FDIC Becomes Landlord To Thousands, IOUSA – The Movie, and US Mint Suspends Gold Coin Sales

August 21

Today’s Breaking News is going to be much shorter than normal. I am putting the finishing touches on the next Crash Course chapter (17a – Peak Oil), and need to devote my time to that. It’s going to be a good one! Actually, two. I had to break Peak Oil into parts “a” and “b,” with the first one almost through production and due out later.

Regulator to help IndyMac mortgage borrowers (August 20 - Reuters WASHINGTON)

Thousands of homeowners with distressed mortgage loans linked to failed lender IndyMac may soon be able to avoid foreclosure under a program announced on Wednesday by U.S. banking regulators.

The Federal Deposit Insurance Corp, which seized Pasadena, California-based IndyMac on July 11 in the third-largest bank failure in U.S. history, said 4,000 mortgage modification proposals were going out this week and it hoped to send out 25,000 modification notices over the next few weeks.

"Our goal is to get the greatest recovery possible on loans in default or in danger of default, while helping troubled borrowers remain in their homes," FDIC Chairman Sheila Bair said in a statement.

IndyMac, the ninth-largest U.S. mortgage lender in 2007, according to the Inside Mortgage Finance newsletter, has about 740,000 loans that it either owns directly or it services for others in a $184 billion mortgage portfolio. Bair has scolded banks for months to speed up loan modifications. Now the FDIC has a chance to practice what it has been preaching.

Oh, this is nice. Now the FDIC is getting into the mortgage business. This is a serious departure from their past activities, skill sets, and possibly charter. To date, we have the Federal Reserve accepting bad mortgages in exchange for cash and Treasuries; the FHLB sporting a $1.5 trillion mortgage portfolio, where it was barely half that a few years ago; and Fannie and Freddie, with absolutely frightening growth in their own guaranteed and retained mortgage portfolios.

In short, every possible government program is already neck-deep in this mess and steadily getting in deeper. The galling thing about this FDIC act is that they are re-working some of these mortgage terms in very extreme ways. This is good if you happen to hold one of these mortgages and you get your payment cut in half. It is painful if you happen to have been less reckless or happened to bank with someone else besides the most reckless bank in CA, because you don’t get any such break. Where, again, does the constitution allow the government to bestow such disproportionate good luck upon a select few?

Buffett spotlights nation's debt crisis (August 21 - CNNMoney OMAHA, Neb. (AP)

The catastrophe looming in the documentary "I.O.U.S.A." isn't romantic like the doomed young love in "Titanic," but billionaires Warren Buffett and Pete Peterson warn it could break many more hearts. The disaster they warn of could be bigger than any we've ever seen - bigger than an iceberg, bigger even than the current mortgage crisis.

If the U.S. doesn't do something, and fast, to tame the federal government's debts - now more than $50 trillion - the two Nebraska natives warn we will saddle coming generations with economic problems that will make this year's financial turbulence look like a trip to the debt counselor's office.

Premiering Thursday at 358 theaters nationwide, "I.O.U.S.A." is part of Peterson's campaign to give the ballooning debt a central role in the presidential campaign.

A live panel discussion after the first showings - tape delayed for moviegoers in the West - will include Buffett, Peterson and other experts. Despite ticket prices much higher than for a feature, at $11.50 to $20, Thursday's showings had sold out at some theaters by Wednesday, organizers said.

The two prominent investors don't share a political philosophy: Peterson endorses Republican John McCain for president while Buffett favors Democrat Barack Obama. But they say the nation's budget and trade deficits aren't really partisan issues.

"Our situation is a lot worse than advertised, and we need to start making some tough choices if we want our future to be better than our past," former U.S. Comptroller David Walker, one of the movie's stars, said Wednesday.

This is the movie I wanted to make, but didn’t. I am so glad that it got done. I am going to see it and I hope you do to.

The Eagle Has Been Grounded

The U.S. Mint has stopped selling American eagle gold-bullion coins. "Due to the unprecedented demand...our inventories have been depleted," the Mint -- part of the U.S. Treasury Department -- told its dealers Friday. "We are therefore temporarily suspending all sales of these coins."

The move shocked sellers and collectors of the coins, which are the most widely traded in the U.S. Suppliers became angry as they turned away customers. Theories about the decision's underlying cause ran rampant -- from investors in gold futures to Russia's invasion of Georgia. The American Precious Metals Exchange, an online gold dealer, posted an alert about the Mint's move, generating confused and angry responses. Many customers said they were mystified because the silver-coin rationing followed a price surge, while the gold suspension followed a drop.

"The situation is strange and doesn't fit the 'normal' supply & demand economic model," the firm wrote to customers.

Well, isn’t this strange.

As gold took its tumble in the paper markets, demand for physical gold climbed sharply by those seeking to take advantage of the lower prices. In response to that demand, the US Mint suspended sales. What an odd thing for a manufacturer to do.

If this is what passes for government efficiency and logic, we need to wish the FDIC good luck in their new roles as mortgage servicer and landlord to tens of thousands of properties.

Seriously, though, if you have not gotten your physical gold and silver stashed away, you will find a day when it is simply not possible to do so. Sure, there will be spot prices quoted that seem affordable, but you will not be able to buy any. That is where we are headed.