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Potential Bailout Cost is $5 Trillion or $43K Per Household

Potential Cost For Bailout is $5 Trillion or $43K Per Household

Steve Watson
Infowars.net
October 15, 2008

The total potential cost of the financial bailout to the U.S. taxpayer is already rapidly approaching $5 trillion, over seven times as much as the meaningless $700 billion bailout bill figure.

Analysts have previously marked out the $5 trillion figure as the actual cost, now those predictions are becoming demonstratively accurate.

Meanwhile, Hank Paulson has defended government intervention, stating “There’s no doubt that the way to get the maximum bang for the taxpayers here was to invest in banks.”

Based on this Reuters summary and the sources linked within the table, here is a breakdown of the bailout’s cost to taxpayers so far.

Bailout Type
Cost To Taxpayers
$300 billion
$250billion
$25 billion
$150 billion
$700 billion+
$29 billion
$200 billion
$85 billion (+ extra request of $35 billion)
$300 billion
$4 billion
$87 billion
$200 billion+
$50 billion
$144 billion
POSSIBLE TOTAL $2.56 trillion+
NUMBER OF HOUSEHOLDS PER
U.S. CENSUS
105,480,101
POSSIBLE COST PER HOUSEHOLD
$24,26

In addition, the U.S. government has said it will temporarily guarantee $1.5 trillion (£856 billion) in new senior debt issued by banks, as well as insure $500 billion (£285 billion) in deposits in non-interest accounts, mainly used by businesses.

These figures take the potential cost to $4.559 trillion+ – or $43, 221 per household.

Furthermore, when you account for the fact that the credit default swap market is around $62 trillion, and that derivatives worldwide are worth between between $1 and $2 quadrillion, the numbers start to become meaningless.

 

Fed To Offer Unlimited Dollars
Bloomberg
October 13, 2008

The U.S. Federal Reserve led an unprecedented push by central banks to flood financial markets with dollars, backing up government efforts to restore confidence in the banking system.

The ECB, the Bank of England and the Swiss central bank will offer unlimited dollar funds in auctions with maturities of seven days, 28 days and 84 days at a fixed interest rate, the Washington-based Fed said today. The Bank of Japan may introduce “similar measures.’’ The dollar declined and some money-market rates fell.

Policy makers from the Group of Seven nations pledged at the weekend to take “all necessary steps’’ to stem a market panic after the MSCI World stock index plunged 20 percent last week. Central banks last week cut interest rates in tandem for the first time since 2001, the U.S. plans to buy $700 billion in distressed assets from banks and in Europe, the U.K. is leading a push to keep lenders afloat with taxpayers’ money.

“By providing unlimited dollar funds they are acting on the back of the G-7 plan to ensure the system is fully liquidized,’’ said Lena Komileva, an economist at Tullet Prebon Plc in London. “We’re going to see even more liquidity provided and more aggressive rate cuts are coming.’’

Read Full Article Here

Banks borrow record $437.5 billion per day from Fed
http://www.reuters.com/article/newsOne/idUSTRE49F97920081017

Millionaire Hedge Fund Trader Thanks Idiot Traders
http://www.guardian.co.uk/business/2008/oct/18/banking-useconomy

Treasury Black Out Key Parts Of Bailout Contracts
http://www.huffingtonpost.com/..136030.html

Wall Street banks in $70bn staff payout
http://www.guardian.co.uk/business/2008/oct/17/executivesalaries-banking

Homeless Numbers Alarming
http://www.usatoday.com/news/nation/2008-10-21-homeless_N.htm

House prices ‘to plummet by 35%’ – the biggest ever fall in Britain
http://www.dailymail.co.uk/news/..–biggest-fall-Britain.html

Royal Bank Of Scotland Nationalized
http://business.timesonline.co…g_and_finance/article4932250.ece

Switzerland Pumps Billions Into Bank System
http://biz.yahoo.com/ap/081016/eu_switzerland_banks.html?printer=1

UBS Gets Bailout From Swiss National Bank
http://www.chicagotribune.com..7,0,4057853.story

Dow Jones Bloodbath Mirroring 1929 Rout
http://www.prisonplanet.com/dow-jones-bloodbath-mirroring-1929-rout.html

Two More Banks Closed By Regulators
http://money…00397x1211373371x1200675175

U.S. Stocks Plunge Most Since Crash of `87 on Recession Concern
http://www.bloomberg.com/apps/news?pid..er=home

Roubini Sees Worst Recession in 40 Years, Rally’s End
http://www.bloomberg.com/apps/news?..efer=home

JPMorgan Responsible for the Destruction of U.S. Financial System
http://www.marketoracle.co.uk/Article6826.html

World May Be Lucky to Get Worst Recession Since 1983
http://www.bloomberg.com..OAeSWBCY&refer=home

Stocks On Track For Worst Year Since 1937
http://www.chron.com/disp/story.mpl/nation/6050283.html

Former Fed chief says U.S. now in recession
http://www.reuters.com/article/newsOne/idUSTRE49D2QB20081014

U.S. Economy Collapse News Archive

 



Bailout Bill Will Help Chinese Banks, Foreign Banks

Bailout Bill Will Help Chinese Banks, Foreign Banks

http://www.youtube.com/watch?v=GqIFoBXGizc

http://www.youtube.com/watch?v=v8Qn4-1q80A

http://www.youtube.com/watch?v=Ek7zc0lJxbM

 

Congress Approves Bailout Bill

AP
October 3, 2008

With the economy on the brink and elections looming, Congress approved an unprecedented $700 billion government bailout of the battered financial industry on Friday and sent it to President Bush for his certain signature.

The final vote, 263-171 in the House, a comfortable margin that was 58 more votes than it garnered on Monday. The vote capped two weeks of tumult in Congress and on Wall Street, punctuated by daily warnings that the country confronted the gravest economic crisis since the Great Depression if lawmakers failed to act.

Read Full Article Here

 

Dow plummets when bailout passes

Recent News:

List of Representatives who Switched from “Nay” to “Yea”
http://www.campaignforliberty.com/blog.php?view=1087#.

Food Riots Have Already Begun as Global Grain Prices Skyrocket, Supplies Dwindle
http://www.naturalnews.com/024372.html

California may need emergency $7 billion bailout
http://www.reuters.com/article/newsOne/idUSTRE49229820081003

Hoax Bank Closure Story Peddles Bailout Propaganda
http://www.prisonplanet.co..e-story-peddles-bailout-propaganda.html

Fed Officials Considering Further Rate Cuts: Report
http://www.cnbc.com/id/26986621

Former Head of Fed’s Open Market Operations Says Bailout Might Make Things Worse
http://georgewashington2.blogspot.com/2..ad-of-feds-open-market.html

Bailout Would Only Prolong Crisis: Jim Rogers
http://www.youtube.com/watch?v=49SYpcaWHTE

Wells Fargo Buys Wachovia Nixing Citi Deal
http://biz.yahoo.com/..ls_fargo_wachovia.html?.v=8

Report blames U.S. trade gap for 5.6 million lost jobs
http://www.reuters.com/article/ousiv/idUSTRE4913E220081002

Putin blames US for world economy crisis
http://www.presstv.ir/detail.aspx?id=71042&sectionid=351020602

Bailout bill is 451 pages long
http://news.yahoo.com/s/a..cnWOA64ch9GkocOsJ0lJv24cA

Who’s profiting from the crisis? Goldman Sachs, of course
http://www.marketwatch.c..CDCB7}&print=true&dist=printMidSection

Paulson Bank Rescue Proposal Is ’Crazy,’ O’Neill Says
http://www.bloomberg.com/apps/ne..mClVjevU&refer=home

France Wants $500B Rescue For Europe
http://business.timesonline.co.uk/tol/business/markets/article4864032.ece

Faber: U.S. Bailout Won’t Stop Slowdown
http://www.bi-me.com/main.php?id=25070&t=1&c=35&cg=4&mset=1011

IMF Adds Pressure On Congress To Pass Bailout
http://www.guardian.co.uk/business/2008/oct/01/banking.useconomy

Google stock plunges more than 93% in “erroneous trading”
http://www.tgdaily.com/html_tmp/content-view-39543-118.html

Ford & GM Auto Sales Drop
http://news.yahoo.com/s/ap/20081001/ap_o..OmxGcLJO8EjS5v24cA

Chicago woman buys a house for $1.75
http://www.presstv.ir/detail.aspx?id=71130&sectionid=3510213

Ex-bankers on pushing customers to rack up debt
http://www.cnn.com/2008/LIVING/pers..dex.html?iref=mpstoryview

US economic dominance over – Russia
IMF Warned Of Full-Blown Crisis
September’s ISM Manufacturing Index “Screams Recession,” Economists Say
SEC Extends Ban On Short Selling
Brazilian president: Brazilian economy solid, U.S. should do their homework
Western World Will Become Less Wealthy
’Car sleepers’ the new US homeless

U.S. Economy Collapse News Archive

 



Bailout: Not $700 Billion, More Like $5 Trillion

Bailout: Not $700 Billion, More Like $5 Trillion

Bei Hu
Bloomberg
September 24, 2008

Treasury Secretary Henry Paulson’s $700 billion plan to buy devalued assets from financial companies is “a joke” because it doesn’t go far enough to calm markets, said Kenichi Ohmae, president of Business Breakthrough Inc.

Ohmae, nicknamed “Mr. Strategy” during his 23 years as a McKinsey & Co. partner, called for a $5 trillion “international facility” to be made available to financial institutions. The system could be modeled on one used by Sweden during its banking crisis in the early 1990s, he said.

“This is a liquidity crisis,” Ohmae said at an investor forum hosted by CLSA Asia-Pacific Markets, the regional broking arm of Credit Agricole SA, in Hong Kong yesterday. “The liquidity has to be so big that people won’t get panicky.”

Paulson’s proposal to remove hard-to-sell assets clogging the financial system marks the broadest intervention since at least the Great Depression. Asian stocks fell today, following U.S. shares lower as investors questioned whether the effort is enough to prevent a recession.

The plan came after the collapse of 158-year-old Lehman Brothers Holdings Inc. and the government takeover of insurer American International Group Inc. caused financial markets to seize up last week. The calamity was the culmination of a year during which the U.S. housing market slump left banks and securities firms with more than $520 billion of asset writedowns and credit losses.

Read Full Article Here

 

NO To The Paulson-Bernanke Derivatives Scam Bailout

Webster G. Tarpley
September 24, 2008

WASHINGTON DC – The grand theft bailout now being rammed through Congress by Treasury Secretary Paulson, Federal Reserve Chairman Bernanke, and other officials of the Bush regime with the help of accomplices Pelosi, Majority Leader Harry Reid, and other parliamentarians is a monstrosity for the ages, combining every hideous feature of monetarism, elitism, oligarchism, and sheer feckless incompetence. It is to all intents and purposes a national suicide note of the United States of America, a contract with the devil that absolutely guarantees irrevocable national decline. For any person of goodwill there can be only one impulse at the present moment, and that is to stop this bailout — to block it, to sabotage it, to bottle it up, to load it with killer amendments, and to do everything legally possible to stop this insane design from going through.

IF MCCAIN VOTES AGAINST THE BAILOUT, HE WILL WIN THE PRESIDENCY

In political terms, McCain is now running well to the left of Obama on this issue, with a much stronger populist profile. McCain has attacked the outrageous greed and corruption of Wall Street. Obama does not dare attack Wall Street, since these are his masters. Obama, sounding like Milton Friedman, only attacks Washington. Obama has said that he will support whatever Paulson demands. That is not a surprise, since Paulson represents Goldman Sachs, and Obama is a wholly owned property of Goldman Sachs, which is his single biggest source of campaign contributions. Obama is a creature of Brzezinski, Soros, and Rockefeller, and without them he has no existence; Obama is an abject Wall Street puppet, an agent of finance capital. This week, both senators will have to decide how they vote on the odious derivatives bailout. Obama will surely vote in favor of it, since this is what Wall Street demands. If McCain votes against it, he will most probably propel himself into the White House on the model of Give ‘Em Hell Harry in 1948. Filthy corrupt Democrats like Schumer are already attacking McCain as the new Huey Long. Huey Long, the Louisiana populist of the 1930s, had many positive features, and we could certainly use a good dose of Huey Long in this country to counteract the elitism, oligarchism, condescension, and arrogant snobbery of foundation operatives like Obama. The bailout is already very unpopular 72% of all voters are opposed to it and it will become more and more hated when it becomes clear that it is also a failure. McCain’s course is clear. Will he have the brains and guts to cross Obama’s T on this vital issue?

PAULSON OF GOLDMAN SACHS, WOULD-BE FINANCE DICTATOR

Paulson is a ruthless and brutal eco-freak usurer who learned his trade at the Goldman Sachs stock-jobbing operation. He is now the leading member of the committee of public safety which rules in Washington, and which includes Gates, Rice, and Mullen. He now demands the astronomical sum of 700 billion dollars for the bailout of mortgage-backed derivatives, collateralized debt obligations, credit default swaps, and other poisonous derivatives. Make no mistake — this is not a bailout of homeowners who are threatened with foreclosure; it is a bailout of the lunatic house of cards which desperate bankers have built on these mortgages using derivatives. The entire crisis is not a crisis of subprime mortgages, it is a crisis of the derivatives bubble which was launched by Wendy Gramm of the Commodities Futures Trading Commission and Greenspan of the Fed with the connivance of Robert Rubin of Goldman Sachs and Citibank, and others in the Clinton administration, some 15 years ago.

These derivatives now amount to a total worldwide notional value that can be estimated between 1 quadrillion and two quadrillion US dollars. This sum is so large that it dwarfs the total value of the entire planet earth and all those who live here. Compared to the cancerous, bloated, and fictitious mass of derivatives which is at the root of this crisis, the $700 billion demanded by politicians, large as this may seem, is nothing but a drop in the bucket. And a drop in the bailout bucket is what it will be. The mass of world derivatives between $1 and $2 quadrillion represents an insatiable black hole which is capable of putting an end, not just to civilization, but the human life itself. The moral choice could not be clearer: humanity will either destroy the derivatives bubble in our time, or the derivatives bubble will surely destroy humanity. Those are the stakes in the current exercise.

Paulson and Bernanke, both lawyers for the Wall Street jackals, lampreys, vultures and hyenas, argue that the public interest demands a bailout of their cronies at Goldman Sachs, Morgan Stanley, J.P. Morgan Chase, Citibank, Bank of America, Wachovia, and the other large money center institutions. Before the American public antes up $700 billion just for openers in the game of genocidal poker which run by the infernal croupiers Paulson and Bernanke, we would be very well advised to examine the veracity of this premise.

Read Full Article Here

 

They Want Mama To Make it All Better! – Congresswoman Marcy Kaptur

http://www.youtube.com/watch?v=ANGsBNMY1_c

 

Rep Defazio On The Bailout Package

http://www.youtube.com/watch?v=ANGsBNMY1_c

Recent News:

Bernanke Admits Bailout is NOT Aimed at Helping Taxpayers
http://georgewashington2.bl..ke-admits-bailout-is-not-aimed-at.html

Real Estate Bigwig Zell Sees 2009 Recession
http://www.cnbc.com/id/26858394

Bailout Is Financial Equivalent Of The Patriot Act
http://www.iht.com/articles/2008/09/23/business/sorkin.php?pass=true

America Versus the Financial Elite
http://georgewashington2.blogspot.com/2008/09/america-versus-financial-elite.html

Fed Acted Like a Liquidity Drug Dealer: Economist
http://www.cnbc.com/id/26848829

’Punish’ those responsible for financial crisis: Sarkozy
http://afp.google.com/article/ALeqM5iQvXaV8mO0SRtfD9FEWqf4Vyrzrg

FBI ‘Probe’ Into Mortgage Giants
http://uk.news.yahoo.com/skynews/20080924/twl-fbi-probe-into-mortgage-giants-3fd0ae9.html

Iran Leader Says American Empire Near Collapse
http://ap.google.com/article/ALeqM5iRcJGft_Pr8uMaY1Bz9ieBSwBNTgD93CMVM80

US Fed throws $30 billion into foreign credit markets
http://afp.google.com/article/ALeqM5itOHJbNrxCHKetPtXIPIbY3TalIQ

China Paper Calls For A New Financial Order Without U.S.
http://www.reuters.com/article/ousiv/idUSPEK4365020080917?sp=true

Top Economist Mishkin: Worse Than the Depression
http://www.cnbc.com/id/26850473

Lehman’s Bankruptcy and the Hidden $138 Billion Bailout of JP Morgan
http://www.cnbc.com/id/26850473

Eveillard Says Gold May Surge as Investors Seek ‘Insurance’
http://www.bloomberg.com/apps/news?pid=20601213&sid=a8L00oInO1YM&refer=home

Wachovia, JPMorgan, Wells Fargo tumble
http://www.reuters.com/article/email/idUSN2231756020080922

Goldman, Morgan Stanley Bring Down Curtain on an Era
Goldman Sachs to be regulated by Fed
Fury at U.S. Lehman Brothers’ staff who could net £1.4bn in bonuses as UK employees face bleak future
Europeans on left and right ridicule U.S. money meltdown
Paulson On Verge Of Historic New Powers
Fed To Supervise Goldman And Morgan

U.S. Economy Collapse News Archive

 



Who’s the REAL elitist? The McCains have 10 homes!

Who’s the REAL elitist? The McCains have 10 homes!

http://www.youtube.com/watch?v=ek3jAkx9m10

 



U.S. Taxpayers to pay for Wall Street Banking Collapse

U.S. Taxpayers to pay for Wall Street Banking Collapse

WSWS
July 10, 2008

In speeches delivered Tuesday, Federal Reserve Board Chairman Ben Bernanke and Treasury Secretary Henry Paulson outlined the ruthless class policy being carried out to place the burden for the financial and housing crisis on the backs of working people.

Bernanke indicated that the Fed would extend its policy of offering unlimited loans to major Wall Street investment banks. The provision of Fed funds to non-commercial banks and brokerage firms, a departure from the Fed’s legal mandate without precedent since the Great Depression, is part of a policy of bailing out the banking system to the tune of hundreds of billions of dollars. The Fed announced its loan program for investment banks last March when it dispensed $29 billion to JPMorgan Chase as part of a rescue operation to prevent the collapse of Bear Stearns.

In his speech, Treasury Secretary Paulson acknowledged that home foreclosures in 2007 reached 1.5 million and predicted another 2.5 million homes would be foreclosed in 2008. But he made clear that nothing would be done to save the vast majority of distressed homeowners from being thrown onto the street.

Paulson, the former CEO of Goldman Sachs, said that “many of today’s unusually high number of foreclosures are not preventable.” With a callous indifference reminiscent of Marie Antoinette’s “Let them eat cake,” he went on to say that “some people took out mortgages they can’t possibly afford and they will lose their homes. There is little public policymakers can, or should, do to compensate for untenable financial decisions.”

In other words, low-income home owners who were lured into high-interest mortgages by predatory mortgage companies and banks are getting their just deserts! Of course, the Wall Street CEOs and big investors who made billions of dollars by speculating on these loans, creating a vast edifice of fictitious capital that was bound to collapse, are not to be held accountable for any “untenable financial decisions.” On the contrary, they are to be subsidized with hundreds of billions of dollars of credit, ultimately to be paid for by public funds.

The two speeches, presented at a Federal Deposit Insurance Corporation forum on the housing crisis held in Virginia, underscore the real social interests—those of the financial aristocracy—that are being protected by the policies of the Fed, the Bush administration, and the Democratic Congress.

Bernanke made clear that his call for an extension of loans to big investment banks is part of a more comprehensive proposal to systemize and regularize federal subsidies and bailouts for troubled banking giants. Particularly significant was the following remark: “Because the resolution of a failing securities firm might have fiscal implications, it would be appropriate for the Treasury to take a leading role in any such process, in consultation with the firm’s regulator and other authorities.” The implication is that the US Treasury should be ready to fund bank bail-outs with whatever taxpayer funds are necessary.

In neither speech was there even a hint that the government has any responsibility to protect home owners, or that the people responsible for the “lax credit and underwriting standards” that led to the current crisis might be called to account by regulators, Congress, or the courts.

 



Fed May Inject $15 Billion Into Failing Mortgage Lenders

Fed May Inject $15 Billion Into Failing Mortgage Lenders

Times Online
July 13, 2008

US TREASURY secretary Hank Paulson is working on plans to inject up to $15 billion (£7.5 billion) of capital into Fannie Mae and Freddie Mac to stem the crisis at America’s biggest mortgage firms.

The two companies lost almost half their market value last week as rumours of a government bail-out swept the stock markets, hammering share prices around the world.

Together, the two stockholder-owned, government-sponsored companies own or guarantee almost half of America’s $12 trillion home-loan market and are vital to the functioning of the housing market.

The capital-injection plan is said to be high on a list of options being considered by regulators as a means of restoring confidence in the lenders. The move would protect the American housing market, but punish shareholders in both companies.

Read Full Article Here

 

U.S. Weighs Takeover of Two Mortgage Giants

NY Times
July 11, 2008

Alarmed by the growing financial stress at the nation’s two largest mortgage finance companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday.

The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis. Their shares are plummeting and their borrowing costs are rising as investors worry that the companies will suffer losses far larger than the $11 billion they have already lost in recent months. Now, as housing prices decline further and foreclosures grow, the markets are worried that Fannie and Freddie themselves may default on their debt.

Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers.

The government officials said that the administration had also considered calling for legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. But that is a far less attractive option, they said, because it would effectively double the size of the public debt.

The officials also said that such a step would be ineffective because the markets already widely accept that the government stands behind the companies.

Read Full Article Here

World’s largest mortgage providers teeter on the brink of collapse
http://www.independent.co.uk/news/busin..f-collapse-866481.html

Senate passes mortgage rescue plan
http://news.yahoo.com/s/ap/20080712/ap_on_go_co/congress_housing

Fannie and Freddie: A Run on the Bank?
http://www.kiplinger.com/columns/picks/archive/2008/pick0711.htm

Run On Banks Spells Big Trouble For U.S.
http://business.smh.com.au/run-on-banks..r-us-treasury-20080713-3eiv.html

Bank Crisis wipes $1 trillion from financial stocks
http://ap.google.com/article/ALeqM..P-JSq4qwbdYAD91P87HO0

World stocks at 21-month low as banks plunge
http://www.reuters.com/article/newsOne/idUSHKG35069520080708

Credit crunch: Emergency scheme to help cash-strapped homeowners
http://www.guardian.co.uk/busines../creditcrunch.houseprices

Small Banks’ Reckoning Day Is Coming
http://online.wsj.com/article/SB121494953423420859.html

Nationalizing Freddie & Fannie?
http://biz.yahoo.com/nytimes/080711/1194793612725.html?.v=4&printer=1

Poole: Fannie and Freddie Insolvent
http://uk.reuters.com/article/burningIssues/idUKBNG6370020080710

Black Tuesday as FTSE plummets, bank shares tumble and Britain faces recession ‘within months’
http://www.thisislondon.co.uk/news/article-23512506-d..+months’/article.do

 



Fingerprint Registry in Housing Bill Passed

Fingerprint Registry in Housing Bill Passed

John Berlau
Open Market.org
May 24, 2008

Fingerprints are considered to be among the most personal of information, and fingerprint databases created and proposed in the name of national security have generated much debate. Recently, “Server in the Sky” — a proposed international database of the fingerprints of suspected criminals and terrorists to be shared among the U.S., U.K. and Canada — has ignited a firestorm of controversy. As have cavalier comments by Homeland Security Secretary Michael Chertoff that fingerprints aren’t “personal data.”

Yet earlier this week, a measure creating a federal fingerprint registry totally unrelated to national security passed a U.S. Senate committee almost without notice. The legislation would require thousands of individuals working even tangentially in the mortgage and real estate industries — and not suspected of anything — to send their prints to the feds. The database and fingerprint mandates were tucked into housing and foreclosure assistance bills that on Tuesday passed the Senate Banking Committee by a vote of 19-2.

The measure the committee passed states that “an indvidual may not engage in the business of a loan originator without first … obtaining a unique identifier.” To obtain this “identifier,” an individual is requiredto “furnish” to the newly created Nationwide Mortgage Licensing System and Registry “information concerning the applicant’s identity, including fingerprints for submission” to the FBI and other government agencies.

The fingerprint provisions are contained in a “manager’s amendment” that was hammered out by committee Chairman Chris Dodd, D-Conn, and Ranking Member Richard Shelby, R-Ala., on Monday and attached the next day to a broader housing bailout bill that had been scheduled for a comittee vote. That bill, the “Federal Housing Finance Regulatory Reform Act of 2008,” expands the lending authority of the Federal Housing Administration and the government-sponsored enterprises Fannie Mae and Freddie Mac to refinance the mortgages of troubled borrowers and banks.

The amendment adopted the fingerprint provisions in a section called the “S.A.F.E. Mortgage Licensing Act.” The fingerprints will be part of what the amendment calls “a comprehensive licensing and supervisory database.”

And the database would cover a broad swath of individuals involved with mortgage lending. The amendment defines “loan originator” as anyone who “takes a residential loan application; and offers or negotiates terms of a residential mortgage loan for compensation or gain.” It states that even real estate brokers would be covered if they receive any compensation from lenders or mortgage brokers. Since many jobs in both real estate and mortgage lending are part-time and seasonal, even some of the most minor players in the mortgage market may have to submit their prints.

Justifications listed in the bill for this database include “increased accountability and tracking of loan originators,” “enhance[d] consumer protection,” and “facilitat[ing] responsible behavior in the subprime mortgage market.”

I conducted a wide Internet search and found fingerprint provisions in some state bills, but I don’t know if any, or how many passed. But in my search, I could find no arguments explaining how, specifically, collecting the fingerprints of loan originators would better serve borrowers getting mortgages. I called the Senate Banking Committee asking this question, but my call has not been returned yet. (I will update OpenMarket readers when and if it is.)

I imagine that, yes, a fingerprint registry might stop an ex-con from handling loans, but I doubt it will make even a dent in the lending problems the bill aims to stop. And I would venture to guess that the vast majority of the problem mortages were handled by employees with no criminal record. Rather, this seem like another thoughtless idea that lets politicians brag that they are “getting tough” about a particular problem.

But this fingerprint database, in addition to the privacy violations, might create a host of new problems of mortgage fraud. Identity theft involving fingerprints is becoming a major concern among data security experts. Security consultant Bruce Schneier has argued that hackers can steal electronic images of fingerprints directly from the databases they are stored in. And there is virtually nothing in this bill about security procedures that would apply to this database.

It amazes me. We have wrenching debates about privacy and freedom vs. national security when it comes to proposed anti-terrorist programs. But then a smililar scheme is done in response to an economic problem, and it almost escapes without notice. A similar thing has happened with anti-money laundering requirements that mandate that banks effectively spy on their customers for possible violations of everything from drug laws to the tax code.

Chertoff Says Fingerprints Aren’t ‘Personal Data’
http://thinkprogress.org/2008/04/16/chertoff-fingerprints/