Topic: The bailout?

[HERDFAN1999]

Well,  how about it?  Should we or shouldn't we?

I don't know.   I do know I have a hard time giving people that have proven they can't manage money $700B of taxpayer funds.  I also don't believe this nonsense that we will make money assuming these bad loans.  Can we believe the hype that there will be a big crash if the bailout isn't done?  I don't know.  Heck, maybe we need the crash?  All I do know is the people that are paid to watch the banking system should be fired.  Any bank receiving a dime of the bailout should also have to fire their entire leadership without any severance.  I read somewhere that $700B could give each family in the US over $400k.  If we are going to be socialist why don't we redistribute it to families? 

[Blade]

No bailout.  Allow the market and economy to correct itself.  Government involvement is the reason we're in this shape.  I can't imagine any of the recooped mortgage money via foreclosures being reimbursed either.  I just think that congress would use it as another kitty for their special interests.

The Clinton administration used their influence to reduce the prime rates and qualifications for these loans.  It was a good concept in a utopian society (as most liberal concepts appear to be).  It would relax the burden on HUD and uplift the standard of living of the poor class, not to mention sparking the economy with new consumers.

However, the poor class can't afford privatized housing.  And they have not been trained/educated to be fiscally responsible.  Therefore, they default, and move back into HUD assisted housing. 

Then you have the bloodsuckers that use government give aways to their advantage.  Brokers that made a killing selling to folks that couldn't afford the housing (including middle class that wanted to raise their SOL), international investment brokers that used the easy money to make easy money.

Then there's the banks.  Anyone that has dealt with banks know that just as insurance companies bet against consumer misfortune, they embrace it to the point of financial ruin.  They thrive off balloon  mortgages, hidden fees and service fees.  Not your neighborhood banks anymore.

Lastly, taxpayers better plan on spreading their cheeks again if Obama gets in.  He's already promised available private housing to all Americans, which is what got us in this shape in the beginning.

[biggreenarms]

However, the poor class can't afford privatized housing.  And they have not been trained/educated to be fiscally responsible.  Therefore, they default, and move back into HUD assisted housing.

bingo, they should have them take a test to qualify for a loan.
 
Question 1
 
What's the definition of ARM?
 
a) Auto Repair Manual
b) Adjustable Rate Mortgage
c) To defend my self
d) Them big things attached to Dog the Bounty Hunter's torso

Seriously though, I am against the bailout. The individuals who took the loans should also be held accountable. What example are we setting by doing this? Overextending beyond their means and when you can't pay the bill, big government to the rescue? And at who's expense?!!!I'd like someone to come pay my mortgage or car payment. But guess what, that will never happen. I was sent an email today with this 1999 article from the New York Times. I'm not a fan of the Times but this was right on target.

September 30, 1999
Fannie Mae Eases Credit To Aid Mortgage Lending
By STEVEN A. HOLMES
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift i ndustry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.

[MarshallMatrix]

I was against the bailout myself, but they did it. What bothers me is, I didn't see any oversight implemented.

None of the laws that provided regulation, that were lifted back in '99 (see: Glass-Steagall Act) were re-implemented. Allowing banks, securities companies, and insurance companies to work for or against each other. By being allowed to work together, maximizing false profits, its like a bookie playing for the team.


See: Gramm and the 2007 mortgage and 2008 economic crises:
http://en.wikipedia.org/wiki/Phil_Gramm

[DJdaHERDfan]

I am against the bailout as well but if it didn't get done, our country financially shuts down within months.

It had to be done.

[MarshallMatrix]

Allow me to rephrase my previous comment. I was against the bailout, without first putting the leash back the lending practices that have been instituted since the post-Great Depression era. I'm not calling for big government, just keep an eye on those huge banking firms and protect the American citizen from their greed. Like how we have Police protecting out neighborhoods. We need structure back again for our Securities and Exchange Commission.

[HERDFAN1999]

Regulation is not the answer.  The answer is holding people accountable.  The numbnuts that were on the House and Senate banking committees that said everything was fine with all of the subprime lending should be fired this election.  The braindead people working in the administration who didn't speak forcefully enough should be fired.  Jimmy Carter and Bill Clinton should be publicly flogged for passing the CRA and then strenthening it.  There is no way the government should have been influencing the market like that - just plain dumb.  It was government interference in the market that got us into this mess.

[2xBison]

i was against it early, now think it had to be done.

dj, you finally got one right on here ;)