Hello:

You know what's lacking here? Leadership. Ain't none coming from Bush. Ain't none coming from McCain. Ain't none coming from Obama.

We're scared, and we're on our own. Without the aforementioned leadership, this ship is going down, while congress squabbles...

Maybe we should start a NEW country... Maybe we'll HAVE to.

excon

Excon,

I have been saying for years that Government is not the answer to our problems. That we need to take responsibility for our own actions, and take the actions to correct mistakes for ourselves. The ultimate responsibility for our financial fates is ours, not the government's.

And now that Congress has proven my point and shown once and for all that they are incapable of handling these things for us, perhaps some people will stop calling for more government intervention in financial, social or moral affairs and leave those issues up to the people.

Government cannot fix problems. They can only create them. PEOPLE fix problems, corporations fix problems, private industry fixes problems. Government MAKES problems. That's why government needs to be smaller, weaker, and on a very short leash.

The biggest lie ever told is "I'm from the government, and I'm here to help."

Elliot

ET,
The government relaxed the rules for getting mortgages and what happened? People who were nowhere near solvent for $400,000 mortgages took them out anyway. I agree that we are responsible for our own welfare but there are so many that make wrong decisions. One of the options is to let them die poor and destitute if they can't dig themselves out. The other option is to set regulations on what loans are allowed based on the balance sheet on the asker.

The problem in the US is the populace has become apathetic to the government's mismanagement plus everyone wants to appear wealthy so they make bad decisions based on the inherent consumerism-driven message in the US. What's the solution? Don't know but it's bigger than this election and the issues the candidates are laying on the table.

Hello El:

Good conservative rant... However, I'm talking about a lack of LEADERSHIP - NOT a lack of government. A leader COULD say what you said, but they ain't.

excon

ET,
The government relaxed the rules for getting mortgages and what happened? People who were nowhere near solvent for $400,000 mortgages took them out anyway.

You forget, Needkarma, that the reason that the banks made these loans in the first place was because 1) the government created Fannie Mae and Freddie Mac, which acted as guarantors for those bad loans, and 2) the Community Reinvestment Act forced banks to make these bad loans. It wasn't de-regulation that caused this mess, it was government intervention that caused it. If Fannie and Freddie had never been created, and if the CRA had never been passed by Congress, we wouldn't be in this mess, regardless of what banking regulations were in place.

Banks don't make bad loans without an incentive to do so. They are not in the business of losing money on bad loans. The incentive to make these loans was the guarantees of Fannie and Freddie, and the threat of sanctions under CRA rules if they didn't make the loans. The combination of knowing that they could pawn these loans off on Fannie and Freddie for a profit no matter how bad they were, along with the threat of monetary fines if they didn't make the loans was what caused this problem.

Eliminate the guarantees of Fannie and Freddie and eliminate the CRA requirements to make the bad loans in the first place, and the banks wouldn't make the bad loans. It would be against their interests to do so... those interests being to make a profit, not take a loss.



I agree that we are responsible for our own welfare but there are so many that make wrong decisions. One of the options is to let them die poor and destitute if they can't dig themselves out. The other option is to set regulations on what loans are allowed based on the balance sheet on the asker.

Asker? I assume you mean "applicant".

Don't you understand that such regulations wouldn't be needed if Congress hadn't passed the CRA requirements of making a percentage of loans to low-income borrowers? No banker would make such loans on their own if they weren't forced to do so. And I speak as one of those bankers who makes such loans. The rules aren't necessary if we just get rid of the CRA requirement to make the bad loans in the first place.

As for people dying "poor and destitute", that is unlikely for several reasons.

1) The banks would prefer to work our a repayment plan than foreclose on a property that they don't want to own and manage. These repayment plans, while painful for the borrower, are not generally onerous. The banks don't want to drive the borrower into bankruptcy, because then they will get nothing.

2) Bankruptcy laws protect the borrowers from dying poor and destitute.

So they won't own a home. Plenty of people don't own homes and aren't "poor and destitute".


The problem in the US is the populace has become apathetic to the government's mismanagement plus everyone wants to appear wealthy so they make bad decisions based on the inherent consumerism-driven message in the US. What's the solution? Don't know but it's bigger than this election and the issues the candidates are laying on the table.

I agree about the apathy towards the government's mishandling of the problem. Where we disagree is on what that "mishandling" entails. I say it is the government intervention itself that is the source of the mishandling. You believe that it is poor regulations that caused it.

As for consumerism... what's bad about consumption? The more that people buy stuff, the more jobs are created, and the better the chance for "poor" people to move up in the world. It is "consumerism"... aka capitalism... that creates our greates strengths and the mobility between the classes that gives Americans the greates opportunities in the world.

Elliot

You forget, Needkarma, that the reason that the banks made these loans in the first place was because 1) the government created Fannie Mae and Freddie Mac, which acted as guarantors for those bad loans, and 2) the Community Reinvestment Act forced banks to make these bad loans. It wasn't de-regulation that caused this mess, it was government intervention that caused it. If Fannie and Freddie had never been created, and if the CRA had never been passed by Congress, we wouldn't be in this mess, regardless of what banking regulations were in place. Weird, you speak of personal responsibility in your first post here then you totally dismiss it on this post. Who cares if the loans were guaranteed, should Johnny McJob who makes $35K a year be getting an interest only mortgage for a $500,000 house? Apparently personal responsibility doesn't always work.
It is "consumerism"... aka capitalism... that creates our greates strengths and the mobility between the classes that gives Americans the greates opportunities in the world.It doesn't work when one decides to carry an unsustainable debt load - then you become a master to your job, working 12 hours a day, neglecting your parenting duties.

Weird, you speak of personal responsibility in your first post here then you totally dismiss it on this post. Who cares if the loans were guaranteed, should Johnny McJob who makes $35K a year be getting an interest only mortgage for a $500,000 house? Apparently personal responsibilty doesn't always work.

Then you are saying that it's not the banks' fault that this happened, but rather the fault of the individual borrowers who over-leveraged themselves beyond their means.

So why are we talking about bailing out Johhny McJob who made bad business decisions and paid too much money for a house he can't afford with a mortgage he can't service? Why is it the government's job (e.g.: the taxpayers' job) to bail him out?

The banks that made bad loans should have to live with the consequences of their actions and take responsibility for bad lending practices. The borrowers should take responsibility for spending more money than they earn to buy an overpriced house. And the government should stay out of it. As they should have done BEFORE they created Fannie and Freddie and the CRA rules.

THAT is personal responsibility. And whenever tried, it DOES work. The problem is that banks never had to take responsibility for the bad loans because they had a government guarantee. The borrowers also never had to take responsibility, because if they failed to service the mortgage, they just relied on the government to cover their payments for them through Fannie, Freddie and GNMA (Ginnie Mae).

We haven't had companies and individuals take responsibility for their financial actions since the New Deal was put into effect by FDR. From that moment on, "government" became the answer to all our problems... everything from welfare to trillion dollar bank bailouts.

Take away the government "safety net" and see how willing to make sub-prime loans the banks will be. My guess, as an insider in the industry, is that they wouldn't be very willing to do them at all.

Again, none of this would have happened without government interference making it possible or mandating it. More regulation by the government is not the solution.

Elliot

Here is leadership for you

Paulson brokered a deal where Citigroup would buy the cr*p from Wachovia for $2.1 billion and the FDIC would be left on the hook for potential loan losses.

Wells Fargo countered the offer and will purchase Wachovia for $15.4 Billion with no additional government assistance. That's a $13 Billion dollar difference!

But Paulson tells us that the now $800 billion pork laden bailout proposal will turn a profit . Uh-huh