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241 Comments
- datababble, on 01/15/2008, -2/+98"Taxpayers are the ones who stand to lose the most from this mess. They are the ones who will be ensuring that sleazy business people profit." Couldn't have said it better myself.
- SparkyMaGee, on 01/15/2008, -1/+90If we bail them out, it will just keep encouraging them to make bad business decisions. Then we will have to keep bailing them out! The market needs to punish, the government wants to be the rich parent who doesn't punish their bratty kids.
- theinept, on 01/15/2008, -7/+581. For every reckless lender there is a reckless borrower. To suggest that the credit crunch is the exclusive fault or responsibility of the mortgage industry is foolish. Borrowers are to blame, the government is to blame, the Fed is to blame. This is a pervasive issue. Attempting to compartmentalize it as one entity's fault is as foolhardy as trying to fix it by lowering interest rates. There are hundreds of holes here. One cork won't plug them all. Identifying one hole and pretending the others don't exist doesn't make sense either.
2. Because this issue is so pervasive and impacts so many people, all of the involved parties have to work together to ensure that it is resolved in a way that minimizes impact on the economy. George Bush's economy has always been skating on thin ice. Now a ***** boulder has fallen into the center of the pond while everyone was out skating. How it got there is, for the moment, irrelevant because we're all standing on the same ice. Mortgage lenders may not "deserve" bailouts and you may not appreciate paying for them, but if nobody does anything, you won't get off quite as cheaply as you will with a thoughtfully-structured bailout.
No matter how this all shakes out, banks and lenders will suffer in the way that matters most to them: in the pocketbook. Bailouts from the US government and other governments are survival measures. Chances are you want your bank to survive because they have all your money but rest assured that they won't be thriving in this environment and not for years to come. - galeninjapan, on 01/15/2008, -3/+45We need to let the market punish them. If they lend to sub prime borrowers who then default on their loan its their fault.
By that same logic we also need to let the lenders go after the people who do not pay their loans back. It's a two way road. - CraigJ, on 01/15/2008, -3/+32Mortgage Lenders Do Not Deserve to Be Rescued By Tax-Payers. Neither do the borrowers.
- Wrathernaut, on 01/15/2008, -2/+30"If we bail them out, it will just keep encouraging them to make bad business decisions."
Just like all those homes in Florida we keep rebuilding, hurricane after hurricane. - MBellan, on 01/15/2008, -0/+23Corporate Welfare only prolongs the problem. What will people just start being able to pay for their mortgage if given a few more years? What about that crazy interest that's going to outrun any decent increase in their means. This isn't a solution. It's Duct Tape.
- SoxFanNH, on 01/15/2008, -2/+24Pathetic that I am waiting until I can afford housing when these people recklessly take out these mortgages they can't afford and now I have to help them out? What a joke...
Let them take some personal responsibility (where has that gone) and learn from their mistakes... - rehwaldt, on 01/15/2008, -5/+26This is very similar to the savings and loan scandals of the early 1980's in which the taxpayers were fleeced for over a trillion dollars. And, guess what, the Bush Family and the Republican Party were responsible for that fiasco.
Google: Neil Bush - stealthc, on 01/15/2008, -3/+24This is very, very simple. When the government centrally manages the economy, bad investments are encouraged. When the market alone is left to regulate itself, there is no one there to coddle bad investors, and the market is allowed to prune out the stupidity and maintain its stability.
The answer to our economic woes is to end economic central planning. Central planning is bad. The Federal Reserve is economic central planning incarnate. If central planning is bad, and the Fed is central planning, then the Fed is bad. To end this ridiculous economic policy is to end the Fed.
Abolish the Fed.
Abolish the Fed.
Abolish the Fed.
The Fed created the Great Depression and profited from it, and they continue to profit from every economic downturn this country has. Even if you want central planning, the government can do it from the Treasury debt-free, without the middleman of the Fed racking up arbitrary bills for your kids to pay. GET RID OF THE PARASITES. - Graves138, on 01/15/2008, -1/+20This is ***** ridiculous. Our country is broke, and we are supposed to just hand money to these people because they are bad at their jobs? Since when does capitalism work like that? "Work hard and you will succeed, or just suck at your job and we will give you other peoples money!".
This government subsidizing is a joke. Our economy will never correct it self if these politicians keep interfering. These people are SIMPLY BAD AT THEIR JOBS, they should not be encouraged to keep doing it. They should be allowed to fail so people who are better at it than them can replace them, but instead we have to stick to the good ol boy system and the government will keep playing it's 'you pat my back i'll pat yours' game with the banking cartels at the cost of the American people. - pimpofpixels, on 01/15/2008, -2/+21It's not right that people are allowed to crash and burn in this country but businesses are always bailed out.
- defektiv, on 01/15/2008, -0/+18no kidding. i get fined out the ass every time i even miss a bill payment. these fools can make tons of cash with a crappy business plan and the government uses my tax dollars to bail them out so they can do it again? remind me again why we even have a federal government?
- coinman987, on 01/15/2008, -0/+18as long as it's not the tax payers money they can do whatever they want
- bspender, on 01/15/2008, -0/+15Unfortunately, our federal tax money is already being used to help them rebuild in super risky areas:
"Should Tax Dollars Keep Rebuilding Risky Areas"
http://www.usatoday.com/money/economy/housing/2007 ...
"Thanks to the [federal] subsidies, a high-risk property — such as one on Dauphin Island — might pay $990 to $1,646 a year for the first $100,000 of coverage on a property and $30,000 on its contents. Without subsidies, the rate would more than double, according to federal data."
"Thanks to government help, "You'd be a fool not to live on the beach," he [Oliver Houck, an environmental law professor at Tulane University] says. "We're building highways to them, causeways to them, sewage-treatment plants to them. We're paying their (flood) insurance to live there."
...gotta love how easy it is for politicians to steal our money and throw it into stupid projects. - 7goats, on 01/15/2008, -0/+15Why can't greedy mortgage companies ON THEIR OWN fix the problem. Re-write the terms of these bad adjustable loans? The mortgages are on the books. Why not convert them all to reasonable loan products with current rates -- instead of these crazee ARMs that will explode to two r three times that. The government, in turn, would agree not to arrest the lot of them for violating usury laws. The laws are already on the books to fix the problem. No tax payer bail out. Let them sort their own mess out. And congress can pass a law exempting all citizens from paying their mortgage until the industry complies with usury law. Simple. I think the industry will sort itself out soon enough.
- pimpofpixels, on 01/15/2008, -2/+17We're going to be 10 trillion dollars in debt pretty soon, and we can't afford to bail out a bunch of banks who's greed exceeded their resources.
Blame the people for taking on mortgages they can’t sustain, but that’s their fault for trying to get rich in a dishonest way.
Blame the banks for over-lending, but it’s their own fault they bankrupted themselves selling junk bonds.
It’s sad that so many people got themselves into this situation, but it’s what happens when you gamble in the name of greed. Should the government bail out other types of gambling addicts? If I lost my house playing black jack should the government subsidize that too? - kalvinb, on 01/15/2008, -0/+15Lenders wouldn't be complaining if the housing market hadn't tanked. Interest only loans and ARMs served to get people into houses they couldn't afford, ever. At the end of the introductory rate people were expected to sell the house at which time the lender recieved all the money they had lent out in one lump sum. This resulted in a huge profit with little to no risk from interest payments for 5 years.
In the case of ARMs the lenders assumed the buyer would refinance, sell the home or lose the home to the bank that would then resell the home themselves at a profit. It was a no lose situation two years ago when houses were flying off the market at rediculous prices.
There was no compelling reason to help these people. The whole idea was to get the interest money from the loan payments and the house and then sell the house at a profit in the worst case scenario. But, the housing market tanked. Now the banks are stuck with houses they can't sell that are worth less than the loan was made out for.
The banks dug their own hole. Every customer did exactly what they expected them to do. They just didn't account for a market where these seized houses couldn't sell. - pimpofpixels, on 01/15/2008, -2/+15It's the fault of BOTH the Banks and The Borrowers.
If you ask me the real issue here is housing prices. If the government does nothing people will start to foreclose, and housing prices will drop rapidly. This is good news to a young guy like me who makes a decent living but who can't afford a house. I can hardly afford a 1 bedroom condo which cost's about 500,000 these days. I WANT housing prices to fall.
When the internet stocks crashed in 2000 a lot of people put their money into housing and this caused a self-fulfilling rise in housing costs. Housing prices are arbitrarily high due to this cycle of investment, and they must be allowed to fall back down to a realistic level. That's the real issue here, and this bandaid which will cost an already indebted nation billions of dollars will not stop the inevitable.
The government should stay out of it. - ravage86, on 01/15/2008, -7/+20Capitalizing Every Word Does Not Help You Make Your Point. Neither does stopping it for the last sentence.
- Slugo, on 01/16/2008, -1/+14Use my tax dollars to bail out people or lenders that can't use a freaking calculator .....NO. Every one of those people did the math, looked at the risk and took it. Do NOT ask the people that were smart enough to do the math and not take the risk to pay for it.
- dafragsta, on 01/15/2008, -7/+19The very reason I don't think we should do it. It was their bad decision and bailing them out only helps greedy slimy deceitful business men. Then again, we tend to just give our 15-40% income tax to whatever cronies the men in charge see fit to make profiteers du jour anyway, so why stop at no-bid contracts and blowing up equipment because it benefits cost-plus providers?
Politics is nearly 100% full of men serving themselves. They are the chosen ones, not us.
Ron Paul 2008 - scoottie, on 01/15/2008, -1/+12Neither do the morons that signed on the dotted line when they knew it was to good to be true
- inactive, on 01/15/2008, -2/+12Sure i will save them , they can borrow from me, i will give them a high intrest loan
- ngmcs8203, on 01/15/2008, -4/+14Wow... a completely logical, and thoughtful post to this topic. You mean to tell me not everyone is on the "who cares about the economy, the gov't shouldn't bail out the banks" boat?
Let's hope your thoughts get through to the rest of them. - uncltim, on 01/15/2008, -2/+12The moral of the story is... If you are prudent and thrifty you will be punished and enslaved.
- inactive, on 01/15/2008, -3/+13So does that 100% include Ron Paul?
- bbqribs, on 01/15/2008, -1/+11Keep in mind that the Democrats have said the "Bush bailout doesn't go far enough" - they want *MORE*.
http://www.timeswatch.org/articles/2007/2007120613 ...
Both sides are ***** us down the muddle. - MaynardJK, on 01/15/2008, -2/+11They waste all of our money on other things so meh? Way to stand up for yourself.
- jdaniel284, on 01/16/2008, -3/+12Privatize profits, socialize risks. That is the neocon mantra.
- skews13, on 01/16/2008, -1/+10ABSOLUTELY NOT! and i don't want the people who took out mortgages on homes they couldn't afford to get any help either. this story boils my ass. no ***** body is entitled to home ownership. there are people out here working hard,and paying rent trying to save enough so they can buy a home to actually live in. i'm of the mind set that if you purchased a million dollar home on a $50k or less income. the only thing your ass deserves is homelessness. it's time we put the speculators out of buisness
- slicerace, on 01/15/2008, -0/+9I think everyone's issue is with the fact that taxpayer money is being spent on bailing them out. The whole point of the "B-paper" ARMs is for a mortgage company, that isn't subject to the same regulations that a bona-fide bank is w/ respect to these mortgages, to be able to loan to people who have more risky credit histories. If I recall correctly, it includes people who have declared bankruptcy within some short number of years, among other things.
Nobody is denying that there are reckless borrowers, but the sheer scale of defaults on these loans is staggering. You're absolutely right that there's a lack of regulation from the government, but ultimately it was the management of the company (a small group of people, comparatively) that decided to offer these B-paper ARMs to unqualified borrowers. I know a guy who offered these types of loans and he made out big because all of these loan officers that pushed these shoddy loans get commission for them.
Look at it like this: it's clear from the credit histories of the borrowers that they're risky mortgage clients to be taking on -- a big red flag, but yet the companies still decide to permit the loan to occur. On the other hand, the borrowers obviously have previous trouble paying back debt and other obligations -- just irresponsible (a decent portion, I'm not saying all) -- of course they're going to take the mortgage no matter what! In fact, most of these borrowers were deceived into thinking that they could pay for these things -- the mortgages are advertised with these tiny 2% interest rates, but when they go up to 24% in a year, the borrowers are SOL.
Also, don't criticize the Federal Reserve for lowering interest rates. The point is that they want to inject liquidity into the market to hold off inflation and prevent a recession. Doing the opposite (raising interest rates) would decrease liquidity and push us further toward a recession and putting us on the brink of stagflation. - jdepp, on 01/15/2008, -3/+11Too ***** right! The people who made those loans should be stripped of everything they gained during that period. It's no different to collecting fees for the delivery of nonexistent goods. The bankers devised a system where they could carry out a fraud without overtly breaking any law, but that's not the point. They knew it would end in disaster and they chose to profit from it in the short term nevertheless. Now they need to be lead out and shot so other people don't feel that they should chance getting away with it also.
- moracity, on 01/15/2008, -3/+11I initially felt the same way until I did some research and found out that the Clinton administration pressured lenders into loosening their credit standards so that people with poor credit could buy homes. Clinton suggested that banks were "discriminating" against people with poor credit histories.
Well, look where we are now. If the government had kept it's nose out of the credit industry, everything would be fine. This is what happens when the government meddles in business. It's the government's fault, so the government should pay back the banks for forcing them into it. Maybe this will teach them a lesson. I don't feel sorry for either side, but the borrowers get off pretty much scott-free. It's the banks that are being destroyed here. - Hetman, on 01/15/2008, -1/+9If you are lending large sums of money out daily. You should be wise enough not to give loans to people who cannot afford them with the interest rate raises. They understood what they were doing and now they should have to pay for it. Do not bail out these greedy bastards.
- poidh, on 01/15/2008, -1/+9"The question is: do reckless lenders deserve to be rescued?"
No they don't. Next stupid question? - BlacklabelSAR, on 01/15/2008, -1/+9"It's the banks that are being destroyed here."
The same banks that push high-interest rate credit cards like loan sharks? That shouldn't even be legal. - monarch00, on 01/15/2008, -4/+11My fear is that letting the Market correct itself is going to take a lot of the middle-class with it... The thosands of people that work for the companies that are going to go belly-up ALL don't deserve to be out of work because their management made poor decisions.
Don't get me wrong, I believe in the free-market's ability to deal with this, I just wonder what happens to the value of the dollar and your average Joe taxpayer in the process... - chuckd, on 01/15/2008, -1/+8I say sure bail them out... just make it a requirement that every idiot sleazeball that made the decision that put them in this situation is fired without any sort of payment. Perhaps even take larger cuts from their personal income taxes to pay the bailout. That way the same bad people won't keep making the same bad decisions.
- Locke2053, on 01/16/2008, -1/+8It's actually more than 40 in the USA. The feds take 35% (general, medicare, and social security tax). Then the states, counties, and cities each take a cut. After that, you pay tax on sales, property, and capitol gains.
High wage earners (upper middle class) in the USA pay more than half their income in taxes. The investor class, who get no wages, just investment dividends and gains, pay the least amount of tax.
In theory, this is because raising taxes on the investor class would hurt the economy, but most economists don't think that is actually true. - pintomp3, on 01/15/2008, -1/+7it wasn't a mistake. the people giving the mortgages had no incentive to deny a loan, they god paid handsomely to sign as many loans as they could and as big as they could make them. they got extra money if it was a variable rate. sometimes they even committed fraud and switched the papers on the borrower. the mortgage officer would get his commission and never have to think about it again. the companies assumed the housing prices would keep going up, that the borrowers wouldn't be able to keep up with rising payments, and that they could keep the house. they didn't count on the declining values, but they could count on their well payed politicians to bail them out. the victims are the borrowers and the tax payers.
- gdog05, on 01/15/2008, -3/+9Stupid lending and or borrowing = FAIL
- Graves138, on 01/15/2008, -1/+7Holy God, did someone actually just say something well thought out and informed on digg? It must be the end times.
- inactive, on 01/16/2008, -0/+6I could not care less about lenders. These people make a living by owning things not by contributing anything useful to society. When their easy way of life is threatened and they might be forced to do something useful for a living they want a bail out. When these lenders stick out their greedy little hand we should stick a knife in it.
- barroni, on 01/15/2008, -1/+7Bad business decisions fueled by greed. BAD LUCK you lose
- inactive, on 01/15/2008, -1/+7Middle class citizens please get out your checkbook.
- galeninjapan, on 01/15/2008, -2/+8This is what i meant. We shouldnt bitch and moan when the lender tries to get the property back. Thats all im advocating.
- gol706, on 01/15/2008, -0/+6Then you need to sell that loan off to a 3rd party investor.
- AndrewDS, on 01/15/2008, -0/+5If we didn't have a federal government, who else would steal your money?
- inactive, on 01/15/2008, -1/+6When people default on their home loans the lender gets the property back the lender doesnt lose much. So why would you attempt to punish the defaulter further? They wasted a lot of money and have nothing to show for it.
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