The white house has really got into this bail out thing: Now they want the ability to to bail out car loans and credit card debt. Oh, the price of propping up the stock market.
In an expansion of its original proposal, the Bush administration is asking for broad power to buy up virtually any kind of bad asset "” including credit card debt or car loans "” from any financial institution in the U.S. or abroad in order to stabilize markets.
Frank said he and Paulson had agreed to create a congressional oversight board as part of the bailout and to require that the government come up with a plan to avoid foreclosures on any mortgages it acquires in the rescue. A government official with knowledge of the talks confirmed the administration backs those provisions.
Well,you know this wasn't just a housing market crunch that was causing trouble, it was alot of bad credit out there, and I'd bet that if you can't afford your house payments, chances are you might not be able to pay yourcar payments, either, just another reason to buy a used car privately and not a new one from a dealer, wait at least 3 years, and it's just as good, but $15,000 cheaper.
It is much more than folks buying homes they could not afford. It is about mortgage bankers who carefully crafted adjustable rate mortgages to either reap the maximum profit or to take the more valuable home when the buyer defaulted. It is aboutinstruments of doubtfulvalue (derivatives) that were based on those mortgages, it is about a failure on the part of the fed, (remember Greenspan thought derivatives were a great thing) it is a failure on the part of the white house and congress.
IMO: Don't bail out anyone or anything. Let the economy have its littledepression. It is going to happenanyway.
The FBI is investigating AIG, Lehman, Countrywide and about 20 other companies for fraud.
But the houses are worse LESS, and that is why people are walking away from loans. Personal responsibility was the spark, and highly leveraged loans were the kindling that ignited the financial crisis.
It is aboutinstruments of doubtfulvalue (derivatives) that were based on those mortgages, it is about a failure on the part of the fed, (remember Greenspan thought derivatives were a great thing) it is a failure on the part of the white house and congress.
The CDO's and CMO's existed long before this problem and provided a relatively secure source of income for many Americans for many years. The problems came in part, when they were repackaged in a way that made their values (lol, or lack thereof) and risk factors far less transparent.
Even the rating systems in place became distorted for those in finance.
But I do agree with you that the problems at the root cause were more complicated than just bad loans.
well, you can all piss and moan about what's GOING to happen. The fact is, while there is lots of
complaining about the cost and the this and the that and bla bla bla.
I have yet to hear an alternative plan of action which will result in LESS pain than what the
administration is proposing. What are the options ? ARE THERE ANY other ones ?
Allowing these major corporations to go belly up will result in a ripple effect to all segments of American
society as well as internationally. So, being a good little capitalist, and abhorring the socialization of our
economy, I'm open to suggestions on how to deal with this.....but I don't see another 'cure' on the horizon.
when they were repackaged in a way that made their values (lol, or lack thereof) and risk factors far less transparent.
+1
The Glass-Seagall Act was passed in 1933 toregulatefinancial instruments: Because of this law there was real transparency.This came to an end in 1990when congressand Klinton signed off on legislation that prevented the government from properly regulating derivatives.
For years the warning signs were there: Congress did nothing, the laid back fed did nothing, ditto for the US Treasury Dep't.
Personal responsibility was the spark, and highly leveraged loans were the kindling that ignited the financial crisis.
Political naivete and corporate greed were thespark. Yes,millions of folks bought homes that they could not afford, no doubt about that. Those unqualified folks were able to buyhouses because the white house and congress encouraged and enabled them to do so.
What is good for the mortgage brokers and banks in the short termwas bad for everyone inthe long term. Letthe banks and mortgage brokerssuffer along with the unqualified home buyers.
Bail Out - Act III
