The Seattle Federal Home Loan Bank has problems.
The Federal Home Loan Bank of Seattle joined its San Francisco counterpart in suspending dividends and “excess” stock repurchases, after devalued mortgage bonds dropped its capital below a regulatory requirement.
The likely shortfall on Dec. 31 was caused by “unrealized market value losses” on home-loan securities without government backing, the Seattle bank cooperative said in a filing with the U.S. Securities and Exchange Commission today.
Calculated Risk says uh-oh and quotes Congressional testimony (PDF) by Nouriel Roubini from February of last year:
[T]he widespread use of the FHLB system to provide liquidity – but more clearly bail out insolvent mortgage lenders – has been outright reckless. … A system that usually provides a lending stock of about $150 billion has forked out loans amounting to over $750 billion in the last year with very little oversight of such staggering lending. The risk that this stealth bailout of many insolvent mortgage lenders will end up costing massive amounts of public money is now rising.
So as state and local governments struggle with the crashing economy, and individuals struggle with uncertainty, unemployment, the loss of homes and debt, we still don’t really know the extent of the damage by this insane financial disaster.
It’s like the car has gone off a cliff and we’re somehow going to suspend it in mid-air by giving people $500. Folks may like the money, and the very serious people who have been wrong about everything for eight years will insist the car can be suspended, but most folks won’t have much time to enjoy the dough. The ground is coming up at them too fast.
http://www.fhlbsea.com/OurComp.....90112.aspx
So, here we have yet another three-quarters of a trillion bux that nobody bothered to tell us ordinary sods about that’s been handed to the Wall Street crooks so they can keep living off the fat of the land…and I’m supposed to be “stimulated” by five hundred bucks?
I’ll tell ya how you can “stimulate” me…..
Taxpayers have forked over $750 billion to bail out the banks, which amounts to $2,500 for every person in the country, and the $500 Bush gave us and the $500 Obama amount to only $1,000 which is $1,500 less than they’re giving to the banks. That means each of us has to pony up with another $1,500 for the banks. When the tax rebates amount to only 40% of what the bank bailout is costing us, I don’t see how that can stimulate the economy.
Back when making cars was a viable business, Detroit got away with charging customers $2,500 for a $2,000 rebate, and stupid American consumers lapped it up.
Apparently the politicians think we’re even more gullible than Detroit knew we were, because they’re charging us $2,500 for a $1,000 rebate, and we don’t even get to drive it.
We’re told the deficit will hit $1.2 trillion this year. That has to cause inflation. You simply can’t print that much money when production of goods and services is falling and not have inflation.
These $500 rebates won’t begin to cover the inflation taxes we’re all gonna pay; $7 gas and $5 bread, here we come …