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Another Outrageous Waste Of Taxpayer Dollars

By Greg L | 10 February 2010 | National Politics, Local Economy | 10 Comments

When IndyMac was shut down by the FDIC, the assets were sold off at a steep discount to a bunch of Democratic Party insiders.  As part of the deal, the FDIC guaranteed to cover creatively-calculated “losses” allowing banks to reap rich taxpayer-subsidized profits in a way that actually encourages banks to foreclose rather than work a way out for homeowners to stay in their houses.  To add insult to injury, once the bank makes a 25% or greater profit courtesy of the taxpayer in the foreclosure, they still can force the homeowner to sign five and six-figure promissory notes to add to their profit margin.

Don’t believe that something so outrageous could actually be happening?  Watch this video

To recap the video, assets of Indymac were sold by the FDIC to OneWest Bank, which is owned by former Goldman Sachs executives and George Soros, for between $0.58 and $0.70 on the dollar.  The FDIC agrees to cover between 80-90% of any losses incurred on these assets, but not calculated on the amount OneWest actually paid for these assets, but on the full face value.  Between the amount of a short sale and the huge check the FDIC will write to cover calculated “losses” on a sale, OneWest actually ends up getting paid more than the amount they purchased the loan for, and they can still go after the borrower for the difference between the original loan amount and the amount ofa short sale.  There’s no way OneWest can lose money if they can force a short sale under this arrangement, and they stand to profit handsomely by foreclosing on as many loans as possible just as fast as they can do it.

No wonder the federal government is saying the FDIC needs more money.

Let’s say OneWest buys a loan with a $500,000 balance.  They’ll pay 70%, or $350,000.  They force a short sale, and let’s say the property sells for $200,000, netting a loss for OneWest of $150,000.  FDIC writes a check to OneWest for 80% of the difference between the original value and the short sale price, which is $240,000.  Between the sale price of the property and the subsidy they get from the FDIC, OneWest immediately nets $440,000 on a loan they only paid $350,000 for, making a sweet a 25.7% profit.  The now homeless borrower of course is on the hook for the $300,000 difference between the original loan balance and the short sale price, and you know OneWest is going to get just as much of that money (gravy) as they can.

The cost to the the federal government in this scenario would be $390,000, adding the sale discount the FDIC provided to OneWest with the loss guarantee payment made.  A proportion of that taxpayer money ends up going to the owners of OneWest.  Since the federal government doesn’t actually have that money available, it borrows it from China, leaving your children and grandchildren to pay interest for decades on a loan so taxpayer money could be given to George Soros.  Soros will, without any doubt, dole out a substantial chunk of that money to political causes that already have rewarded his generosity by putting together just this kind of scheme.

Pissed off yet?

Now compare this to the rhetoric this Congress and Administration used to convince the electorate that this whole scheme was supposed to be in the public interest.  This was supposed to help people stay in their homes, and unless the taxpayers ponied up billions of dollars, the whole financial industry would collapse leaving us all broke and homeless.  Instead, the federal government subsidizes activity that actually encourages foreclosures, destroys the future of millions of ordinary people,  and financially rewards the politically connected with lavish helpings of your money.  So much for the Obama Administration actually giving a whit about keeping people in their homes.  This disaster is little more than an opportunity for the politically-connected to reap profits by deliberately imposing misery on the American people.  The next time Congress and this Administration say it’s time to “fix” economic problems in the country, they should be assigned criminal liability for outcomes they engineer.

They ought to throw the whole lot of them, the Congressmen, Senators, the President and his whole administration in jail.  At least this November we can forcibly retire some of them which is one hell of a light punishment for the borderline criminal activity they seem to have deliberately engaged in.



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10 Comments

  1. Ayn Rand IS Right! said on 10 Feb 2010 at 3:02 pm:
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    Looters and Moochers. Looters and Moochers.

  2. anon in dale city said on 10 Feb 2010 at 3:45 pm:
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    Whats costing the taxpayer money? Why is the Media not talking about Socialized snow removal?!?!?

  3. Done With Radicals said on 10 Feb 2010 at 4:21 pm:
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    This is going to slam local governments. By encouraging short sales in order to make subsidized profit this will further decrease property values and put additional pressure on local governments like ours that are already strapped. George Soros makes a big profit and our schools end up having to cut their budgets even more.

    I would sure like to bail those corrupt congresscritters out of office for this crap, but the real responsibility lies with the administration. They’re the ones that made the rules for these bailouts and payments from FDIC. Someone ought to follow the money and see how much of this ends up paying bribes to the people who wrote the rules for the FDIC.

  4. A PWC Resident said on 11 Feb 2010 at 10:30 am:
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    “To recap the video, assets of Indymac were sold by the FDIC to OneWest Bank, which is owned by former Goldman Sachs executives and George Soros, for between $0.58 and $0.70 on the dollar.”

    In my opinion, what isn’t clearly explained in this blog is the connection between the economic policies of the Obama Administration and that of Congress to the above transaction. Please explain further the Obama Administration policies that can be compared to “the rhetoric this Congress and Administration used to convince the electorate that this whole scheme was supposed to be in the public interest.”

  5. Greg L said on 11 Feb 2010 at 10:45 am:
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    Funding for this scheme was appropriated by Congress in the TARP bill. The Obama Administration, specifically the Treasury Department, wrote the rules under which OneWest would be compensated for “losses”. Ultimately, everything the executive branch of the federal government does or fails to do is the responsibility of the President.

  6. A PWC Resident said on 11 Feb 2010 at 10:59 am:
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    Here’s an article link that may be of interest to BVBL blog readers:

    http://www.roanoke.com/editorials/wb/236141

  7. Anonymous said on 11 Feb 2010 at 1:20 pm:
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    Obama’s Owned — You Can Bank On It

    http://www.humanevents.com/article.php?id=35584

    According to the AP, private citizens have to come up with ideas on how to fix this country. Sorry AP, I had no idea Sarah was running for president at this time. its NOT her job to come up with solutions, its up to the dumb ass in the White House to fix the crap HE created.

    http://newsbusters.org/blogs/noel-sheppard/2010/02/07/ap-bashes-sarah-short-ideas-palin-horrible-photo

  8. Kevin C said on 11 Feb 2010 at 2:39 pm:
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    Anonymous said on 11 Feb 2010 at 1:20 pm: “Obama’s Owned — You Can Bank On It”

    NO ONE, and I mean ABSOLUTELY NO ONE, gets inside the beltway WITHOUT being OWNED !!!

  9. Kevin C said on 11 Feb 2010 at 2:49 pm:
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    Greg L said on 11 Feb 2010 at 10:45 am: “Funding for this scheme was appropriated by Congress in the TARP bill.”

    Once again, Politicians don’t SOLVE problems, politicians FUND problems !!!!!

    Where’s the incentive to SOLVE a problem when, WITHOUT the problem you cannot justify the FUNDING to SOLVE the problem if you’ve SOLVED the problem ???

    It’s kinda like CIRCLE JERK !!!!!

  10. DPortM said on 12 Feb 2010 at 3:58 pm:
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    Thanks for the link, a PWC Resident. Howell is an enemy of the state, a RINO, and needs to be extricated from the House of Delegates. Howell is a disgrace. Aren’t there any conservatives out there who will take him on next year come reelection time?

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