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Udderly ridiculous
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| | US Treasury Secretary, Henry Paulson on July 8th talking about how the gov't shouldn't bail out homeowners: Many of today's unusually high number of foreclosures are not preventable. Due to the lax credit and underwriting standards of the past years, some people took out mortgages they can't possibly afford, and they will lose their homes. There is little public policymakers can, or should, do to compensate for untenable financial decisions. And in the midst of rapid price appreciation, some people bought homes anticipating an immediate profit. Now that their investments have not turned out as they had hoped, these people may walk away, even though they can afford their mortgage payment. These borrowers can and should be living up to their mortgage commitment—government intervention here would be inappropriate. These two categories of foreclosures—stemming from lax underwriting standards and increased speculation—will remain elevated in the near term. Selective bailouts anyone?
If the small people make poor financial decisions, screw them, they made poor decisions and should pay for it. But, ah... Private banks are a different matter.... if the uber-wealthy are going to start taking hits, there should be bailouts. Federal bailouts. In fact, Federal Reserve should just create money out of thin air to bail them out and has already done so. This was without any peep from Congress or the President or the Supreme Court. Pretty powerful decisions they can make on our money, huh?
Why do bankers deserve the bailouts but none to the average dumb citizen? Doesn't almost every point Paulson makes towards homeowners above, apply to banks? Socialize banking industry losses, but nothing towards the people themselves?
Please, someone, explain why this is okay? |
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"For in the final analysis, our most basic common link, is that we all inhabit this small planet, we all breathe the same air, we all cherish our children's futures, and we are all mortal. "
-- John F. Kennedy
"Watch your thoughts; they become words. Watch your words; they become actions. Watch your actions; they become habits. Watch your habits; they become character. Watch your character; it becomes your destiny."
--Patrick Overton
"It doesn't matter where you are as much as where you are headed."
--Mike Shanahan
Edited: 7/12/2008 4:39 AM by Nuclearcow |  |  |
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Elite Pathogen
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Udderly ridiculous
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| | lame duck
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Udderly ridiculous
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Grognard fantôme
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Elite Pathogen
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Day-Saver!
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| | here are the facts on IndyMac. The Rise and Fall of Indy Mac About 95% of the $19 billion in deposits in the bank are insured, but that leaves $1 billion that was not covered by FDIC guarantees. According to the agency, 10,000 IndyMac customers could lose as much as half of that amount, or $500 million. The agency says the failure will cost the Deposit Insurance Fund between $4 billion and $8 billion, based on preliminary estimates. IndyMac, with assets of $32 billion and deposits of $19 billion, is the fifth bank to fail this year. So it's not going to be quite 30 billion dollars covered jerm, but however many billion, that's still a load of cash. IndyMac grew rapidly during the real estate and home building boom. Its specialty was so-called Alt-A loans, those for which home buyers were asked to produce little or no evidence of income or assets other than the house they were buying. While home prices climbed, Alt-A loans posed few problems for IndyMac. If a buyer wasn't able to afford his payments, the bank got title to a home worth more than the amount owed. The bank was also able to find investors eager to buy pools of those mortgages that had been pulled together into securities backed by the future payments. But when the housing bubble burst and prices began to fall, losses at IndyMac began to rise. Investors ran away from the mortgage-backed securities, leaving the bank to suffer the loan losses itself and without the funding it needed to make new, safer loans. The OTS, which oversaw IndyMac, criticized Sen. Charles Schumer, D-N.Y. The OTS claimed that a June 26 letter Schumer wrote to regulators questioning IndyMac's viability prompted a run on the bank in which customers withdrew more than $1.3 billion prompting a liquidity crisis. "Although this institution was already in distress, I am troubled by any interference in the regulatory process," said OTS Director John Reich in a statement Friday. Schumer shot back. He said that lax enforcement by OTS was a primary cause of the problems at IndyMac, as well as those of the nation's housing market and economy. "IndyMac's troubles ... were caused by practices that began and persisted over the last several years, not by anything that happened in the last few days," Schumer said. "If OTS had done its job as regulator and not let IndyMac's poor and loose lending practices continue, we wouldn't be where we are today. Instead of pointing false fingers of blame, OTS should start doing its job to prevent future IndyMacs." Then again, the reason IndyMac failed, in addition to Chuck Shummer's help, is because so many people were defaulting on their loans. The reason IndyMac failed was not because people were defaulting on their loans, it was because IndyMac was giving out loans it had no business giving out, if proper due dilligence was done. Let me reiterate: IndyMac grew rapidly during the real estate and home building boom. Its specialty was so-called Alt-A loans, those for which home buyers were asked to produce little or no evidence of income or assets other than the house they were buying. |
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HERE I COME TO SAVE THE DAY!
Edited: 7/12/2008 1:58 PM by Locus Coeruleus | | | |
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Elite Pathogen
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| The reason IndyMac failed was not because people were defaulting on their loans, it was because IndyMac was giving out loans it had no business giving out, if proper due dilligence was done. Let me reiterate: Since you're being picky, though I agree that what you are saying was (at least a large part of) the cause of the defaults, I think I was right  . IndyMac went out of business because people were defaulting on their loans. People were defaulting on their loans because they had no business getting those loans and IndyMac was irresponsible enough to give them anyway. Add to this the soaring price of oil and, as a result, everything else and perhaps a large percentage of people who probably could have gotten by, didn't. The point I was making is that the government will bail out big banks to help save the economy but the little guy losing his home also hurts the economy. I'm basically throwing weight behind Nuke's point.  Geddit? | |
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