HAVE ANY of you wondered if anyone’s profiting from this terrible housing market? The answer is absolutely YES and who is it?

It’s the usual suspects!

Just to illustrate what I’m talking about, you just have to follow the story of the failure of a California bank called IndymacBank.

This bank failed in July, 2008 after having made a large number of non-qualifying loans to people who bought homes with no down payment and in some cases with loans that were in excess of the value of the property at the time the loans were made.

Making these kind of loans were supported by FannieMae and FreddieMac and were touted as making sure every American could own a home whether they could afford it or not.

Non-qualifying means that the people who bought the houses didn’t have to verify their incomes and so the bank didn’t really ever know whether the people could pay the loans back or not.

But that is not the story here. We’ve talked about that in earlier editorials.

The story here is who’s making money on this deal and, as I said, it’s the usual suspects.

A little savings bank in California wanted to buy the assets of Indymac but they couldn’t get it together until some Wall Street big wigs came to their rescue and agreed to help out.

Of course their agreement came with strings and the FDIC agreed to give all sorts of goodies when the Wall Streeters started negotiating their position in the deal.

What a surprise it was when it came to light who was in on the deal, a bunch of private equity big-wigs who were promised a huge amount of government support. The private investors included Dune Capital, LLC, J.C. Flowers & Co., Paulson & Co., MSD Capital, L.P., Stone Point Capital, SSP Offshore LLC and SILAR MCF-1 LLC., a veritable “Who’s Who” of Wall Street Fat Cats.

Who controls those companies you ask? Well, it’s a Goldman Sachs’ executive along with John Paulson, the brother of Hank Paulson, the former Secretary of the Treasury under George Bush and George Soros, one of the principal backers of MoveOn.org, the progressive web site that supports all the way to the left causes.

Once they were on board, the Indymac assets were sold in March of 2009 to little One West Bank.

Why would this bunch want to back a bank that is buying up a portfolio of mortgages that have gone bad or may go bad?

The answer is big PROFITS!

One West bought the Indymac portfolio for 70% of the amount due on all 1st morgages and 58% of the amount due on all home owner equity loans, commonly known as HELOC’s.

Then, on top of the discount, the FDIC guaranteed that they would reimburse One West up to 80% of any losses that it suffered from the collection of these loans.

Let’s take an example of how this really turns into big profits for One West.

John Doe and his wife owe $478,000 on their house and have not made payments for several months. The amount of the payments is added to the loan balance making the total amount owed $485,200.

West One Bank bought the loan from the FDIC as part of the Indymac failure for $334,600 or 70% of the face amount of the loan plus the delinquent payments.

The bank then sold the house that is underlying the loan after foreclosure for $241,000 which leaves the bank with a paper loss of $244,200.

But remember, One West gets 80% of its loss back from the FDIC. That means that the FDIC pays One West $195,350. So the bank gets back $436,360 on its original investment of $334,600 for a profit of $101,760.

But the bank didn’t stop there. It also managed to get the homeowner to sign a promissory note for an additional $75,000 for what the bank said it was losing because of the homeowner’s default.

What a deal! One West owned and controlled by Washington insiders have been able to make a fortune on the recession and real estate collapse.

And you thought that the government was there to help you, the little guy.

Them’s who have gets and always will regardless of who’s controlling Washington.