http://www.bloomberg.com/…

Federal Reserve Chairman Ben S. Bernanke, who led the biggest expansion of the central bank’s power in its 95-year history to battle the worst economic slump since the Great Depression, will be nominated to a second term by President Barack Obama.

Bernanke “has led the Fed through one of the worst financial crises that this nation and this world have ever faced,” Obama said in remarks prepared for delivery today at 9 a.m. in Martha’s Vineyard, Massachusetts, where Bernanke is to join him.

“As an expert on the causes of the Great Depression, I’m sure Ben never imagined that he would be part of a team responsible for preventing another,” Obama said. “But because of his background, his temperament, his courage, and his creativity, that’s exactly what he has helped to achieve.”

Bernanke’s nomination for a second four-year term starting Jan. 31 requires Senate approval and was endorsed by the head of the Banking Committee, Christopher Dodd. The Fed chief will still face tough questioning from lawmakers who say he was slow to recognize the severity of the mortgage crisis and didn’t do enough to protect American consumers while leading bailouts of financial firms including Bear Stearns Cos. and American International Group Inc.

Obama decided to reappoint Bernanke because he wanted to keep together the team that had weathered the crisis, an administration official said. The official said Treasury Secretary Timothy Geithner, Chief of Staff Rahm Emanuel and National Economic Council Chairman Larry Summers all recommended Bernanke be reappointed.

“May whatever god you believe in have mercy on your soul.” –Q

This isn’t surprising in the least… but really… “expert in the Great Depression”… I don’t see it. “Responsible for preventing another?” I strongly disagree. He’s not to blame for the Greenspan and legislative policies that helped get us to this place… but he’s surely responsible for the Keynesianism on crack corporatism that he’s pushed for and implemented. He’s also to be criticized, as the article mentions, for the biggest expansion in central banking power ever.

As this video is called: Ben Bernanke was wrong

Why would you want the same people who caused this problem to be the ones with the charge to fix it… especially when their solution is a continuation of that which lead to the problem?

http://news.yahoo.com/…

Despite their denials, influential Democratic Sens. Kent Conrad and Chris Dodd were told from the start they were getting VIP mortgage discounts from one of the nation’s largest lenders, the official who handled their loans has told Congress in secret testimony.Both senators have said that at the time the mortgages were being written they didn’t know they were getting unique deals from Countrywide Financial Corp., the company that went on to lose billions of dollars on home loans to credit-strapped borrowers. Dodd still maintains he got no preferential treatment.

Dodd got two Countrywide mortgages in 2003, refinancing his home in Connecticut and another residence in Washington. Conrad’s two Countrywide mortgages in 2004 were for a beach house in Delaware and an eight-unit apartment building in Bismarck in his home state of North Dakota.

I hope this really bites him in the ass in his 2010 re-election campaign. Anything to give Peter Schiff an advantage should he run. Hell… I’ll take whatever other random Republican or Demograt that could possible get in. Dodd is awful.

Turns out:

Donna Hanks initially purchased her home (315 South Ellwood, Baltimore, MD 21224) on 7/06/2001 for $87,000. She re-fi’d in 2005 for $270,000, went into bankruptcy in 2006, and this was the 2nd foreclosure. The $300 a month was actually the $340 a month she agreed to re-pay as she was over $10,000 behind in her payments. The house was sold in July 08 and they couldn’t get her out until September 08 after not paying anything for over a year.

Homesteading involves abandoned or never utilized property. This house is obviously owned by at least the bank and a two minute phone call could have revealed it was now sold to a new owner. That house was never hers. It was the banks. It’s unlikely she was even close to having more than 50% of the principle paid.

Groups like ACORN and those who support them helped create this housing bubble by using government to ban so called discrimination in lending, redlining, pushing for the CRA and low interest rates.

That term predatory lending bugs me big time. Why isn’t it predatory borrowing? The government was incentivizing if not forcing banks to lend. No one forced the lendees to borrow. No one forced them to ignore the contract or keep them from having a lawyer look over the mortgage.

If you can’t afford to own, rent. If you want to homestead there is plenty of unutilized land out west.

http://www.usatoday.com/…

More than half of mortgages modified in a bid to avoid foreclosure fell delinquent within six months, a top U.S. banking regulator said Monday, casting doubt on a proposal to rewrite home loans en masse.

Comptroller of the Currency John Dugan said it is unclear why so many borrowers ran into trouble again so soon after getting help, and that raises questions about how policymakers should address loan modifications.

“Is it because the modifications did not reduce monthly payments enough to be truly affordable to the borrowers? Is it because consumers replaced lower mortgage payments with increased credit card debt?” Dugan said at a housing conference in Washington organized by the Office of Thrift Supervision.

“Is it because the mortgages were so badly underwritten that the borrowers simply could not afford them, even with reduced monthly payments? Or is it a combination of these and other factors?”

The crumbling housing market is at the heart of the financial crisis that tipped the United States into recession and dragged down the global economy, and regulators are scrambling to find a way to limit foreclosures.

Sheila Bair, chairman of the Federal Deposit Insurance Corp, has been a big proponent of a home loan modification program that would encourage lenders to rework a greater number of mortgages by pledging public money to share the cost of defaults on restructured loans.

However, Dugan’s figures suggested that the cost to taxpayers may be high. He said his data showed that of mortgages that were modified in the first three months of 2008, nearly 36% had re-defaulted after three months, and almost 53% were behind on payments by six months.

These people lived far beyond their means. Dropping the monthly payments isn’t likely to help greatly as the banks are going to be incentivized to keep payments higher otherwise the mortgage would be spread out possibly over several decades. One should not ignore too that those with mortgages are incentivized not to worry much about keeping payments up to date given the bailout mentality currently running rampant. Why bother paying my mortgage when if I default the government will step in and take on the high risk, low return debt and refinance it to something ridiculously low? The system is entirely incentivized to fail… the fact it works at all is a testament to the market and some people’s personal responsibility.

The Constitution of the United States says but one thing about contracts.

Article I, section 10, clause 1:

No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, expost facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.

As Wikipedia states:

The framers of the Constitution added this clause due to fear that states would continue a practice that had been widespread under the Articles of Confederation—that of granting “private relief.” Legislatures would pass bills relieving particular persons (predictably, influential persons) of their obligation to pay their debts. It was this phenomenon that also prompted the framers to make bankruptcy law the province of the federal government.

Knowing that we do that the US Constitution is a document of enumerated federal powers we look to Article 1, Section 8, Clause 4: The Congress shall have Power

To establish an uniform Rule of Naturalization, and uniform Laws on the subject of Bankruptcies throughout the United States;

It would seem to me that “a proposal, popular among many Democrats, to allow judges to modify mortgages in bankruptcy court.” would be unconstitutional as singling out mortgage contracts as judicially modifiable would make bankruptcy law non-uniform. I doubt they are currently but that would not legitimize this additional infraction.

It would seem to me that “uniform Laws” applies to the topic not simply their reach. Otherwise the Congress could create special exceptions for whomever they wished so long as they group things narrow enough.

Regardless of what the Constitution says I’m still not OK with an arbiter single handedly changing a contract without explicit consent by all parties of that contract. In this case it would obviously be used to help the mortgagor over the mortgagee. One could claim that by going to the government court you are giving consent but I doubt that completely private bankruptcy arbitration is something which is generally accepted. So I’m not sure that there is much of a choice in reality.