....

    Average foreclosures over last 10 years......very small %...

  9. TraderC


    Instead of $0/share, they are getting $10/share. That's a bailout.