Daily Archives: January 16, 2012

The MoveOn.Commies & Friends to Target Banks Thursday

The MoveOn.Commies, Jobs for Justice, Occupy--the usual I’m-bored-let’s-protest-something-crowd, plan to go after banks on Thursday.
From the MoveOn.Commies:

To make sure the president gets our message, this Thursday we’re protesting Bank of America, Chase, Wells Fargo, and other 1% banks that ravaged our economy. We’ll urge the president to order a federal investigation Wall Street—and show him the culprits to investigate. By taking just one hour out of your day, you’ll join with thousands more from the 99% to make sure the president hears us loud and clear.

I guess they won’t be going after Barney Frank, Fannie and Freddie, the Community Reinvestment Act acolytes. That would be too inconvenient. 

Tell ’em where you saw it. Http://www.victoriataft.com

Scott St. Clair: Should Washington St. Senator Maralyn Chase be Flogged for Introducing This Wash Out of a Bill?

Car Wash Police Chief

Sometimes what they do or say goes beyond the pale. Outrageous stupidity in word or deed that cannot be taken seriously without dignifying the underlying lunacy is such that the only appropriate response is to consider resorting to the lash.

Should the offending idiot be flogged?
Car Wash Offender

In this case, it’s Washington state Sen. Maralyn Chase, D-Edmonds (pictured left), who has introduced Senate Bill 5777, a measure so patently absurd that citizens everywhere should be manning the barricades with pitchforks and torches to prevent any progress on it while others assemble a goodly supply of tar and feathers for just administration upon its sponsor.

SB 5777 effectively outlaws charitable fund-raising car washes, and criminalizes violations of the impossible-to-meet requirements to have one.
Gone are those Saturday morning events at the local gas station or parking lot that benefit the cheerleading squad, Girl Scout camp, the junior high pep band, the church youth group, Little League or anyone else looking to raise funds for activities that find it harder and harder to get funding in the first place.
Car Wash. Stop the Madness!

Additionally, one more wholesome activity that teaches kids the value and reward of work goes, if you will, down the drain.
The bill demonizes “outdoor car washing” by claiming all sorts of environmental hazards result from it. In reading the bill’s catalogue of horrors, you would think car washes are the second coming of the Exxon Valdez or the BP – Gulf of Mexico disaster. Charitable car wash efforts will, under the bill, be required to use biodegradable soap, wash cars only on water-permeable surfaces (how many gas stations are built on grass?), block off storm drains, capture all used car-wash water and pump it into a sanitary sewer drain or onto grass or landscaping and other nonsensical requirements.
You Have the Right to Remain Silent

Since you can’t make this stuff up, here’s the criminal part direct from the bill: “A person found in violation of section 2 of this act must serve a minimum of six hours of community service related to storm water education.”

What’s the maximum punishment – life without parole? Will an alleged offender receive a jury trial with state-provided counsel?    Miranda warnings to be offered? (Hat tip to Bellevue, WA attorney Richard Pope for raising these questions.)
Haz Mat Needed for Car Wash?

And specially deputized Kar Wash Kops – I can hear them now: “All you kids put down those hoses, buckets and rags, then up against the wall, feet back and spread ‘em. Book ‘em, Danno – First Degree Car Wash!”

Adding insult to injury, each May, the bill requires each public school to teach the evils of car washing as storm water pollution. It’s not as though public education in Washington state doesn’t have enough troubleswithout adding this drivel. Add to reading, writing and arithmetic “car wash etiquette.”
Car Wash Offender

The 2012 session of the Legislature is scheduled to run 60-days. On the agenda are serious issues dealing with budget shortfalls, tax increases and even the thorny issue of gay marriage. Yet the honorable lady from the 32ndDistrict wishes to burden her august assembly and the taxpayers of Washington state who pay for it all by clogging the process with the question of outlawing charitable car washes and criminalizing those who don’t toe the mark.

Should Sen. Maralyn Chase, D-Edmonds, be flogged?
Tell ’em where you saw it. Http://www.victoriataft.com

Numbers Don’t Lie: Occupy Portland Was a Lawless Disaster

Mayor Sam Adams and his Rainbow City Council looked the other way nearly every time Occupy Portland broke the law or disregarded city codes during the illegal encampment from October 6 to November 13.

From the beginning when the non leader leaders told the City they’d disregard the law by defying permit requirements, then camped out in two parks against the camping ordinances,  disregarded health rules, sanitation laws–the lawless atmosphere continued unabated. But it grew worse when they invited their friends the from the other rabble rousing groups. And come they did. And when that happened on day two, the Occupy camp went from being Hoodstock to Hell Night.

Graph of Portlander’s Disdain for Law During Occupy

Cops were mere babysitters for the druggies, anarchists and assorted homeless street kids and gutter snipes who brought their kids and dogs to the invasion. Even with an indulgent police response, ie looking the other way–ALOT–the crime stats hit the roof during the Occupy Portland and again on December 3rd, another Occupy melee.
 

Respect for Leadership of Mayor During Occupy

Now the Portland Police Bureau has  released the crime stats from the area of Occupy Portland in the times surrounding Occupy.

I wish there were a chart to demonstrate the growing disdain Portlanders felt for the “leadership” surrounding Occupy and the enabling the City did for its lack of leadership during this time.

Tell ’em where you saw it. Http://www.victoriataft.com

Dr. Eric Fruits: Portland’s Gas $ Goes to Sidewalks, Street Cars & Light Rail, but Not to Streets

The Oregonian reports that the Portland Bureau of Transportation proposes to stop repaving major roads for the next five years as part of its plan to cut $16 million from its upcoming budget. Such cuts would add to an already growing backlog of paving projects.
The figure above shows Portland’s paving backlog has grown by more than 500 miles since 1999.  By 2008, Portland had a backlog big enough to pave a two lane road from Pioneer Courthouse Square to San Francisco.

Read the rest (oh, there’s sooo much more) Here.

Tell ’em where you saw it. Http://www.victoriataft.com

Joe the Small Business Owner: Where’s Obama Getting Money for Payroll Tax Holiday? Your Mortgage.

*Editor’s note: I recently asked Joe the Small Business Owner to explain how President Obama’s payroll tax holiday will be paid for. New homeowners will be paying for it. The housing market is in a depression now. Obama’s move to heap on home buyers the cost of the payroll tax holiday reminds me of those who send a box of kittens down the river because they can’t afford them and are too lazy to solve the problem of finding them homes.

80 Basis points means that for every one hundred thousand dollars of money borrower your fees just increased by 800.00. [T]his is a convoluted attempt to make it look like the consumers got a tax break. [It] in all likelihood is going to make the economic recovery last longer, as it directly will slow down real estate, by making financing more expensive, or making less people qualified to purchase homes. [T]his is a sneaky, not well thought out attempt at redistribution of wealth, at the expense of housing industry.

Dear Victoria:

You had asked me to explain the recent payroll tax extension signed into law, and the effect of the rise in rates in mortgage costs.  Basically what was done here is the government extended the social security/Medicaid payroll tax rate for individuals.  Now remember companies have always matched the employee/w2 contribution.  The company rate of course was not cut, only the part the employee w2 wage earner pays. 

 

So that is good news. It gives each w2 wage earner which can include some corporate owners if they pay themselves on a w2 a small tax holiday (two months).
Now the bad news:  Behind the scenes what the Government did is tell the GSE’s (see explanation below) that they are going to have to pay 10% of their guarantor fees to the United States Treasury. 

What that actually means as we have seen in the mortgage industry is a rise of points on each loan of anywhere from 50 to 80 basis points.  On any loan that is going to be delivered to the GSE’s after April first.  Loans being originated today, that are going to be delivered on or after that day are having increases to offset the additional cost of GSE fees. In effect this raise of cost of doing business was and is being immediately transferred to the consumer through the higher cost of borrowing.  Now all these terms and basis points and language tend to confuse the consumer, so let’s put it in quantifiable dollar cost.  80 Basis points means that for every one hundred thousand dollars of money borrower your fees just increased by 800.00.

As far as we can tell it looks like this additional cost is for a ten year period of time.

That’s pretty significant when you look at the shape housing is in. Raising the cost to do business and the cost of financing is going to effectively mean fewer people are now qualified. 

 
If you do not have the cash to pay for the increased cost, you can take a higher rate. Higher rates equal less qualified borrowers. Remember today’s underwriting standards are about as tight as they have been in years. For the most part, if a borrower exceeds a total debt-to-gross income ratio of 45%–no matter what –the GSE’s underwriting engines will not approve a file. No matter what kind of additional other risk mitigation factors are involved…i.e. loan to value, credit score, cash, etc.
So in summary, this is a convoluted attempt to make it look like the consumers got a tax break. Behind the door is a huge cost increase of doing business for the housing industry.  Also from our understanding the GSE’s do not get to keep this money, but must pass it on to treasury, so none of this is directly going to fund the multi-billion dollar losses at the GSE’s. 

In fact it could actually cause them to have more losses if it affects value and qualifying significantly as foreclosures and delinquencies could again increase.  Remember higher costs mean less buyers, less sales, mean price competition, and could possibly further erode value.

It is good from the standpoint that someone is starting to pay attention to the deficits, however, this is nothing but a back door tax increase to home buying/refinancing public, and in all likelihood is going to make the economic recovery last longer, as it directly will slow down real estate, by making financing more expensive, or making less people qualified to purchase homes. 
The key to any long lasting vibrant AMERICAN ECONOMIC Recovery is for real estate to get HEALTHY.  Less borrowers means more valuation issues. 

In summary my conclusion is this is a sneaky, not well thought out attempt at redistribution of wealth, at the expense of housing industry.  Remember in business all costs are eventually passed on to the consumer.  Businesses manage margins.  If the administration had a business background and embraced capitalism, they would know what we just told them here.  Assuming they care.   

EDITOR’S NOTE: Joe-the-Small-Business-Owner is a longtime banker in the Portland area. I keep his identity secret because we know what happens to conservative businessmen around here when they tell the truth about things. 

**A government-sponsored enterprise (GSE) is a financial services corporation created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors: agriculture, home finance and education. Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and it targeted education when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. GSEs hold or pool approximately $5 trillion worth of mortgages.[1][2][3]

behind the scenes is tell the GSE’s
Tell ’em where you saw it. Http://www.victoriataft.com

Dr. Eric Fruits: Portland’s Gas $ Goes to Sidewalks, Street Cars & Light Rail, but Not to Streets

The Oregonian reports that the Portland Bureau of Transportation proposes to stop repaving major roads for the next five years as part of its plan to cut $16 million from its upcoming budget. Such cuts would add to an already growing backlog of paving projects.
The figure above shows Portland’s paving backlog has grown by more than 500 miles since 1999.  By 2008, Portland had a backlog big enough to pave a two lane road from Pioneer Courthouse Square to San Francisco.

Read the rest (oh, there’s sooo much more) Here.

Tell ’em where you saw it. Http://www.victoriataft.com

Joe the Small Business Owner: Where’s Obama Getting Money for Payroll Tax Holiday? Your Mortgage.

*Editor’s note: I recently asked Joe the Small Business Owner to explain how President Obama’s payroll tax holiday will be paid for. New homeowners will be paying for it. The housing market is in a depression now. Obama’s move to heap on home buyers the cost of the payroll tax holiday reminds me of those who send a box of kittens down the river because they can’t afford them and are too lazy to solve the problem of finding them homes.

80 Basis points means that for every one hundred thousand dollars of money borrower your fees just increased by 800.00. [T]his is a convoluted attempt to make it look like the consumers got a tax break. [It] in all likelihood is going to make the economic recovery last longer, as it directly will slow down real estate, by making financing more expensive, or making less people qualified to purchase homes. [T]his is a sneaky, not well thought out attempt at redistribution of wealth, at the expense of housing industry.

Dear Victoria:

You had asked me to explain the recent payroll tax extension signed into law, and the effect of the rise in rates in mortgage costs.  Basically what was done here is the government extended the social security/Medicaid payroll tax rate for individuals.  Now remember companies have always matched the employee/w2 contribution.  The company rate of course was not cut, only the part the employee w2 wage earner pays. 

 

So that is good news. It gives each w2 wage earner which can include some corporate owners if they pay themselves on a w2 a small tax holiday (two months).
Now the bad news:  Behind the scenes what the Government did is tell the GSE’s (see explanation below) that they are going to have to pay 10% of their guarantor fees to the United States Treasury. 

What that actually means as we have seen in the mortgage industry is a rise of points on each loan of anywhere from 50 to 80 basis points.  On any loan that is going to be delivered to the GSE’s after April first.  Loans being originated today, that are going to be delivered on or after that day are having increases to offset the additional cost of GSE fees. In effect this raise of cost of doing business was and is being immediately transferred to the consumer through the higher cost of borrowing.  Now all these terms and basis points and language tend to confuse the consumer, so let’s put it in quantifiable dollar cost.  80 Basis points means that for every one hundred thousand dollars of money borrower your fees just increased by 800.00.

As far as we can tell it looks like this additional cost is for a ten year period of time.

That’s pretty significant when you look at the shape housing is in. Raising the cost to do business and the cost of financing is going to effectively mean fewer people are now qualified. 

 
If you do not have the cash to pay for the increased cost, you can take a higher rate. Higher rates equal less qualified borrowers. Remember today’s underwriting standards are about as tight as they have been in years. For the most part, if a borrower exceeds a total debt-to-gross income ratio of 45%–no matter what –the GSE’s underwriting engines will not approve a file. No matter what kind of additional other risk mitigation factors are involved…i.e. loan to value, credit score, cash, etc.
So in summary, this is a convoluted attempt to make it look like the consumers got a tax break. Behind the door is a huge cost increase of doing business for the housing industry.  Also from our understanding the GSE’s do not get to keep this money, but must pass it on to treasury, so none of this is directly going to fund the multi-billion dollar losses at the GSE’s. 

In fact it could actually cause them to have more losses if it affects value and qualifying significantly as foreclosures and delinquencies could again increase.  Remember higher costs mean less buyers, less sales, mean price competition, and could possibly further erode value.

It is good from the standpoint that someone is starting to pay attention to the deficits, however, this is nothing but a back door tax increase to home buying/refinancing public, and in all likelihood is going to make the economic recovery last longer, as it directly will slow down real estate, by making financing more expensive, or making less people qualified to purchase homes. 
The key to any long lasting vibrant AMERICAN ECONOMIC Recovery is for real estate to get HEALTHY.  Less borrowers means more valuation issues. 

In summary my conclusion is this is a sneaky, not well thought out attempt at redistribution of wealth, at the expense of housing industry.  Remember in business all costs are eventually passed on to the consumer.  Businesses manage margins.  If the administration had a business background and embraced capitalism, they would know what we just told them here.  Assuming they care.   

EDITOR’S NOTE: Joe-the-Small-Business-Owner is a longtime banker in the Portland area. I keep his identity secret because we know what happens to conservative businessmen around here when they tell the truth about things. 

**A government-sponsored enterprise (GSE) is a financial services corporation created by the United States Congress. Their function is to enhance the flow of credit to targeted sectors of the economy and to make those segments of the capital market more efficient and transparent. The desired effect of the GSEs is to enhance the availability and reduce the cost of credit to the targeted borrowing sectors: agriculture, home finance and education. Congress created the first GSE in 1916 with the creation of the Farm Credit System; it initiated GSEs in the home finance segment of the economy with the creation of the Federal Home Loan Banks in 1932; and it targeted education when it chartered Sallie Mae in 1972 (although Congress allowed Sallie Mae to relinquish its government sponsorship and become a fully private institution via legislation in 1995). The residential mortgage borrowing segment is by far the largest of the borrowing segments in which the GSEs operate. GSEs hold or pool approximately $5 trillion worth of mortgages.[1][2][3]

behind the scenes is tell the GSE’s
Tell ’em where you saw it. Http://www.victoriataft.com