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cletus8269

Obama to appoint panel for auto recovery

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WASHINGTON (AP) - It will take more than one "car czar" to help get the embattled U.S. auto industry back on track, President Barack Obama has decided. Instead, his administration is establishing a presidential task force to direct the restructuring of General Motors Corp. (GM) and Chrysler LLC, a senior administration official said Sunday night.

Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers will oversee the across-the-government panel, the official said, speaking on the condition of anonymity because no announcement has been made.

GM and Chrysler are expected to submit restructuring plans to the government by Tuesday, the deadline for showing how they can repay billions in loans and become viable in spite of a huge drop in auto sales.

The auto industry task force is just one element of Obama's plan to revive the flailing economy. On Tuesday he's flying to Denver to sign the $787 billion stimulus bill into law, taking his economic message to the American people, who are giving him high marks for handling the crisis.

Obama will also be tackling the home mortgage foreclosure crisis. The direct appeals for public support follow scant GOP backing in Congress for his agenda and increasing partisan bickering.

Passage of the stimulus measure - unprecedented in its cost - was a major victory for Obama as he struggles to lift the country from a financial nosedive unseen since the Great Depression of the 1930s.

"I think it's safe to say that things have not yet bottomed out," press secretary Robert Gibbs said Sunday. "They are probably going to get worse before they improve. But this is a big step forward toward making that improvement and putting people back to work."

The symbolism of the stimulus signing is obvious for Colorado, where a growing green-energy industry will draw major benefits from the plan.

And Obama seems likely to continue selling that recovery by traveling around the country.

"He is determined to keep in touch with the American people who sent him here to do this job," senior adviser David Axelrod said.

With the stimulus victory in hand, Obama planned to shift to the housing crisis with an announcement Wednesday in Phoenix.

Obama was expected to offer help to homeowners on the brink of foreclosure. Details have not been disclosed, but the nature of the crisis suggested mortgage loans would have to be revalued downward along with interest rates.

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Associated Press writer Philip Elliott contributed to this report from Chicago.

http://apnews.myway.com/article/20090216/D96CLG6O0.html

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There is no way in hell this is going to work like supporters of the Corp would hope it would.

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There is no way in hell this is going to work like supporters of the Corp would hope it would.

there is no way in hell GM would survive without his support right now. given his propensity for carefully constructed thought and integrity I await with optomism

Edited by turbo200
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Ruling things by committe by accountants is what got GM into this mess in the first place.

"Given his propensity for carefully constructed thought and integrity"

Wow that must have been some good Kool Aide! It's time to wake up the dream is over. Nancy P is running your lives.

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None of it is going to matter anyway. GM needs to declare bankruptcy now. We're just in the eye of the storm. The worst of the current batch of bad mortgages has already passed. What isn't being reported is that there is a larger wave of what are called "Option ARM" and "Alt-A" mortgages due to start resetting en mass beginning late spring to early summer with the peak happening mid winter next year.

If you thought the past 12 months were bad, wait till ya get a load of the next 18.

*continued after I find a place to plug my laptop in*

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None of it is going to matter anyway. GM needs to declare bankruptcy now. We're just in the eye of the storm. The worst of the current batch of bad mortgages has already passed. What isn't being reported is that there is a larger wave of what are called "Option ARM" and "Alt-A" mortgages due to start resetting en mass beginning late spring to early summer with the peak happening mid winter next year.

If you thought the past 12 months were bad, wait till ya get a load of the next 18.

*continued after I find a place to plug my laptop in*

If only the Treasury could guarantee the financing.

BTW Don't forget the commercial property market - that is about to go boom too.

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None of it is going to matter anyway. GM needs to declare bankruptcy now. We're just in the eye of the storm. The worst of the current batch of bad mortgages has already passed. What isn't being reported is that there is a larger wave of what are called "Option ARM" and "Alt-A" mortgages due to start resetting en mass beginning late spring to early summer with the peak happening mid winter next year.

If you thought the past 12 months were bad, wait till ya get a load of the next 18.

*continued after I find a place to plug my laptop in*

Totally agree.

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Correct, the commercial wave starts in the middle of the Option Arm/Alt-A pop. I hear the John Hancock tower in Chicago is in foreclosure already.

Here is the difference between what has happened and what is about to happen.

In the past 12 months, most of what has failed has been fairly standard adjustable rate mortgages. You get a $180k mortgage for a $200k home and get an adjustable interest rate that resets every year after 5 years or so. You paid the standard principle + interest + escrow. What has happened is the first bunch of homeowners who's mortgages reset could no longer afford the new payments. Some refinanced, but a good many went into foreclosure. The foreclosures put downward pressure on home prices. When this happened, even fewer people could refinance their homes because the values of the home often fell below the amount of the first mortgage. The vicious cycle started and that's how we got where we are today.

Keep in mind that 12 months of that have brought down the largest investment banks in the country, put Bank of America, CitiGroup, and Wells Fargo on the ropes, and forced mergers of banks that never would have happened in a normal climate.

Here is the fun part.

With an Option ARM loan you have the option to make partial principle and partial interest payments. What you don't pay gets amortized back into the principle of the loan up to a maximum of 115% or 125% of the original loan value or once 5 years has been reached. Many people pick these types of loans because it was the only way they could afford the monthly payments on their McMansion. In the meantime, property values have fallen across the board making refinancing out of these loans virtually impossible. Once these loans are recast (similar to the resetting of the interest rate in an ARM), the home owner goes from making a minimum payment that doesn’t even cover interest to a fully amortizing payment that covers all interest AND principal. And remember, principal is 15-25% higher than the original loan balance. Most people with these types of loans also put no money down or got a second mortgage to pay for their money down. They owe 25% more than their home was valued at way back at peak housing prices. The resulting payment shock—imagine your monthly mortgage payment suddenly increasing 3x—leads these loans into default like none other.

Now, with all that in mind. Lets look at the numbers.

The end of 2008 was the time period where the highest dollar value of standard ARM loans was due to reset. At the peak, about 36 billion dollars per month in loans reset. There is a lag with standard ARMs because the payment shock is anywhere between 0% and 20% increase in monthly payment. Many families can handle it for a short while before they start falling behind.

May/June 2009 is when the Option ARMs begin to reset. This wave has 3 small dips. The peak of the first wave hits us in December 2009 and reaches $25b per month in recasts. It drops off for a bit then shoots up to $30b a month in recasts around June 2010. Drops back to $20b per month in December 2010 and then surges to $40 billion per month in June 2011. Now when these loans recast, there will be a lot less lag time because the monthly payment will jump anywhere from 80% to 200% of what the homeowner is used to paying. With no way to pay and no ability to refinance, homeowners will throw in the towel much faster.

Are you ready for the punchline? As of December of 2008, a stunning 28% of option ARMs were delinquent or in some stage of foreclosure. This is before any recasts have even kicked in!

Remember, the banks have already failed and consolidated from just the first mess. Bank of America, Wells Fargo, and Citigroup are already dangling on the cliff.

GM..... all of us... have much bigger things to worry about than this committee.

P.S. If this thread gets political it's getting moved.

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In the meantime, property values have fallen across the board making refinancing out of these loans virtually impossible. .

Yes - and the talk about renegotiating the terms of the mortgages has been shown to be a bust. Somewhere recently I read, the banks that have done this have only delayed the inevitable. The banks pulled owners out of ARMs/Interest Only and put them into 40-50 year fixed and they still could not afford the payments.

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Yes - and the talk about renegotiating the terms of the mortgages has been shown to be a bust. Somewhere recently I read, the banks that have done this have only delayed the inevitable. The banks pulled owners out of ARMs/Interest Only and put them into 40-50 year fixed and they still could not afford the payments.

60% of renegotiated mortgages end up back in default in 6 months.

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60% of renegotiated mortgages end up back in default in 6 months.

That looks like the numbers I saw.

Now - In the early 1980s recession, pick up truck sales picked up with new construction starts earlier than the traditional passenger car fleet.

With all the forclosures out there and soon to be out there, does anyone expect that to happen any time soon?

There goes the Detroit 3 cash cow. GMs revenue was all about the 900s.

Cool site with map function to see how bad it really is.

http://www.realtytrac.com/

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Anyone know the mix of ARMs to fixed ?

-- -- -- -- --

Both my morgage broker, and a professional accountant advised against me pre-paying on my morgage.

If I had gotten a 30-yr fixed morgage, I'd have 14 more years to go.

If I had merely run the course on my bi-weekly, I'd have 6 more years to go.

Instead I pre-paid regularly, and have been morgage-free since 2004.

I am very thankful for my innate fiscal conservatism.

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Yep the fox is in the henhouse. Finally the leftists have GM and the auto industry just where they have always wanted them. Just the saddest of times.

Just the thought of GM groveling to these people is frankly humiliating.

Edited by Oldsmoboi
If you want to be political, sign up for a premium membership and join the Politics forum.
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It's going to be a pretty thin line separating 'politics' from GM when politics is now so deeply ingrained into GM in 2009. Perhaps a clear definition of what constitutes 'politics' as perceived by the mods is in order, to avoid spot administrative editing of member's posts. Just a suggestion.

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Ironic that the US government, who is nearing 11 trillion in debt and can't manage itself, is going to be overseeing the GM turnaround now.

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Yep the fox is in the henhouse. Finally the leftists have GM and the auto industry just where they have always wanted them. Just the saddest of times.

Just the thought of GM groveling to these people is frankly humiliating.

How bizarre. Frankly this is really quite silly.

I've always tried to be reasonable in my posts.

I've seen some of the most hateful, vulgar posts on C&G and nothing said or edited.

And with that I'm finished with C&G.

I've had mostly good times here and enjoyed the insights of a few great people here...they know who they are.

And I wish those individuals much good fortune in the years ahead.

But there is a limit to one's patience.

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:(

Yep the fox is in the henhouse. Finally the leftists have GM and the auto industry just where they have always wanted them. Just the saddest of times.

Just the thought of GM groveling to these people is frankly humiliating.

:( Sorry to see one of the stable and informitive go but I can understand. I would have liked to seen your full post. What was left is so true.

As stated above Poltics and GM are now one so C+G needs to learn how to deal with it. Just look at the thread topic, it does not get more politcal than that.

Edited by hyperv6
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How bizarre. Frankly this is really quite silly.

I've always tried to be reasonable in my posts.

I've seen some of the most hateful, vulgar posts on C&G and nothing said or edited.

And with that I'm finished with C&G.

I've had mostly good times here and enjoyed the insights of a few great people here...they know who they are.

And I wish those individuals much good fortune in the years ahead.

But there is a limit to one's patience.

I'm sorry you feel that way. We had an exception to the political rule during the election season, but once the election was over the Politics rule was reinstated. Since their appeared to be a demand for an area for politics to be discussed, we created a section for it if people chose to join in that discussion.

General government policy as it pertains to GM is not the same as partisan politics.

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And with that I'm finished with C&G. I've had mostly good times here and enjoyed the insights of a few great people here...they know who they are. And I wish those individuals much good fortune in the years ahead. But there is a limit to one's patience.

Well this absolutely SUCKS (tho I understand completely).

If you pop back in, shoot me a PM, HE.

If not, anyways; thanks for some great conversation from the Same Page.

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I'm sorry you feel that way. We had an exception to the political rule during the election season, but once the election was over the Politics rule was reinstated. Since their appeared to be a demand for an area for politics to be discussed, we created a section for it if people chose to join in that discussion.

General government policy as it pertains to GM is not the same as partisan politics.

while your point is not lost, i feel your handling of the situation was just this side of overbearing. harley expressed an extreme political opinion, in the past we would have had a few uninformed trade retorts, some ignorant catcalls, and then it would have all died down. besides some confusion no one was hurt. i generally and unwaveringly feel the moderation is self-sustained here and that we are able to keep polite and respectful tones, which works better than the almost opressive tone some of the modding has taken, which i admit i've only noticed in spontaneous bursts....no doubt due more to gentlemanly behavior by most of my fellow posters.

Edited by turbo200
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How bizarre. Frankly this is really quite silly.

I've always tried to be reasonable in my posts.

I've seen some of the most hateful, vulgar posts on C&G and nothing said or edited.

And with that I'm finished with C&G.

I've had mostly good times here and enjoyed the insights of a few great people here...they know who they are.

And I wish those individuals much good fortune in the years ahead.

But there is a limit to one's patience.

Sorry to hear this HE. I wish you the best, if you stop back PM or let me know! I always enjoyed your views, and most often agreed with them. You will be missed.

Edited by gm4life
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while your point is not lost, i feel your handling of the situation was just this side of overbearing. harley expressed an extreme political opinion, in the past we would have had a few uninformed trade retorts, some ignorant catcalls, and then it would have all died down. besides some confusion no one was hurt. i generally and unwaveringly feel the moderation is self-sustained here and that we are able to keep polite and respectful tones, which works better than the almost opressive tone some of the modding has taken, which i admit i've only noticed in spontaneous bursts....no doubt due more to gentlemanly behavior by most of my fellow posters.

:withstupid:

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