President's Homeowner Affordability and Stability Plan

[WhoWee]

Consider this:

http://www.ftc.gov/opa/2008/09/emc.shtm

In September the FTC fined EMC Mortgage/Bear Stearns/JP Morgan-Chase $28 million for mortgage/collection actions.

We all know Bear Stearns failed and JP Morgan-Chase took a bailout and is on a short list for Nationalization.

Now let's step back and look at the events...the government forced lenders to make loans and allowed the loans to be bundled and sold, EMC bought loans to service, the FTC found that EMC engaged in bad practices, the FTC won a $28 million suit against EMC, Bear Stearns/EMC failed, JP Morgan-Chase acquired Bear Stearns/EMC, the government gave JP Morgan-Chase Tarp funds, (EMC was paid the $28 million back?), the government took preferred stock, the government is considering additional funding and a conversion of preferred to common (control) and EMC is still servicing mortgages (read Rip-Off Reports).

Will the government allow EMC to continue to operate business as usual? Why not just shut it down to an administrative staff and renegotiate ALL of the loans in the Bear Stearns/EMC portfolio?

 

[Ivan Seeking]

Absolutely agree.

I am completely against a bail out, with my tax dollars, for irresponsible people that bought homes they knew they could not afford . Why do these people deserve my money when millions of people are in danger of losing apartments due to losing jobs? They did nothing wrong, they didn't try to spend beyond their means. Yet now they are being told that they have to hand their tax money over to people that wanted things they couldn't afford?

I do not understand how this is even being considered.

This has nothing to do with what's fair. We are way past that. It is a matter of following the shortest path to recovery.

Entire communities are being destroyed by the current crisis. Obama and his team are trying to prevent a virtually inescapable deflationary spiral.

 

[Ivan Seeking]

The point I think many people are missing is that this is part of a complete recovery package. The economy can't recover until the credit and housing markets are functioning again. We could just allow nature to take its course - forget the antibiotics and allow the disease to run its course and hope the patient recovers - but if we do, the threat is that we may not recover for a decade or more. There is even a chance that we will never recover completely [at least not in my lifetime].

 

[Ivan Seeking]

I am troubled/bothered by the government help/assistance on home affordability when it involves allowing people to keep ownership of their houses when they cannot afford payments.

That is not the plan. The idea is to renegotiate mortgages - primarily interest rates - to levels that are sustainable. If someone simply cannot afford the house, there will be no help. However, the argument is that when possible, it is in everyone's financial interest to see that people keep their homes. This includes all of us, the banks, and the homeowners. I heard one claim that one can even show that in many areas, the loss of value in one's home due to neighborhood forclosures is far greater than the added tax liability due to the bailout. I know we live in an area that has been relatively unaffected by the housing crisis, but we still took a ~ $50,000 hit in equity last year - the first drop in value in twenty years! And if we consider where we would be given the last twenty year trend [note that we have not seen the hyperinflation found in the cities, ours has been slow and steady growth], it cost us another $30K. I would gladly pay an extra $1k [picking a number from the blue] in taxes to avoid another drop like that. I could do that for fifty or eighty years and still break even.

I'm also disturbed by people the claim that people were mislead by predatory lenders, because if these people did not understand the details of the financing, then they had no business buying a house and entering into a contract in the first place.

In an ideal world that might be reasonable, but this is not an ideal world. Almost anyone with whom I discussed this sort of things admitted that when they bought a house, it reached a point where they were just signing whatever they were handed. Also, not only is there a burden on the loan company to represent the loan accurately, not everyone is sophisticated enough to understand what they're signing. They rely on the loan company to help them understand their liability [Even stupid people should be able to buy a house]. And there is certainly precedence for the legal argument that sophisticated crooks don't win simply because they tricked people into signing a document. The banks also had a moral obligation to issue loans that were sustainable. But with the advent of bundling, the incentive for responsible banking was lost - issue as much crap as possible and then dump it [and the liablity] for a profit.

According to one expert from the past somewhere, no one should ever buy or sell a home without using a real estate lawyer. How many people do that? I know I didn't. Luckily we did just fine. But I've learned a lot since then and I will use a lawyer the next time.

 

[Astronuc]

That is not the plan. The idea is to renegotiate mortgages - primarily interest rates - to levels that are sustainable. If someone simply cannot afford the house, there will be no help. However, the argument is that when possible, it is in everyone's financial interest to see that people keep their homes. This includes all of us, the banks, and the homeowners. I heard one claim that one can even show that in many areas, the loss of value in one's home due to neighborhood forclosures is far greater than the added tax liability due to the bailout. I know we live in an area that has been relatively unaffected by the housing crisis, but we still took a ~ $50,000 hit in equity last year. I would gladly pay an extra $1k [picking a number from the blue] in taxes to avoid another drop like that. I could do that for fifty years and still break even.

The assessed value in my house has also dropped about $50K in the last year to 18 mo. But then the appreciated value was ridiculous.

In an ideal world that might be reasonable, but this is not an ideal world. Almost anyone with whom I discussed this sort of things admitted that when they bought a house, it reached a point where they were just signing whatever they were handed. Also, not only is there a burden on the loan company to represent the loan accurately, not everyone is sophisticated enough to understand what they're signing. They rely on the loan company to help them understand their liability. And there is certainly precedence for the legal argument that sophisticated crooks don't win simply because they tricked people into signing a document. The banks also had a moral obligation to issue loans that were sustainable. But with the advent of bundling, the incentive for responsible banking was lost - issue as much crap as possible and then dump it [and the liablity] for a profit.

According to one expert from the past somewhere, no one should ever buy or sell a home without using a real estate lawyer. How many people do that? I know I didn't. Luckily we did just fine. But I've learned a lot since then and I will use a lawyer the next time.

It's not so much ideal as expecting people to behave responsibily as one might expect from animals with highly developed brains. I read the loan terms and ran the calcs on taxes and interest, and new exactly what the monthly payments would be in relation to my paycheck and other debts, such as a car.

We also hired a real estate lawyer who gave us a standard contract he used, and who collected $400 for that standard contract. He let me know that he spent more than an hour on adding some terms we insisted on because we needed the owner to clean out the garage and basement.

 

[Astronuc]

As for the government 'forcing' banks and financial institutions to make loans to whomever, from I've read that just doesn't seem to be the case. The government did make money less expensive for institutions like Fannie Mae and Freddie Mac to borrow money, and they simply made lots of loans in order to make money. The subprime mortgage business generated a lot of income for the banks, and they simply bundled them with better mortgage, securitized them and sold those as investment grade instruments to unsuspecting clients (e.g. sovereign funds), who were looking for high yields.

People leaving the government were going to work for Fannie Mae and Freddie Mac, which had established a lobbying effort to discourage tighter regulation on their activities. Meanwhile, the Wall Street investment firms were using creative financing to create dubious financial instruments, which resulted in an over-leveraged market.

The government failed in its role to regulate, and the market failed in its role of fiduciary responsibility and self-regulation.

As for whether or not the current recession/correction is similar to the Great Depression, is one considers the following discussion from the Wikipedia article, it sure seems to echo what we now observe, particularly with respect to over-indebtedness and asset depreciation.

http://en.wikipedia.org/wiki/Great_Depression#Causes

Second, there are structural theories, most importantly Keynesian, but also including those of institutional economics, that point to underconsumption and overinvestment (economic bubble), malfeasance by bankers and industrialists, or incompetence by government officials. The only consensus viewpoint is that there was a large-scale lack of confidence.
. . . .
Irving Fisher argued that the predominant factor leading to the Great Depression was overindebtedness and deflation. Fisher tied loose credit to over-indebtedness, which fueled speculation and asset bubbles.[12] He then outlined 9 factors interacting with one another under conditions of debt and deflation to create the mechanics of boom to bust. The chain of events proceeded as follows:

1. Debt liquidation and distress selling
2. Contraction of the money supply as bank loans are paid off
3. A fall in the level of asset prices
4. A still greater fall in the net worths of business, precipitating bankruptcies
5. A fall in profits
6. A reduction in output, in trade and in employment.
7. Pessimism and loss of confidence
8. Hoarding of money
9. A fall in nominal interest rates and a rise in deflation adjusted interest rates

Certainly we've observed 1 - 8.

 

[Phrak]

Now how can these recipients all be called 'responsible'? The wording of this plan is, at least, misleading.

"ignorant."

I say good to it. Should homeowners or the people that took this economy on a joy ride be left holding the bag? I'm talking about the internet/PC/communications joy ride that sent millions rushing-in, hell-bent to get rich.

Ask Astronuc.

Should only those with enough lobbyist influence on government be bailed out? There's no free lunch. Someone will pay. Some pay now.

This economy didn't just happen because of some preordained 'economic cycle'. The housing boom-bust didn't just happen.

There were these dangling bananas to make life better, and the banana stampede left some ruin in it's wake that may have done greater damage than the dangling bananas did good. (But it shook some of the entrenched money to lower bows--so I can't say it was all bad.) It will take some time to recoup for most people. I sold real estate short--I'm still standing short--so I don't have anything to gain by this stance, but fair is fair.

You're rent will decline, in any case. The value of realestate in normalized dollars will not recover until the 2030's.

 

[Phrak]

Certainly we've observed 1 - 8.

What money hording?

He left out a decrease in the velocity of money, and falling prices--the price of goods chasing a contraction in sales.

 

[mheslep]

[

The chain of events proceeded as follows:

1. Debt liquidation and distress selling
2. Contraction of the money supply as bank loans are paid off
3. A fall in the level of asset prices
4. A still greater fall in the net worths of business, precipitating bankruptcies
5. A fall in profits
6. A reduction in output, in trade and in employment.
7. Pessimism and loss of confidence
8. Hoarding of money
9. A fall in nominal interest rates and a rise in deflation adjusted interest rates

Certainly we've observed 1 - 8.

Astronuc, it is commonly agreed that #2, contraction of the money supply, was a major cause of the depression, and no, we have not seen #2 now. The fed has done exactly the opposite this time, the money pipes are wide open, as they very well understand at least that aspect of the Depression. Bernanke has written and spoken extensively on the contribution of bad monetary policy to the GD; he's gone to extremes to prevent at least that recurrence.
http://www.federalreserve.gov/releases/H6/Current/

 

[mheslep]

I say good to it. Should homeowners or the people that took this economy on a joy ride be left holding the bag? I'm talking about the internet/PC/communications joy ride that sent millions rushing-in, hell-bent to get rich.

Ask Astronuc.

Should only those with enough lobbyist influence on government be bailed out? There's no free lunch.

You are arguing in fact that there be a free lunch for many mortgage holders.

 

[Astronuc]

How about 1-9, except 2? What's different now as opposed to then is the flow of money in the global markets. Back in the 1930's, the US didn't have countries like China and the Gulf States willing to loan $100's of billions.

On the other hand, I'd like to know how the heck the government is financing all of this - borrowing? Printing more money? And how the government expects to pay off what it borrowed and when?

I am absolutely bewildered by the state and local governments discussing their portion of the bailout. This is so surreal and ludicrous.

I think a lot of money has moved off-shore, or rather the money off-shore has been parked pending an end to the decline in the financial and equities markets.

 

[mheslep]

How about 1-9, except 2? ...

Certainly, though without some reference to absolute scale those are also true of any common recession. Loss of confidence, falling asset prices,...

 

[Ivan Seeking]

The assessed value in my house has also dropped about $50K in the last year to 18 mo. But then the appreciated value was ridiculous.

I edited a bit late. We have seen a fairly steady increase in value over the last twenty years [as a percentage the last year's price]. In the last five years or so we did see the value increase more quickly, but we have not seen the hyperinflation of housing prices as seen in the cities - we were not artificially inflated. This is mainly because we are still living in the sticks, but civilization is beginning to catch up with us.

It's not so much ideal as expecting people to behave responsibily as one might expect from animals with highly developed brains. I read the loan terms and ran the calcs on taxes and interest, and new exactly what the monthly payments would be in relation to my paycheck and other debts, such as a car.

You are making my point: Many people have no idea how to do a calculation like that. You don't think that having a masters in nuclear engineering puts you at a bit of an advantage compared to the average Joe? There are plenty of people who can barely do fractions, but they still have jobs that pay well and allow them to buy a home. What's more, they don't know enough to know that they need help, or where to get it.

 

[Astronuc]

You are making my point: Many people have no idea how to do a calculation like that. You don't think that having a masters in nuclear engineering puts you at a bit of an advantage compared to the average Joe? There are plenty of people who can barely do fractions, but they still have jobs that pay well and allow them to buy a home. What's more, they don't know enough to know that they need help, or where to get it.

I do have the advantage of having an undergraduate course, Engineering Economics, in which we did a lot of theory and calculations on present/future worth, monthly or term payments, effects of interest rates and taxes. It was very useful when buying a car or house to sit down and run the numbers. The car salesman had to get up and leave during our conversation to go talk to his manager. I got a good deal.

Something like basic economics, cost of money, interest and installment payments should be taught at the high school level, since it is such a fundamental aspect of living in a developed society.

 

[Ms Music]

What's more, they don't know enough to know that they need help, or where to get it.

Are we rewarding ignorance then?

 

[TheStatutoryApe]

You are making my point: Many people have no idea how to do a calculation like that. You don't think that having a masters in nuclear engineering puts you at a bit of an advantage compared to the average Joe? There are plenty of people who can barely do fractions, but they still have jobs that pay well and allow them to buy a home. What's more, they don't know enough to know that they need help, or where to get it.

I think that these people are the product of our culture. Its common place for people to live beyond their means. It seems only logcal to me that anyone should be very careful when getting themselves into any sort of major financial obligation. Unfortunately for most it is considered merely a fact of life that you will have to go into major debt at some point and so they don't really think about it much. People piling on the bandwagon only perpetuate this as the standard.
I agree that something needs to be done. Unfortunately I have no idea what since I am not very economicaly savvy. At the very least though I would like to see the message sent that the current standard in financial responsibility is entirely unacceptable. I don't see that painting these people as victims is going to do that.

 

[Astronuc]

Feds unveil plan to help 9 million stay in homes
http://news.yahoo.com/s/ap/20090304/ap_on_go_pr_wh/obama_housing

WASHINGTON – The Obama administration kicked off a new program Wednesday that's designed to help up to 9 million borrowers stay in their homes through refinanced mortgages or loans that are modified to lower monthly payments. Borrowers, however, are being advised to be patient in their efforts to get help because mortgage companies are likely to be flooded with calls.

Government officials, launching the "Making Home Affordable" program also acknowledge that the initiatives are only a partial fix for a sweeping problem that has helped plunge the U.S. economy into the worst recession in decades. In fact, tens of thousands of homeowners in some of the most battered real estate markets — concentrated in California, Florida, Nevada and Arizona — won't be eligible for the two programs.

"It's not intended to prevent every foreclosure or to help every homeowner," a senior Treasury Department official told reporters. "It's really targeted at responsible homeowners."

There was also skepticism that banks would be willing to participate.
. . . .

Apparently a large number of people (responsible homeowners) feel this is unfair.

http://politicalticker.blogs.cnn.com/2009/03/04/poll-majority-say-obama-mortgage-plan-is-unfair/

Time will tell.

 

[Ms Music]

Well I sure don't know anyone that thinks it is fair... The only person I have ever known to have to go through a foreclosure, it is all ready done. So doesn't even help them. So I am paying for a lot of *supposed* responsible mortgage holders for the rest of my life that I don't even know. *sigh*

 

[Astronuc]

It's not clear to me that mortgage rescue package will stimulate the economy, unless the intent is to ensure a flow of money to the lenders, who then have to turn around and 'lend' or invest in the economy.

Perhaps it will keep the mortgage foreclosure crisis from getting worse, i.e. it will by like treading water, but treading water is not the same as being rescued. If those who can't make payment on their mortgage are given assistance that makes it possible to pay their mortgage, it would seem they still do not have much left to make other purchases. So the economic demand is still down.

Who gets help from the mortgage plan?
http://marketplace.publicradio.org/display/web/2009/03/04/pm_mortgage_guidelines/

Let's see what happens with Friday's unemployment report.

Who's hit the worst by the recession?
http://marketplace.publicradio.org/display/web/2009/03/04/pm_whos_hit_q/

Job Losses Show Breadth of Recession
http://www.nytimes.com/2009/03/04/business/04leonhardt.html

 

[Phrak]

Are we rewarding ignorance then?

Did you know that the resale value of housing would drop below perchase value, before the market knew it?

 

[mheslep]

Did you know that the resale value of housing would drop below perchase value, before the market knew it?

Why is that relevant? Should everyone be insured by the government against depreciating housing prices?

 

[Proton Soup]

Why is that relevant? Should everyone be insured by the government against depreciating housing prices?

no, but they should have been protected from predation.

 

[mheslep]

no, but they should have been protected from predation.

If that's the concern then at least let us see a plan addressing just the predator loans. For fraudulent loans seize lender assets, or otherwise seek redress from those lenders. Then use the proceeds to help those that had mortgages w/ those lenders, directly. The present plan is closer to blank check.

 

[Proton Soup]

If that's the concern then at least let us see a plan addressing just the predator loans. For fraudulent loans seize lender assets, or otherwise seek redress from those lenders. Then use the proceeds to help those that had mortgages w/ those lenders, directly. The present plan is closer to blank check.

i don't think that is the concern here, it is simply a concern that i have. personally, i am for law (but most importantly, enforcement) that would limit the kinds of shenanigans lenders pulled, especially the bait-and-switch ARMs, lying about homebuyer income, and loading people up with enough debt that they have no wiggle room at all and can't survive unexpected expenses. i would go further than seizing assets, though. i think these sorts of "white collar" crimes are indistinguishable from physical violence and merit prison time.

 

[Astronuc]

This summary of the HASP was published in the local news paper.

Speculators and house flippers are excluded from the Homeowner Affordability and Stability Plan

Part 1: Loan refinancing

Up to 5 million homeowners with a solid payment history on mortgages held or owned by Fannie Mae or Freddie Mac will be eligible to refinance into more affordable terms.

Homeowners may be able to refinance if they have less than 20% equity in their homes. An appraisal may be necessary.

The program will end in 2010.

Part 2: Load modifications

Lenders and other loan servicers can begin making modifications that could help up to 4 million at-risk homeowners in their homes.

Homeowners with a first loan can have an unpaid principal balance of up to $729,750. Higher limits will be allowed for owner-occupied properties with two or four units.

Borrowers must document income, which includes providing two most recent pay stubs and an affidavit of financial hardship.

Program will run until Dec 31, 2012.

Forclosure (lis pendens) filings in our county:
2004 500
2005 599
2006 878
2007 1184
2008 1322

The rate of foreclosures in 2009 is down from the same time in 2008.

 

[mheslep]

As McCain might have called it, one 'fundamental' in the economy of this country is that ~90% of the mortgage holders continue to pay their mortgage on time. A hard question to be put to the HASP is what will it do to the mindset of those 90%?

 

[mheslep]

... modern western governments today are actually quite socialistic and generally moving even further to the left. The US is actually one of the furthest to the right. ...

That's true about the large EU states, but as I've pointed out before it is somewhat of a misconception in this country that all of the other modern Western governments are far left or even to the left of the US. All of the Baltic states have flat taxes rates. Ireland has a ~15% business tax (compared to our 35%). Several EU countries have moved away from their once government only health care systems for increasingly private alternatives such as in the Netherlands and Canada. Chile has a mostly private social security system.

 

[TheStatutoryApe]

If that's the concern then at least let us see a plan addressing just the predator loans. For fraudulent loans seize lender assets, or otherwise seek redress from those lenders. Then use the proceeds to help those that had mortgages w/ those lenders, directly. The present plan is closer to blank check.

the problem here is that the loan companies were not preying upon the home owners. no mortgage company is going to be able to make money by signing off on loans to people who are unlikely to be able to pay them off. they were preying upon other financial institutions. they signed up anyone they could(and lied so they could sign up more) and then sold the bad loans to other banks. they make money and the other banks suffer when the defaults occur. now you might want to still go after them anyway but when what they were doing became common knowledge in the industry no one wanted to buy their loans anymore and the vast majority of the companies went belly up. they don't exist any more so you can't get anything from them. and even if you could they would be bankrupt and cleaned out long before enough money could be found to fix the problem.

 

[Phrak]

Where were youall when Nick Guarino, Wall Street Underground, was telling this story as past history in 2001? Any talk of a 1930's style recession--or whatever the talking heads in the ABC's are calling it, was met with blank looks as late as 2007. I got zero traction in these forums in 2008.

The federal funds rate stands at .25%. Twentyfive more points and there's no where left to go. This is the corporate bailout that has been ongoing for nearly a full decade, has debased the dollar bigtime, induced millions to invest in cheap, Chinese imitation consumer goods, and has evolved to include propping up the housing market, and no one is complaining about this trillion dollar giveaway.

And, by the way, this also induced the housing bubble, the current topic of discussion.

On the plus side of this equation we are graced with the internet, cell phones, and Chinese knockoffs that are falling apart.

 

[WhoWee]

It's not clear to me that mortgage rescue package will stimulate the economy, unless the intent is to ensure a flow of money to the lenders, who then have to turn around and 'lend' or invest in the economy.

Perhaps it will keep the mortgage foreclosure crisis from getting worse, i.e. it will by like treading water, but treading water is not the same as being rescued. If those who can't make payment on their mortgage are given assistance that makes it possible to pay their mortgage, it would seem they still do not have much left to make other purchases. So the economic demand is still down.

All of the plans put forward should have clear goals...this one is as vague as save or create (insert latest # of) jobs...otherwise it looks/feels like they are shooting from the hip...and risking the largest sums in history.

 

[Phrak]

An economy is stimulated by labor that increases the value of infrastructure.

An economy is hampered by:

-Depletion of resources to pay misdirected labor to build worthless infrastructure. (The original cause of all this grief.)

-Redirection of resources that deplete infrastucture or create lesser valued infrastructure.

-Disassembly of an infrastructure to components that add lesser value. (The justification for the last 8 years of corporate welfare to prevent it.)

-Just about everything else.

Only sweat and blood rebuilds an economy. Everything else, such as a fradulent stimulus package, is about making someone else sweat and bleed for it.

 

[WhoWee]

The primary "RESOURCE" being depleted is the US credit line...there IS a limit.

 

[Phrak]

Liquidation.

Without finding an online definition of liquidation, or liquidationism, this is my own definition: "Let failing investments fail, let failing institutions go bankrupt, and let those who can't pay mortgages undergo foreclosure."


Who do you want to prop-up and who would you let liquidate?

In addition, who is going to pay for propping up whom?


And more, does liquidation of category X--in this case recent home per purchasers--harm the overall economies of We-The-People or help us?

Those who say it helps will say it helps in the long term, where short term patches are more costly, and delay economic recovery.

Those who disfavour a particular liquidation would argue that liquidation causes more liquidation in other economic sectors, a domino effect--and delay of economic recovery.

But most arguments are motivated by self interest. If those who didn't know they were accountable for this mess found out, most would conveniently discover a new god.


Keynes was against liquidation. On a web sight in his honor,

http://econ161.berkeley.edu/Economists/keynes.html" ,

Keynes criticizes Treasury Secretary (Harding through Hoover) Andrew Mellon, who stood in favor of liquidation.

Mellon: "[T]he government must keep its hands off and let the slump liquidate itself."

Keynes: "Mr. Mellon had only one formula: "Liquidate labor, liquidate stocks, liquidate the farms, liquidate real estate." He insisted that, when the people get an inflation brainstorm, the only way to get it out of their blood is to let it collapse. He held that even a panic was not altogether a bad thing. He said: "It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people"...

I quote this to round-out the meaning of liquidation.

--------------------------

mheslep, In case you were wondering why I hadn't responded... I can argue that recent home purchasers are getting unfairly screwed, but I can't argue that renters who pay taxes are getting unfairly screwed by paying for them. That's not right either.

 

[WhoWee]

Are you suggesting a very large expansion of Section 8...or is that too radical?

 

[Astronuc]

Some insight into Home Affordability and Stability.

Elizabeth Warren: Foreclosures Threaten Economy
http://www.npr.org/templates/story/story.php?storyId=101611260

Fresh Air from WHYY, March 9, 2009 · According to a report issued Mar. 6, 2009 by the Congressional Oversight Panel charged with monitoring the use of bailout funds, the rate of home foreclosure is now three times its historic rate — "so large that it threatens the entire economy."

Panel chairwoman Elizabeth Warren joins Fresh Air to discuss the foreclosure problem — and what can be done about it.

. . . .

Warren discusses what the plan covers and what it doesn't.

It looks like bankruptcy is the solution to negative equity, but that doesn't apply to primary resisdence. This will require a change in bankruptcy laws (one is pending in Congress). But there are limitations/restrictions. This however could mean banks take more losses, i.e. some banks would be forced 'underwater'.

Bottom line - we can't pretend anymore that the banks' assets are more than they actually are.

http://cop.senate.gov/documents/cop-030609-report.pdf