Archive for January, 2010

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If A Developer Can Walk Away From The Mother Of All Underwater Mortgages, Why Can’t You?

January 31, 2010

Is it because corporations have more rights than you do?  Or is it because corporations are amoral legal fictions, concerned only with profits for their owners (and officers)?  Or both?

Five Supreme Court justices believe that corporations should have unfettered rights to free political speech, just like you and me.  Go figure.


Stuyvesant Town and Peter Cooper Village - under water by about $2.5 billion

Tishman Speyer Properties walks away from 11,232 Manhattan apartments because it can’t pay its mortgage. That’s good business.

Rick Gilson, a college custodial supervisor in South Dakota, wants to walk away from the mortgage on his mobile home. If he does, he’ll be a deadbeat.

Those two borrowers face the same financial dilemma: Their mortgages far exceed the values of their properties. Yet one gets to walk away without guilt, while the other can’t.

Until now, the focus of the real estate crisis has been on individuals. One in four U.S. homeowners, or nearly 11 million Americans, are underwater on their mortgages. In some parts of the country – Florida, Nevada, Michigan, California and Arizona – the share tops 40 percent.

Some experts say it makes sense for some people to walk away if they’re deeply underwater, even if doing so could wreck their credit score for seven years. It may not be worth it to keep paying a mortgage when they can find comparable rental housing for considerably less money.

The argument against walkaways is that they will wreak economic havoc if a lot of people do it. Banks will have more bad loans on their books. They’ll make fewer loans. Home prices will plunge more.

The rules are different, though, for the walkaway of all walkaways.

That title is reserved for what happened to one of New York’s trophy properties, the 56-building Stuyvesant Town and Peter Cooper Village complex. Spanning 80 acres on Manhattan’s east side, it’s the largest single-owned residential area in the city. Its red brick buildings, built by Metropolitan Life in the 1940s for World War II veterans, are still a haven for the city’s middle class.

Commercial real-estate firm Tishman and its partner, investment firm BlackRock, paid $5.4 billion to buy the property from MetLife in late 2006 – right at the market’s peak. They hoped to make money by converting rent-regulated apartments into luxury condos and raising rents.

Then the housing crash hit. The value now: $1.8 billion.

And you thought you overpaid for your house.

Tishman exits the deal with a ding to its reputation, but it will be fine. It still has Rockefeller Center and the Chrysler Center in New York, and dozens of properties in cities worldwide. The company has about $33 billion in assets.

Residential homeowners wouldn’t get off so easy.

University of Arizona law professor Brent White, who has written about mortgage walkaways, says societal pressures often trump what’s actually legal. He thinks individual borrowers believe they are obliged to repay their loans even when it isn’t in their financial interest.

“The problem is that we have a structure whereby corporations can walk away with impunity but individuals can’t,” White said.

Gilson is frustrated that real-estate tycoons can default on a $4.4 billion mortgage, but he’s not supposed to do the same on his $31,000 loan.

How can you blame him?

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Why do people often vote against their own interests?

January 30, 2010

“There is nothing voters hate more than having things explained to them as though they were idiots.  (Even if they ARE idiots.)

As the saying goes, in politics, when you are explaining, you are losing. And that makes anything as complex or as messy as healthcare reform a very hard sell.”

This impressive article is from the BBC.  Sometimes the Brits understand us Yanks better than we understand ourselves.

Turkeys voting in favor of Christmas

The article made me realize that although I was impressed with Obama’s performance before the hostile Congressional Republicans, it probably won’t change even one Republican mind.  We members of the reality-based community applauded, but the immediate and universal Republican reaction to the same event (as led by Faux Noise before the Q&A had even ended) was that Obama was “lecturing” to them as if they were in grade school.

Well… Obama had actual facts, and the Republicans only had their own erroneous silly myths.  (I’m trying to be charitable by not calling them “lies”).  I suppose that when knowledge and judgment encounters willful ignorance, the result usually does sound like lecturing.

From the article:

Thomas Frank, author of  What’s the Matter With Kansas, believes that the voters’ preference for emotional engagement over reasonable argument has allowed the Republican Party to blind them to their own real interests.

The Republicans have learnt how to stoke up resentment against the patronising liberal elite, all those do-gooders who assume they know what poor people ought to be thinking.

Right-wing politics has become a vehicle for channelling this popular anger against intellectual snobs. The result is that many of America’s poorest citizens have a deep emotional attachment to a party that serves the interests of its richest.

Frank says that whatever disadvantaged Americans think they are voting for, they get something quite different:

“You vote to strike a blow against elitism and you receive a social order in which wealth is more concentrated than ever before in our life times, workers have been stripped of power, and CEOs are rewarded in a manner that is beyond imagining.

“It’s like a French Revolution in reverse in which the workers come pouring down the street screaming more power to the aristocracy.”

As Mr Frank sees it, authenticity has replaced economics as the driving force of modern politics. The authentic politicians are the ones who sound like they are speaking from the gut, not the cerebral cortex. Of course, they might be faking it, but it is no joke to say that in contemporary politics, if you can fake sincerity, you have got it made.

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President Obama takes questions from House GOP

January 29, 2010

President Obama today spent 90 minutes taking questions from the House GOP Conference in Baltimore, Maryland.

The bad news for the GOP is that President Obama not only took their tough questions, but he answered them — and he was tough, forcing the GOP to confront the facts instead of their make-believe Fox News reality.

In fact, to get a sense of just how effective President Obama was, Fox “News” cut off the Q&A session before it ended (CNN and MSNBC both carried the full event live).

You can view the full video:
http://www.dailykos.com/tv/w/002521/
but if you just want a taste of what it was like, check out this portion of President Obama’s response to a question from Mike Pence, in which President Obama calls out Republicans who on the one hand condemn the stimulus but on the other “appear at ribbon cuttings for the same projects that you voted against.” Watch:

President Obama’s tone was calm, reasoned, and respectful — but he did not give an inch, and did not let Republican lies go without challenging them. It was really quite extraordinary.

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Congressman’s Foundation Has Money for Golf Outings, but Not for Scholarships

January 29, 2010

by David Wallechinsky

Frontier Foundation, established seven years ago by Congressman Steve Buyer (R-Indiana) to award scholarships, has yet to help any students, but it has financed Buyer’s golf game. Buyer’s foundation has collected more than $800,000, while not giving out a single scholarship, and prompting a government watchdog group to ask for an investigation of the congressman’s operation.

Rep. Steve Buyer, R-IN

Citizens for Responsibility and Ethics in Washington (CREW) has written to the IRS to see if it will investigate whether the foundation violated federal tax law by “failing to operate for its stated public purpose of helping needy students and by doing little more than paying for the congressman to play golf with donors with interests before his committee.”

Buyer, who serves on the House Energy and Commerce Committee, has been the beneficiary of donations from pharmaceutical and tobacco businesses. The Pharmaceutical Research and Manufacturers Association (PhRMA), the drug industry’s main lobby, donated $200,000 to Buyer’s foundation.
CREW also is asking the Office of Congressional Ethics to delve into the matter and determine if Buyer violated ethics rules “by abusing a charity for private purposes and by trading legislative assistance for donations to the charity and a job for his son.” PhRMA hired Buyer’s son, Ryan, to be its “federal affairs manager.”
In 2003, Buyer created the Frontier Foundation, with the (stated)  intention of handing out scholarships once the fund reached $100,000. The foundation has now raised $880,000, but Buyer now claims it needs $1 million before it can start giving out assistance. It has been able to pay for fundraising golf outings at luxury locales, however.
(You won’t hear about this on Faux Noise.  This is It’s OK if you’re a Republican. –  G)
(Update – today Rep. Buyer announced that he will retire from Congress at the end of his term and will not be a candidate in November.  That brings the Congressional retirement count to 15 Republicans and 12 Democrats.)
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Miss me yet?

January 29, 2010

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Senate Republicans have jusy one answer for Democrats: No

January 29, 2010

By Dana Milbank

Friday, January 29, 2010

In his State of the Union address Wednesday night, President Obama asked lawmakers to “work through our differences, to overcome the numbing weight of our politics.”

On Thursday, Republicans sent their answer.

The Senate took a vote on extending the federal debt ceiling — without which the United States would go into default. All 40 Republicans voted no.

The Senate took a vote on requiring Congress not to pass legislation that it can’t pay for. All 40 Republicans voted no.

The Senate took a final vote on passing the overall plan. Thirty-nine Republicans voted no. The 40th, Sen. Mike Enzi (R-Wyo.), skipped the vote.

The state of the union is . . . unchanged.

(The “Party of NO” unanimity against “paygo” rules is particularly odd, since Republicans were for it before they were against it.  What in the living hell are Senate Republicans trying to accomplish?  And why should anyone vote for them to help them do it? – G)

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The best democracy money can buy

January 28, 2010

Murray Hill, Inc. is running for the GOP’s nomination in Maryland’s 8th CD, promising a historic campaign that “puts people second…or even third.”

As Murray Hill, Inc. says:

We bought it. We paid for it. And we’re going to keep it

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As a corportation, Murray Hill, Inc. can self-finance.

Update: Questions are mounting over whether or not Samuel Alito will sit on Murray Hill, Inc.’s steering committee. Asked whether he had encouraged the corporation to run for office, Alito frowned, shook his head like a pissed off six-year-old, and mouthed “not true.”