Wall Street Bailout

[womb raider 940]

I was just watching the news and the guy said the people have spoken. He said they had a record number of people who emailed them and spoke up against this. So I guess it does work if you have numbers.

[sarah]

Amen! We do not have a spectator's government!

May I close with a "clip show" of bush-isms:
terror, 9-11, terrorism, program, bailout, program, terrorists, program, september 11, terror....

[Schmo]

So what now . . . bailout version 2.0??? This time maybe we can not only "save" all the companies that gambled and made bad decisions, but homeowners that gambled and made bad decisions buying homes they couldn't afford . . . yeah that'll be swell and then we'll all be happy. What happened to a taking responsibility for your actions? I say F#@K 'em all! No bailout for anyone . . . we already have both welfare and unemployment systems for those affected

May I close with a "clip show" of bush-isms:
terror, 9-11, terrorism, program, bailout, program, terrorists, program, september 11, terror....

One of the guys I work with pointed out that if you ever listen to Rudy Guiliani speak its more or less . . . noun-verb-9/11 . . . not too far off.

[RAT]

Anyone need a laxitive? Larry King Live, right now...

[Russ Chung]

I say F#@K 'em all! No bailout for anyone . . . we already have both welfare and unemployment systems for those affected

Joe, I'm a little surprised with your response, considering that your former employer was one of the organizations that contributed to the problem, and YOU might end up being one of those taking advantage of the welfare and unemployment systems!!!

Today's vote in the House of Representatives killed an ill-conceived proposal to address the financial crisis, BUT THE PROBLEM STILL EXISTS, IT IS NOT GOING AWAY AND IT NEEDS TO BE ADDRESSED. It's easy to say "no bailout for anyone.." but if the financial institutions have to work their way out of the hole that they have created for themselves without government assistance, it WILL (not "might" or "could" but WILL) lead to a recession that WILL last for a long time. Japan's recession began in the same way in the mid-1990s with a bursting of a real estate "bubble" and it still has not completely recovered. Last weekend, the Associated Press ran an article about the similar financial crises in Sweden and in Japan: http://www.newsday.com/business/nati...,3615328.story Sweden "acted quickly and decisively" but Japan "waited too long" resulting in a "lost decade" of slow economic activity.

It's easy to say that greed and excessive risk taking led to the problems that we are seeing today, and we should just let the organizations fail, but the result will be that we would all be worse off. Today's Wall Street Journal has an article about how the decision to let Lehman Brothers fail "triggered a chain reaction" and "the consequences of that decision look more dire than almost anyone imagined." http://online.wsj.com/article/SB122266132599384845.html What's important to remember is that Lehman Brothers failure has hurt people who were NOT greedy and were not risk takers.

I think that the federal government should establish a "mortgage default and foreclosure disaster relief fund". This disaster relief fund would be patterned after hurricane and other disaster relief loan and grant programs because the mortgage default and foreclosure crisis is just as much a disaster as a flood, hurricane or other natural disaster. The Mortgage Disaster Relief fund would provide homeowners whose mortgage is in default or foreclosure a "lifeline" that would allow them time to remain in their homes while they restructure the payments. Although this might not save every homeowner with delinquent payments from foreclosure, this would help some homeowners and would ultimately reduce the amount of "toxic" mortgage backed securities that the federal government would need to purchase to bail out the financial institutions.

[Schmo]

Joe, I'm a little surprised with your response, considering that your former employer was one of the organizations that contributed to the problem, and YOU might end up being one of those taking advantage of the welfare and unemployment systems!!!

Today's vote in the House of Representatives killed an ill-conceived proposal to address the financial crisis, BUT THE PROBLEM STILL EXISTS, IT IS NOT GOING AWAY AND IT NEEDS TO BE ADDRESSED. It's easy to say "no bailout for anyone.." but if the financial institutions have to work their way out of the hole that they have created for themselves without government assistance, it WILL (not "might" or "could" but WILL) lead to a recession that WILL last for a long time. Japan's recession began in the same way in the mid-1990s with a bursting of a real estate "bubble" and it still has not completely recovered. Last weekend, the Associated Press ran an article about the similar financial crises in Sweden and in Japan: http://www.newsday.com/business/nati...,3615328.story Sweden "acted quickly and decisively" but Japan "waited too long" resulting in a "lost decade" of slow economic activity.

It's easy to say that greed and excessive risk taking led to the problems that we are seeing today, and we should just let the organizations fail, but the result will be that we would all be worse off. Today's Wall Street Journal has an article about how the decision to let Lehman Brothers fail "triggered a chain reaction" and "the consequences of that decision look more dire than almost anyone imagined." http://online.wsj.com/article/SB122266132599384845.html What's important to remember is that Lehman Brothers failure has hurt people who were NOT greedy and were not risk takers.

I think that the federal government should establish a "mortgage default and foreclosure disaster relief fund". This disaster relief fund would be patterned after hurricane and other disaster relief loan and grant programs because the mortgage default and foreclosure crisis is just as much a disaster as a flood, hurricane or other natural disaster. The Mortgage Disaster Relief fund would provide homeowners whose mortgage is in default or foreclosure a "lifeline" that would allow them time to remain in their homes while they restructure the payments. Although this might not save every homeowner with delinquent payments from foreclosure, this would help some homeowners and would ultimately reduce the amount of "toxic" mortgage backed securities that the federal government would need to purchase to bail out the financial institutions.

Russ, you make some very good points and I'd bet we'd agree on more points than we'd disagree on. Something must be done to avoid disaster, but I do not think a mass bailout is the answer. I'd like to see some other alternatives like the one you mentioned or some of the others that I've been reading about. Although I do see greed and stupidity as the root cause of this problem, I also agree that it's not just the greedy that are being impacted . . . The company I'm with has laid off thousands of hard working people that had nothing to do with the decisions that lead to this crisis, while the guys at the top who are responsible for these decisions have walked away with hundreds of millions . . . it's absolutely disgusting. As far as my situation . . . believe me . . . I know!!! And yes I most likely will be affected and may have to take advantage of the unemployment that I've been religiously paying into for the last 17 years . . . the difference is, I'm not going to be asking you and the rest of America to bail me out . . . I take responsibility for myself.

[USMC 0369]

Okay, I'm a little dense (you all should realize that by now) so I need a little help with all of this.

As I understand it, the problem began with people feeling they were entitled to live outside their means. Everyone wanting the "Hollywood" lifestyle, and felt they deserved it. So, they were able to secure loans from institutions that didn't feel it necessary to actually check to see if people made as much money as they put on the loan application. Or in some cases, the institutions themselves were making up bogus numbers in order to secure a loan for these people. So now we have a family, making $50k a year living in a $750k house that's actual value is only around $400k.
So everything was okay for a while, say around 5 years or so...they made payments, ran up credit card debt to get little things like food or fuel to get to work... When suddenly, the [Bush] and the oil companies decided that Americans weren't paying the same rate as the rest of the world for fuel. So we saw gas prices double or better in the last 5 years. Which, of course left no money to pay the credit card debt they had run up, and oh yea, there's still a mortgage payment to make, which they can't. So bankrupt they go, & taxpayers suck up that debt. Bank forecloses on the house, but that's not what the banks need, they need someone to buy the damn house now...but everybody has quit spending because the price of fuel is through the roof.
And this vicious cycle repeats about 20 million times, viola recession?

[rockhead]

This is what happened.


http://www.breitbart.tv/?p=182503

[igofshn]

A prime example is all the $40,000 millionaires. People make $40,000 a year and try to live like millionaires. San diego and the bay area are full of them.

[RAT]

Okay, I'm a little dense (you all should realize that by now) so I need a little help with all of this.

As I understand it, the problem began with people feeling they were entitled to live outside their means. Everyone wanting the "Hollywood" lifestyle, and felt they deserved it. So, they were able to secure loans from institutions that didn't feel it necessary to actually check to see if people made as much money as they put on the loan application. Or in some cases, the institutions themselves were making up bogus numbers in order to secure a loan for these people. So now we have a family, making $50k a year living in a $750k house that's actual value is only around $400k.
So everything was okay for a while, say around 5 years or so...they made payments, ran up credit card debt to get little things like food or fuel to get to work... When suddenly, the [Bush] and the oil companies decided that Americans weren't paying the same rate as the rest of the world for fuel. So we saw gas prices double or better in the last 5 years. Which, of course left no money to pay the credit card debt they had run up, and oh yea, there's still a mortgage payment to make, which they can't. So bankrupt they go, & taxpayers suck up that debt. Bank forecloses on the house, but that's not what the banks need, they need someone to buy the damn house now...but everybody has quit spending because the price of fuel is through the roof.
And this vicious cycle repeats about 20 million times, viola recession?

Nick,
Here's the scary part; this was predictied as early as 1999:

The origins of the problem are pretty well laid out by the NY Times themselves in 1999, 9 years almost to the day.

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 gr owth 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 tentat ively, into this new area of lending, Fannie Mae is taking on si gnificantly 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 industry 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 mortga ge with an interest rate one percentage point above that of a c onventional, 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.
Fannie Ma e officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.
the number of non-Hispanic whites who received loans for homes increased by 31.2 per cent.
Despite these gains, home ownership rates for minorities continue to lag behind non-Hispanic whites, in part because blacks and Hispanics in particular tend to have on average worse credit ratings.
In July, the Department of Housing and Urban Development proposed that by the year 2001, 50 percent of Fannie Mae's and Freddie Mac's portfolio be made up of loans to low and moderate-income borrowers. Last year, 44 percent of the loans Fannie Mae purchased were from these groups.
The change in policy also comes at the same time that HUD is investigating allegations of racial discrimination in the automated underwriting systems used by Fannie Mae and Freddie Mac to determine the credit-worthiness of credit applicants.

So, while at first this program may have had some merit, it was never intended to be used to give middle class people the advantage of being able to buy more house than they could afford. greed got in the way and the program was abused beyond beleif. And the CEOs that got fat off of this will most likely never see time in a jail cell for thier part in this.

[sarah]

Wow Kurt, that was a mess!

We can play the blame game all day long, but what is the ROOT of the problem!?

Yeah, people were stupid for taking on the loans.
Lenders were stupid for giving them out.
But WHO set the low interest rate and continues to print money out of thin air? (hint)

Blaming the people and fear-mongering is just propaganda. The American public has been fed it many times before, and this time we're standing up for ourselves!

EDIT: Oh, and bonus points for anyone that can tell me which branch of government the Federal Reserve is, OR who owns it!

[RAT]

Root problem? Greed? Lack of oversight? Incompetent leaders? Take your pick. I don't think I was pointing fingers, merely answering Nicks questions with some documented facts. The fix? GetPaulson reigned in, get our congressmen, scratch that, get Washington flushed out of all the corruption by voting smartly (do your home work on your politicans) and, maybe hardest of all, change the mindset of the American people. How do you do that? Hell if I know...

[USMC 0369]

This is what happened.


http://www.breitbart.tv/?p=182503

LOL... "movie no longer available"

The Gov't got to it first!!!

A prime example is all the $40,000 millionaires. People make $40,000 a year and try to live like millionaires. San diego and the bay area are full of them.

Unfortunately I think this is a nation wide epidemic.

So, while at first this program may have had some merit, it was never intended to be used to give middle class people the advantage of being able to buy more house than they could afford. greed got in the way and the program was abused beyond beleif. And the CEOs that got fat off of this will most likely never see time in a jail cell for thier part in this.

Soooo... greed by the consumer to get more than they truly can afford, and greed by the CEO's who were getting paid big dollars to make more risky loans than their companies could absorb, should everyone default [exactly like they're doing now.] Yea, I'd say that's a helluva mess.

[womb raider 940]

A prime example is all the $40,000 millionaires. People make $40,000 a year and try to live like millionaires. San diego and the bay area are full of them.

nothing wrong with that if you dont put everything on credit.

[Kodiak Spirit]

I thought the Federal reserve was a privately owned entity... isn't it owned by some fat cats in the UK?

Didn't the Gov't repeal some federal safeguards and guidelines for the mortgage industry in the early 90's? like 92? the type of guidelines that keep honest people honest... Morality is the problem here with this top heavy economy, people with no morals letting greed run amuck.

I just hope I git my Exxon Valdese munny before they BK...