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

Discussion in 'Politics, Religion, Social Issues' started by stevento, Mar 25, 2008.

  1. stevento macrumors 6502

    stevento

    Joined:
    Dec 10, 2006
    Location:
    Los Angeles
    #1
  2. sushi Moderator emeritus

    sushi

    Joined:
    Jul 19, 2002
    Location:
    キャンプスワ&#
    #2
    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?
     
  3. blackfox macrumors 65816

    blackfox

    Joined:
    Feb 18, 2003
    Location:
    PDX
    #3
    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.
     
  4. IJ Reilly macrumors P6

    IJ Reilly

    Joined:
    Jul 16, 2002
    Location:
    Palookaville
    #4
    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.
     
  5. Abstract macrumors Penryn

    Abstract

    Joined:
    Dec 27, 2002
    Location:
    Location Location Location
    #5
    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.
     
  6. Rodimus Prime macrumors G4

    Rodimus Prime

    Joined:
    Oct 9, 2006
    #6
    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.
     
  7. stevento thread starter macrumors 6502

    stevento

    Joined:
    Dec 10, 2006
    Location:
    Los Angeles
    #7
    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
     
  8. solvs macrumors 603

    solvs

    Joined:
    Jun 25, 2002
    Location:
    LaLaLand, CA
    #8
    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.
     
  9. beatzfreak macrumors 6502

    Joined:
    Jan 11, 2006
    Location:
    NYC
    #9
    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

     
  10. Desertrat macrumors newbie

    Joined:
    Jul 4, 2003
    Location:
    Terlingua, Texas
    #10
    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
     
  11. mkrishnan Moderator emeritus

    mkrishnan

    Joined:
    Jan 9, 2004
    Location:
    Grand Rapids, MI, USA
    #11
    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.
     
  12. dsnort macrumors 68000

    dsnort

    Joined:
    Jan 28, 2006
    Location:
    In persona non grata
    #12
    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.
     
  13. IJ Reilly macrumors P6

    IJ Reilly

    Joined:
    Jul 16, 2002
    Location:
    Palookaville
    #13
    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.
     
  14. mactastic macrumors 68040

    mactastic

    Joined:
    Apr 24, 2003
    Location:
    Colly-fornia
    #14
    Is Person A named Bear Stearns?
     
  15. skunk macrumors G4

    skunk

    Joined:
    Jun 29, 2002
    Location:
    Republic of Ukistan
    #15
    That's Mister Bear Stearns to you.
     
  16. Daveman Deluxe macrumors 68000

    Daveman Deluxe

    Joined:
    Jun 17, 2003
    Location:
    Corvallis, Oregon
    #16
    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.
     
  17. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #17
    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.
     
  18. leekohler macrumors G5

    leekohler

    Joined:
    Dec 22, 2004
    Location:
    Chicago, Illinois
    #18
    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.
     
  19. Daveman Deluxe macrumors 68000

    Daveman Deluxe

    Joined:
    Jun 17, 2003
    Location:
    Corvallis, Oregon
    #19
    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...
     
  20. GoCubsGo macrumors Nehalem

    GoCubsGo

    Joined:
    Feb 19, 2005
    #20
    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. ;)
     
  21. GoCubsGo macrumors Nehalem

    GoCubsGo

    Joined:
    Feb 19, 2005
    #21
    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.
     
  22. mactastic1971 macrumors regular

    mactastic1971

    Joined:
    Jan 9, 2008
    Location:
    Bay Area, CA
    #22
    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!!!
     
  23. IJ Reilly macrumors P6

    IJ Reilly

    Joined:
    Jul 16, 2002
    Location:
    Palookaville
    #23
    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.
     
  24. fotografica macrumors 68040

    Joined:
    Jan 7, 2006
    Location:
    Boston
    #24
    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......
     
  25. Music_Producer macrumors 68000

    Joined:
    Sep 25, 2004
    #25
    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'
     

Share This Page