McCain's Answer to Mortgage Crisis: "Not Our Problem"

[stevento]

according to mccain, its not the gov't's job to help people in this situation

http://www.cnn.com/2008/POLITICS/03/25/candidates.economy/index.html

what a terrible leader.

[sushi]

So let me get this straight.

Person A gets a loan for a property that they cannot afford, however, because of low introductory interest rates, they are able to purchase the property.

Then when interest rates go up, person A cannot pay their mortgage. This forces them into foreclosure.

And you expect the government to bail person A out, correct?

[blackfox]

There is, of course, the issue(s) of predatory lending.

Who exactly is the irresponsible party in these cases? The homeowner? The lender? I suppose it varies, but I would have to imagine that the average lender is a little more savvy in terms of finance, than a first-time and/or lower-class prospective homeowner.

I wasn't a real fan of McCain's comments regarding the removal of regulatory, accounting and tax burdens on financial institutions - so they could build a "buffer" - I don't think that's realistic or honest.

In any case, I don't necessarily think McCain is an ass w/ these comments. That said, the sheer size of this mess and how it affects so much of the economy, means that you have to make a choice of bailing out those who don't deserve it (w/ those that do), in order to save the health of the system. At least that's how I see it, simply put.

[IJ Reilly]

So let me get this straight.

Person A gets a loan for a property that they cannot afford, however, because of low introductory interest rates, they are able to purchase the property.

Then when interest rates go up, person A cannot pay their mortgage. This forces them into foreclosure.

And you expect the government to bail person A out, correct?

If only for the same reasons the Fed stepped in to rescue investment banks and other lenders and investors in risky paper and bizarre, unregulated mortgage-backed derivatives. Even if you're completely disinterested in looking at both sides of the ethical equation, you should at least be interested in the collateral damage to the economy produced a free-falling housing market. Because it's not so much that people were buying homes that they could not afford, as they were sold on balloon payment loans on homes which they are now unable to refinance due to negative equity produced by falling values. As values continue to fall, more and more homeowners will be swept up in the tide. This should not be a pretty picture, even to someone who believes that these homeowners deserve to be punished to the fullest extent.

[Abstract]

I don't think the mortgage crisis is the government's fault, but it IS the country's, and the government's, problem.

I personally don't think it's the responsibility of the government to bail these people out, but I know that my point of view is from that of a Lemming. If I was in government, I think I'd be forced to step in and do something rather than assign blame and let the walls crumble, regardless of how I feel as a subjective citizen.

But anyway, as a pleb, I say it's Person A's fault, and it's their problem.

[Rodimus Prime]

I think both sides are at fault.

The people for getting loans they could not afford and defaulting on them. They should be held accountable for there debts.
The banks screwed up by giving out bad loans. Not just some bad loans but a lot. They are responsible for the health of there company. If a loan defaults it really hurts the bottom line. They gave out loans to people who are frauds. It the banks fault for giving out a lot of those loans.

The only reason the government has to step in and bail them out is the shear size of it. It was bring down everything. If it was just one or 2 smaller companies I would say let them sink. They screwed up but instead we have the major players in the market struggling to get by.

[stevento]

And you expect the government to bail person A out, correct?

yes, sometimes
in this situation yes.
hillary will enact a 90 day foreclosure freeze to help people work it out and stay in their home, because its better for that person and the economy overall.

conservative policies like "we help those who help themselves" are bad for economy

[solvs]

So let me get this straight.
If that was all there is to it, this wouldn't be such a big deal. There's no quick fix, but this is a complex problem to begin with, with enough blame to go around. As said though, it is a problem for all of us. One that's been a long time coming, that so far no one has done much about, which has made it worse. And I posted a link in another thread about how the feds actually did make things worse when some Governors (like recently fallen NY Gov Spitzer) tried to help guard against it using preexisting rules. The feds stepped in and stopped them. I'm trying to find it, but all I can find now is the stuff about prostitutes. :rolleyes: I can look harder if you need it.

Is a little hypocritical though that they bail out some of those responsible but those hurt by it, even if they did "follow the rules" are left to their own devices while they still scream free market.

[beatzfreak]

If that was all there is to it, this wouldn't be such a big deal. There's no quick fix, but this is a complex problem to begin with, with enough blame to go around. As said though, it is a problem for all of us. One that's been a long time coming, that so far no one has done much about, which has made it worse. And I posted a link in another thread about how the feds actually did make things worse when some Governors (like recently fallen NY Gov Spitzer) tried to help guard against it using preexisting rules. The feds stepped in and stopped them. I'm trying to find it, but all I can find now is the stuff about prostitutes. :rolleyes: I can look harder if you need it.

Is a little hypocritical though that they bail out some of those responsible but those hurt by it, even if they did "follow the rules" are left to their own devices while they still scream free market.

Here's the link to the Washington Post piece written by Spitzer:

How the Bush Administration Stopped the States From Stepping In to Help Consumers (http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html?nav=rss_opinion/columns)

Predatory lending was widely understood to present a looming national crisis. This threat was so clear that as New York attorney general, I joined with colleagues in the other 49 states in attempting to fill the void left by the federal government. Individually, and together, state attorneys general of both parties brought litigation or entered into settlements with many subprime lenders that were engaged in predatory lending practices. Several state legislatures, including New York's, enacted laws aimed at curbing such practices.

What did the Bush administration do in response? Did it reverse course and decide to take action to halt this burgeoning scourge? As Americans are now painfully aware, with hundreds of thousands of homeowners facing foreclosure and our markets reeling, the answer is a resounding no.

Not only did the Bush administration do nothing to protect consumers, it embarked on an aggressive and unprecedented campaign to prevent states from protecting their residents from the very problems to which the federal government was turning a blind eye.

Let me explain: The administration accomplished this feat through an obscure federal agency called the Office of the Comptroller of the Currency (OCC). The OCC has been in existence since the Civil War. Its mission is to ensure the fiscal soundness of national banks. For 140 years, the OCC examined the books of national banks to make sure they were balanced, an important but uncontroversial function. But a few years ago, for the first time in its history, the OCC was used as a tool against consumers.

In 2003, during the height of the predatory lending crisis, the OCC invoked a clause from the 1863 National Bank Act to issue formal opinions preempting all state predatory lending laws, thereby rendering them inoperative. The OCC also promulgated new rules that prevented states from enforcing any of their own consumer protection laws against national banks. The federal government's actions were so egregious and so unprecedented that all 50 state attorneys general, and all 50 state banking superintendents, actively fought the new rules.

[Desertrat]

Yes, Bush people stepped in against Spitzer's efforts about "predatory lending". It appears it was a lawyer's argument over meanings and applicability, and so far I've only seen Spitzer's side of the story.

I've yet to see any data about just how many people could legitimately be said to have been suckered by predatory lending, as a percentage of all loans. Just browsing the news stories, it seems as far more people were either way too optimistic about an unending rise in house values, or simply were too optimistic about their own financial futures. And there were others who borrowed against their equity and continued a profligate lifestyle. But, hard to tell. Human-interest sad stories are attractive to the newsies.

As far as Bernanke's bailouts, he's attempting to save the entire system, as opposed to bailing out "friends". Bloomberg, this morning, alleges as much as $460 billion in write-downs before the debacle eases--but the world of derivatives is still a threat. Bernanke's worry is a domino effect which would result in a worldwide meltdown. Dunno, yet, if he'll succeed.

McCain is essentially correct: It is wrong for the government to enter in and break private-sector contracts which are legal as of the time of the making. The history of such meddling leads one to ask, what's next? Cars? Furniture? Appliances?

'Rat

[mkrishnan]

... you should at least be interested in the collateral damage to the economy produced a free-falling housing market.

I agree. I think asking whose fault this is is somewhat less important than making sure that this doesn't tank larger segments of the economy, repairing the damage already done, and implementing safeguards that prevent recurrence.

I don't particularly care for anyone getting rich off this, and I'm not overly sympathetic to the people losing their homes, but this does impact the rest of us substantially also... particularly here in Florida, a relatively harder hit state, there are serious larger economic impacts. One example is that higher education here is threatened because of reduced government revenues.

[dsnort]

I worked in the housing industry briefly back in 2002, even then you could see this coming.

The current crisis is a perfect storm of stupidity.

Speculators driving prices of homes out of the realm of reality.

Lending institutions relaxing guidelines to qualify people for loans they couldn't afford. ( With government encouragement.)

People signing for loans that were beyond their means.

I agree something has to be done for the overall health of the economy, but I'm not happy about it. Especially knowing that some of these big construction outfits made a mint off the situation, and have very little exposure to the current mess.

[IJ Reilly]

I worked in the housing industry briefly back in 2002, even then you could see this coming.

The current crisis is a perfect storm of stupidity.

Speculators driving prices of homes out of the realm of reality.

Lending institutions relaxing guidelines to qualify people for loans they couldn't afford. ( With government encouragement.)

People signing for loans that were beyond their means.

I agree something has to be done for the overall health of the economy, but I'm not happy about it. Especially knowing that some of these big construction outfits made a mint off the situation, and have very little exposure to the current mess.

Who's happy about it?

Truly this was a house of cards, but the events which kicked out the supports were the decline in housing prices and the complex investment instruments which poorly rated risk, and depended on real estate prices continuing to increase.

[mactastic]

And you expect the government to bail person A out, correct?
Is Person A named Bear Stearns?

[skunk]

Is Person A named Bear Stearns?That's Mister Bear Stearns to you.

[Daveman Deluxe]

I need a little bit of clarification on the issue.

My understanding is that many of the people whose mortgages are being foreclosed were given bad advice by lenders, and that the problem was systemic--that loan officers were specifically told to tell people that they could afford loans when they could not. Is this the case?

This is not to say that I think that this is the ONLY problem in the situation. I want to know because it would help me figure out whether I think that more of the people losing their homes deserve help or not.

[leekohler]

So let me get this straight.

Person A gets a loan for a property that they cannot afford, however, because of low introductory interest rates, they are able to purchase the property.

Then when interest rates go up, person A cannot pay their mortgage. This forces them into foreclosure.

And you expect the government to bail person A out, correct?

Problem is- they're going to bail out the morons who loaned the morons the money in the first place. Either you help them all, or you help no one.

[leekohler]

I need a little bit of clarification on the issue.

My understanding is that many of the people whose mortgages are being foreclosed were given bad advice by lenders, and that the problem was systemic--that loan officers were specifically told to tell people that they could afford loans when they could not. Is this the case?

This is not to say that I think that this is the ONLY problem in the situation. I want to know because it would help me figure out whether I think that more of the people losing their homes deserve help or not.

You would be correct Daveman. Several friends of mine did that very thing and I warned them, but they were convinced they'd be able to sell in a few years when their property values went up. Problem was, they bought so high that the values really could only go down, and they did.

[Daveman Deluxe]

lee: That's interesting. I think that if it can be proven that borrowers were systematically given bad advice, that the lenders should be held liable for their losses.

I'm kind of curious what The Economist's position on all this is...

[jessica.]

So let me get this straight.

Person A gets a loan for a property that they cannot afford, however, because of low introductory interest rates, they are able to purchase the property.

Then when interest rates go up, person A cannot pay their mortgage. This forces them into foreclosure.

And you expect the government to bail person A out, correct?

Of course. Isn't this now the "way"? All I can say is thank you to the really stupid consumer who signed for a loan they couldn't afford and double thanks to the really stupid loan broker who held the customer's hand the whole way. I can pay my bills again for yet another month. ;)

[jessica.]

I need a little bit of clarification on the issue.

My understanding is that many of the people whose mortgages are being foreclosed were given bad advice by lenders, and that the problem was systemic--that loan officers were specifically told to tell people that they could afford loans when they could not. Is this the case?

This is not to say that I think that this is the ONLY problem in the situation. I want to know because it would help me figure out whether I think that more of the people losing their homes deserve help or not.

Yes, lenders and brokers gave bad "advice" but somehow the finger pointing stops there. I said it before and I'll say it again, there needs to be an test that one must pass before you can take out a loan for/on a house. There are some who were truly duped, there are others who are taking advantage of the situation. My question is and always has been, where in the hell is all the cash out these morons got when they refinanced their home? And yes, "morons" is harsh, but life is harsh.

[mactastic1971]

I bet the three trillion dollars the US Government has spent in Iraq could have came in handy for bailing out all those poors sods!!!

[IJ Reilly]

I need a little bit of clarification on the issue.

My understanding is that many of the people whose mortgages are being foreclosed were given bad advice by lenders, and that the problem was systemic--that loan officers were specifically told to tell people that they could afford loans when they could not. Is this the case?

This is not to say that I think that this is the ONLY problem in the situation. I want to know because it would help me figure out whether I think that more of the people losing their homes deserve help or not.

The lenders were making the same assumptions as the borrowers -- that property values would continue to increase, so when it came time to refinance, that nobody would be caught with their pants down. And then the investors who bought mortgage-backed securities made the same wager. Looking back at it, you have to wonder how anyone could be so happy to make such dangerous assumptions. The loan officers at the mortgage brokers didn't have to care who was left holding -- they sold the loans, and made their money by collecting points and fees.

[fotografica]

My question is and always has been, where in the hell is all the cash out these morons got when they refinanced their home? And yes, "morons" is harsh, but life is harsh.

The one,maybe more,high def flat screen tv's in the house (complete with built in surround sound),the newly renovated kitchen complete w/granite countertops and all stainless steel appliances that rarely even get used,the high end car/suv in the driveway, whirlpool/sauna on the outdoor deck etc......

[Music_Producer]

I'm sorry if this sounds rude.. but this is entirely the consumer's fault. Predatory lending? Please.. every sales pitch or marketing tactic out there is predatory. When someone who earns $30,000 *wants* to buy a $350,000 house and believes that he can afford it by listening to a lender.. then he's an idiot.

Where is the common sense in this country? People spend beyond their means.. and that is what has happened here. Pure speculation. I know many people who bought homes thinking 'Oh my $350,000 home will become $700,000 in a year and then I will sell it for a nice profit'

They're all screwed now with their homes probably worth $150k or so. Point is, even if you ARE a speculator.. you should not get into something you know you cannot afford.

If these homeowners are bailed out, then how about bailing out regular stock speculators or investors? I made a speculative mistake buying 15,000 shares of Global Crossing .. and lost my money. Can I have my money back please mr. Feds?

Pure bunch of idiots - everyone - consumer and the government. NOBODY should be bailed out - not hedge funds, not banks, not investment funds, not consumers. Let the problem correct itself. Plus if the Feds keep helping, in the future banks or consumers will always think "Oh I can get away with this because the govt will bail me out'

[IJ Reilly]

Let the problem correct itself.

Yeah, that'll work.

[psychofreak]

I'm sorry if this sounds rude.. but this is entirely the consumer's fault.
So what if it is? That doesn't make the situation any better.

Let the problem correct itself. Plus if the Feds keep helping, in the future banks or consumers will always think "Oh I can get away with this because the govt will bail me out'I think the government would rather have over-confident banks/consumers than a depression very soon.

[Cleverboy]

I'm sorry if this sounds rude.. but this is entirely the consumer's fault. Predatory lending? Please.. every sales pitch or marketing tactic out there is predatory. When someone who earns $30,000 *wants* to buy a $350,000 house and believes that he can afford it by listening to a lender.. then he's an idiot. If there's something in fine print... or WORSE... hidden in the language of the agreement in legalese, and it says that your $1,400/month loan will jump its adjustable rate up to a $2,300 a month loan if conditions in the market shift, or if your 30 days late, I think that should be the focus of tougher regulations. Why? If that sort of thing gets triggered across a large cross-section of our lower income population causing the entire economy to up-end... then, um... yeah, bail them out, fix the problem that should not have gone without a "check" in place, and see if there's smoother sailing. If there is fact NO real problem requiring consumer protection, then DON'T bail them out. Let the market decide.

People, especially BANKS do shiesty things. Keep 'em honest. Not everyone with a crazy loan deserves to suffer unlimited punishments for being a sucker.

~ CB

[Music_Producer]

So what if it is? That doesn't make the situation any better.

I think the government would rather have over-confident banks/consumers than a depression very soon.

Ok. Fine. Watch what happens next.

WTH is it with people thinking "OMG! A depression!" So? You need that to correct markets, to enforce strict regulations for future events. Where do you think the money to carry out these bailouts is going to come from? Your pockets.

When Social Security and Medicare gets wiped out (they probably already are to an extent) it'll be fun to watch. And for the person who posted about the fine print regarding interest rate changes.. dude, you're buying a HOUSE! I would expect the consumer to do some homework and know the terms.

The problem here is NOT that people didn't know that interest rates would change. It's that they anticipated that their houses would be worth double or triple the initial investment, and so they didn't worry about the risk of rates being reset. What they did not see coming was the real estate market crashing. That happened, and now everyone is whining.

If I come to you and say "Hey man, I'll give you this gold bar for $1,000 an ounce.. at 10% interest with 0 down, after 6 months interest rate will be 15%.. and will switch every few months" You buy it thinking "Yeah, in a year gold will be $4,000 an ounce, I'll sell it and make a nice profit"

But commodities get sold off.. gold gets to $750 an ounce.. does that give you a right to complain because you're stuck with a losing investment?

What I see is that the average person does not do their homework about mortgages or finance. Americans barely have any idea about interest (which is why they keep making monthly minimum payments on their credit cards)

[Eraserhead]

I'm sorry if this sounds rude.. but this is entirely the consumer's fault. Predatory lending? Please.. every sales pitch or marketing tactic out there is predatory. When someone who earns $30,000 *wants* to buy a $350,000 house and believes that he can afford it by listening to a lender.. then he's an idiot.

In the UK in the 1980's they had mortgages called "endowment mortgages" that were widely mis-sold, in the end the banks were force to refund all the money that was lent. Although as with all things buyer beware applies to an extent, if people don't realise they will have a problem then the loans have been mis-sold.

[Desertrat]

Music Producer, it seems to me an amazing amount of people are either slow-learners or no-learners. As near as I can tell, buying a house or a car is about 10% practical ("Well, we have two kids, so we need three bedrooms.") and 90% emotional (I just LOVE the view from the family room!"). For cars, it's mostly, "But, honey, it's TAUPE!"

Cost? Forget the cost. "Sure, we can afford the payments." The balloon at the end of the note's time is just way, way off, right?

People lease cars when they're not business write-offs? How dumb is that?

I figure that those who did ARMs and I-O loans probably figure Judge Judy is top-drawer entertainment. Never miss an issue of the Enquirer...

Bail 'em out? No way.

'Rat

[IJ Reilly]

I get it. The lenders were smart and greedy and the home buyers were stupid and greedy. So whatever happens next it serves 'em right. In fact it serves the rest of us right, just for living in the same country.

[stevento]

the idea of "let it solve itself" is exactly the kind of failed conservative policy that we need to depart from.
the conservative hands off attitude towards the economy is wrong

[Thomas Veil]

I don't think the mortgage crisis is the government's fault...Not primarily. Certainly the borrowers and the lenders share the responsibility for this, although as some have pointed out, the lenders should really know better than to make these offers in the first place.

But I think you can parcel out a portion of blame to the government, too, for not regulating predatory/irresponsible lending well. The toughest laws against it that I've seen have mostly been on the city or state level, and have come late in the game.

This is part of the price we pay for worshipping at the altar of free market economics. Realistically, we are a seriously under-regulated nation compared to what we were in the 1960s and 1970s.

[Desertrat]

Thomas Veil, how can government further regulate in any real-world way how somebody decides to loan or not loan? How? There are already heaps, gobs and bunches of regulations concerning lending institutions. Have you any actual meaningful experience within one of these? Talked to any banker about what they must or must not do; can or cannot do?

The government itself, since back in the Carter era, has encouraged what are now called sub-prime loans. These laws were enacted specifically to help poor people to become homeowners. Law cannot inculcate common sense.

The Fed's games with interest rates encouraged the entire bubble. Greenspan's policies enabled the money games which ensued.

How do you regulate the tens of thousands of appraisers who are members of MAI--"Made As Instructed"? How do you even know to investigate the tens of thousands of mortgages which were over-appraised? Which ones? Where do you start?

Establish a minimum down-payment? Fine, but then you're in conflict with the existing "help the poor" laws. The next argument is about defining poor. "I'm poor!" "No, you're not." For that matter, why should government pester me about carrying the paper for a 100% mortgage if I think the buyer is good for the payments? Is some bureaucrat's judgement inherently better than mine?

The more you try to regulate markets, the worse the situtation gets. It doesn't matter if it's marijuana or mortgages.

'Rat

[IJ Reilly]

The investment banking business is almost completely unregulated. Their ability to create mortgage-backed derivatives free from any scrutiny or requirements for disclosure of underlying risk was one of the primary driving forces behind unwise lending practices. As we've seen, a run on these banks can cause substantial pain throughout the economy because they are major elements within the extremely complex web of banking. The prospect of the entire enterprise imploding was very real. It still is.

So, I am still waiting for an answer to my previous question, for those who believe that the economy solves all problems automagically. Even if this is true, then why should everyone suffer for the sins of the few?

[Desertrat]

IJ, I agree with you, fully, about the investment bankers. Some of the discussion problem may be in semantics, since these aren't really bankers in the historical sense. "Traders of financial instruments" might be a better term.

If such trading is allowed at all, under some body of laws, there is a major problem for regulation: Even these traders, themselves, do not fully understand the complexities of the system. They've said so, somewhat publicly. (Remember, Long Term Capital Management went down the tubes, even though it was directed by people with Nobel Laureates in finance/accounting.) A regulatory person can easily ask a question for which nobody can provide an answer. And then?

As to your question: Whether finance, war or trade, a relative few make the decisions. When they're wrong, suffering will always be widespread.

'Rat

[IJ Reilly]

Why does suffering need to be widespread? Is this some law of nature?

Economies prosper when individuals have a fundamental confidence in the soundness and integrity of basic economic institutions. They are at risk of collapse when this confidence is shaken. This was perhaps the most important lesson of the financial crisis of the early 1930s. The response of the Hoover administration was to allow the economy to fix itself. It didn't fix itself, and I don't believe anyone, investor or banker, would want to return to the banking system in place before 1930. A little regulation in the right places can go a long way towards restoring and maintaining confidence.

What these regulations should be, I don't know. I only know that the investment banks can't be permitted to continue to drive unwise lending practices, and push everyone, the prudent and imprudent alike, to the brink of financial ruin -- and possibly right over the brink. The idea that we must all suffer just doesn't cut it with me.

[leekohler]

If these homeowners are bailed out, then how about bailing out regular stock speculators or investors? I made a speculative mistake buying 15,000 shares of Global Crossing .. and lost my money. Can I have my money back please mr. Feds?

Pure bunch of idiots - everyone - consumer and the government. NOBODY should be bailed out - not hedge funds, not banks, not investment funds, not consumers. Let the problem correct itself. Plus if the Feds keep helping, in the future banks or consumers will always think "Oh I can get away with this because the govt will bail me out'

Amazingly- I agree with you. People will just do this sort of thing again if we let them get away with it. We'll pay a price in the short term for their stupidity, but I think it's worth learning the lesson.

But IJ, I also agree with you. We do need to put regulations in place to prevent this type of thing from happening on such a wide scale.

[IJ Reilly]

Amazingly- I agree with you. People will just do this sort of thing again if we let them get away with it. We'll pay a price in the short term for their stupidity, but I think it's worth learning the lesson.

But IJ, I also agree with you. We do need to put regulations in place to prevent this type of thing from happening on such a wide scale.

How long is short term? How deep? How wide? I've been listening to as much expert discussion about the impacts of this financial crisis as I can stand, and the one common, salient characteristic of these experts is that they haven't got a clue about how damaging this situation is or will become. So it's all well and good to talk about the value of "moral hazard," but let's get serious here. If you lose your job, your business is pummeled, your home drops 30% in value, your retirement fund gets wailed on, and for no other reason than you live in the same country with people who've made poor financial decisions -- then who really is being punished?

[leekohler]

How long is short term? How deep? How wide? I've been listening to as much expert discussion about the impacts of this financial crisis as I can stand, and the one common, salient characteristic of these experts is that they haven't got a clue about how damaging this situation is or will become. So it's all well and good to talk about the value of "moral hazard," but let's get serious here. If you lose your job, your business is pummeled, your home drops 30% in value, your retirement fund gets wailed on, and for no other reason than you live in the same country with people who've made poor financial decisions -- then who really is being punished?

We're all getting punished and we're all feeling it. We need to also hold those financial institutions accountable for their irresponsible lending practices. I think we can safely say that it's everyone's fault for not insisting they be regulated properly. And why should they care? If they know if they screw up they'll just be bailed out, why should they do the right thing? Now look where we are. It has to stop sometime. This is just another example of "laissez-faire" capitalism and what happens when it runs amok.

[IJ Reilly]

We're all getting punished and we're all feeling it. We need to also hold those financial institutions accountable for their irresponsible lending practices. I think we can safely say that it's everyone's fault for not insisting they be regulated properly. And why should they care? If they know if they screw up they'll just be bailed out, why should they do the right thing? Now look where we are. It has to stop sometime. This is just another example of "laissez-faire" capitalism and what happens when it runs amok.

The reality is that the lenders and the financial institutions aren't necessarily one in the same. The lending practices which we seem to want to blame primarily on borrowers are driven by the demand for these relatively new mortgage-backed investment instruments peddled by investment banks. The lenders and the mortgage brokers are really just processing loan applications, collecting points and fees, and reselling the debt to investment banks and hedge funds. Talking about interim solutions as "bail-outs" is just a way of avoiding addressing the problems in a system which has become a huge ball of string that nobody really understands anymore. Now we're dealing with the pragmatic realities of a lot of pain being spread through the economy for an uncertain duration and degree. I think at this point it's more important to put out the fire than to try to figure out precisely who started it. That's an important question too, but not right now.

[leekohler]

The reality is that the lenders and the financial institutions aren't necessarily one in the same. The lending practices which we seem to want to blame primarily on borrowers are driven by the demand for these relatively new mortgage-backed investment instruments peddled by investment banks. The lenders and the mortgage brokers are really just processing loan applications, collecting points and fees, and reselling the debt to investment banks and hedge funds. Talking about interim solutions as "bail-outs" is just a way of avoiding addressing the problems in a system which has become a huge ball of string that nobody really understands anymore. Now we're dealing with the pragmatic realities of a lot of pain being spread through the economy for an uncertain duration and degree. I think at this point it's more important to put out the fire than to try to figure out precisely who started it. That's an important question too, but not right now.

And then what happens next time? We bail them out again? Either way, we're paying IJ and it's hurting all of us. We need to address the root of it and stop this from happening again.

[IJ Reilly]

And then what happens next time? We bail them out again? Either way, we're paying IJ and it's hurting all of us. We need to address the root of it and stop this from happening again.

Again, I think if we use the term "bail out" to describe any and all solutions, short or long-term, then surely there will be a next time. Getting to the root of the problem is needed, but for now, the free-fall has to be stopped or the hurt may be far more painful than anything we could imagine. This is what I am hearing the financial experts say anyway.

[skunk]

Either way, we're paying IJ and it's hurting all of us.Personally, I think you're being too soft on him. Let IJ pay his own way. It's the only way he'll learn.

[leekohler]

Personally, I think you're being too soft on him. Let IJ pay his own way. It's the only way he'll learn.

OK- I'll be the Pun Police and you can be the Grammar Police. :)

Again, I think if we use the term "bail out" to describe any and all solutions, short or long-term, then surely there will be a next time. Getting to the root of the problem is needed, but for now, the free-fall has to be stopped or the hurt may be far more painful than anything we could imagine. This is what I am hearing the financial experts say anyway.

In all honesty I think it might be too late to stop it. What's done is done and I believe you're right- the hurt is going to be more painful than we can imagine. There may be a few things that can be done to help soften the blow, but I really think big pain is coming no matter what.

[IJ Reilly]

Personally, I think you're being too soft on him. Let IJ pay his own way. It's the only way he'll learn.

Are you calling me a mooch?

In all honesty I think it might be too late to stop it. What's done is done and I believe you're right- the hurt is going to be more painful than we can imagine. There may be a few things that can be done to help soften the blow, but I really think big pain is coming no matter what.

It could get worse. The key right now seems to be slowing the rate of foreclosures. This becomes a vicious cycle. The more foreclosures, the more the housing market drops, the more homeowners fall into foreclosure. This cycle will start to pull in plenty of homeowners who weren't in over their heads. It'll be people who've lost their jobs or have to move for other reasons, and can't sell for anywhere close to the price at which they purchased. If the credit markets don't open up, then even qualified home buyers won't be able to get mortgages or refinance. It's not inevitable, but it become more so if we become more interested in putting heads on stakes than addressing the immediate crisis. They'll be plenty of time for blame and long-term solutions later.

[leekohler]

Are you calling me a mooch?



It could get worse. The key right now seems to be slowing the rate of foreclosures. This becomes a vicious cycle. The more foreclosures, the more the housing market drops, the more homeowners fall into foreclosure. This cycle will start to pull in plenty of homeowners who weren't in over their heads. It'll be people who've lost their jobs or have to move for other reasons, and can't sell for anywhere close to the price at which they purchased. If the credit markets don't open up, then even qualified home buyers won't be able to get mortgages or refinance. It's not inevitable, but it become more so if we become more interested in putting heads on stakes than addressing the immediate crisis. They'll be plenty of time for blame and long-term solutions later.

Why is it impossible to do both at the same time? The problem I see is when the storm passes, everyone forgets about preparing for or preventing another.

[mactastic]

Bob Rubin nailed it in noting that if Wall Street investment firms want to act like banks, then they should be regulated like banks.

Personally, I think you're being too soft on him. Let IJ pay his own way. It's the only way he'll learn.
Are you suggesting IJ be allowed to die in the street if he can't pay? Your inner Libertarian is showing through... ;)

[Music_Producer]

IJ, Lee.. let me clarify what I am trying to imply here. IJ.. you mention that if we don't bail out these guys, the economy will suffer.. and everyone will suffer because of that (yes, myself too)

But.. do you want it to be *worse*? If we keep doing these bailouts, the economy will have a temporary fix, and then get back to square one. Why? People will start borrowing again recklessly, banks will want to make money after going through heavy losses, so they will start their zero-down lending procedures, interest rate-only mortgages only, etc.. schemes once again.

Did you read CNN's cover story on the home page? It's about this lady who used to make $70k a year, and is now having a tough time buying food.

Explain this.. why would someone who makes $70k a year have no savings to fall back on? Maybe because she has a $2500 interest only loan. Wow, $2500 interest only! What happens when the principal starts kicking in? Don't tell me you are going to feel sorry for this woman, I sure don't. And I don't want to bail out this person. I don't want to bail out anyone who spends beyond their means.I don't want to pay Social Security and Medicare when I pay my taxes if I know I am not going to get anything back in return.

Essentially, bailing out will lead to a repeat cycle. Am I worried about the local economy? Of course, I own a small business and things are looking rather grim. But looking at the bigger picture, I think we need to 'suffer' as well for everything to correct.

EVERYTHING is overvalued in this country. Stocks, houses, businesses, corporate salaries, -- everything! It's about time some normalcy takes place.

We are already in huge debt, we can't even pay the interest on the national debt. We borrow money from social security, medicare, cut down police,firefighter,educational jobs, etc. Cut down on medical funding , and on top of that we have this bloody war we keep spending money on. So when we do these bailouts (200 billion $ pumped by the Feds almost every week into the financial system) who do you think is going to pay? They would need 1 trillion $ to bail out housing.

I am so damn worried about the dollar as well .. I trade currencies and it bothers me every day when I hear that some bank or the other is switching from their dollar reserves to euros. China, Japan, etc have huge dollar reserves. Do you think they like watching their investments go down the drain? There's talk of switching the pricing of oil from $ to euros.

At the risk of fixing our problems temporarily, we face a much more cataclysmic collapse.

[Music_Producer]

This is what I am hearing the financial experts say anyway.

Financial experts? Please, be your own expert. These idiots are the ones who give erroneous advice all the time. The only people who have been making any sense since the last two years have been Greenspan and Soros.

[leekohler]

IJ, Lee.. let me clarify what I am trying to imply here. IJ.. you mention that if we don't bail out these guys, the economy will suffer.. and everyone will suffer because of that (yes, myself too)

But.. do you want it to be *worse*? If we keep doing these bailouts, the economy will have a temporary fix, and then get back to square one. Why? People will start borrowing again recklessly, banks will want to make money after going through heavy losses, so they will start their zero-down lending procedures, interest rate-only mortgages only, etc.. schemes once again.

Did you read CNN's cover story on the home page? It's about this lady who used to make $70k a year, and is now having a tough time buying food.

Explain this.. why would someone who makes $70k a year have no savings to fall back on? Maybe because she has a $2500 interest only loan. Wow, $2500 interest only! What happens when the principal starts kicking in? Don't tell me you are going to feel sorry for this woman, I sure don't. And I don't want to bail out this person. I don't want to bail out anyone who spends beyond their means.I don't want to pay Social Security and Medicare when I pay my taxes if I know I am not going to get anything back in return.

Essentially, bailing out will lead to a repeat cycle. Am I worried about the local economy? Of course, I own a small business and things are looking rather grim. But looking at the bigger picture, I think we need to 'suffer' as well for everything to correct.

EVERYTHING is overvalued in this country. Stocks, houses, businesses, corporate salaries, -- everything! It's about time some normalcy takes place.

We are already in huge debt, we can't even pay the interest on the national debt. We borrow money from social security, medicare, cut down police,firefighter,educational jobs, etc. Cut down on medical funding , and on top of that we have this bloody war we keep spending money on. So when we do these bailouts (200 billion $ pumped by the Feds almost every week into the financial system) who do you think is going to pay? They would need 1 trillion $ to bail out housing.

I am so damn worried about the dollar as well .. I trade currencies and it bothers me every day when I hear that some bank or the other is switching from their dollar reserves to euros. China, Japan, etc have huge dollar reserves. Do you think they like watching their investments go down the drain? There's talk of switching the pricing of oil from $ to euros.

At the risk of fixing our problems temporarily, we face a much more cataclysmic collapse.

I couldn't have said it better. Enough is enough. If we don't start putting things in place to stop this stuff now, we're going to end up far worse off eventually.

[IJ Reilly]

IJ, Lee.. let me clarify what I am trying to imply here. IJ.. you mention that if we don't bail out these guys, the economy will suffer.. and everyone will suffer because of that (yes, myself too)

I can answer this easily by quoting back a previous post of mine.

Again, I think if we use the term "bail out" to describe any and all solutions, short or long-term, then surely there will be a next time. Getting to the root of the problem is needed, but for now, the free-fall has to be stopped or the hurt may be far more painful than anything we could imagine. This is what I am hearing the financial experts say anyway.

I don't even know who the "these guys" are in your argument, so I can't respond to that, and I think the argument that "everything is overvalued in this country" to be far too vague and strange to even know how to respond.

[Cleverboy]

I think its clear we want to stop foreclosures on large amounts of people who purchased homes THEY LIVE IN and who've had their interest rates balloon due to factors they didn't realize would affect their monthly mortgage. We need to improve regulations that guard against predatory lending practices that created these circumstances. For all the idiots who purchased houses they could not afford on no-money down as a "flip" prospect, sorry... no help for you. But... let's get serious... are the regulatory principles of the Bush administration to blame? Sure! To believe otherwise is willful ignorance. You don't need to abandon personal liability to recognize the POOR ECONOMIC THEORY that encouraged the EXACT result we're now seeing. :mad:
What was distinctive this time was that the new borrowing was concentrated in housing. It is generally true that lower interest rates spur home buying, but this time, as is now well known, commercial and investment banks created new financial mechanisms to expand housing credit to borrowers with little creditworthiness. The Fed declined to regulate these dubious practices. Virtually anyone could borrow to buy a house, with little or even no down payment, and with interest charges pushed years into the future.

As the home-lending boom took hold, it became self-reinforcing. Greater home buying pushed up housing prices, which made banks feel that it was safe to lend money to non-creditworthy borrowers. After all, if they defaulted on their loans, the banks would repossess the house at a higher value. Yes, for some of you, it might feel good to point the finger at fellow citizens and say that this is where the fault begins and ends... but if you take a moment to look into what happened on a LARGER scale, you'll see that much of the affects were predictable, intentional, but based on faulty logic.

http://www.dailystar.com.lb/article.asp?edition_id=1&categ_id=5&article_id=90316
In the course of 2006 and 2007, the financial bubble that is now bringing down once-mighty financial institutions peaked. Banks' balance sheets were by then filled with vast amounts of risky mortgages, packaged in complicated forms that made the risks hard to evaluate. Banks began to slow their new lending, and defaults on mortgages began to rise. Housing prices peaked as lending slowed, and prices then started to decline. The housing bubble was bursting by last fall, and banks with large mortgage holdings started reporting huge losses, sometimes big enough to destroy the bank itself, as in the case of Bear Stearns. Sure, sure... its great to just say "stupid people" and wait for things to improve, but without corrective regulatory oversight, the cycle just waits to start again if we have a president that is put under pressure (by ego or electorate) to generate short-term and illusory prosperity instead of a stable and realistically valued economic outlook. This is a time to TAKE ACTION, not sit on your ass and wait and see how things play out.

Sorry, but its the very epitome of STUPID. Some downturns can cost enough that no recovery is possible without assistance and corrective measures to make sure the problem isn't allowed to reoccur.
I don't even know who the "these guys" are in your argument, so I can't respond to that, and I think the argument that "everything is overvalued in this country" to be far to vague and strange to even know how to respond.Sure sounds sane when you put it like that. Specific things are over-valued. Most of the artificial boom that's been created could have been avoided by the proper governance of a competent administration. When Bush sat down with Greenspan to get him onboard, I knew things were going to turn extra-sour. Especially when Greenspan didn't come out of the meeting saying Bush was on crack. The original gulf between their policies seemed so stark at first.

~ CB

[IJ Reilly]

Yeah, but isn't more soul-satisfying to wag a boney finger at all those stupid, stupid people who are doing all those stupid, stupid things for stupid reason? I mean, we deserve whatever they get, right?

[Desertrat]

Cleverboy, the problem with your idea, "are the regulatory principles of the Bush administration to blame? Sure!" is that the laws under which any regulation is or is not done were in place from past Congresses, going back at least to the Carter era. And, no one administration in between failed to sign off on some new regulatory law. You can't regulate without an enabling law, and if you don't know there's a problem, what do you ask for in a law?

What Congresscritter impresses you as to an understanding of not only the tiny details but the big picture? Who in the White House has your confidence? Which presidential candidate seems to show even a modicum of understanding?

Can we try, "None of the above?"

Again: The gigantic financing entities who dealt in all this mortgage paper and the ensuing creations from it are directed by people who admit that they, themselves, don't always understand their computer models' instructions. What regulatory person from outside could regulate? What would he regulate? How?

Again: LTCM was directed by Nobel laureate economists. It failed, guessing wrong on derivatives to the tune of some six billion dollars. (Number from memory.) It is guesstimated that at the present time, worldwide, derivatives exist to an amount of 40 trillion dollars, if not more. Yes, trillion.

D-d-d-d-don't guess wrong, folks...

'Rat

[elcid]

Ugh, these are just political landmines. Of course, you play that on CNN and basically everyone hates McCain.

Yet as I recall, these are contractual agreements. They get a rate, and after awhile, according to the signed agreement, it may go up.

Now, if someone defaults on that, or markets turn and it happens to a lot of people, I just do not see how that is the governments fault.

Now, Hilary says something about at 90 day freeze? Sure, in the public it sounds great. Great political soundbyte. But if I can't pay my loan now and didn't have the foresight to talk to the bank before, what does a 90 day freeze do for people?

This is a situation that was bound to happen sometime. It is the market balancing itself out, and people are going to get hurt. It sounds good politically to do something.

[Cleverboy]

Cleverboy, the problem with your idea, "are the regulatory principles of the Bush administration to blame? Sure!" is that the laws under which any regulation is or is not done were in place from past Congresses, going back at least to the Carter era. And, no one administration in between failed to sign off on some new regulatory law. You can't regulate without an enabling law, and if you don't know there's a problem, what do you ask for in a law?Yup. But, as I said... the lack of regulation wasn't really a problem until a president created the conditions for the problem to manifest itself through his intent to foment the appearance of a prosperous economy in spite of a war (which is entirely stupid to do on its face). That's the whole point! I suspect the Bush administration hoped to bring the war to an end quickly, and that the stupid measures being taken to goose the economy were only intended to be short-term measures in wait of a huge outpouring of good news in the Middle East (look, we have a new oil partner, and they love us!)... but that's probably way too generous.

In a crude example, I'm saying that Timmy was never given cheap small toys to play with before, but the moment he was, we realize that he immediately started putting them in his mouth... it is at that point we realized that the toys had lead paint, and Timmy got sick. We put the regulations in place to prevent that NEXT time (improving oversight of toy imports and stepping up trade partner accountability)... but until Timmy was given cheap small toys from store buying from China, we didn't realize how destructive such an unwise purchase could have been.

Anyway... McCain is only pandering right now. He was saying the same thing I am about helping home owners with dramatic interest increases and NOT greedy speculators earlier in March. He's ONLY downplaying it NOW. Let's not get it twisted, people.

"Right now we have some policies in place on subprime lending," he said. "But I would be more than happy to work out ways so that we can quickly - and there is, I think, 2 million, the last number I saw, homeowners at risk of losing their homes - so they could get relief from doing so. I would hope present measures that have been taken would succeed in doing so, not reward the greedy speculator.

"But the family that can't afford a dramatic increase in their interest payments - so I am willing to provide more relief if necessary, and I'd like to see as much as possible directed at those who deserve it."

He did not offer specific plans during the interview on how he would help homeowners facing ballooning mortgage payments. The Ohio Plain dealer accused him of changing his tune, but the McCain campaign said:
McCain's campaign said it doesn't see any conflict between his comments to The Plain Dealer and his speech Tuesday.

"John McCain has been consistent throughout on this topic," spokesman Jeff Sadosky said. The basic principle always being that the government should not be bailing out speculators and those acting fraudulently or irresponsibly, but should be in place to work with the mortgage lenders to help homeowners who have the ability and the resources to stay in their homes."
McCain's tone on mortgages shifts
http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/1206693064181100.xml&coll=2&thispage=2

Apparently people hear what they want to hear sometimes. McCain is not getting into specifics so that he can appear sympathetic while being able to tout being a "free trader". It's possible even he has no idea what he'd really do.

~ CB

[Cleverboy]

Again: The gigantic financing entities who dealt in all this mortgage paper and the ensuing creations from it are directed by people who admit that they, themselves, don't always understand their computer models' instructions. What regulatory person from outside could regulate? What would he regulate? How? The classic "nothing could have been done" explanation. I understand though, what you're saying, in terms of the sentiment. I was listening to someone speaking on the issue of teaching math in our schools, and that simply saying our teachers need training... doesn't answer the fact that its not clear WHAT training the teachers need in the face of pressure to give students a more well rounded mathematics education. --But, do you just sit on your ass, or do you really LOOK actively at well reasoned measures that NO ONE disputes could be helpful if done right?

Listen to Obama's speech. Without reading too far into parts he even states do not go into greater detail (no time), I think things like making sure that an entity who's risks are underwritten by the U.S. government should have the U.S. government as part of its oversight... seems pretty straight forward.

http://my.barackobama.com/page/community/post/samgrahamfelsen/gGBRqm

This just sounds like incredibly OBVIOUS stuff for people not to agree seems amazing to me.

This loss has not happened by accident. It's because of decisions made in boardrooms, on trading floors and in Washington. Under Republican and Democratic Administrations, we failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practices. We let the special interests put their thumbs on the economic scales. The result has been a distorted market that creates bubbles instead of steady, sustainable growth; a market that favors Wall Street over Main Street, but ends up hurting both.

Nor is this trend new. The concentrations of economic power – and the failures of our political system to protect the American economy from its worst excesses – have been a staple of our past, most famously in the 1920s, when with success we ended up plunging the country into the Great Depression. That is when government stepped in to create a series of regulatory structures – from the FDIC to the Glass-Steagall Act – to serve as a corrective to protect the American people and American business.

Ironically, it was in reaction to the high taxes and some of the outmoded structures of the New Deal that both individuals and institutions began pushing for changes to this regulatory structure. But instead of sensible reform that rewarded success and freed the creative forces of the market, too often we've excused and even embraced an ethic of greed, corner cutting and inside dealing that has always threatened the long-term stability of our economic system. Too often, we've lost that common stake in each other's prosperity.

Let me be clear: the American economy does not stand still, and neither should the rules that govern it. My problem is, I think McCain believes some of the same things, but he's being hamstrung and easily confused by the details. He's well-meaning, and at times "good-sounding", but he's not a detail oriented person and he's being heavily influenced by a party that rewards big business under the misguided notion that this equates to being a good stewart of the free market and capitalistic economy.

Well...
http://i27.tinypic.com/120m447.jpg

The Carlton Sheets of this world have preyed on hurting families, by suggesting its "NO-MONEY-DOWN" tactics as an investment opportunity and/or (and this is important) a way to get your first home. I purchased the package, but after reviewing it, I realized it introduced far too much risk for me to get involved with... and yet, the program encouraged it. Independently, I found out later that my sister purchased the same program, and my current girlfriend did too. She actually owns a three family house, but she didn't use the program to do it. She found their tactics somewhat unconsionable, yet the commercials repeated over and over and over again, encouraging people to invest in realestate... using methods that only after a while began being questioned strongly by the MSM.

Should logical people presume to get their real estate market education from a late-night informercial package? Probably not. But then again, if you were to place a bet on whether blue-collar workers might respond to a vague notion of common-sense, or a testimony-laden 30 minute ad that repeats every night making bold promises... well, I think you'd lose the bet. It amused me that many of the non-Viagra supplements were litigated into changing their language starkly (I believe the FCC stepped in). There certainly IS a case for consumer protection on issues where economics are at risk.

In the harshest most frank light, our market is a delicate balance of those operating between FEAR and GREED. That's just how it is. There NEEDS to be a balance. Where fear (or simple caution) is justified, the information needs to not only be available, but required to be disclosed and regulation needs to bolster it so that greed (or want of even meager improvement in one's standard of living) doesn't carry the day.

It's my belief that programs like these were made possible by having special interests control the way the market was regulated. Very short-sighted. Real people that in many cases did not realize how much risk they were getting into were goaded repeatedly into jumping into the market. While many might characterise this as pure greed... in many cases, its something that never should have been allowed to happen in the first place. PREVENTION not CURE is generally always best.

Where problems have already occurred, then we have to remedy the situation in the most financially responsible manner. This does NOT presume we just "sit back" and watch it happen, just as it doesn't presume what BUSH has been doing, which is to artificially bolster the market for short-term appearances over long-term detriment. This is not a zero sum game here. It just requires a reasoned approach based on the best economic strategy, not willful ideology, absent clear precedent and sound policy.

~ CB

[Thomas Veil]

Cleverboy, the problem with your idea, "are the regulatory principles of the Bush administration to blame? Sure!" is that the laws under which any regulation is or is not done were in place from past Congresses, going back at least to the Carter era. And, no one administration in between failed to sign off on some new regulatory law.You may be right about the Carter era, but we all know deregulation was a big mantra of the Reagan administration and all Republican administrations and Congresses since. Not that the Dems are guiltless, because seeing the bandwagon go that way, they willingly hopped on it.

[Desertrat]

"...his intent to foment the appearance of a prosperous economy in spite of a war (which is entirely stupid to do on its face)."

That might have affected the psychology of optimism to some extent, but Bush had zilch to do with Greenspan's policies wrt FedRates. It was FedRate policy which enabled the financial activities.

"...deregulation was a big mantra of the Reagan administration..."

Except that the mega-financials didn't exist at the time of the Reagan administration. They began, then, as an effort to compete with one (maybe more than one) of the then-existent Japanese mega-banks. And such things as derivatives were just the "gleam in daddy's eye", about which nobody knew nuttin'.

Cleverboy, I have no objection to regulation. But before you can regulate in any legitimate fashion, you must understand that which you would regulate. The present pattern is to begin regulating before understanding.

"This loss has not happened by accident. It's because of decisions made in boardrooms, on trading floors and in Washington. Under Republican and Democratic Administrations, we failed to guard against practices that all too often rewarded financial manipulation instead of productivity and sound business practices."

I fully agree. But, even a blind hog finds an acorn every now and then. Would anybody care to persuade me that a large part of this has not come about as we came to the well-publicized "end of the smokestack industry age and the beginning of the information age"? As people sought other ways to generate wealth during the decline of smokestack industry?

I note also that an economy where some two-thirds or more of its value consists of people passing the same money back and forth among themselves isn't the healthiest way to do. Particularly when much of the profit leaves the country. First Britain, then us (and Japan and Germany), now China: Make things for sale as exports and you have economic power. Become a net consumer and you lose economic power to the exporters--and we're losing. For now, at least, we're a poorly conditioned football team, and it's the fourth quarter.

The bottom line, seems to me, is that we can't really afford to do any bailing out--at least not to any great extent. A limited amount of feel-good, yeah, whether right or wrong. We don't have the money. Any thing the government does is going to do more harm than good over the next several years. It basically just makes Cheney even more wrong about deficits...

'Rat

[IJ Reilly]

I think we need to throw "bail out" on same scrap-heap of meaningless political rhetoric as "amnesty" and "death tax."

[stevento]

when they say predatory lending they mean when they get into these adjustable rates at 5% thinking its such a great deal then ten years later its 20% or higher

[skunk]

when they say predatory lending they mean when they get into these adjustable rates at 5% thinking its such a great deal then ten years later its 20% or higherThey mean that the lender sets an artificially low threshold in order to entrap the rash and foolish. It's hardly an innocent mistake.

[IJ Reilly]

They mean that the lender sets an artificially low threshold in order to entrap the rash and foolish. It's hardly an innocent mistake.

It's not just the rash and the foolish who are being entrapped. When housing prices drop 30%, even people with plenty of their own skin in the game get caught. I think it's time we called in the circular firing squad. The rash and the foolish must be dealt with harshly or they will never learn.

[leekohler]

It's not just the rash and the foolish who are being entrapped. When housing prices drop 30%, even people with plenty of their own skin in the game get caught. I think it's time we called in the circular firing squad. The rash and the foolish must be dealt with harshly or they will never learn.

IJ- I think we're all talking in circles. The bottom line is this- we as a society allowed this to happen, and we're all going to suffer for it. I think we all agree that it sucks that we all pay for this. But no matter what we do, it's going to have a severe negative impact on us all. We will all pay. The only discussion that seems relevant to me is- how do we prevent it from happening again? To me, that is of paramount importance.

[IJ Reilly]

IJ- I think we're all talking in circles. The bottom line is this- we as a society allowed this to happen, and we're all going to suffer for it. I think we all agree that it sucks that we all pay for this. But no matter what we do, it's going to have a severe negative impact on us all. We will all pay. The only discussion that seems relevant to me is- how do we prevent it from happening again? To me, that is of paramount importance.

Circular, as in circular firing squads? Yes, I'd agree with that. I'm hearing way too much nonsense about "bail outs" (evidently, the automatic description of all possible solutions) to believe that much rational thinking is going on here.

I don't have your fatalistic view that nothing can be done to mitigate the impacts of the crisis in the housing markets, which can get much worse if we take the position that nothing can or should be done now. We've constructed our entire economy since the 1930s on premise that booms and busts aren't necessary, let alone productive. We don't need a severe recession or depression to wash out our collective sins, whatever they may be. I think we should at least try to miss the iceberg before jumping overboard.

[solvs]

Here's the link to the Washington Post piece written by Spitzer:

How the Bush Administration Stopped the States From Stepping In to Help Consumers (http://www.washingtonpost.com/wp-dyn/content/article/2008/02/13/AR2008021302783.html?nav=rss_opinion/columns)
Thanks, all I could find on a cursory search was about prostitutes. :p

Yes, Bush people stepped in against Spitzer's efforts about "predatory lending". It appears it was a lawyer's argument over meanings and applicability, and so far I've only seen Spitzer's side of the story.
So, then you don't believe it, or don't think it would have helped? There really isn't another side. They did it. I don't know if it would have helped much, but it certainly couldn't have helped. That's yet another reason why we partially also blame the administration. No one is defending people who paid more than they could afford or the banks who made the loans or anyone else. Plenty of blame to go around. Trying to dismiss the lending institutions or administrations roles because of that though is disingenuous at best.

The more you try to regulate markets, the worse the situtation gets.
And apparently the less you regulate such things (or as noted above, the more you try to stop regulation) the worse it gets, so here we are.

I also don't know what to do, but I don't think anyone does. All we have left is to try to hope someone can work something out without too many negatives. So far I haven't seen that. At least I can admit I don't know what to do, unlike all the experts, some of whom helped to get us into this mess in the first place and only seek to make things worse.

[Badandy]

yes, sometimes
in this situation yes.
hillary will enact a 90 day foreclosure freeze to help people work it out and stay in their home, because its better for that person and the economy overall.



GO HILLARY 2008!!!!!



uggghhh. When does it stop with you...

PS: And no, she won't enact a 90 day foreclosure freeze, because she won't win the nomination.

[Iscariot]

Yeah, but isn't more soul-satisfying to wag a boney finger at all those stupid, stupid people who are doing all those stupid, stupid things for stupid reason? I mean, we deserve whatever they get, right?

Totally. Forget the snake-oil salesman, string up those who drank it.

[skunk]

It's not just the rash and the foolish who are being entrapped. When housing prices drop 30%, even people with plenty of their own skin in the game get caught. I think it's time we called in the circular firing squad. The rash and the foolish must be dealt with harshly or they will never learn.The entrapment of the rash and foolish is bringing disaster to those who otherwise would be safe enough. Needless to say, the fault lies not with the rash and foolish, but with those who have compromised the viability of the system by lending to them.

[solvs]

I guess we can wait a little bit to see if McCain changes his mind again, like he has on the tax cuts:

http://www.reuters.com/article/bondsNews/idUSN1331349120080314

Or cigarette taxes:

McCain's stand on tobacco is put to test (http://www.boston.com/news/nation/articles/2008/03/26/mccains_stand_on_tobacco_is_put_to_test/)

Ironic that he dinged Romney on flip-flopping, and we all remember how Kerry was painted.

When does it stop with you...
I'd say when Obama actually gets the nod, or even wins the Presidency, but I doubt even then.

Still don't understand how anyone can truly defend everything from any of these people.

[IJ Reilly]

The entrapment of the rash and foolish is bringing disaster to those who otherwise would be safe enough. Needless to say, the fault lies not with the rash and foolish, but with those who have compromised the viability of the system by lending to them.

That's my view essentially. We can certainly trace the demand for easy credit back to investors. If they hadn't been the collective buyers of "secured" debt that wasn't so secure after all, then the lenders would not have been marketing this debt to home-buyers. The only strung-out home-buyers with whom I have little sympathy is those who drew most of the equity out of their homes to buy toys, and the "flippers" who bought homes expecting to resell them in a few months to turn a quick buck. Those people deserve their pain.

[solvs]

His healthcare plan isn't great either:

McCain's health plan fails her (Elizabeth Edwards) test (http://www.latimes.com/news/nationworld/politics/la-na-health30mar30,1,1061539.story)

Elizabeth Edwards, the wife of former Democratic presidential contender John Edwards, said she and John McCain have one thing in common: "Neither one of us would be covered by his health policy."

Edwards lodged her criticism of the presumptive Republican presidential nominee's proposal Saturday at the annual meeting of the Assn. of Health Care Journalists.

Under McCain's plan, insurance companies "wouldn't have to cover preexisting conditions like melanoma and breast cancer," she said.

McCain has been treated for melanoma, the most serious type of skin malignancy. Edwards in 2004 was diagnosed with breast cancer, and announced a year ago that it had returned and spread into her bones, meaning it no longer could be cured.

McCain's plan focuses on offering new tax breaks for individuals who buy their own health insurance. But critics say the Arizona senator's proposal avoids giving insurers requirements on whom they must cover and how much they may charge.

His plan would make it difficult for people with preexisting conditions, but who aren't covered by a government- or job-sponsored plan, to buy individual coverage, Edwards said.

Cancer survivors are routinely denied insurance when they try to purchase it as individuals, health experts say.
Not that Hillary or Obama's plans are great, but again, at least they aren't as bad.

That was actually one of the things I liked about Edwards, though I don't know how we would have paid for his plan.

[stevento]

They mean that the lender sets an artificially low threshold in order to entrap the rash and foolish. It's hardly an innocent mistake.

yes but what mccain says is "well they were irresponsible to get into these adjustable rates, its not our fault or our problem"

dems say "we need law to curtail this predatory lending and teach people financial literacy"

[Mackan]

I think it is pretty clear that if too many people are taking mortages they can't pay back, it will have a bad affect on the economy of the country as a whole. It isn't exactly helping to avoid a recession, is it...

McCain hasn't been showing good judgement in my opinion, regarding anything. If he is elected, (which the U.S people most probably will, despite having a very interesting choice of a younger black man or a woman), I don't see any change coming regarding anything... Just another Bush.

[Cleverboy]

And, finally... McCain steps in to say what EVERYONE ELSE was saying about helping homeowners. GASP! Apparently, a change of heart was in order afterall.
http://www.nytimes.com/2008/04/11/washington/10cnd-mccain.html?_r=1&hp&oref=slogin
“He stated the obvious, which is that we cannot rescue those who made poor investments and poor decisions,” Mr. Martinez said late last month on CNN. “However, where I think he fell short, and I think you will agree with me, is the fact that we need to do some things that can help families, that can help people.”

The Democratic candidates reacted dismissively to Mr. McCain’s new plan — which the senator announced at a window store in Bay Ridge, Brooklyn, a week before he plans to make what his aides are billing as a major speech on the economy.

Mrs. Clinton said in a statement that “Senator McCain is apparently of two minds on the housing crisis and neither seems to know how to steward the economy effectively.”

“Just two weeks ago,” her statement continued, “Senator McCain said he’d rather do nothing than something about the housing crisis and attacked my plan with tired right-wing talking points. Today, it looks like he’s proposing a warmed-over, half-hearted version of the very plan he criticized, to help families restructure mortgages to save homes and keep housing prices from falling further.”

And Senator Barack Obama — who was outlining his own proposal for a $30 billion economic stimulus package that included the creation of a $10 billion foreclosure prevention fund and $10 billion in relief for the state and local governments hardest hit by the crisis — said he was glad that Mr. McCain had “finally decided to offer a plan.”

“Better late than never,” Mr. Obama said in prepared remarks he planned to deliver in Gary, Ind. “But don’t expect any real answers. Don’t expect it to actually help struggling families. Because Senator McCain’s solution to the housing crisis seems a lot like the George Bush solution of sitting by and hoping it passes while families face foreclosure and watch the value of their homes erode. The American people can’t afford this kind of do-nothing approach. They need help immediately.” If for no other reasons than to cataring to Bloomberg and voter criticism, at least McCain's finally made a move and gotten in line behind Clinton and Obama. Irritatingly however, McCain still holds tight to pretending money falls out of te sky, and attempting to downplay his non-answers by not stating any specifics.
Mr. McCain did not mention how much his plan would cost, but his economic advisers were scheduled to brief reporters later in the day.
Note the beads of sweat on McCain's face (from the article photo). "M-m-must look like I k-know what I'm talking about. P-project confidence in a plan I'm still trying to understand!"

~ CB

[stevento]

I think it is pretty clear that if too many people are taking mortages they can't pay back, it will have a bad affect on the economy of the country as a whole. It isn't exactly helping to avoid a recession, is it...

people get into these adjustable rates at 5% then get shafted when the rates go up to 20 and their payment doubles
hillary's plan would freeze forclosures for 90 days and freeze rates on adjustables

I don't see any change coming regarding anything... Just another Bush.
everyone totally agrees with that.