When will the US financial baillout occur?

[Steve]

There are all kinds of homeowners caught up in this. The greedy house flipping, speculator type and those that relied on their realtor or banker's advice. Yes, its ultimately their responsibility but as said, this group also included the poor and working class who honestly didn't know what they were signing.

 

However, we can all agree that the banks and mortgage companies were not ignorant. They knew exactly what they were doing. There are no innocents amongst them.

 

We are bailing out those that not only knew perfectly well what was going on but also amongst them firms that knew they were misleading some of the borrowers.

 

 

[Bangkoktraveler]

We bought a house and did not have to show income, nor place of residence, nor utility bills. We didn't show anything but my driver's liscense and what I told them that was my social security number.

 

I personally think threy were idiots but right now, it seems if they behaved as idiots, the government is going to bail them out as a reward. Not right!

[Old Hippie]

Well, now, I must disagree with you disagreeing with my disagreeing with you...

 

The banks were telling this guy "...you can't afford this," he should have figured he couldn't afford it, and he should have known that it could go the other way.

 

I had these shit bags trying to sell me loans like that, but I had done my research, and asked many questions. I didn't like the answers or the numbers, so I didn't buy. Now I still don't own, but the guy who was irresponsible and didn't do his homework can keep his house, at MY/Our/Taxpayer expense? Yes, the banks are to blame in part, but putting 100% of the blame on the banks is like blaming the heroin dealer because you went and took that first hit, and decided to be a junkie, knowing all the risks ahead of time.

 

The poor immigrants who just want the American dream are indeed casualties, o.k. maybe a little sympathy for them. But by and large, a lot of amateur speculators stand to benefit. They can put the properties in their name, spouses name, kid's names...and get bailed out...fuck them.

 

You buy a home, you know you will lose it if you don't make the payments. We don't bail out people who get sick and can't pay, we don't bail out people in other situations, so why bail these people out? If we are going to give sympathy to one, then we have to give it to all, and then no one will pay their bills. We already see corporations dodging their bills and contracts in bankruptcy, and others suffer, where will we let it end?

[..]

The banks were telling this guy "...you can't afford this," he should have figured he couldn't afford it, and he should have known that it could go the other way.

You are giving a pass to the wrong folks!

 

You've got it completely backwards here. Where is the concept of the risk taker (banks) being sure that the risk they take is in fact no risk at all by vetting the people they are giving money to? What's up with zero-down NINJA loans? Of course consumers are going to try to get something for nothing -- it is little risk to them, just a ding on a credit report, gone in seven years. If a bank fucks up, it is their livelihood as we are seeing now.

 

Now, I'm a free market guy, so if a lending institution wants to play that game, so be it. But when it goes tits up, and the money cannot be paid back, and the collateral is only worth half of what you loaned on it, som nam na. Either eat it and carry on, or liquidate your remaining assets and go out of business. Nowhere is "ask Uncle Sugar for the cash cuz you were stupid" an option (unless you are a Republican, evidently).

 

Regards,

SD

[chelseafan]

Well, now, I must disagree with you disagreeing with my disagreeing with you...

 

The banks were telling this guy "...you can't afford this," he should have figured he couldn't afford it, and he should have known that it could go the other way.

 

I had these shit bags trying to sell me loans like that, but I had done my research, and asked many questions. I didn't like the answers or the numbers, so I didn't buy. Now I still don't own, but the guy who was irresponsible and didn't do his homework can keep his house, at MY/Our/Taxpayer expense? Yes, the banks are to blame in part, but putting 100% of the blame on the banks is like blaming the heroin dealer because you went and took that first hit, and decided to be a junkie, knowing all the risks ahead of time.

 

The poor immigrants who just want the American dream are indeed casualties, o.k. maybe a little sympathy for them. But by and large, a lot of amateur speculators stand to benefit. They can put the properties in their name, spouses name, kid's names...and get bailed out...fuck them.

 

You buy a home, you know you will lose it if you don't make the payments. We don't bail out people who get sick and can't pay, we don't bail out people in other situations, so why bail these people out? If we are going to give sympathy to one, then we have to give it to all, and then no one will pay their bills. We already see corporations dodging their bills and contracts in bankruptcy, and others suffer, where will we let it end?

 

You miss the point, the banks were oringially turning him down but then started throwing him mortgages at 5x his annual income, this guy is no economist and believes that he can pay back the loan because the bank actually GIVES him a mortgage. I am not saying he is entirely blameless as he should of worked out his budget BUT its the banks who are at fault in this particualar case. They have to take culpability for giving him the mortgage which they knew he couldnt afford if things went wrong - such as now.

 

[Old Hippie]

Ok, to SD and CF,

 

Yes, the bank fucked up, but the guy went into this, blinded by his own greed. The banks were telling me I could afford a mortgage that was $500 more than I make in a month. They offered me all these options, playing on MY greed. They were telling me "...you can sell the house in 5 years when the terms expire, make tons etc...flip it..."

 

BUT because there was enough information out there, I kbnew better than to get into a deal like that. I am no economist, but I knew it was a major risk I would not get into. As I said, yes, the banks are wrong to loan the guy money, they were greedy. But so was the guy, the borrower. These people were mainly motivated by greed, they were convinced they were going to "get rich quick" because someone sold them that idea...no different than any con game. The banks didn't care if the guy could pay it in 5 years or whenever, they figured they take the house and sell it for more. So greed on both sides.

 

But somewhere in all of this, people have to take responsibility for their own actions. If I get "seduced" into a low interest credit card, run up a bill trying to "provide the dream" for my family, and I can't pay when the terms change, who's fault is that? Should I be bailed out, allowed to keep my stuff? maybe go and buy more stuff? Where are we going to draw the line?

 

Then there are people walking into a new home, then defaulting on their previous home, should that be allowed? We need to stop all the give aways for corporations, and irresponsible people.

 

Let the market fall, let the housing prices settle to where they really should be, and tighten up the market and start over.

[shygye]

Actually, it is 100% the banks fault. The banks paid the mortgage brokers higher commissions on these toxic loans instead of the 30y fixed rates. Some mortgage brokers were faking the income levels of loan applicants. The banks never checked the info on the loans. The banks were getting rich selling the loans and collecting fees for managing the loans.

 

Those that should sink are the flippers, not 3-5 years but 3 to 6 months, and those home buyers that got money at closing, ie >100% mortgage.

[Faustian]

Indeed, in the UK the banks changed their policies. It used to be 3 times your income for a mortgage. It was a non-negotiable thing for years. Then house prices went up and up. Mr and Mrs average couldn't afford a house.

 

The banks very graciously decided to offer people 5 times, 6 times and more a persons wages. They got good returns on the mortgage/interest rates on these loans. It was posed as if they were doing us a favour and we understood the risks etc etc. But there really was no alternative. House prices were prohibitive.

 

Now we are looking at a 30% fall in the UK. Huge amounts of negative equity for huge amounts of people.

 

Both the banks and consumers must accept responsibility, but no one did a damn thing. Everyone with a brain knew this was coming. Now the government talks of regulation....too late.

 

An economic boom built on debt. Nice move. I recall having discussed this a few years back. Eventually such a boom must end, as there isn't limitless money. It's a house of cards. No one did anything, a lot of folks got rich quick. Mr average will be shafted. Mr rich will just wait for the next opportunity to fuck the average folks again. There'll be one....

[Steve]

Not that I want persoanl harm to come to these guys, but I want to see these CEO fat cats named be mentioned more in the media and the pols.

 

The S&L scandal in the '80s had names to go along with it, like Keating. Enron did as well.

 

Know one knows off hand who the CEOs of Lehman Brothers, WaMu or Merrill Lynch are.

[chuckwoww]

Interesting that the FDIC stepped in just before the bail-out was due to be passed. Shareholders were reassured by Alan Fishman on September 17th. JP Morgan picked up WAMU for $1.9 B not including the $31 B in debt JP Morgan will assume. The bailout bill will cover the debt. Nice deal for JPM. I wonder if Mr. Fishman will get his $19 million severance package?