Hostility to Homeowners-Why Bailouts Are Bogus
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The agreement in the US Senate last Thursday to create new bipartisan housing legislation reflects pressure in Congress to tackle the mortgage crisis. Despite the emerging consensus among the parties in favour of more government intervention in the housing market, the final shape of the bill has been influenced by a curious coalition opposed to a full rescue of mortgage borrowers.
Opposition to government aid to homeowners also has a broad base. Many pundits thought John McCain was dead in the water with his assertion that the government should not be bailing out banks or homeowners that have speculated and took too many risks. What we are seeing now is an array of opponents – pitting renters against homeowners, the young against the old and prudent savers against ambitious housing entrepreneurs.
Opponents of aggressive housing legislation are coming particularly from areas that avoided a speculative property bubble. Many Americans of all stripes feel they are being made to pay for mistakes committed in a relatively small group of boom-and-bust states such as California and Florida where many speculators bought property hoping to flip it. When the market went south they got left holding the bag. Now, the public is being asked to foot the bill.
Many Americans feel that speculators and other home owners who took out loans they could not afford are lining up to be rewarded for foolish behavior. What is interesting is that any attempt to help homeowners will also undoubtedly help out the banks who offered these lousy loans in the first place. Many Americans are asking themselves why they should have to pay to bail out banks and people who took out loans they could not afford. Before I bought a home, I scrimped and saved. I waited until I could afford it. That is not the case with the group(s) we are being asked to help out. In fact, even if we bail them out now, what is to say that these same people will be able to keep paying their mortgage 6 months from now. Just because the federal government would buy the loans doesn’t mean that Uncle Sam can give them a pass anymore than the banks could. Simply changing the entity who holds the mortgage will not solve this mess short or long term. Where is the fairness here? The fact that this question gets asked shows just how an attempt at bailing out those who spent and lent beyond their means is problematic.
A poll last week found that 53 per cent of Americans reckoned the government should not help out homeowners who borrowed more than they could afford, with only 29 per cent in disagreement and 17 per cent unsure.
Opposition to government help for banks that made bad loans was even stronger, with naysayers outnumbering proponents four to one, the Rasmussen Reports survey reckoned.
Recent statistics also show that over 94% of mortgage holders are keeping up their end of the bargain and paying on time. The other 6% is made up of a mix of speculators and those that either hit hard times and/or signed on the dotted line for loans they could not repay.
A great deal of hostility to any kind of government intervention is predicated on the disastrous resolution of the savings and loan crisis. More than 1,000 community mortgage lenders failed during the late 1980s and early 1990s, costing the US taxpayer about 180 billion dollars.
There also appears to be a broad consensus that to cushion borrowers and lenders against the consequences of their actions is to risk spreading “moral hazard” by forming a perverse incentive to repeat past mistakes.
The Democratic leadership in Congress will argue that proposals on the table now – including at least $300bn in federal guarantees for re-financing mortgages at lower prices and public funds for advice on foreclosures and for states to buy abandoned homes – represent the difference between some government action and none. As argued earlier federal guarantees are meaningless to the rest of us who pay our bills and don’t live by the credit card. What Democrats and Republicans fail to acknowledge (because it is an election year) is that helping these entities out doesn’t change the moral hazard described above. It only gives the politicians political cover and only extends the misery for the homeowner and the tax payer.
Many of my friends who typically vote Democratic told me an interesting story. Many have never voted Republican but said they might vote for John McCain purely because of his cautious opposition to the bail-out issue.
Many of my friends rent. They don’t have a dog in the show. They are angry that speculators may now get government assistance.
Neil Cavuto brought up two very good points for all of us to consider:
“One, there was a time things were much worse.
And two, there was a time when we didn’t treat ourselves as victims.
I think the second point is the really important one.
It’s probably fair to say some got duped into signing questionable mortgages.
But they signed them.
Some blame McDonald’s for making them fat with those double cheese quarter pounders.
But they ate those double cheese quarter pounders.
Some got in over their heads racking up credit card debt from unscrupulous lenders.
But they racked up the debt on those credit cards.
My point is not that there’s always someone to blame.
Just that there’s only one person ultimately accountable.
You.
Me.
Us.
The greatest generation got that greatest of all simple points in life.
We are what we do, what we sign, what we eat.
As Jeno (from Philadelphia) himself reminded me on this very show, “life didn’t give me much, so it was up to me to get much out of life.”
He got that.
Do we?”
And the bigger question is: Will the politicians get it? Or will they reward those that didn’t play by the rules and spent beyond their means? And if they do, how much will it cost all of us in the end? The unfortunate answer is that the politicians will try to pass this legislation so they can demonstrate they are trying to do something about the problem. Many people don’t want to be hostile to homeowners and banks, but seriously, why is it my responsibility to help pay off my neighbors mortgage? Would anyone take me seriously if I walked up to a stranger and asked for their credit card so I could go charge on it? Guess what, that is exactly what the politicians are going to do to all of us. Grab your wallets folks it’s going to get rough.
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Comments
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0 
0 Oh, yeah, by the way…I do appreciate that you didn’t try to say this issue was the fault of the Democratic presidential front runners, if it’s apparently a bipartisan effort.
I’m glad to hear about John McCain’s apparent maverick stand again…he’s an interesting duck, I was really sorry he lost to Bush years ago, I was considering voting for him.
Where do Obama and Clinton stand on this issue, are their positions also known?
Just to round out the tale a bit.
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0 0 That’s what I was thinking….I don’t see the big fuss over 6%. Granted I don’t want the govt bailing out those 6% either, but I’m sure the number is much much higher than that. Good article otherwise. And I’m with Nemesis with her statement of why are people so quick to shirk their responsibilities? It seems we’ve got a whole generation of people who want help everytime things don’t go their way. Everyone is looking for a handout when their life gets the least bit uncomfortable. Everyone is looking their 15 minutes of fame or to get rich quick. Nobody wants to get it the old fashioned way either with hard work and determination. It’s all about instant gratification with this generation, and then they end up whining and crying foul when things don’t go their way or they realize that they’ll actually have to put in a hard days work for an honest days pay. I say enough is enough!
The backbone of our country has been broken and it’s time we get out act together and stop relying on other people to fix our problems. G.W. wants to hand out rebate checks to “jump start” the economy. if you wanna jump start the economy, bring industry back! Stop outsourcing everything this country was known for producing 30 years ago. Stop relying on other countries to feed us with their fruits, vegetables, grains, etc. Stop relying on other countries to cloth us, to give us transportation, etc…the list goes on and on. You rarely see a “made in America” label on much of anything these days. And people wonder why we’re on hard times. We need to start busting our butts again and getting back to work and start producing the products that originally made this country the great super-power that it once was. But that would be too hard huh? Lets just ask for another handout! Doing that is no different that those dirty smelly folks standing on the corner begging for change. And the people that give it to them on only enabling them. You feel so compelled to help….than bring them a sandwhich and some job applications. You’ll do alot more help that way I gaurentee it.
So my answer is “NO”. No bailouts for these people that can’t live within their means. No bailouts for these people that got “in over their heads” because they wanted to impress their friends and keep up with the “Jones’s” by purchasing a house they really couldn’t afford to begin with. You got yourself into this mess, you need to get yourself out.
But that’s just MY opinion. 
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0 0 For Nemesis and 007, here is a nice little article that points out some added details and dissects the bailout plan proposed by the Bush Administration. I hope Mr. Bush can learn the lesson Former President Nixon learned when he tried price controls and freezes that have been articulated and pushed by Obama and Clinton. All of these politicians are grasping at straws to fix a problem that they should just leave alone.
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0 0 I appreciate the link Mike….very interesting indeed!
I don’t mean to bash the Bush administration….but they never cease to amaze me. Unbelievable!
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0 0 Thanks for the link, Mike. The best part was the very last sentence:
“But whenever politicians attempt to protect borrowers and lenders from their folly, they just encourage more folly.”
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0 0 what about mortgage protection insurance??? was or is the crisis affected in any way by the relatively recent concept of mpi? I know we had to pay it with our last house, as we didn’t put down 20%….what about all of the people allowing their homes to go into foreclosure??? did they all put down 20%?
We moved away from Idaho to an incredibly steep real estate market about four years ago…talk about sticker shock!!! But my husband and I made a conscious choice not to be caught up in the whole notion of buying an outrageously expensive house just because someone would “qualify us” for it. As I watch the r.e. market tank, I am very, very glad we “settled” for a perfectly nice, older home without all the expensive bells and whistle. Lots of foreclosures here these days.
On a related note, I was watching some show on TLC the other night; something about buying your first home. Anyway, they were showing a girl about 20 who had a reasonable job but poor credit. She was buying a 300,000 house!!! She went to lender after lender until she found someone who told her he was willing to “stretch” a little and qualify her for a 300k loan. !!!!!!!!! I realize housing values are all over the place, but, really, don’t people believe in saving for a down payment and living within their means????
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0 0 Babs, #7 “but, really, don’t people believe in saving for a down payment and living within their means????”
They haven’t been taught to do that, it’s an entitlement world out there. Instant gratification and why not? The entire credit industry is beating a path to your door to give you credit at 25%+ interest.
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0 0 Yeah, many persons in college are inundated with credit offers and open up multiple accounts. The credit industry claims to run education campaigns to consumers to tell them not to go into debt…..I believe that about as much as cigarette companies educating would be smokers not to start!
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0 0 This article really strikes a chord with me. Having been a general contractor during the 90’s boom in Colorado and being a co-owner of a real estate office during that time as well, I have some pretty strong opinions about the Government mortgage bail out.
I remember being surprised by how many young couples bought the houses I built and wondering how the hell someone in their early 30’s could swing a $500,000 home. I was doing well financially but chose to live in a modest home (no where near the size I was building) and pay off the mortgage.
These kids were getting help with down payments from parents or putting 5% down and taking out an up front second to cover the 20% down and avoid MIP plus securing 3 year balloon loans for 2-3 % to get the payments down to $2500 to $3000 a month. All the while speculating the market would continue to explode and they would make a boat load (tax free!) after 2 years. Save for a down payment?? Not for these folks.
That formula worked for a while. Now it doesn’t, the housing market is finally slowing so by all means let’s bail out the greedy, financially irresponsible, risk-taking idiots because they are “loosing” their homes. At this point, nothing Washington rolls out shocks me.
I’m thinking about cashing out my 401k and buying lottery tickets. If I hit the power ball I’ll be set for generations!!! And if I loose my life’s savings-some dipstick in DC can bail me out…..Only fair isn’t it?
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0 0 I agree with the last few comments….people just can’t seem to (or rather don’t want to) live within their means these days. I think most of the people that are having foreclosure problems are the ones with bad credit who got into a house with little or no money down and went with a subprime mortgage. (very interesting article btw Mike, thanks for the link!) Then when their rates went up and the economy tanked, they just couldn’t afford that 300k house that they just “had” to have.
I liked 007’s idea regarding teaching our kids in school about money management. Its obvious they’re used to Mommy & Daddy buying everything their hearts desire.
I was brought up to work for everything I wanted at a very young age. While my friends were wearing designer clothes, expensive sneakers and riding new bikes….I was up at 5am each morning working a paper route to buy some decent clothes. And then after school I’d wash and wax cars in and around our neighborhood so I could buy my own bike. (and that was after I was done mowing the lawn, chopping wood and doing chores around the house) My parents only bought me the “necessities” when I was growing up. And by necessities, I mean clothes, (as long as they were on sale and that weren’t hand-me-downs) school supplies and maybe the occasional book since we didn’t have a tv most of my childhood. If I wanted a “luxury item”, like some cool shoes or a radio (we had transistor radios when I was growing up), I had to work for it. I remember I saved my money for 2 years to buy my own car when I turned 16.
Nowadays kids have their own tv’s with 3-4 hundred dollar video game systems, they walk around with 200 dollar jeans, designer watches, I-Pods, and then their parents buy them new cars with thousand dollar stereo systems when they turn 16. It amazes me how paren’ts just don’t teach their kids the value of hard work and/or working to “earn” these types of things. They spoil their kids and give them whatever they ask for. But then these are the same kids that grow up and 25-30 years old buy a 3-4 hundred thousand dollar house with no money down in order to impress their friends. And we wonder why there are so many foreclosures at this day and age.
I’ve only been up here for a couple years, but I know a few young couples that have big houses and brand new cars and they live from paycheck to paycheck. They can’t afford to do much of anything else because their spending 80% of their combined monthly income on their mortgage.
“Living within ones means”…..yeah, that’s definately a big issue in this day and age.
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0 0 I’m wondering what is actually taught in our high schools and colleges today that precludes any knowledge whatsoever about finance and business. My college age daughter doesn’t have a clue how to balance her check book or even how to figure her cash outflow vs inflow each month. She has figured out how to save money for cosmetic surgery she wants but doesn’t need. No mention of her student loans or car payments due. And buying a house? No way will I cosign on that disaster in the making.
It’s easy to see how some get in over their heads due to their own ignorance of finance. I feel sorry they never paid attention and learned BUT I’m NOT going to bail them out from their own stupidity. Unless there was serious predatory lending practices going on I don’t have much sympathy for those losing homes they had no business getting into in the first place.
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0 0 Should schools or parents be the ones responsible for teaching financial lessons?
I read a book at our library about teaching your kids about money, suggesting giving hefty monthly allowances but requiring them to pay for their own things. The first year they have to use their allowance to pay for their lunches at school, treats and toys, and birthday presents for friends. The next year you give them a bit of a raise, and they have to start buying their own shoes, etc.
It sounded like a lot of money to give a kid (it started at like $50 a month), but the author figured out they were saving money by not having the kids pester them for little things along the way. Plus the kids were learning to manage their own money and make their own mistakes while teenagers, rather than when they were young adults and stumbling out in the world with credit card offers and home loans.
So should schools or parents be the ones responsible for teaching financial lessons?
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0 0 I agree that parents should teach it, because they can’t count on the school to give practical experience (the school can teach the basics, and do, but it’s not real until you operate your bank account yourself).
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0 0 I am shocked to hear that schools can’t give practical experience……yet, these are the same people that are wanting to provide sex education to our kids and keep clinic visit results protected from parental oversight. It is amazing that people really want to cede their rights and responsibilities to government bureaucrats who can’t or won’t really “take care” of the problems that afflict our society as it is now. They have had ample time to fix problems from deficit spending, food safety, airline safety, and other matters and yet, we still have ecoli scares with spinach and beef, we still have people getting on planes with REAL weapons, etc…..
The message is pretty clear, the government sucks at many things. However, they are good at collecting taxes when the want to and building tanks. Maybe they need to just stick to a few things they do well and stop meddling in things they usually just screw up!!!!!
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0 0 I think the schools should give the basics for things such as budgeting, and sex ed. Mostly, because parents aren’t doing a good job of teaching some of these subjects at all, and they really need to be taught.
But a school can only give the basics. It can’t really give a child money and have that child manage it for daily life needs, to learn how to handle a checkbook and budget in real life…which a parent can do.
A school can’t really give a child a good background on the private morals and family values that the parents have. So the school offers the basics in sex ed, and the parents (if they bother) can teach the values end of it.
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0 0 In my high school I took an elective general business and finance class that should really be mandatory for all high school students. We did practical exercises like preparing tax returns, balancing checking accounts, home finance, etc. It really helped me get started in the real world. I agree it should be a joint effort between schools and parents but face it, many parents are just too ignorant of these subjects themselves to be of any use teaching their kids (ask someone at random how much ten percent of one hundred is and watch the blank stares). And with the current culture in this country many kids just refuse to learn anything they deem unimportant anyway. The situation is only going to get worse. The simple things those of us who grew up before the 1980’s take for granted, like common sense, are increasingly rare.
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0 0 Man, I love Cavuto. I hope you do too. Excellent article on American reliance on the nanny state.
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0 0 On the other hand, if parents don’t have the financial and money skills, how can we expect them to teach it to their kids? Obviously kids are already learning their parents’ BAD financial and money skills.
If it’s a minor problem, it should be parent’s responsibility, right?
If it’s a major problem across America, it should be America’s responsibility, right?
Maybe our schools could help a little by integrating more financial lessons into curriculum. My fifth grade teacher had us using a checkbook system (”money” paid based on grades earned) all year long, we got to have monthly auctions for fun items and fines if you misbehaved. However, that was the only year I can remember getting “real-world” financial education.
The consumer economics I took in high school was so boring I quit going so I don’t know how much financial skills they taught. The consumer economics class I took at night school was much more focused on the real world and students took it seriously. Maybe if more financial education was integrated into math classes each year? Maybe require finance courses in 10th, 11th, and 12th grades?
So again, if the problem is widespread across America, if the problem cannot be fixed by parents because the parents don’t have the skills themselves, and if the problem is causing our country to decline internationally, what should our society do to fix it?
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0 0 The study of economics always seemed to be boring, especially in the macro-econ classes I took. However, when you break it down to micro-econ and start talking about real world examples in our daily lives people get it pretty quick because it effects their pocketbook. Alot of people seem to be interested when it hits close to the wallet. Another positive step are books like Freakenomics. This book is an interesting read and spells out how economics works. There is always the interesting economics of homosexuality and heterosexuality as well. That gets people’s attention and they perk right up.
Schools can make the teaching fun and interesting as well. However, if they buy stodgy books and boring lesson plans it is no wonder people don’t pay attention or learn anything. Like most subjects, alot depends on the quality of the teacher and their ability to capture the imagination and attention of their audience.
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0 0 Thanks for that link, Mike. I’m liking him more and more.
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0 0 Cavuto is an interesting guy. From what I learned at the Glenn Beck fundraiser at the Civic, Cavuto has Multiple Schlerosis. He is also has limited vision, possibly blind in one eye or partial in both. Often, when he speaks to guests he can’t even see them and sometimes even has convulsions on the TV set…..yet, he keeps on trucking and is smart as a tack. His story is amazing and should inspire many people who are disabled or downtrodden to keep chugging!
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0 0 Wow. You have to admire someone like that. I love the tv show Scrubs (even though they’re all much younger than me, it’s foul humor that I enjoy) and they had Michael J Fox as a doc with OCD. He just worked around it even as he acknowledged it, and it hardly ever got him down.
I’ll have to check into more of Cavuto’s stuff. Thanks for pointing him out to me.
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0 0 If parents don’t have the “financial or money skills” as Joe put it, they shouldn’t be having kids in the first place. imo But since there’s no way to stop “less than bright” people from having children, I thinnk our schools are our next best option.
When I was in school, algebra wasn’t required, so I wasn’t required to take a math class senior year. I didn’t really have to take one junior year, but I opted for a “business math” class. It was very informative and taught a lot about money management. Also, the teacher was a riot. Very funny man who really got the class motivated and interested in such a boring topic. Like Mike mentioned, it really does have a lot to do with the attitude of the teacher. They can make all the difference in the world as far as making a boring class enjoyable and the topic fun to learn. I really think it should be more of a requirement than an elective in this day and age.
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0 0 Regarding the comment that some Democrats are considering voting Republican because of this bailout talk, I can attest. I am not only a Democrat, but a liberal Democrat who believes the Government has an obligation to help the less fortunate. I can promise you that if the Government bails out homeowners at public expense or risk of expense or even pressures mortgage companies to partially forgive mortgages I will be voting for McCain. It is fundamentally unfair to those who either acted responsibly or failed to act stupidly.
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0 0 Lester #25, while I can appreciate your frustration, I wouldn’t vote for a candidate because of their position on one issue only.
From the PR today (via AP) “The Bush administration announced new steps Wednesday to help more homeowners head off foreclosure, clashing with lawmakers in both parties who want the government to step in with a broader housing rescue.”
So it is a bipartisan issue, Republicans and even Bush is proposing some steps for helping these hapless homeowners, too.
John McCain has thusfar expressed skepticism per the post above, but that one issue alone does not a good president make.
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0 0 Whoa! Well, McCain was only cautious in that he wanted his own version to go out…he’s for a type of bailout, just as the rest.
From cnn:
http://money.cnn.com/2008/04/10/news/economy/mccain_econ_plan/index.htm?postversion=2008041012
“McCain introduced what he is calling his “HOME Plan,” which blends elements of mortgage rescue proposals by the Bush administration, the Office of Thrift Supervision, House Financial Services Chairman Barney Frank, D-Mass., and Senate Banking Chairman Chris Dodd, D-Conn.”
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0 0 Excellent, the article reports more details here:
“To qualify for McCain’s HOME Plan, a borrower’s home would have to be a primary residence. In addition, the government would verify that the owner told the truth about his financial situation when he applied for the original mortgage and was able to make a down payment when getting his original loan, according to a campaign adviser.
Lenders would voluntarily write down the loans based on the home’s current market value and give the borrower at least a 10% equity stake. If the borrower later sells the home at a price higher than the refinanced loan, the lender and the federal government each would receive a portion of the sales price. They would be entitled to as much as one third of the loan’s reduction in principal.
So under McCain’s plan, if a borrower owes $150,000 on a home worth only $100,000, the lender would have to reduce the loan to $90,000. The $60,000 difference in principal would be split three ways: The lender and federal government would get as much as $20,000 each, depending on how much the home sells for when the borrower moves, and the owner would get the rest.
The new mortgage would be a 30-year fixed rate loan, and the government would back 80% of the new loan.”
Sounds reasonable for all parties involved and doesn’t reach the level of an unearned or undeserved handout….and most importantly, it doesn’t simply delay the foreclosure process like Clinton’s 90 day moratorium that is like putting a bandaid on a gaping wound. Homeowners still get to keep their homes, but it isn’t a free pass. Lenders continue to receive revenue, but don’t get artificially inflated prices to jack up revenue at taxpayer expense, and the government recoups some equity in a sale for assisting the homeowner and lender in leveraging the price of the note to more realistic market price. What’s not to like?
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0 0 Well I prefer that the government does no stepping in at all, and I don’t much care for any of the plans.
But, this is a classic example of a big mess that has far reaching implications in our society, so the government is having to step in to fix it for all concerned.
Sometimes that happens, in many different areas. Government sometimes has to fix something that private industry and the citizens created or messed up. But they don’t always do very well (McCain’s plan sounds the most reasonable so far, but that doesn’t mean it will be the one approved.)
Usually the government foists a terrible repair plan on the citizens (such as “don’t ask, don’t tell”, or “no child left behind”). If we gotta do it, I hope the new one works.
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0 0 anyone know about mortgage insurance? does that have any impact on the crisis?
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0 0 Mortgage insurance doesn’t cover binding contracts being enforced. That’s what is going on here. Rates went up and people can’t make good on their signed promises. To make the higher payments. I can’t think of anyone who would offer insurance for paying higher monthly mortgages from ARM’s, since the inherited danger of what is now happening is so apparent from the start. The only way insurance would work in this scenario is if a bank took out insurance on the owner for failing to pay up when then the rate went up. If insurance covered this kind of thing, there would be talk of bailing out insurance companies right now instead.
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0 0 Actually, I am talking about mortgage insurance paid by the homeowner as part of their payment to the mortgage co; the “insurance” is to protect the lender in case of a default by the homeowner. The foreclosures which are causing the “crisis” would be obviated by insurance coverage, which makes me wonder: did all these people defaulting on their loans really put in excess of 20% down initially???
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0 0 actually, I did a bit of internet surfing and found this intriguing answer to my question: apparently, a lot of subprime lenders don’t require PMI . . . yowza!! so they made questionable loans, and eliminated one easy way to almost “guarantee” they would not lose money on the deal (ie by carrying insurance, which would pay the mortgage company the value of the house in event of default by the homeowner).
Here is the link with some great comments:
http://pubcit.typepad.com/clpblog/2008/01/where-is-the-mo.html
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0 0 Babs, you’re right. You can buy that kind of insurance. I know a lot of places offer it for just about everything, including any credit extended to you whether it’s credit cards, vehicles, or houses. But usually it will cost you a certain amount of money per $1000 of the price, making it not too enticing to people who got into ARMs in the first place.
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0 0 This isn’t insurance you take out for yourself; it is required by most lenders if you don’t put down at least 20%. It protects only the lender, not the homeowner. i don’t believe you can even purchase it, separately: it just is a required fee that is paid until your equity in the house reaches 20%.
Would have saved all these subprime lenders a lot of heartache right now, but, as that blog points out, a lot of lenders were doing some “creative” financing for their lendees.
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0 0 Yeah, you wouldn’t want to have the potential homeowner to have to fork over extra money each month to go into escrow to pay PMI….that wouldn’t attract clientele….and look who took the bait! People trying to save money and make money. Neither party deserves our help and support. Both sides were trying to cut corners and look where it got them….right into our pocketbooks!!!!
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0 0 well, I am ticked about all this because my hubby and I have PAID pmi before, as we fell a bit short of 20% in our downpayment on our second house. So we paid it, and then asked to have it removed from our payment once our equity bumped us over 20%.
So now I find out that we are in “crisis” because the morgage companies didn’t want to detract home buyers just because, oh, I don’t know, maybe they couldn’t afford a mortgage??? yeeesh.
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0 0 btw when I said “we” being in crisis, I meant the country due to the subprime crisis……..
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1 0 I’m not sure exactly how I feel about the government bailing out the mortgage crisis. Obviously, something needs to be done to get the economy out of a recession but should the government help? I do know how I feel about the financial responsibility of the individuals involved with the mortgage problems! You need to understand EVERYTHING about something you are buying before you buy it, especially a large investment such as a home! Take responsibility for your own actions.
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1 0 I’m tired of my town favoring homeowners. They get their leaves & brush picked up 4 times a year for free. They get their old trees maintained by a Hortocultist. Are town is broke. Now the board just passed a utilty tax to keep these services for the rich homeowners whose home increased in value 65% in 6 years. We just had a property tax increase which caused landlords to raise everyone’s rent. The problem is 90% of renters don’t vote - so they will continue to act like Sheeple taken to the Slaughter!
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1 0 What many of you pseudo existentialists fail to understand is that we have no choice but to bail out these crooked lenders. Look no further than the crash that lead to the great depression. You had a massive crash in the stock market and banking industry. It caused a world wide economic DEPRESSION that nearly destroyed capitalism. The government realized back then that it had to insure banks to stave off a repeat of that devastating crash. YES - we are bailing out some bastages but we have no choice. Our system is constructed with bastages.
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1 0 Insuring banks is not what the federal government does. It insures deposits put in banks by the FDIC, and only upto $100,000. This provision is not for the benefits of the banks, it is for depositors……and helps ensure some level of confidence in banks so there won’t be a run on what little deposits most banks have on hand (usually they only are required to keep 10% of deposits on hand and can loan the rest).
We do have choices here besides a blank check. Those choices are well known and to this point have been ignored by the ruling elites. Fortunately, some US Congressmembers held the line today and voted NO against rewarding bad behavior (except our Congressman Mike Simpson….he voted yes on it!).
What these bankers would have you believe is that the sky will fall out if this is not passed. The Congress should be debating alternatives right now, like accounting changes of Mark to Market and looking at bolstering Federal Housing Admin. insurance (cost estimated at 40 billion) to lenders to assure them (and investors) that housing/mortgage bonds are safe to invest in and keep afloat. This in turn allows the lenders to work with home owners to keep paying on their mortgages and stay in their homes and not on the street. That is real relief for Main Street without cow-towing in Wall Street. We have some alternatives right now.
It is high time that Congress take the next step and enact legislation right now that can make the situation better without turning taxpayers into landlords and mortgage brokers……and one that does not require 700 billion in new spending with the inevitable tax increases to go with it. Our economy cannot afford new taxes. The price of goods and services have doubled and tripled lately. People cannot afford it and cannot afford to bailout fat cats who made poor business decisions. The road is not easy but taking the easy road out by throwing money at a problem won’t solve the tough choices ahead.
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007 says he’ll do some research and post comments after that. I’m not that cautious, so I’ll post comments now.
This was a well written article. I don’t know if your statistics are true, but if they are, I can’t see why the fuss over 6%.
I don’t want to bail out either the banks or the borrowers. But if we help the lenders, then we should also help the borrowers (seems really strange to help the corporations but not the public).
I like Cavuto’s quote. I, too am tired of the lack of personal responsibility in today’s world. (I understand that sometimes things get so bad that folks must take the bankruptcy route, but I don’t want that to be an easy road to take.)