TARP Repayment, Housing

Timothy Geithner recently said, "None of them would have survived... the entire financial system and all the major firms in the country, and even the small banks across the country, were at that moment at the middle of a classic run, a classic bank run." This statement is in contrast to what the executives of the big banks said, like Goldman Sachs who claimed they would have survived without government help at the peak of the crisis. I wonder what he means by a 'classic' collapse. I presume he's talking from the textbook.

Imagine being the handful of people who believed the entire system was collapsing and what they were thinking and feeling at the time, like Paulson and Bernanke. Look at how a few can control the whole course of our financial system. Congress totally bought into that fear and there was no 'check and balance.' I'm still supporting the removal of Bernanke.

Good news is that most of the TARP will be repaid and that at least $200B is saved. I hope the government doesn't go out and immediately spend the savings. There are still hundreds of billions the government guarantees of devalued securities and other assets of the banks. There needs to be some form of 'available savings' for unexpected disruptions.

I can't help but comment on the housing industry. Chase said in November that 50% of the borrowers on their mortgages didn't make the 3 months of the payments required to make modified loans permanent. What the government is forcing the banks to do is not achievable because people were given loans in the past that even with monthly reductions, extensions on the timeframe of the mortgage, and low interest rates still cannot qualify, and it is outside their financial means to continue. Yet the government seems to have a one-tracked mind and continues this path that is nonproductive. Also, one of the big housing websites, Trulia.com is showing increasing new listings for foreclosures that are coming onto the market in the areas that I follow in California and Oregon.

Given my belief that each of us has a soul plan, there is a mixture of destiny and choice. I also believe that the world has a soul plan along with each individual country. I wonder what the U.S. has destined on its path as we move into 2010. It is a time of major change. There is no doubt about it based on what we have experience in the last two years.