Saturday, January 12, 2008

More Shenanigans at Bank of America

Just when you thought the lies couldn't get any more brazen....

Bank of America is buying out Countrywide Financial at a hefty discount, as Countrywide is reeling from all the bad loans it made. So get this:

"I think it's positive for the borrowers," Bruce Marks, chief executive of Neighborhood Assistance Corporation of America said. "There are millions of home owners with unaffordable mortgages. The deal will allow Bank of America to restructure loans to what homeowners can afford."

Marks suggested that Bank of America will be able to help current Countrywide customers where Countrywide can't, because it doesn't give risky subprime mortgages, so it plans to convert them into prime loans.

News flash... whether or not it's subprime is NOT a question of whether it's fixed-rate or adjustable-rate. It's a function of the borrower's prospective ability to repay. So apparently BoA is going to have its High Priests of Accountancy wave their magic fingers over the balance sheet, and >poof!<>Either this is incredibly sloppy reporting, even by CNN's standards, or someone's blowing a particularly cheap grade of smoke. Fortunately, they did talk to someone who injected a note of reality:

"[This deal] doesn't make any difference to the home owner," said Hanzimanolis. "The only difference will be where you pay your bill to. Just because Bank of America is buying your Countrywide subprime loan, it doesn't change [into a prime loan] when they buy it."
But the story then goes back to cheerleading for good ol' BoA, friend of the working family & all that.

Taylor noted that restructuring loans also makes financial sense for the bank. "Bank of America may very well intend on having loans restructured to ones that are closer to prime loans and performing assets, because they would rather have the homeowners stay in their homes and pay their mortgages than face the alternatives."

In doing so, Bank of America may be able to recoup some of the losses it incurred from purchase of Countrywide, said Marks. Since the bank has already written off the value of many of those loans, it plans on getting strong returns by restructuring customers' loans.

Okay, let's take this one at a time. They've written off the loans... so they're not going to foreclose, but instead if they can get anything, even below market, they can get strong returns, stronger than expected at least. Ah, the joys of tax law. Speaking of which, how about having the taxpayers subsidize the entire deal? Which they're going to do... But that's another story.

"restructuring to avoid foreclosure," short version: Rewarding someone who took out more mortgage than they could afford, in order to avoid the painful consequences of dealing with a loan that should never have been written in the first place. Thus avoiding market discipline for irresponsible lender and irresponsible borrower.

Meanwhile, if you've been struggling to keep up on your payments? Sucker.... see how many current mortgages (versus, say, those delinquent 3+ months) get restructured. Holding off until you had a down payment saved up? Stooopid. Enjoy the higher rates and tighter credit check. Meanwhile, the guy next door, with the lower credit rating, no down payment, and more house than he can afford? He's going to get below-market interest for years, possibly the rest of his mortgage, so he doesn't get foreclosed. You, on the other hand, by showing some responsibility, demonstrated you're more than capable of making higher payments.

Responsibility is punished, and recklessness is rewarded.


Monday, January 7, 2008

Fanboys and their obsessions

From xkcd, the coolest & geekiest webcomic out there:

That's what strikes me about the Paul crowd...there's an obsessive element to it. I understand enthusiasm for a candidate, but there's such a strong element of with-us-or-against-us and hero-worship to so much of it. Yes, I have a favorite candidate, who I'm enthusiastic about... But I don't maintain that candidate is without weakness or will be the single-handed savior of American democracy. And whatever is driving his fanbase, it's not well-reasoned agreement with his positions, which are an incoherent mess. (Get the government out of almost everything except national defense and regulating orgasms; economic ideas regarded by most economists as crackpot--and yes, they're based on ideas from a Nobel-winning economist, but it was Nobel-winning economists who brought us the LTCM debacle--a Nobel is no sign of infallibility; and why can't Paul quite bring himself to distance himself from the white-separatist fringe?)

Oh, well. Every election has its sideshow.

Clinton Desperation Syndrome

Andrew Sullivan has a quick post quoting a Clinton campaign email. He notes the subtext, but I think he misses the deeper irony.

From a Clinton campaign email list:

The Iowa caucus process is a broken and flawed process. It was designed to allow for the active party Dems generally known to one another to assign delegates and was not designed to handle a flood of students and independents. It was a system designed to give more power to Dem party loyalists. In the tension over whether the candidates should be chosen by the party or by the general public, the Iowa caucus was designed to give the party the advantage. For this reason, the Iowa system failed on Thursday.

Translation: we couldn't control it. So it sucks.

The irony is that Her Inevitableness ran on a not-so-subtle argument that she had the ground organization (i.e. control of the party activists) to lock up the nomination.

Obama won in spite of the control of the machinery, not because of it.

Obama as Rorschach

So pundits on the right see Obama as being, underneath the airy rhetoric, actually deeply progressive.

Meanwhile, some on the left are concerned that underneath it all, he's actually deeply conservative.

Meanwhile, others recognize his liberalism but compare him to Regan all the same.

I don't know whether it's seeing different subsets of the facts; seeing the same things but valuing them differently; or some sort of political Rorschach. But it certainly is interesting.

Sunday, January 6, 2008

Well, crud.

Just got word back that a conference paper I'd submitted was turned down. The reviews were generally positive, but one reviewer essentially ripped me a new orifice, rating the paper very low, which brought the average rating down beneath the acceptance threshold.

Now that experience--several generally positive reviews and one blistering denunciation--is not in itself all that unusual. It's not universal, but it happens. And reading the blistering reviews, while not always pleasant, is often educational. I've read through blistering reviews that did in fact home in on design flaws, overstated claims, or places where I had, in fact, overlooked something. Not pleasant, but useful. And someone clearly went to some trouble to review the paper, to read it closely. I haven't always agreed with the criticisms, but they are, for the most part, at least mostly fair.

In this case, I can't help wondering. The comments included that I should have included some examples of X (there were 3 in the paper already, wasn't that enough?), should have included some examples of Y (Y being something completely irrelevant to the point I was making), it should have been presented as a case study (I thought it was, though the words "case study" didn't appear in the title, so maybe that point wasn't clear), and that I didn't address any of several other questions (which admittedly were interesting, but were not what the paper was about).

The rest of the blistering criticism seem to boil down to "this wasn't the paper I wanted to read; you should have written a different paper."

And the icing on the cake: My paper was the only one reviewed for this conference by this particular reviewer.

Oh well. The system is what it is, and I knew what it was like when I chose this career. Most of the time it works fairly well, but it's not perfect, and sometimes the imperfections spatter. And if I'd submitted something I thought was marginal and it got accepted because a review got sloppy the other direction, I wouldn't be complaining.