Meeting at the White House
After a 60 Minutes interview with President Obama in which he referred to bankers as “fat cats” that he would take to task in his scheduled meeting at the White House today, three bankers skipped out on the affair. The point of the meeting was for the Administration to remind the banking industry that they were given an exorbitant amount of money to save their tails during the bailout and Obama said of the banks, “now that they’re back on their feet, we expect an extraordinary commitment from them to rebuild our economy” (full text of his speech is here).
Obama called for banks to make more small business loans and that he’s tired of potential employers not getting the help they need, “I’m getting too many letters from small businesses who explain that they are credit worthy.”
News outlets buzzed after the big meeting and bankers on several shows said that there was little disagreement in the meeting. Then they all went out for ice cream together. Well, they didn’t do that last part, but they did publicly state on the circuit that it was a productive meeting. But read until the end of this post and you’ll get a good chuckle like I did.
Why this all matters
The real estate industry and unemployment are closely tied together, that cannot be denied. What scares me about this and what everyone seems to have missed was a PBS interview this evening where mouthpiece Richard Davis, CEO of U.S. Bancorp (USB) was asked when these small business loans might begin and his response was:
“When the recovery starts to happen. So you’ll see, whatever actions we can take, whoever is qualified, we’ll do our level best to qualify them. If we can help guide them to become more qualified we will do that. But until and unless the recovery starts to occur and we start to see some momentum where there’s a real future attached to some of these great plans that small businesses have, it will take some time.”
Umm WHAT!?!? So, let me get this straight- you have a meeting in a fancy room in the White House, you have a productive day, you tell news outlets that sunshiney days are coming again but when asked WHEN the sun would shine, your answer was the equivalent of saying that you can’t help recovery until the recovery is already firmly in place? That is NOT what the President asked of you, he asked you to kick start the economy because you owe it to America and instead you give lip service to the media and make no plans on doing anything until the economy fixes itself.
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Classic is as classic does. You’d think they could afford better writers at this point.
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December 2009 D-bag awarded to Richard Davis, CEO of U.S. Bancorp (USB)
If Obama wanted the furniture, he should have put that in the offer.
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More smoke and mirrors….
In most cases, the banks were not “given” the money. They have to pay it back. Most are. By the Presidents own admission, the taxpayers will “make” money on the short term loans. We will most certainly lose on AIG and GM, but gain on many of the others. Also, do we want tighter lending criteria, or not? Many of these home buyers and small businesses were credit worthy by the old standards, but are not now. FHA may soon require a 5% DP, and on November 11th on CNBC, Realogy CEO and Preident Richard Smith recomended 10%. That’s too high IMHO, but we do need to get back to buyers having some immediate skin in the game.
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To most first home buyers I’ve ever worked with, 1,2,3% is skin, 10% is life – to most, just making that payment is skin. heh
Having to make a payment is not “skin”, it’s servicing your loan. Skin is a down payment. If a payment was “skin”, then why are so many defaulting? I think 5% is doable. If a buyer can’t save 5%, then I question their money management skills, and the home was not really much of a priority unless they could get in witrh little down payment. Lower lending standards is what got us to this point, let us not repeat history.
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Apparently, sarcasm is lost on you. Carry on..
Thats what I heard from him too. That they are not going to help until they are assured that its in their best interest. It does not matter that the taxpayers bailed them out, they are still only looking out for themselves and they do not feel that they owe a debt back to us.
-Tyler
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Fine, don’t feel an obligation and FINE, don’t give a crap about anyone outside of your ivory tower but for the love of gravy, don’t go on a press tour talking about how you and Obama are sittin’ in a tree and how Obama is so wonderful and you’re taking his advice to focus on small business loans, then quietly sneak off to PBS and say that you don’t care to be the solution you promised the President and America you would be and cause change, rather you’ll wait for change to come around and you’ll be the effect. LAME.
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I wish I could have been there, or at least outside, where I could have handed to every reporter and news agency a flyer showing how the Feds via the FDIC are giving these very same banks what amounts to a premium to take over the paper of failed banks, and the guarantees that incentivize them to foreclose instead of negotiate a short sale.
The Feds are still paying the banks. We will not make a net profit on TARP at the end of the day.
The question remains, if Bank Of America will hold true to it’s commitment to increasing lending in the coming year up to $5 billion dollars. While it won’t do much. it is still something, and other large banks should follow suit.