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| Financial Bailout Passed by Congress | |
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| Tweet Topic Started: Oct 4 2008, 10:23 AM (881 Views) | |
| Liquorman1 | Oct 6 2008, 09:03 AM Post #31 |
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Groupie
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The finer points are debateable, and it goes way further in depth than this, but here goes. 1994 - Clinton administration forces fannie mae and freddic mac to make a certain number of loans to poor ppl who could not afford them otherwise, as well as a certain number of minorities. They used Welfare and Unemployment checks as income (something you previously did not do, and only idoits WOULD do). 1994-2008 - Everything about the above system works good... If a person bought an overpriced house and defaulted, they could easily get rid of it, avoid bankrupty, keep their credit decent, and buy another mortage due to rising home prices and land prices. With lenders only requiring 5% down, the homeowner had little invested and cared less if he defaulted. ALso, with such little down, it makes the payments higher than they could normally afford, thus ARM's. 1999 - Repeal of the 1934? Glass-Stegall act. It now means that investment banks and now act more like holding banks, but under the lesser oversight of the SEC. I.E. allowed to do what they want. Thus, in the 1930's, J.P. Morgan Chase had to spin-off Morgan Stanley, mainly due to under-capitalization concerns, but Oh how our memory is short. GSE's - The govt backed these mortages. (Govt backed mortage securites). There was so much fraud in the system it was unthinkable. Lax oversight (mainly due to deregulation by the dems under Clinton). Example. I know a guy in the mortage business who refinanced a guys mortage 3 times in 2 years. Each time he refinaced this 100,000 mortage, the loan officer got 3,000, the firm he worked for at least that much, and the lending institution at least that much. 18,000 a pop, 3 times, 36,000 in fees in 2 years. Corruption is rampant. These GSE's were touted by the govt as the safest thing since money. The CEO of Fannie mae said that the capitilization of his company was not a issue, and that even the capitialization could fall under 2% (meaning for every dollar they lent, they only had 2 dollars in the bank if that mortage defaulted). This was as recent as 2005, in the congressional hearings. (I have the video on youtube.) Now, the combination of all that in my view. Lending to ppl who shouldn't have gotten loans in the first place caused home prices to spike. A spike that Lasted 15 years. The housing market is in need of a correction, which will be painful. The economy can't be great forever. Also, the currency is is need of devaluation. Not like the depression, but a small correction. The index of inflation has been changed 3 times since 1990, each time measuring things that were not going up as quickly. If we used the same index as they did in 1990, inflation would be running at above 10%, instead of the current stated 2% or whatever. COmpanies, using those GSE's that I was talking about ^^ leveraged themselves. Meaning, they lent the same money out several times over...and it worked ok if no one defaulted and the housing market continued to rise. Bear sterns was leveraged 33-1 when it collapsed, Lehman Brothers something like 27-1. The two left standing, Goldman sachs (24-1) and Morgan Stanley ( 23-1 I think) are the strong. They didn't take as much risk..they should survive and reap the rewards of good leadership. The shitty banks shouldn't. ALso, if the congress coninutes to bail out companies (They are bailing out the automakers) companies will continue to to feel entitled to it. For YEARS companies reaped massive profits without reinvesting (Ford, GMC) and now, b/c they were stupid and pissed away the money, the govt. has to become the white knight and bail them out? On the Taxpayers backs? And the Banks....quite frankly the strong purchased insurance in excess of the FDIC and the SIPC. My firm, Morgan Stanley, insured by the SIPC for up to 500,000, purchased additional insurance to cover the entire value of their clients portfolio in the case of collapse. All during the 90's they were laughed at for doing this. You see where they are now. In a truely free market, let freedom reign. If the bank is not innovation, they will fall. Let the strong survive, the weak fall, and let the pain be felt when it is needed. All this plan will do is artificially restart the economy, bouy land prices, e.t.c., and when a president with some actualy sense gets in office, the correction in the future will be that much harsher. On a side note, I like the New Zealand system. You must have 85% of the downpayment of a house b4 you buy. This means the homeowner would be more reluctant to arbitrarily default on his/her loan. I didn't put nearly all I could, but I think that is enough for now. |
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| Celeborn | Oct 6 2008, 10:17 AM Post #32 |
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Fat
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well personally I think one step to correct this would be to make Neg-am mortgages illegal. I realize thats only a small step but there really is no reason for a neg-am mortgage so we should just get rid of it. ohh sry definition time. Neg-am mortgage = monthly payment is less then the interest hence ur balance and payments both go up. should be obvious why this is retarded. However more importantly WE NEED FINANCIAL EDUCATION IN HIGH SCHOOLS! so the public knows what the fuck they are doing. an average credit card debt of $15,000 per person is good indication of lack of correct money management in the US. |
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| Canadian | Oct 6 2008, 10:47 AM Post #33 |
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The Predator
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read your first reply to this topic after i believe sneakies first post when he changed it. you said "there is nothing wrong please dont change my topic" |
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| BaCkSpAcE | Oct 6 2008, 11:18 AM Post #34 |
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Full [Evo]
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Wrong again I said don't change the title because mamba said so. I thought celeborn changed it just because mamba asked him to, I did not know I forgot to put the word bill in. So before you jump in on a post that you have no idea about get your facts straight. And stop bringing it up. Anyways on to the topic, I think the government should not have a bail out plan because it just makes every one think that no matter how many times we mess up the government will bail us out. We are suppose to learn from our mistakes and not do it again. |
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| Dr.DeLeTe | Oct 6 2008, 11:48 AM Post #35 |
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Nowhere Kids, This Is War Therapy For You
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Oh my god, dude are you still talking about that? what is wrong with you man. |
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| Mamba | Oct 6 2008, 12:50 PM Post #36 |
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Full Member
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I have more pull than you think. |
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| Rampid | Oct 6 2008, 02:16 PM Post #37 |
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everyone drop it. its getting old. backspace - you jump to conclusions about why the title was edited and automatically assumed that it was changed because we don't like you. poo - just stfu, i'm getting annoy with you trying to turn everything into a flame.... delete - just let it go, don't get involved with it because its just going to escalade the flaming. anymore post off topic will result in a 3 hour mute. back on topic: I agree with liq about letting them fail. if we just pick them back up when they screw up, then what do they learn? we don't need to push the nation farther in debt. |
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| BaCkSpAcE | Oct 6 2008, 02:50 PM Post #38 |
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Full [Evo]
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I don't know where you got that idea from because never in any post have I said they did it because they don't like me . Personally I could care less if you like me or not . I asked them several times in each post to stay on topic that it was getting old . So please mute me for 3 hours because I just wanted to tell you , you where wrong. He edited the post because I made a mistake , problem solved. |
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| Rampid | Oct 6 2008, 03:31 PM Post #39 |
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you never said it, but you act like thats why they do it. |
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| Mamba | Oct 6 2008, 03:35 PM Post #40 |
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Full Member
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I'm sure Delete will interject soon. Watch out Rampid, hell be after you. |
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| Canadian | Oct 6 2008, 04:12 PM Post #41 |
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The Predator
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yes massa i know better then to disrespect someone who is a forum troll now. |
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| Celeborn | Oct 6 2008, 04:16 PM Post #42 |
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Fat
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forum troll would be the incorrect term. and the large tower quote was unnecessary. |
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| Canadian | Oct 6 2008, 04:23 PM Post #43 |
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The Predator
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there have been larger tower quotes on here in my time that i have been on the forums. most of which have not had a warning issued. and seeing as how rampid rarely ever appears on sc now. (yes i know its cause ur at school) what else do i call him? forum stalker? |
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| Celeborn | Oct 6 2008, 04:28 PM Post #44 |
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Fat
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forum stalker would work. its just the term forum troll has a specific meaning which didn't apply here. also I didn't wanr u I just said it was unecessary. by the way this thread isn't gunna stay on topic. but the jist is they wanted to stay in office so they took out a 700 billion dollar loan, gave wallstreet a booster shot. Hoping the economy wouldn't look as bad as it is for the next two months. |
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| Canadian | Oct 6 2008, 04:29 PM Post #45 |
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The Predator
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also i heard somewhere that the us government is putting alot of those ceo's on trial for fraud or some shit like that. and oh ok fine forum stalker sounds good. |
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3:51 AM Jul 11