How much of AIG’s bailout/handout is financing Israeli mortgages in Jerusalem & the West Bank?
March 6, 2009
As of March 4, 2009, the American taxpayer has bailed out American International Group (AIG) to the tune of $163 billion (assuming that the Federal Reserve and the Federal gubmint are to be believed on anything anymore).
On March 3, 2009, this exchange took place in the august and hallowed halls of what used to be known as the Congress of a Constitutional Republic:
Senator Sanders: “Will you tell the American people to whom you lent $2.2 trillion of their dollars?”
Ben Bernanke: “No.”
One can only surmise Bernanke’s reasoning. He claims he doesn’t want to spook the banks and the markets or some such claptrap. I have another possible reason: Bernanke, being an Orthodox Jew, doesn’t want the American public to get any inkling of Israel’s share of the various bailouts.
AIG owns a company in Israel called Ezer Mortgage Insurance (EMI). EMI will insure/finance up to 95% of a private Israeli mortgage. Below is EMI’s nifty ad gizmo with some of the relevant text copy underneath the link. I’ve adjusted the figures to reflect current money values. Please alert me if you spot any problems with the math. (Warning – very annoying music):
EMI sets the premium as a function of the LTV (Loan To Value ratio) and the term of the loan. As a rule of thumb – for every $100,000 of a loan taken by a borrower, the borrower pays an additional $25 a month.
David Silberstein is an affluent Jew living in Florida, with a strong affiliation to the Jewish state; his children are even considering immigrating to Israel and serving in the Israel Defense Force when they tun 18. Consequently, David is keen on buying an apartment in Israel to strengthen his ties with the Land and to enable his children to live comfortably while in Israel. David has found a property that he likes carrying a price tag of $176,000. While David has sufficient equity to buy the apartment, he has chosen to use EMI’s financial instrument (credit insurance)!
Because it’s a smart choice: this way, he has money left over for additional investments and for spreading the risk! David knows that with EMI’s solution, he can buy an apartment without using up all his equity and continue to enjoy the standard of living to which he is accustomed. David and his wife have decided to invest start-up capital in the amount of 10% of the value of the apartment. Accordingly, the terms of the mortgage extended to them by the mortgage bank is as follows:
Property value: NIS 740,640
Property value in $: 176,070
Total loan NIS: 666,576
Total loan in $: 158,463
Total start-up capital NIS: 74,064
Total start-up capital in $: 17,607
LTV (Loan to Value ratio): 90%
Monthly payment including EMI premium: NIS 3,857
Monthly payment including EMI premium in $: 916.92
EMI premium out of total monthly payment: NIS 152
EMI premium out of total monthly payment in $: 36
Loan term of 25 years. 4.5% fixed interest rate
America, doesn’t it give you the warm fuzzies to know that while our economy is tanking, Israelis and Jews making aliyah to Israel will still be able to “enjoy the standard of living to which they are accustomed”?
For a little more insight into how the Israeli mortgage market works, see these two links:
From the first link:
For those who are building a home in Israel while paying a mortgage elsewhere, or alternatively while paying rent, most mortgage banks offer graces on the loans. Two types of graces exist in Israel – partial and full. Under the terms of a partial grace, only interest must be repaid during the grace period. Under the terms of a full grace, no payment is made during the grace period and any interest that should have been paid is added to the loan balance and is paid back as part of the loan once the grace period ends. Graces are not offered on the zakaut loans and some banks do limit graces to certain loan types.”
Question: Gee whiz, why don’t Americans get these ‘grace’ periods on their mortgages?
Answer: Because we need to give our last drop of blood to support and subsidize the holy, sacred Israeli mortgage market.