Random Thoughts

I’m in one of those musing moods, so move on along if you find this as boring as I suspect it might be.


Love ’em of hate ’em you have to admire not only their chutzpah but their political savvy. By backing a piece of health care reform which mandates employer provided health insurance they managed to: a) short circuit union organizing efforts; b) get themselves a prominent seat at the negotiating table; and c) stick it to their competitors.

The unions won’t quit trying to organize Walmart but the priority for that effort not to mention funding has probably slipped way down the ladder. They know how big the chits are that Walmart just got from the administration and they won’t want them cashed at their expense.

Walmart will have a big say in what the final employer mandate looks like — assuming there is one. It’s doubtful that mandate will be too far off what they already provide.

The moms and pops that try and compete with Walmart and some of the big boys as well are probably tearing their hair out. Odds are that they provide less to their employees, if they provide any health insurance at all, than Walmart. So Walmart gets a bill that doesn’t cost it an arm and a leg but probably pulls all four appendages off some of its competition.

Probably one of the saviest and most completely craven corporate sellouts in history.

Daniel Inouye

If you missed it, the Washington Post has an article about Senator Daniel Injouye intervening on behalf of a bank in his home state of Hawaii. It seems the bank had been deemed ineligible for TARP money due to its losses. He went to bat for them and shockingly they ended up with $135 million.

So far so good, right? Just a senator sticking up for his constituents. Problem is the good senator owns stock in the bank. In fact, his ownership adds up to two-thirds of the total assets he lists on his disclosure forms.

Remember the Keating Five? Those five senators that were accused of interfering with an investigation of Charles Keeting during the S&L crisis. Three had their carreers ruined and the other two, John McCain and John Glenn were censured by the Senate. Think Inouye might be in for similar treatment?

Think again. Inouye, though obviously conflicted in this case, violated no rule of Congress. In fact, Congress leaves it up to their members to determine when they have conflicts of interest. If you want a real crime, there it is.

125% Loans

Obama’s loan modification program has been expanded to include homeowners who may be under water by as much as 125%. I talked about all of the reasons that this was a bad idea in a previous post. The more I think about this, the more I wonder what’s behind the move.

My gut reaction is that they’re scared to death that there’s another huge wave of foreclosures among this part of the population just waiting to happen. They may sense or maybe have some data that these borrowers are so strung out that they just might start walking in droves. I think they may be right.

If that’s the case then look for an even more drastic measure when this doesn’t work. Don’t be surprised if it involves cash payments or mandated principal modifications to bring the LTV down to at least 100%.

Based on nothing more than conversations I’ve had with various friends and acquaintenances that find themselves in the negative equity pickle, the attitude seems to be developing that only a chump would hold onto a house that will probably never be worth what they paid for it (whether that’s true or not that’s the mentality I see). They’re more than over the internal moral debate about defaulting on a debt. The only thing that’s keeping them around is the hope that there might be more assistance coming from the government. They may be right.

Beezer Homes

The government filed criminal conspiracy charges against Beezer (NYT Link) alledging the use of fraudulent lending practices by its mortgage subsidiary. Beezer will pay $50 million to the government and those defrauded in order to clear the record.

Note, these were criminal charges. That means that someone should or could serve time in prison. Instead, the shareholders of Beezer are bailing out management. Someone tell me why Madoff gets 150 years and Beezer gets to buy its way out. Please!

See, that wasn’t so bad. I sure feel better.

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