Obama comes through for speculators in underwater mortgages

The hedge fund candidate has become the hedge fund President. Obama's mortgage moves will enrich hedge funds (such as those run by Obama supporter, George Soros, sugar daddy of the Democrats) who speculated by buying up underwater mortgages to be now made whole by you.

The Washington Times reports:

On Tuesday, the Federal Housing Administration announced a "short refinance option" for underwater mortgages - that is, mortgages on which the amount that the homeowner owes is more than the house is worth. Under this new program, the government promises to guarantee what's left of the mortgage's face value after the mortgage holder agrees to write off 10 percent of the principal.

For some big Wall Street financial houses, this could represent a major windfall. Some of these firms bought risky mortgages at huge discounts from their face value, often just 40 percent or 50 percent of the amount owed. Say a Wall Street firm paid $250,000 to take over a risky $500,000 mortgage. If the firm agrees to reduce the face value of what is owed by $50,000, the FHA will guarantee the mortgage. Thanks to the protection from default, the loan's value instantly increases from $250,000 to $450,000 - a $200,000 gift to the Wall Street mortgage holder.

While the Washington Times focuses on Wall Street, many of these mortgages have been bought up by hedge fund investors as well. Obama attacks fat cats on Wall Street for partisan and populist reasons to rile his base and bring them out to vote and to worship him. Meanwhile, he pulls fast ones to enrich them at our expense. In other words his rhetorical attacks against wealth are, in his own words, just distractions.

One always has to watch what Obama does behind the scenes. We know most of the media won't.

In the guise of reform, Schumer obligates donors

Schumer has been a champion of Wall Street financial firms for years, particularly hedge funds, yet now is holding himeslf out as a reformer.

It was Schumer who helped organize hedge fund lobbying efforts and campaign contributions, as reported by the NY Times on March 13, 2007:

On a cold evening in late January, Senator Charles E. Schumer invited a who's who of hedge funds to dinner at Bottega del Vino on the Upper East Side of Manhattan. More than $100 billion worth of wealth sat around the table, including Paul Tudor Jones of Tudor Capital; Steven Cohen of SAC Capital; Stanley Druckenmiller of Duquesne Capital; and James Chanos of Kynikos Capital, according to a person who was briefed on the dinner.

Mr. Schumer, the New York Democrat, had some simple advice for the billionaires in his midst: If you want Washington to work with you, you had better work better with one another.

(snip)

Now, Schumer is holding himself out as a leader in the effort to reform Wall Street as part of the effort by Democrats to raise a populist argument in the run-up to the November elections.

Expect Schumer publicly to treat his former Wall Street friends the way he treated a flight attendant, now that the spotlight is on the money shoved deep into his and other Democrats' pockets for years.

Privately, Schumer will see to it that the "reforms" are for show only, so that he can go back to the Wall Street fundraising well again and again and again.

From Bloomberg: Of the $7.4 million contributed by employees of the 100 largest hedge funds and 50 biggest buyout firms in 2005-06, Democrats received $5 million, Federal Election Commission records show. The biggest checks went to congressional campaign committees led by New York Senator Charles Schumer and Illinois Representative Rahm Emanuel, which took in $2.8 million.