Do you think the govn’t should give Wall Street the $700b?

I am truly amazed by how many people are against this “bailout” for reasons far beyond the current situation.

I would say the only reason most people are against the bailout is because they have no idea of the severity of the problem and it’s consequences.

@Stupid 177942 wrote:

But the problem must be solved, because thanks to the millions of irresposible borrowers, the banks have turned into real estate agents.

I don’t really fault borrowers too much. The banks knew at a glance these people couldn’t afford loans and in may instances fudged numbers. They knew down the road that the borrowers’ mortage payments would increase beyond their means.

My sister and her husband bought another house a little over a year ago and her credit rating is in the 800+ range. The bank tried to tell her and her husband they could even borrow more than they knew they could afford. But they’re experienced with the process, most of the borrows were first time borrowers pretty much clueless with poor credit ratings. That is why they’re called sub-prime loans. Just because you can lend a risky prospect money doesn’t mean you should.

I don’t think people really do understand (if i’m right in my analysis – check back in a few years ” title=”” class=”bbcode_smiley” /> ).

The way i see it is that while the money will bail out those on the verge of bankruptcy, the hoped for result is to keep those who hold securities of the these failing instutions from failing.

In other words we need to save the con men who did this, so that those who we’re defrauded don’t lose everything. So in effect we’re saving the victim by helping out the criminal who did the damage.:toidy:

It stinks worse than the pork barrel($18 billion a year) that McCain is so concerned about, but the private sector isn’t going to buy garbage for enough money to save the system.

I support some kind of move, even this expensive shell game, because there is really no sure fire answers to this problem. hell this hasn’t really happened before, the closest thing was the depression 75 years ago, so the “play book” is a bit old.

You’re right GamTrack, we could spend $700 and not save the system, or we could do nothing and maybe the market will repair itself. As we know, sometimes even the best firefighters sometime have to get out of the building and let it burn. But for now, i say “More Water!”

AAA Rated, Sub-Prime Debt

Isn’t this the same as Kosher Pork, Jumbo Shrimp, and Violent Pacifists?

I don’t really fault borrowers too much. The banks knew at a glance these people couldn’t afford loans and in may instances fudged numbers.

I do blame the borrowers as much as the lenders, if not more. Also, the problem is – it was not the banks who gave the bad loans, but the mortgage lenders. They in turn packaged 1000s of loans together and sold it to the banks as “mortgage-backed”. If the borrowers were responsible payers – there would have been no problem – the housing market would have continued to rise, or at least be stable, and those subprime loans would have been a decent bet. The subprime market was a great opportunity for many people to provide a secure roof over their families, unfortunatelly many BORROWERS got greedy.

Blaming the banks for offering loans is like blaming the caisnos for offering blackjack. 101 of gambling is play within your means, 101 of borrowing is borrow within your means.

Another big problem was the “house flippers”. A lot of folks took loans on 2-3 homes just so they can sell them (not live in them) a couple of months later. Many were people with perfect credit who just got greedy beyond their limits, also making a high risk bet they did not fully understood. All this led to homes increasing in value only through speculation, which led to people having to borrow more money to buy an over-evaluated home.

I understand that the market could work out this crysis on its own, the problem is that I do not want to participate in such process. In order for me to continue to receive a paycheck, thousands of people have to also conitnue to receive paychecks, something highly unlikely if we leave the markets to themselves. Many of us saw our income significantly declining thanks to 30%-40% increase in gas prices alone. Can you imagine what we would make if the unemployment rate doubles or triples???

AAA Rated, Sub-Prime Debt

Isn’t this the same as Kosher Pork, Jumbo Shrimp, and Violent Pacifists?

No. Those are subprime borrowers who have not missed or been late on a single payment.

On many occasions people are considered subprime borrowers not because they don’t have the money to pay their payments, but because some ID thief ran their credit score to the ground, or a relative died and they had to open another credit card to pay for the sudden expenses, etc.

Bad credit doesn’t automatically mean bad people.

Well, I guess just because I figure that I understand it, I assume that most others will and I guess that may not be the case.

AmCan, has painted the perfect senero for exactly what is going on.

I left the US in late 2006 and then decided to come back and make the best of it so Hubby and I decided to buy a home and we were offered like $100k MORE than we wanted and I remember thinking that it was very odd that they would do that, but we settled on a $250K home, which was in our budget, instead of going for the max. like the banks WANTED us to do.

The lender was reckless and the borrowers that took more than they knew they could afford was just as reckless.

Edit: I also remember that the banks were sending me brightly colored flyers monthly and it was one of them that caught my attention and we went to them. We closed and had the deal on a newly built house in RECORD time (17 days) and I’m self employed. All they wanted was 2 years of tax records and six months of my bank statements.

sorry but subprime debt are people who are bad credit risks, they can never be termed triple AAA rated. Companies that never missed a payment, such as the auto companies have their debt rated in the B’s now, and that’s what’s called junk bonds. A subprime consumer isn’t even close to a b.

The fact that people packaged a bunch of high risk loans together may reduce the possibility of a 100% loss, but it’s not even close to AAA.

No. Those are subprime borrowers who have not missed or been late on a single payment.

These loans are often packaged and sold before payment starts. And if they are such great credit risks, why won’t anyone buy these securities? Why are defaults so high? Because it’s AAA?

And as I said, a lot of people don’t understand this mess. You are looking at it the wrong way – the 3A’s credit rating is assigned to the intument, not to a company or a person. The instrument is called “asset-backed security” or mortgage-backed security. This instument itself holds a risk rating, not the people with mortgages/companies with assets.

Here is a cnn quote that may explain it best:

A bank or brokerage bundles up hundreds of mortgages and sells investors debt that is backed by mortgage payments and secured with homes. These asset-backed securities – ABS’s, in Street parlance – are sold in slices, each of which carries its own theoretical level of risk, ranging from the supposedly invulnerable (AAA) all the way down to the bottom rung of investment grade and even past that, to a highly speculative unrated slice.

It’s possible to create a AAA-rated asset out of somewhat shaky collateral, because the first dollar of income goes to the securities with the highest rating, while the first dollar of loss is assigned to those with the lowest. The bottom layers provide a cushion that supposedly protects the higher-rated securities.

I.e. you will likely see money from those borrowers who have bad credit but pay their mortgage payment.

@GamTrak 177969 wrote:

I left the US in late 2006 and then decided to come back and make the best of it so Hubby and I decided to buy a home and we were offered like $100k MORE than we wanted and I remember thinking that it was very odd that they would do that, but we settled on a $250K home, which was in our budget, instead of going for the max. like the banks WANTED us to do.

The lender was reckless and the borrowers that took more than they knew they could afford was just as reckless.

that is just my point, the bank/lender knew by looking at your financial data exactly how much you qualified for and to tell you something other than what the data revealed was completely irresponsible, a lie actually. However you were sharp enough to know better, but there were many people that were not. I don’t fault people for being ignorant but I do fault banking people for deliberately presenting data inaccurately in an effort to mislead someone.

Although like stupid said, some got over extended. I happened to catch a little of c-span and an expert said it was due more to bigger homes and vacation homes. He said the sub-prime loans were just a small part of it.

Amcan you’re analysis is spot on actually.

Although I’m not so concered with pork barrel spending, it’s such a small part of the budget it’s hardly going to make a dent and most of that money is spent on infrastructure which in turn creates jobs which in turn supports local economies and so on.

Many of us saw our income significantly declining thanks to 30%-40% increase in gas prices alone. Can you imagine what we would make if the unemployment rate doubles or triples???

I have a small retail site so I know exactly what fuel costs have done to profits. It ain’t pretty. ” title=”” class=”bbcode_smiley” /> All the shipping services are quite expensive now.

Well as of now the bill did NOT pass. The vote is 10 short of passing and the DOW is down 680 points.

Looks like the house republicans are not going for this at all. Now what?

---

NEW YORK – Fear swept across the financial markets Monday, sending the Dow Jones industrials down as much as 705 points, as traders feared the financial bailout package would not pass the House.

ADVERTISEMENT

As the vote was shown on TV, stocks plunged and and investors fled to the safety of the credit markets, worrying that the financial system would keep sinking under the weight of failed mortgage debt.

The markets were highly volatile, with the Dow regaining ground to trade with a loss of about 360, then falling backing again, trading down about 480 at the 10,662 level.

With Wall Street nervous that the plan may not pass, the yield on the 3-month Treasury bill sank to 0.32 percent from 0.87 percent on Friday. That showed that investors were prepared to get meager returns on an investment as long as it was secure.

read here