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No- they should be allowed to fail and cease to exist as business entities.
Please see my post #43 on this thread.
No- they should be allowed to fail and cease to exist as business entities.
Please see my post #43 on this thread.
Presumably, the government would take control long before the company began to fail, while it was still healthy and functional. This would be the point.
WRONG. The notion of "sub-prime" mortages was NOT invented by bankers, it was a gov't creation to attempt to allow the "poor" to become homeowners. Bankers reluctantly issued these "gifts", disguised as "low income" mortgage loans, ONLY through gov't pressure and offers of "safety" by the gov't backed "insurance" of these loans. This GOV'T CREATED artificial demand, for more private homes, caused the "housing bubble", having the (unintended?) effect of flooding the market with oversupply, eventually dropping the value of many existing homes on the resale market, placing otherwise innocent home buyers in a position of being "underwater" on their traditional home mortgages.
WRONG. The notion of "sub-prime" mortages was NOT invented by bankers, it was a gov't creation to attempt to allow the "poor" to become homeowners. Bankers reluctantly issued these "gifts", disguised as "low income" mortgage loans, ONLY through gov't pressure and offers of "safety" by the gov't backed "insurance" of these loans. This GOV'T CREATED artificial demand, for more private homes, caused the "housing bubble", having the (unintended?) effect of flooding the market with oversupply, eventually dropping the value of many existing homes on the resale market, placing otherwise innocent home buyers in a position of being "underwater" on their traditional home mortgages.
Please see my post #43 on this thread.
Banks aren't the only ones that got bail outs.
The government repealed the Glass-Steagall Act through the Gramm-Leach-Bliley Act in 1999 by President Bill Clinton and allows commercial banks to gamble and speculate with depositors money like the investment banks. With the blessing and help of Fannie Mae and Freddie Mac by taking on more risk moving into the subprime mortgage market. The government encouraged all this lending, not because they're altruistic and wanted everyone to have homes but because increased sales from credit improves revenue by stimulating the economy giving them more money to spend. The SEC allowed the Credit Rating Agencies (Moody's, Standard & Poor and Fitch) to give AAA+ ratings to securities that were junk mixed 50/50, so that banks could sell the repackaged mortgages to investors knowing that 1/2 would default. Those securities as is custom were insured by companies like A.I.G. to the tune of trillions and even the insurance policies were sold as investments. When the inevitable occurred and markers were called in on foreclosures there was a liquidity crisis causing a chain effect that rippled thru the markets threatening to crash the worlds economies. If the US government had not stepped up with the bailouts there would of have been a collapse of the financial system as we know it. All those future sales on homes and other items (cars, ATV's, boats, motorcycles, RV's, jet ski's, snow mobiles, etc) from easy credit created a ton of toxic paper, wealth that evaporated over night from over valuating the markets and their assets.
The credit bubble has run the economy for over a decade now and had to be re-propped up but it's starting to sink again because it's a flawed concept.
This is actually so true. 50 years of stable banking after Great Depression era regulations where insituted. After the 80's and the beginning of deregulation we get the Savings and Loan failures and now the worst downturn since the Great Depression. What we hear NOW is that when we deregulate banks and allow them to "innovate" the problem is we don't let them fail.Government didn't force banks to make bad loans, banks rewrote banking laws to mine deeper and deeper into the mountain until they unleashed forces they couldn't control but we tax payers backed them up so to the banker's minds the risks were low and the competition fierce to mine that last loan dollar.
This is actually so true. 50 years of stable banking after Great Depression era regulations where insituted. After the 80's and the beginning of deregulation we get the Savings and Loan failures and now the worst downturn since the Great Depression. What we hear NOW is that when we deregulate banks and allow them to "innovate" the problem is we don't let them fail.
So now we're going to let major insitutions fail like domino's. If you wanted to end capitalism and the market system that's a great ideology to follow.
An example is in the Phoenix AZ area where homes were over built. I was advised to buy a 'second' home as an investment (It would be an unfunded obligation.), by the time it was built I could sell it for a substantial profit. This is an exact example of what you posted about except for one thing, that is that it was driven by private business.Exactly. It is not if, but when, this will be "needed" again, perhaps the massive increase in student loans, state/city pension "unfunded" obligations or the national debt itself (as interest rates rise) will be the next "trigger" for it. We can not, as a nation, continue to spend more that we "earn" and expect some future economic "miracle" to occur to balance the books.
No, pretending banks didn't influence, pressure, and pay Congress to change the banking laws is what's insane.NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane.
An example is in the Phoenix AZ area where homes were over built. I was advised to buy a 'second' home as an investment (It would be an unfunded obligation.), by the time it was built I could sell it for a substantial profit. This is an exact example of what you posted about except for one thing, that is that it was driven by private business.
So, how do you think that housing bubble should have been, um, controlled?
NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane.
Fannie and Freddie have been around for a long time as has the US push for home ownership. Fann and Freddie's share of the subprime lending market DECREASED during the bubble.Banks had tremendous political pressure to relax "discriminatory" lending practices and thus made "sub-prime" loans WITH gov't backed blessing, in the form of Freddie/Fannie mortagage insurance, that ALL knew was unsustainable.
Name the banking law that you allege that banks, not the congress wrote, voted into law and was then signed by the president. Crickets...
No, pretending banks didn't influence, pressure, and pay Congress to change the banking laws is what's insane.
Come on, we all know what the score is, here - quit playing around.
We could have purchased a second or third home and many did and no " "sub-prime" loans WITH gov't backed blessing" were needed. Our third home, we expect to sign the papers today, purchased via a short sale, apparently the owners were pushed over the edge by a 2nd mortgage used to purchase a new car. I don't think 2nds were enabled by anything but the 'banking' industry.NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane. Banks had tremendous political pressure to relax "discriminatory" lending practices and thus made "sub-prime" loans WITH gov't backed blessing, in the form of Freddie/Fannie mortagage insurance, that ALL knew was unsustainable. Name the banking law that you allege that banks, not the congress wrote, voted into law and was then signed by the president. Crickets...
But to get this you would have needed government regullation. Don't forget that the lenders are judged on their performance over a short time period, months. This is because it is a private industry. The problem actually develops over a few years that is longer than the feed back control process that private industry uses.By requiring (returning to?) the prior SANE lending laws (that did allow "discrimination") by requiring down payments, solid buyer income and credit history, reasonable loan to value ratios, and honest "fair market" valuation appraisals.
NONSENSE. Banks did not rewrite ANY banking laws, congress did. Pretending any different is insane. Banks had tremendous political pressure to relax "discriminatory" lending practices and thus made "sub-prime" loans WITH gov't backed blessing, in the form of Freddie/Fannie mortagage insurance, that ALL knew was unsustainable. Name the banking law that you allege that banks, not the congress wrote, voted into law and was then signed by the president. Crickets...
Apparently you don't know how and who authors bills in Congress. You believe that your district and state representatives sit down in a conference room with their staff and other Congressional members and write bills? Ha!
Lobbyists and Special Interests organization author bills, which may or not be even read by our Congressional members. Hell, neither side of the isle had a clue as to what was in the Health Care Bill before signing it into law...and admitted to as much. Who wrote the health care bill's 2000 plus pages? Guess who! It was pharmaceutical, insurance, medical provider Lobbyists who were creating a bill for their specific benefit...not ours.
All Congressional members do is "Sponsor" or Co-Sponsor bills. Yes, as a rule their staffers are at varying degrees involved in bills, but no way to really know for sure. That's why special interests now own our government.
I additionally have to point out that I was a design engineer in the computer industry. I had enough income etc., as you point out, to participate in the housing bubble. Many of my peers did.By requiring (returning to?) the prior SANE lending laws (that did allow "discrimination") by requiring down payments, solid buyer income and credit history, reasonable loan to value ratios, and honest "fair market" valuation appraisals.
But to get this you would have needed government regullation. Don't forget that the lenders are judged on their performance over a short time period, months. This is because it is a private industry. The problem actually develops over a few years that is longer than the feed back control process that private industry uses.