OK, the financial institutions made loans, charged a bunch of fees, sold them off at a profit almost immediately, those buyers bundled them into securities, charged more fees, sold off those securities at a profit, so all along the way the players are keeping slices of this new debt. And when the shiate hit the fan, the homeowners were mostly left with a mortgage debt in excess of the value of the property, many bankrupted, lost their houses and savings, but we covered the losses of the lenders instead of bailing out the borrowers. So after all the dust settles, which group benefited from the boom and the bust? It's not homeowners.... Follow the money as they say.
And the bigger point is the purpose of all the changes were NEVER to 'redistribute' downward. The banking and lending environment we had in the bubble was nearly exactly what the biggest lenders and the most powerful institutions in the U.S. paid good money - $billions over time - to get. Look at the results during the bubble - everyone in the process was shoveling in profits, pay, bonuses and stock appreciation gains as fast as they could work the shovels.
The lenders didn't get any of their losses covered. Over 500 banks went out of business and the "bailouts" weren't gifts. They were loans designed to keep the key players from defaulting on their obligations. Basically, we loaned them the money to keep them afloat long enough to pay for their mistakes.
The people that got over on us all were the individuals that decided not to make payments on their zero-down payment loans when it turned out their "investment" didn't turn out to be as profitable as they thought it would be. The same thing happened in Ireland. It should have been something to take a lesson from but so many people have the same skewed perspective you have that I wonder how long it's going to be before we do it all over again. My wife (Irish) still believes that land is a foolproof investment. Fact is, we may not ever again in our lives see land values like those stupidly high inflated bubble values that made homeowners and prospective homeowners giddy with delight. It was an orgy of financial excess for all involved; not just the lenders. The lenders were the ones left holding the bag.
Right, and so I still didn't see a direct answer to the question, 'are you talking about the mortgage payment made to the bank'?
I would ask you though, I know I am not the smartest person in the world, but when we bought our house, I read the documents before signing them, and if I had questions, I asked right then for clarification, and if I didn't like the answer, I asked to have it changed...Are you telling me that the borrower has NO responsibility for their situation? That the banks forced them to sign the papers?
No I don't know that I've ever said that. It's a straw man and possibly one of the largest non sequiturs I've seen. I don't even give up enough to "live like those in poverty", so I am not sure how a small bump in a progressive tax bracket would be asking anyone else to.
That's not a very good or logical argument, j-mac.
A bit, but really the securities are what ****ed the market. If everyone wasn't ridiculously long on the AAA-rated exotic securities, the housing bubble wouldn't have crumbled the entire stock market and US economy. It could have been handled on a case-by-case basis. Instead, people who were underwater already saw their home values drop, their financial portfolios drop, and some even lost their jobs due to a number of varying reasons.
The bad mortgages played a role, for sure, but to put the blame squarely there seems odd to me.
The lenders didn't get any of their losses covered. Over 500 banks went out of business and the "bailouts" weren't gifts. They were loans designed to keep the key players from defaulting on their obligations. Basically, we loaned them the money to keep them afloat long enough to pay for their mistakes.
The people that got over on us all were the individuals that decided not to make payments on their zero-down payment loans when it turned out their "investment" didn't turn out to be as profitable as they thought it would be. The same thing happened in Ireland. It should have been something to take a lesson from but so many people have the same skewed perspective you have that I wonder how long it's going to be before we do it all over again. My wife (Irish) still believes that land is a foolproof investment. Fact is, we may not ever again in our lives see land values like those stupidly high inflated bubble values that made homeowners and prospective homeowners giddy with delight. It was an orgy of financial excess for all involved; not just the lenders. The lenders were the ones left holding the bag.
The mortgage defaults were absolutely the cause. When the housing prices crashed, millions of people walked away from their mortgages and stuck the banks with their losses. It was so much so fast that even the biggest financial institutions reeled from the losses. The sub-prime mortgage orgy set it up. The homeowners walking out on their mortgages en masse triggered it. And the credit default swaps sent the shock waves through every corner of the globe and the financial markets.
But, again, the banks fought for and got the right to self regulate their reserves, and so leverage went from maybe 10-1 to 30 or 40-1. So, sure, a loss of principal of only 3% wipes them out. It's their JOB to manage that risk and they failed in their core function - massive fail.
My answer didn't reference those payments, so no, that's not what I was talking about
I didn't say that either. The point was fairly simple - two parts.
1) The lending environment was what the lenders wanted and spent $billions buying, and they got nearly 100% of their wish list checked off.
2) After the dust settled, what happened after the boom and bust was redistribution upwards, from the poor and middle class mostly to the banks and related financial institutions.
2a) Much of the reason for that is people who defaulted lost their homes, much of their savings, etc. which is what happens, but we bailed the banks out of THEIR losses, which is NOT what is supposed to happen. It made the loans risk free only to the lenders - heads they win, tails we (taxpayers and borrowers) lose.
How do you lose your life savings by refusing to pay your mortgage payments on a loan that you took out with no down payment, Jasper? Answer that before going off on diatribes about how the people who walked out on their loans were just innocent victims.
jmotivator;1064222812]FALSE! This is patently and demonstrably false. Creation is ALWAYS an available option so wealth creation is always available.
Where did I call them "innocent victims." I'm just not blaming deadbeats for taking banks up on their offer to borrow money, no down payment, no job, no income check, etc.
Yeah but they need more tax cuts first. Seriously. How else will they keep on making good paying jobs and make America strong again. :roll:The faster they can get to 100% , the sooner it will start trickling down.
Ok, simple or not I think clarification was needed, so I asked...Is that ok with you?
I disagree...The lending environment was created by a law created to make sure that people who traditionally couldn't qualify for home loans, got them anyway, because it just 'wasn't fair' to use the proponents of that law's words...So, the banks, as far as I understand, were being told that the loans to these people were backed by the government, and the banks took steps to hedge their risk on the loans....Was it proper? no. Was it proper for the government to force the banks to make these loans? no.
More than a few banks went under as a result of this crap. And the ones that got bailed out were with the blessing of the government against the wishes of the majority of the population...
I agree with that Jasper, but if I remember correctly, the administration said that they had to do this to avoid a total collapse of the banking system...So, yes, we got hosed....Guess what, under this administration, they are doing it all over again.
Fannie and Freddie to offer 3% down payment mortgages - Dec. 8, 2014
You should be blaming the deadbeats for walking away from their obligations. They borrowed money with a promise to repay the loan and they reneged on their part of the deal. They left the banks and the taxpayers to take the loses for their bad purchases and their defaults.
Yes, I'm taking out on you what is my problem with the system. My apologies.
We've had lots of threads on this topic, but my reading of the environment, and I've read a number of books from different perspectives on the crisis, is there was little to nothing being forced on banks. The GSEs were a bit different because they had a mandate of sorts to make 'affordable' loans and we backed them with taxpayer guarantees, but made them into the ultimate crony capitalism example of a public guarantee, massive private profits. But outside the GSEs, and I know it's hard to separate them, it's my reading that the lenders thought they'd found a way to genuinely eliminate or nearly so the risk of making loans to deadbeats with various forms of derivatives that functioned as "insurance" of a sort. Only problem is the "insurers" had no ability to make good on those losses. They effectively wrote insurance they had no ability to cover. Point is, the vast majority made the loans because they made record profits doing so, and didn't account for the actual risks involved.
I agree with that, and I also recognize that the banks had to be bailed out. We couldn't see the system collapse. My only wish was at least the people who led their companies into ruin paid a price, and many did not. It makes me ill to hear some of them come on TV now and whine about their poor banks being regulated. Boo hooo - don't want to be regulated, don't come running to the taxpayer when your banks is collapsing. That's the "free market."
Yes, I am not here to defend Obama. I think he failed in this area and set some terrible precedents, and one of the greatest disappointments was early on when he appointed Geithner and Summers - two guys who DIRECTLY pushed for and signed off on the system that collapsed. Their advice was catastrophically wrong. In a sane world, they are nowhere near any lever or power again, ever.
The whole process forced me to rethink the relationship between government and Wall Street et al and who actually wields power in this country. I'm getting more and more convinced we don't ever even see the people wielding actual power, and we (and by this I also mean almost all of the nominal power structure as well) surely get no say in what they do.
You should be blaming the deadbeats for walking away from their obligations. They borrowed money with a promise to repay the loan and they reneged on their part of the deal. They left the banks and the taxpayers to take the loses for their bad purchases and their defaults.
You should be blaming the deadbeats for walking away from their obligations. They borrowed money with a promise to repay the loan and they reneged on their part of the deal. They left the banks and the taxpayers to take the loses for their bad purchases and their defaults.
Well, yeah, we can blame the dead beats, which I do....but I also blame Clinton for FORCING banks to lend to some of these people.
I agree with that. That is also why libs will be crying about lending standards being too tight. In fact, I've already heard that noise. The banks aren't anxious to lose their asses again but I'm sure some bleeding heart lib legislation that's supposed to empower people who can't really afford a home to buy a home will be proposed again. And if we are stupid enough to make the same mistake again, we'll have a similar outcome again. The banks won't be begging for it, though.
Like I said, if you stand on any street corner begging people to take $200,000 NINJA, negative amort, zero down, 110% loans, etc. you'll get an endless number of people willing to borrow money. But if you go bankrupt, I won't blame the people accepting the money. Your sole job as lender is to lend to those who can repay, and to manage the risk to cover the losses of those who will not.
I'm not calling the borrowers victims, but the idiot is the person BEGGING deadbeats to take their money. They thought they'd rewritten the rules on risk and eliminated it. They were catastrophically wrong. Really, who believes in low risk, high return investments? Suckers is who. The banks were the suckers. They're paid 7 and 8 figures to be smarter than that.
Well, they were partially right - we bailed some of them out so they did get low risk, and high returns! Bad on us....
Well, yeah, we can blame the dead beats, which I do....but I also blame Clinton for FORCING banks to lend to some of these people.
Hilarious - is this serious? Blaming Clinton for loans made years after he left office? In my world, all I heard were non-stop radio and TV ads begging 'these people' to take out loans. Didn't see anyone forcing anyone to lend....
the worst thing you can do for your children is to make life easy for them......
educate them, then show them the door.
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