dazedgonebye
Veteran
I'm going to use it to pay my taxes.
Thardy
Veteran
I've heard when you owe a million, you're partners.
Yes, a smooth devaluation helps. In the grand scheme of things, however, there really aren't that many loans (as a percentage) that fall into this category; I believe it's been overblown in the media.
Fraud? If so, then the lenders should be the one punished, not the taxpayer...
Fraud? If so, then the lenders should be the one punished, not the taxpayer...
Berliner
Well-known
The other side to 'suspect borrowers' is unscrouplous lenders who actually understood what would happen when that 4.5% rate 'adjusted' to 8.5% ater two years, doubling the monthly payment. Or those 'interest only' loans--usually on jumbo notes--where in a declining market, the value goes down, and the equity quickly goes negative...Dumb consumers (sheep), dodgy lenders...equal blame.
foto_fool
Well-known
I have partners who are money guys. They say when you borrow a million, the bank owns you. But when you borrow a billion, you own the bank. So what does this mean for all the other countries who have funded the current $trillion national debt? (Which, as has been pointed out, is still historically small as a fraction of GDP.)
And speaking of history: ecoomic advisors to governments have been arguing from time immemorial over whether deficit spending or balanced budgets are better policy. The deficit spenders have consistently won.
And speaking of history: ecoomic advisors to governments have been arguing from time immemorial over whether deficit spending or balanced budgets are better policy. The deficit spenders have consistently won.
wgerrard
Veteran
Eugene has it right. In the 'old days', when a lending institution gave someone a home loan, they continued to hold that mortgage. Today, they package the debt and sell it as soon as they can. Then that debt gets resold, etc., etc. The value of the debt everyone is now holding rests on the ability of the guy in the house to continue making payments.
I'm not so sure that we can apply the word 'fraud' to adjustable rate mortgages. Most advertising that I recall did tell the prospective buyer that the rate was subject to increase. It might have been in the fine print, and the salesperson might have left it out of the pitch, but if it was in the paperwork, I don't think fraud is the right word.
I'd agree that lenders who knowingly lent to people who were not qualified should take their medicine, except that some of those lenders are so big that their collapse will hurt a lot of uninvolved innocents.
I'm not so sure that we can apply the word 'fraud' to adjustable rate mortgages. Most advertising that I recall did tell the prospective buyer that the rate was subject to increase. It might have been in the fine print, and the salesperson might have left it out of the pitch, but if it was in the paperwork, I don't think fraud is the right word.
I'd agree that lenders who knowingly lent to people who were not qualified should take their medicine, except that some of those lenders are so big that their collapse will hurt a lot of uninvolved innocents.
Berliner
Well-known
It all comes down to corporate greed. I miss the Cold War days...when our greed was kept in check by the imminent threat of nuclear annihilation...
aizan
Veteran
how much crack can i get for $300? 
aizan
Veteran
oops, did i say crack? i meant treasury bonds.
Al Kaplan
Veteran
Just endorse the checks over to me. I will dispose of them in an environmentaly safe manner.
Talus
pan sin sal
mine is already spent. I'll just go ahead and pay down some credit cards. debt > me
Speaking of nuclear reactors, we need more of those badly.
Berliner
Well-known
Where IS Olsen? I am sure he has something to say...this thread has his name all over it...
anselwannab
Well-known
Enjoy your welfare checks!
I bought a house in 2006 and got a 30 year loan, after my loan officer looked at me like I was an idiot, and questioned where I got my MBA. The thing that irks me is that I had to bid on houses against people who were getting ballon loans. They could bid higher, and did, causing prices to rise. Now those idiots are going to get some protections like frozen rates or no foreclosures. They keep their lower monthly payments, while I'm stuck with my higher payments. Now these ballon head idiots are trying to price fix houses where they are, which just screws first time home buyers trying to save for a house.
There is a sh!t sandwhich out there and we all have to take a bite. The bozos in Washington and Wall Street are trying to put 'special sauce' on it to make it taste better.
They make it sound like they are trying to protect the little guy, but what they are really trying to do is protect the bankers, who knew what they were doing. I KNEW WHAT THEY WERE DOING. If these packaged loans have lost say half their value, let people buy back their loans at 60 cents on the dollar. Even if their house value goes down, their loan amount has gone down. Let the bankers take it in the 'depisot slot'.
Not that I've thought about it much or have strong feelings.
Mark
I bought a house in 2006 and got a 30 year loan, after my loan officer looked at me like I was an idiot, and questioned where I got my MBA. The thing that irks me is that I had to bid on houses against people who were getting ballon loans. They could bid higher, and did, causing prices to rise. Now those idiots are going to get some protections like frozen rates or no foreclosures. They keep their lower monthly payments, while I'm stuck with my higher payments. Now these ballon head idiots are trying to price fix houses where they are, which just screws first time home buyers trying to save for a house.
There is a sh!t sandwhich out there and we all have to take a bite. The bozos in Washington and Wall Street are trying to put 'special sauce' on it to make it taste better.
They make it sound like they are trying to protect the little guy, but what they are really trying to do is protect the bankers, who knew what they were doing. I KNEW WHAT THEY WERE DOING. If these packaged loans have lost say half their value, let people buy back their loans at 60 cents on the dollar. Even if their house value goes down, their loan amount has gone down. Let the bankers take it in the 'depisot slot'.
Not that I've thought about it much or have strong feelings.
Mark
V
varjag
Guest
Bill, with "fraud" I was referring not to the sales side of it but rather the way loans were repacked. Those who did it, smart people in their way, knew what was going to happen in the end, i.e. what Mark have written above. It might be not punishable by letter of law, but it is a fraud scheme according to most existing moral value systems.
Berliner
Well-known
The little guy has not mattered for quite some time in the US, at least not on an individual basis. However, collectively most US economic activity IS consumer driven (spending). This program is (in theory) designed to ensure US economic viability. So next winter US citizens are not burning their dining room tables in the wood stove to heat the house, or selling silverware to stand in line to buy bread & butter...
-----------
Late last year, the CEO at CitiGroup –world’s largest bank-- ‘resigned’, because Citi stock declined over 50% during his tenure. During the same period 17K jobs were cut worldwide at Citi. 4K additional announced this year. His salary/compensation package including options during his last year was over $40M, so since when have morals played any role in banking/finance??? Corporate greed…at it’s best…
-----------
Late last year, the CEO at CitiGroup –world’s largest bank-- ‘resigned’, because Citi stock declined over 50% during his tenure. During the same period 17K jobs were cut worldwide at Citi. 4K additional announced this year. His salary/compensation package including options during his last year was over $40M, so since when have morals played any role in banking/finance??? Corporate greed…at it’s best…
sepiareverb
genius and moron
I'm going to China!
Just kidding.
Just kidding.
sooner
Well-known
I agree with Mark, above, the industry knew what it was doing, and lots of people made really bad choices in opting for loans and houses they couldn't afford. But I blame government even more, because they're the ones supposedly exercising some adult supervision to all this. Yeah, right. The checks are meant for everyone, including single adults, but you get more with kids. All this does is add to our already devastating debt burden and help fuel inflation, which is the real concern here. Housing prices need to come down, and the bankers can withstand some losses. In fact, the sooner they puke out their own bad loans the sooner the world economy can breathe easier again and start investing. We always talk stimulus but this kind of gimmick never works to change macroeconomic realities in a 13 trillion dollar economy.
Berliner
Well-known
There is more than enough blame to go around. The corporation, the consumer, the government; all equally share in this big mess we've made.