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Here Comes TARP 2: Bank Of America Implodes, At $6.87, BAC CDS Up 20% To 260 bps As Bankruptcy Contemplated

Tyler Durden's picture

Submitted by Tyler Durden on 08/08/2011 11:30 -0400

With Bank of America investors finally realizing it is game over for the company as a going concern, at this point there are just two options for Brian Moynihan: the spin off of CFC as a bad bank, backstopped by the Fed, or, well, Chapter 11, which for a bank is essentially liquidation (and with CDS trading up 50 bps to 260 a bankruptcy seems increasingly inevitable). It also means that another TARP is on the way. And once America realizes that another several trillion have to be put into its insolvent banking sector, it will get quite violent. The biggest irony: it is AIG which takes down the financial system for the second time after its lawsuit against BAC filed last night kills Bank of America.

for full article, and link to AIG Lawsuit against Bank of America:



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    Mark Steyn: It’s all bumps, no road in Obamaville


    June 10, 2011|By MARK STEYN

    This is Main Street, Obamaville: All bumps, no road. But shimmering on the distant horizon, beyond the shuttered diner and the foreclosed homes, is a state-of-the-art electric car, the new Fiat Mirage, that should be wheeling into town in a half-decade or so provided it can find somewhere to charge. “We will be able to look back and tell our children,” declared King Barack the Modest of his own candidacy in 2008, “this was the moment when the rise of the oceans began to slow.” Great news for the oceans! Meanwhile, back on dry land, a quarter of American mortgages are “underwater” – that’s to say, the home “owners” owe more than the joint is worth. In Harry Reid’s Nevada, it’s 63 per cent. Perhaps Obama’s Aquatic Bodies Water-Level Regulatory Authority, no doubt headed by Jamie Gorelick or Franklin Raines or some other Democrat worthy, could have its jurisdiction extended to the Nevada desert.



    The Obama Administration has threatened to veto legislation that begins the process of shutting down the TARP bailout program and saves taxpayers $8 billion – the latest example of the Democrats who run Washington fighting for an unacceptable status quo.

    In a “Statement of Administration Policy,” the White House defends its veto threat by arguing the TARP program Republicans aim to eliminate with H.R. 830 is “vital to the Nation’s sustained economic recovery.” How many people have used this “vital” program? 44.

    Despite the program’s failure, more than $8 billion in TARP funds have been set aside by the Administration to keep it going. That’s why, as the Washington Post reports, H.R. 830 “would terminate” this TARP program “and put the unused funds toward paying down the deficit.”

    For full article:

    The minority is upset that Rep. Darrell Issa did not want to waste an entire day of having the witness for the hearing first hear each member make a “full of hot air” opening statement, instead asking that each member supply their opening statement for the record, within 7 days:

    At the start of the hearing, chairman Rep. Darrell Issa announced the committee members would waive their opening statements and instead would have seven days to place them into the record.

    Rep. Elijah Cummings, the committee’s ranking Democrat, immediately fought back questioning this deviation in traditional procedure, but Issa held his ground.

    “I recognize that tradition is we hold the members, the witnesses here for sometimes an hour through opening statements.  That is a tradition that I intend to break,” Issa said.  “That doesn’t mean there won’t be opening statements in the future.”

    Issa’s decision to omit opening statements at the hearing stems from his desire to hear from the witnesses, Neil Barofsky, the special inspector general for TARP, and Tim Massad, a Treasury official, first instead of from the committee members.

    for full article:

    Last week I interviewed an investor who buys foreclosed properties and rents them out long-term for solid returns. He claims that’s the only way to right the housing market — get long-term investors to eat up the excess inventory. The biggest roadblock, however, is credit. Fannie Mae and Freddie Mac both limit the number of investor mortgages.

    Fuse | Getty Images

    Multiple sources now tell me that the Administration, specifically over at the Department of Housing and Urban Development, is considering ways to get more investors into the housing market, possibly with the help of Fannie and Freddie. HUD would not confirm that, but Fannie Mae’s chief economist Doug Duncan said it is definitely on the table both at HUD and at Fannie

    For full story:

    SCARED YET????

    from BusinessInsider:

    I’ve been hearing a story this past week that intrigues me. I can’t prove it, but I would love to know if it were true. I will throw this out to the blog world and see what comes back. Who knows, we may get some clarity on a key issue.

    I have heard this story directly from a few folks in Nevada. I know someone in NY who has a similar story. But when I heard from yet another person in Florida this morning I said, “There must be something to this”. My sample of information is too small. I want to know if this is a coincidence or is there something bigger and nefarious afoot.

    There has been (from my narrow perspective) a flood of approved loan mods in just the last few weeks. People who were on the edge and not paying a mortgage get a letter in the mail that says their application has been approved. After weeks and months of hanging on a phone and waiting for an axe to drop some relief arrives.

    Nothing particularly unusual about that. Mods are granted all the time. But I was struck by the timing. The foreclosure story is exploding around the banks. It is not possible to see where this will end but it is a certainty that it will cost the banks big time.

    What might a banker do if he was sitting on a pile of defaulted mortgages and now the traditional route of foreclosure was blocked? Adding to the problems of the bankers is that there is no assurance that they even have a valid claim to foreclose given that so much of the paperwork is tainted.

    One possible response would be to get all troubled borrowers to reaffirm their debt, the second is to get the trouble borrowers back to paying something on the mortgage, even if it were a fraction of what was formerly owed on a monthly basis. A loan modification would achieve both results. When a borrower signs up for a loan mod they sign new papers. A portion of this process will re-establish any loan balance that is due. The language in the mod could have new foreclosure terms that eliminate the banker’s problem with past tainted documentation. Once a borrower makes a few months of new lowered payments they are, in effect, confirming their acceptance of the new terms.
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    This fact marks our political age: The pendulum is swinging faster and in shorter arcs than it ever has in our lifetimes. Few foresaw the earthquake of 2008 in 2006. No board-certified political professional predicted, on Election Day 2008, what happened in 2009-10 (New Jersey, Virginia and Massachusetts) and has been happening, and will happen, since then. It all moves so quickly now, it all turns on a dime.

    But at this moment we are witnessing a shift that will likely have some enduring political impact. Another way of saying that: The past few years, a lot of people in politics have wondered about the possibility of a third party. Would it be possible to organize one? While they were wondering, a virtual third party was being born. And nobody organized it.

    Here is Jonathan Rauch in National Journal on the tea party’s innovative, broad-based network: “In the expansive dominion of the Tea Party Patriots, which extends to thousands of local groups and literally countless activists,” there is no chain of command, no hierarchy. Individuals “move the movement.” Popular issues gain traction and are emphasized, unpopular ones die. “In American politics, radical decentralization has never been tried on such a large scale.” Here are pollsters Scott Rasmussen and Doug Schoen in the Washington Examiner: “The Tea Party has become one of the most powerful and extraordinary movements in American political history.” “It is as popular as both the Democratic and Republican parties.” “Over half of the electorate now say they favor the Tea Party movement, around 35 percent say they support the movement, 20 to 25 percent self-identify as members of the movement.”

    for full article:

    At a time when funds are scarce and political campaigns are expensive — Don Unsworth’s family may have launched an idea, and a way for grassroots Americans to have political influence from beyond the grave.

    Described by family as lively, humorous and politically conservative, Mr. Unsworth’s newspaper obituary reflected all those qualities with the following request:

    “In lieu of flowers the family respectfully asks that donations be sent to the American Cancer Society, or to the campaign of anybody who is running against President Barack Obama in 2012.”

    for full article: