What is Digg?107 Comments
- rpi22, on 12/12/2007, -0/+40When times are good they have money up the wazoo. When times are bad the taxpayers bail them out. Man, i am totally changing careers!!
- insomniac8400, on 12/12/2007, -1/+25The company is at fault for the money lost by stock holders. They shouldn't have given so many loans to people who would lose nothing by defaulting. They lied to their stock holders. The economic downfall, is the dumbass people's fault who bought homes they couldn't afford.
- rz8472, on 12/12/2007, -4/+22Corporate welfare FTL.
There is a serious problem in this country when the weight of government is applied to benefit the crooks and liars such as these subprime lenders, Halliburton, Blackwater, Bechtel, and others. No wonder so many people want to limit government to the least common denominator, because we haven't seen an effective one in a long time.
Not to mention that we spend so much more money on corporate welfare than welfare welfare. At least the latter, while possibly misguided, is not so extensively motivated by special interests. - oOLiquidNightOo, on 12/12/2007, -0/+12i would've let to have set in on this business plan 3 or 4 years ago:
"hey i've got an idea, let's take the people with bad credit, meager jobs and no savings, and instead of giving them the current historically low fixed interest rate(that they can't afford), we'll charge them a significantly higher variable interest rate of maybe 8 or 9%. we'll also roll all of their expenses right into the mortgage so that they won't have to show up to the closing table with any money. we'll see a great return on our investment. i mean, what could possibly go wrong?" - Yez70, on 12/12/2007, -1/+12OK, I just paid cash for my home. I would have had to take out a subprime loan, if I chose a mortgage. I may have chosen an ARM mortgage too.
Can I sue the government for the same benefits these idiots who over-financed are going to get? I figure I'd have borrowed $100k - with a 3% interest break over 5 years, I'm owed $15,000. Should I choose the bank to bill or will the government send me a check? I could use a new car.
Anyone else owed money? - Wronghead, on 12/12/2007, -5/+15If you voted for Bush in 2000 or in 2004, please do us all the favor of refraining from voting in 2008.
Thank you. - inactive, on 12/12/2007, -4/+12Since you didn't bother to read the article and clearly are commenting out of ignorance I'll bring you up to speed so you can better comprehend what is really going on.
While some people knowingly took out mortgages they assumed they would eventually be able to afford others, who were not very educated in the loan process were screwed by brokers, banks, and lenders. The brokers fudged their tax returns and income to get them approved. Some lenders were aware of the lies, but they were too greedy to turn the commissions away,
FTA "As brokers, appraisers, lenders and others committed blatant fraud, Wall Street turned a blind eye. It bought the loans, packaged them in bundles and sold them to investors around the world." - justinlarsen, on 12/12/2007, -1/+8hrm.. ron paul?
- radu79, on 12/12/2007, -0/+6Same here, I am saving money to buy a house in cash. Meanwhile, I have my savings in a money market account offered by my credit union.
The rates dropped from around 5% this summer to ~4% today. After paying taxes for the interest and adjusting for inflation, I kind of lose money.
And those morons are going to be bailed out at our expense. What motivation do people have to save money and not get in debt if they are treated like that? - SRSco, on 12/12/2007, -1/+7Okay. An article is critical of Bush. So you all digg it up and post your 9th grade anti-Bush rhetoric without even having a slight understanding of economics or the subprime meltdown. Please see the following article to educate yourself a little more on where the Democrats stand on this. (To use the words of the article, they wish to reward the cheaters and liars even more than Bush.)
http://www.newsday.com/business/ny-usmort1207,0,33 ... - inactive, on 12/12/2007, -0/+6What happen is called mass hysteria and panic. I worked for a couple of lending companies and during the hey day of mortgage loan lending, I began to realize that the whole industry was involved with ARTIFICIALLY inflating the market thus causing people to panic and buy (no matter the cost) for fear that the price of owning a home would never go back down again. I used to blame the appraisers but as this article states, it was the whole industry.
But, to be honest, borrowers should have been smart and not 100% financed a home. They should have realized exactly how much am ARM loan that had a yearly incremental interest increase of say 2% would actually cost in the end. When those Interest Only/Negative Amortization loans came out, many of us realized this was the start of the end of things. Those loans would go to people who really couldn't afford a loan...and of course, they would pay the least amount possible and now end up in a situation where many people are in now: mortgage loan owed is above 100% and the inevitable foreclosure. - Pake, on 12/12/2007, -6/+11And yet, if he didn't do anything, everyone would be bitching about how he doesn't care.
- CaptainStone, on 12/12/2007, -0/+5Here is the other problem:
Median Household Income - $46,326 ( http://www.whitehouse.gov/fsbr/income.html )
Median Housing Value 2006 - US - $185,200 ( http://factfinder.census.gov/servlet/GRTTable?_bm= ... )
Median Housing Value Sept 2007 - $212,000 ( http://www.usatoday.com/money/economy/housing/2005 ... )
Who can realistically afford a median house at $212K and only have a median household income of $46K? You can't! This is my small view as to why the economy is not in good shape.
I make a very good salary. However, I can't own a home and take care of retirement, living expenses, college saving, medical, etc while living near my job. My current commute is 2 hours each way.
I spoke with lenders trying to sell me crazy ARMs that I just didn't understand but would allow me to live within 10 miles of my job. The temptation was high. Taking the time to think things through, I finally overcame that temptation. Bought my current house. The commute frustrates me. However, I know that financially I am safe. If I lost my job tomorrow, I could still afford to pay for my house via other permanent sources of income. I would have to fore go luxuries such as yearly trips to Europe, cable TV, high speed net, cell phones, steak dinners, etc, but I would survive and still be happy.
Stop living outside your means! Stop trying to keep up with the Jones and just live your own life. - piratearggghhh, on 12/12/2007, -0/+5Damn rickroll'd
- LordRedSnake, on 12/12/2007, -0/+5I don't quite understand why anyone thinks this is corporate welfare. Banks aren't receiving any tax breaks or funds from the government to carry out this plan. They're agreeing to extend teaser rates to borrowers at risk of defaulting (or already defaulting). Banks are pretty much agreeing to this plan because they have a gun up to their heads; several congressmen have threatened much more extreme measures if this plan doesn't go through. The end goal here is to bail out the borrowers who are going to lose their homes. Extending loans to defaulting borrowers isn't really in the banks best interest, but people will still persist in calling it corporate welfare for whatever reason.
However, this is not to say that banks shouldn't have come up with a similar plan on their own. In fact they would have been smart to get together and figure out a way to minimize foreclosures. When the banks are all foreclosing on tons of houses, they have to sell the houses to recoup their costs. Selling so many houses at once will just further exacerbate the already declining prices and ensure that banks receive even less money back from the sales. Slowing this process down as much as possible would help both homeowners as well as the banks. It just should not be a result of government decree.
Yet the road to hell is paved with good intentions. This is a result of government action that started nearly a decade ago, and now the government is stepping in to screw up incentives again. Let's look at the history here: Fed lowers interest rates way too much due to the Asian financial crisis in 1997... dot com bubble ensues leading up to the dot com bust when the fed raises rates again. US experiences a recession and Fed cuts the rates way low again... leading to a housing boom and bust when rates go back up again. Now we're dropping the interest rate again and bailing out banks. I wonder where this is going to lead?
Bailing out borrowers and banks with low interest rates only encourages more reckless behavior because everyone realizes that if everything goes to hell, the government is going to step in again and give them cheap money to save their asses. How about banks face a squeeze, learn to innovate and allocate funds to reduce risk and make markets work more efficiently? - LisaThurmond, on 12/12/2007, -3/+7It sends the wrong message. Corporate welfare while we're suffering through RECORD DEFICITS. Grrrrrr.
- radu79, on 12/12/2007, -1/+5Even so, it's not rocket science to figure out how much you will have to pay, and see if you can afford that.
When you loan so much, you god damn better be sure you can afford it. - Archon810, on 12/12/2007, -2/+6Is there anything Bush can do right?
- EvilAnimator, on 12/12/2007, -14/+18Nice headline. This is almost exactly the plan Hillary Clinton wants too. And other Democrats want to go even further in "rewarding the cheaters."
- sonnybobiche, on 12/12/2007, -0/+4It's not black-and-white, guys. There were two options here. Bail out the companies and at the same time keep poor and middle-class people from losing their recently purchased homes, or punish the companies for taking huge risks and let everyone lose their houses and go bankrupt. It was lose-lose. The real issue here is that now the companies are encouraged to take bigger and bigger risks, knowing that if they win, they're profitable, and if they lose, the feds will bail them out. And there's not much we can do about it.
- jongos, on 12/12/2007, -1/+4Actually this effort will only bail out people who are current on their mortgages. If you're behind at all, you're excluded which boggles my mind because people who are about to lose their homes because they're behind are stil S.O.L. For the people who had adjustable rate mortgages that just jumped %50 to %60 percent, they're still likely to lose their homes if they can't come up with the cash to bring their accounts current.
In effect the people lowest on the totem pole aren't getting helped out at all because they'll never be able to afford to 'catch up'. - vorsicht, on 12/12/2007, -0/+3Wow a well reasoned argument. I didn't think that happened on threads like this.
- Bridea, on 12/12/2007, -0/+3Let's consider the alternative: the White House does nothing. America enters deep recession. Fed keeps cutting rates to boost economy. Dollar devalues. Then what?
- Wronghead, on 12/12/2007, -1/+4What he said.
Also, it is up to the banks to lend to people who can afford to pay it back. If they were unable to do so, they lose at business and do not deserve to be bailed out. Banks do not lend money because of "crying liberals."
Sorry, but you have failed. - Leomarth, on 12/12/2007, -2/+5What you people don't get is that government always benefits only those who are entwined in it. All the whining and crying about government should really help real people... it's not in the governments interest. Your government does not care about you. And all the whining and crying is anxiety management on your part; you've put the onus on the government instead of yourself. And that's all that is ever going to happen.
- cyberpear, on 12/12/2007, -2/+5strangely, I am usually inclined to bury all stories with "Bush" in them. This one is actually a concern for me.
- bxblox, on 12/12/2007, -0/+3they should go bankrupt and the people should lose their homes. bad choices allow for bad consequences
- cherwilco, on 12/12/2007, -4/+7as long as you count lie, cheat, and steal then yes there are 3 things
- smackafiyah, on 12/12/2007, -0/+3The more I hear about this the more I'm happy that I chose a fixed rate on my mortgage
- animeguru, on 12/12/2007, -0/+3First off, having two options IS "black-and-white."
Second, I say let the sub-prime companies take it up the ass and the people who bought way more than they could ever afford lose their homes. Future mortgage companies won't make such retarded decisions as to underwrite a loan for a half million to the guy who works the register at McDonalds and those of us who were sensible enough to purchase a home within our means and continue to pay for it don't get burned because we actually did some research before taking out a 30 year loan.
I feel for people, but I don't care who you are, the numbers just don't make any sense. Even the most dimwitted of citizens should be able to realize that they can't afford a McMansion unless their take home pay is a lot higher than minimum wage. - rworne, on 12/12/2007, -0/+2The other downfall is the dumbasses who bought houses they cannot afford drove up the prices so even more dumbasses (myself included) cannot afford to buy one now. This is how the honest person gets punished.
/me is still pissed that a simple small condo in a semi-decent So. Cal neighborhood would require a jumbo loan. - yeti22, on 12/12/2007, -0/+2This sort of bailout just makes me furious. Bush is among the crowd that's always saying "Let the market sort it out." Now, when the market appears to be doing just that, he has to step in and use government assets to protect private interests. Which is it Mr Bush, are we going to live with the sink-or-swim market, or does the greater good sometimes trump private interests? Why does the media not call him on his double-talk?
Seems to me it would have been cheaper and less painful in the long run to have robust regulation... - brentinkc, on 12/12/2007, -4/+6See what Allan Greenspan has to say about sub-prime mortgages
http://www.youtube.com/watch?v=eBGIQ7ZuuiU - GoatMonkey2112, on 12/12/2007, -0/+2A few people did get screwed by the mortgage companies just out of their own ignorance of what an option mortgage is. If you pay that lowest option every month, you're eventually going to be screwed if you haven't saved up a big pile of money for when the balloon is due.
- kemp34, on 04/24/2008, -0/+2Greenspan played maybe the biggest role in getting us here with his years of cheap credit.
- Scottamus, on 12/12/2007, -0/+2Welfare for crooks by crooks.
- SRSco, on 12/12/2007, -1/+3This article is worthless. Just some *****'s opinion. Since 99% of you people digging this have no clue about the subprime debacle you're just blinding digging and commenting.
I don't know WHERE THE HELL you found a parallel with this and Haliburton.
This plan has nothing to do with bailing out lenders. This is to help borrowers. The poor people who got tricked into these loans are the ones that are getting help. If homeowners are going to pay less on their mortgages than originally planned, then somebody is going to lose money, and that's going to be the lenders and those who invested on these securities. This isn't corporate welfare. This is consumer protectionism. If you're against that, then fine. But understand the ***** concept before you start shouting Halliburton and getting free diggs from every uninformed diggtard who diggs anything and everything critical of Bush even if it is totally irrelevant and unfounded. - dracostimpy, on 12/12/2007, -1/+3The proper role of government is to stay the hell out of the marketplace altogether, because it's government intervention that breaks it EVERY time. The Fed is a quasi-government agency, and the monetary policy it dictates is responsible for every boom and bust since its inception. Prior that that, booms and busts were virtually non-existent in America, acts of God notwithstanding.
- SRSco, on 12/12/2007, -1/+3Thank you.
- sjbdallas, on 12/12/2007, -0/+2well said. for me, a 125K mortgage at 6.5% is $1127 a month. That's 1/4 of my monthly income and just about right.
- jongos, on 01/13/2008, -0/+1because it''s not the people that can afford their homes that's sinking the economy. So by bailing out people who arent so bad off, effectively we've done nothing to curb the crisis
- inactive, on 12/12/2007, -0/+1Many people could afford it at the time but then there were a lot of cutbacks on jobs. Employment rates dropped and a lot of people were left penniless or living off of their savings (if they were fortunate/smart enough to have savings).
Sure, there were a lot of shady deals going on and there were people that took loans they couldn't handle but there were also the honest people that lost jobs.
I have a few friends that ended up in foreclosure due to job loss. Fortunately for them they were able to work out their mortgage woes and save their homes. Not everyone is that resourceful.
Should there be a moratorium on foreclosures? I believe so. It will help those that are in dire straits due to the economy and those that are there because of their own stupidity will still be there a year or two from now when the moratorium is lifted.
I would never take an ARM but some people didn't plan on having their homes for more than 5 or 7 years (they typically take them when they plan on either selling and moving elsewhere or when they are just not educated enough to realize how an ARM will most likely end up screwing them after more than a few years). - Trillion08, on 01/21/2008, -0/+1First the Gov't wants "everyone to be able to afford a house". A home for everyone. AWWEEE what a caring and loving government we have. Well the reality is: NOT EVERYONE CAN GET A HOUSE.
So you create all these gov't programs to get people in houses and... 2007 comes around and low and behold none of these people can pay their mortgages. People left and right are losing their homes, not to mention those losing their jobs.
Now the gov't tries to be the savior again by bailing these people out.
Get the trend here??? THE GOVERNMENT F-U-C-K-S THINGS UP EVERYTIME THEY TRY TO INTERFERE IN PEOPLES LIVES.
GET A FREAKING CLUE.
Thanks George Bush for destroying the economy, destroying Iraq, and getting the whole world to hate us. - zeny888, on 01/04/2008, -0/+1The video reveals how predatory lenders were unregulated and often unscrupulous, targeting people they knew couldn’t pay. The broker would make the loan, take a fat commission, and pass on the responsibility as quickly as possible. One lawyer tells: "It’s American capitalism at its worst."
WATCH IT!
http://digg.com/business_finance/MORTGAGE_MELTDOWN ... - animeguru, on 12/12/2007, -0/+1I agree aside from the 'crying liberals' part. I agree that it was us liberals that wanted to make it more affordable for people to own homes, and I don't think that it is wrong, but I think it was taken to the Nth degree.
Helping a person qualify for a mortgage that they are _close_ to meeting the standard checks for is one thing, helping a person qualify for a home that costs double what they can afford is another.
I believe that a large part of the problem was that people kept being approved for more and more and more and the Fed rate was so low that banks just kept borrowing more and more to loan out to consumers. Housing prices started rising to ridiculous levels and people who couldn't afford the home they just purchased could turn around and sell it for a profit before being foreclosed on. Rinse and repeat.
Eventually though, prices were so high that selling the home you couldn't afford was becoming more difficult. Resulting home prices fell and now people are saddled with homes that they paid more than market rate for. Even if they sell, they're in the hole.
The worst part about this whole fiasco is that the ***** who will qualify for this bailout are the ones who bought within the last year, when homes were at their peak price and everyone was already saying that people were going to get burned by all this unchecked sub-prime lending. Those ***** are the ones who are going to get bailed out. Not the family that bought 5-6 years ago when prices were reasonable and chose a 5 year ARM. They're getting hit with huge raises in interest rates that they can't afford and will lose their home. That family choosing an ARM was a bad decision, but not fraudulent. And yet we're going to reward the fraudulent buyers and give the honest ones who made a mistake the shaft. - sflchica1209, on 12/12/2007, -0/+1I hate this idea. Why are we going to reward those individuals that got bought more than they could afford.
Granted, there are people out there that bought within their budget, but have since lost jobs, gotten sick, etc. I understand those people not being able to get out of their houses.
The problem lies with the next generation of Americans. Right now, housing is well out of reach. Why should we continue to subsidize those individuals who bought when housing was well over priced.
Its a basic economic principle = cycles. Right now were headed (or already started) a recession. A recession is not the time where we should subsidize every Americans bad decision. (those dreams of getting a slap on the wrist and a new slate don't really exist)
Times are going to be tough for a while. These are the times that those few Americans that don't attempt to live out of their means, that actually put away a bit of savings, that pay their bills on time, those hard working Americans, will be the ones that come out on top.
As for the people who have lived beyond their means for years now, I say, why should I pay for your mistakes? - dupswapdrop, on 12/13/2007, -0/+1yes but the real estate still goes back to the bank to be resold. plus the bank gets what ever assets they can from the people who defaulted on the loan. so buyer 1 gets a mortgage for 300,000 pays 5% down, buyer goes belly up bank gets real estate back keeps the 15,000 down payment. Bank resells at 289,000 10% down buyer defaults 28,900 back to the bank and it just keeps going. The bank never loses all the mortgages are just paper backed only by the real estate.
- dupswapdrop, on 12/12/2007, -0/+1No they want to bail out the companies, then Bush and the boys get their kickbacks. But poor and middle-class people will lose everything. The rich get richer!
- ItsTheSun, on 03/01/2008, -0/+1this is really insightful
- inactive, on 12/12/2007, -0/+1Interesting theory there. It held water until you said "cannot afford to buy one now."
We have bought 3 investment properties in the last 9 months. Trust me, you can afford now easier than ever. The banks are lining up to take a loss on a foreclosed home they own.
They already lost and holding the property is doing nothing for them so they typically just want to sell it, take the loss and move on. -
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