Bob King's Father Couldn't Be Prouder of Him

Autoblog Discusses UAW Politics

If you want to read about the current state of UAW politics, click on this article at Autoblog. I'm all for disclosure, but, judging from the picture, Bob King is getting a little too personal for my tastes. Might there be a little bit of exaggeration there, Bob?

Can Bank of America Bankrupt Countrywide to Avoid Insolvency?

- Not So Fast Says Legal Journalist Frankel

Alison Frankel must be the smartest journalist on the planet when it comes to legal matters. She writes a blog for Reuters called On the Case. Recently she commented on speculation in the financial press that Bank of America could dodge insolvency by separating what used to be Countrywide and bankrupting that unit only. Ms. Frankel considers that unlikely to work and points out that at least one New York Trial Court has already treated the Countrywide acquisition as a "defacto merger", which would prohibit BofA from separating the Countrywide mortgage business for a separate bankruptcy.

Why the Proposed $20 Billion Attorneys General Mortgage Settlement Stinks

It's hard to get a handle on the scope of the whole the banks dug for the entire economy in their mishandling of mortgages from 1990 or so to 2007. Incompetence and self-dealing across our financial community resulted in a vast wealth-distruction machine that not only cost more than 20% of our national wealth, it left us with broken institutions, no confidence in our economy, and, to top it off, it left millions of Americans with no home equity, no mobility and no ability to chase new economic opportunities. The best way to get a general picture is to look at the decrease in the value of your home and look at the increase of homeowners who are now trapped by negative equity. Wall Street and national demonstrations notwithstanding, President Obama still doesn't seem to get why he has lost so much support and credibility with the left two thirds of the American constituency (Forget the right third, they never liked him in the first place.) when he still seems to support letting the banks walk away with slap on the wrist for dragging the economy under. (Here's my prescription for Obama: fire Tim Geithner, you'll see your poll numbers go up 10% immediately, and you'll probably start getting some good advice once and a while.)

Rolling Stone writer Matt Tiabbi does an excellent job in a brief article that describes in plain English why the proposed $20 billion settlement between the 50 attorneys general and the big banks would end up as a bailout that dwarfs TARP. In essence, it would mean allowing the banks to pay $20 billion and walk away from more than $1 trillion in potential losses. Quoting:

How? The math actually makes a hell of a lot of sense, when you look at it closely.

Any foreclosure settlement will allow the banks to pay one relatively small bill to cover all of their legal liabilities stemming from the monstrous frauds they all practiced in the years leading up to the 2008 crash (and even afterward), when they all schemed to create great masses of dicey/junk subprime loans and then disguise them as AAA-rated paper for sale to big private investors and institutions like state pension funds and union funds.

To recap the crime: the banks lent money to firms like Countrywide, who in turn created billions in dicey loans, who then sold them back to the banks, who chopped them up and sold them to, among other things, your state’s worker retirement funds.

So this is bankers from Deutsche and Goldman and Bank of America essentially stealing the retirement nest eggs of firemen, teachers, cops, and other actors, as well as the investment monies of foreigners and hedge fund managers. To repeat: this was Wall Street hotshotsstealing money from old ladies.

later in the article. . .

[Just one] settlement, covering 22 mostly private plaintiffs, cost one bank, Bank of America, nearly half the size of the entire proposed AG settlement. This is from the Times story about that deal, in June:

In a research note, Paul Miller of FBR Capital Markets projected that Bank of America could face a total of $25 billion of losses from the soured mortgages, the most of any of the major banks.

So a private analyst this summer was estimating that just one bank, Bank of America, could face more in damages than the Obama administration and the AGs are now trying to “wrest” from all the major banks, combined, for all their liabilities.

Just a few days ago, news of more such suits came in. An Irish company called Sealink Funding is suing Chase and Bank of America, seeking $4.5 billion combined in connection to losses in mortgage-backed securities sold to them by those banks. Meanwhile, a German bank, Landesbank Baden-Wurttemberg, is suing Chase for an additional $500 million in losses.

These huge amounts – a few billion here, a half a billion there – are coming from single companies, directed at single banks. And think about the Bank of America settlement for $8.5 billion: what’s the usual payoff in a lawsuit settlement? Ten cents on the dollar? Five?

In fact, the settlement amount in that case was just 2% of the face value of the loans when they were securitized ($424 billion), and represented just 4% of the principal still outstanding ($221 billion).

Why do those figures matter? Because the way these securitizations were structured, legally, Bank of America is obligated to buy back any loans that were sold fraudulently at face value – that is part of the legal language in the “pooling and servicing agreements” under which all of these mortgages were pooled.

So minus a settlement, Bank of America – one bank -- had a potential liability of $424 billionjust from its Countrywide holdings! And it got off for $8.5 billion, a major victory.

All of which puts in perspective the preposterously small size of the proposed AG settlement. $20 billion would be a lousy number if we were just talking about Bank of America. But all the big banks combined?

OMG - Brad Pitt TOTALLY LOOKS LIKE Elizabeth Warren

Brad Pitt

Elizabeth Warren

Tom Cruise, you stay out of this.

Michelle Bachmann Gets Equal Time

- at Bad Lip Reading

"... and when I buy stickers for folks in prison, I bring milk - not backyard meth." That's what I call a role model.

Flat Rock to Build Fusions

There is a tentative deal between Ford and the UAW, but not many details have been released other than there will be bonuses and promises of job preservation/creation. Some of those jobs will be at the assembly plant at Flat Rock Michigan. Flat Rock currently assembles the Ford Mustang and the (slow-selling) Mazda6. Earlier this year, Mazda announced plans to pull out of the joint venture Flat Rock plant. Without new product, this would leave the already underutilized facility operating at well less than half capacity.

The tentative contract would call for moving some production of the hot-selling Ford Fusion to Flat Rock. Currently the Fusion is assembled in Hermosillo, Mexico, and because it is not assembled by the UAW or the CAW, it is not on the UAW's approved vehicle list. The next generation Fusion is set to go on sale early next year as an early 2013 model. Since the Mazda6 is built on a version of the same platform as the Fusion, we can hope that UAW-built Fusions start rolling off the assembly lines either concurrently with or shortly-after their Mexican-built counterparts.

Stick a Fork in the AG Mortgage Settlement

- It's done

California attorney general Kamala Harris announced that her state was pulling out of the proposed 50 state settlement with the major mortgage servicers. Since New York and some other states had already pulled out, the loss of California suggest that there really isn't the possibility of a deal worth doing -- if there ever really was one.

This is both good and bad news for borrowers who are behind. It is good news because you don't have to worry about a broad release of claims that could take away foreclosure defenses. It is bad news because without broad-stroke handling of numerous claims, we aren't going to get to any solution fast of our foreclosure mess.

Elon's coming
Tesla Model S Has it's Coming Out Party

The Telsa Roadster, the company's first vehicle, was designed to sell in the hundreds. The new model, the Tesla Model S is designed to sell in the tens of thousands.

This weekend Tesla CEO Elon Musk held a coming out party for the Model S, which will go on sale next year, at the former Toyota/GM factory in Freemont, California where the car will be built. The audience included media and hundreds of future customers who have already put deposits down on the S. Even though the S will go 0-60 in the 5s, and have at 160 miles of electric range, Musk highlighted the carrying capacity of the car, packing 8 folks and their luggage in the car as it drove on stage. Official seating capacity is 7 including a 2-child back jump seat.

http://www.youtube.com/watch?feature=player_embedded&v=1qnILaSuN68

Rick Perry

"Is that a pledge pin I see on your uniform? A pledge pin! On your uniform!"