Is Washington Finally Getting Into It? [Bank Bail-out]

Decision Point ^ | 30 November 2007 | Sy Harding

[Rockitz]

Once again our beloved government comes to the rescue of the irresponsible at the expense of the responsible.

[Balding_Eagle]

Banks forced by the US GOvernment to make loans they knew were risky, all in the name of diversity.

I had this discussion with my lib cousin last spring. This result was nearly inevitable.

[FoxInSocks]

Let those who made the idiotic decision to enter into a contract they would never be able to afford move out, and then sell the homes to reasonable persons at realistic market prices.

[saganite]

One word. Gold standard. Well, two words.

[RockinRight]

Actually, I’m OK with this, assuming the Treasury dept. didn’t actually pay the banks any money to do it, and it appears that they did not.

[RockinRight]

Antiquated idea that isn’t possible today unless we wish to severely limit economic growth and make it nearly impossible to lend money even to responsible people.

Thanks for playing.

[Moonman62]

This plan has an appeal. It should help some of the victims hold onto their houses, while forcing the lenders to suffer some by living with their teaser rates for a longer period.

There you go.

[RockinRight]

Aside from calling the people “victims” I have little issue with it.

People seem excited about the possibility of recession/depression because it will hurt those “stupid people” without realizing all of us will be affected.

[saganite]

You prefer the current situation? Obviously the financial situation will have to get much worse before a return to the gold standard but it will eventually occur. Hopefully I will be gone from this mortal coil before then because the pain will be real.

[RockinRight]

With the gold standard, you are faced with a limited supply of money which creates several major obstacles to economic growth:

-zero-sum economics - with a fixed supply of money (gold) one man cannot become rich without impoverishing others
-limited ability to lend money - even a guy wiht 30% down an a 700 credit score might not be able to get a mortgage because a bank literally “runs out” of money to lend
-banks could lie about gold reserves actually existing - which is one reason the gold standard was moved away from in the first place

[Toddsterpatriot]

In the early 1990s, greed and foolishness got the banks in trouble again, resulting in the scandals and losses surrounding the infamous savings & loans collapse. Congress formed the Resolution Trust Corporation (RTC), which protected bank depositors by taking over or closing more than a thousand S & Ls and failed commercial banks, at a cost to taxpayers estimated to be more than $600 billion.

Not even close to $600 billion. Not even $200 billion.

[Rockitz]

Forced? Please provide a reference.

[Non-Sequitur]

It wouldn’t be a Bush administration without a bail out of some sort of financial institution. With his old man it was the Savings & Loans, now it’s the banks.

[saganite]

even a guy wiht 30% down an a 700 credit score might not be able to get a mortgage because a bank literally “runs out” of money to lend

Yep, the current system is so much better (sarcasm). Just print more “money”. That has never worked in history and won’t work much longer.

[RockinRight]

I’m not saying we should just indiscriminately print more money.

Just that the gold standard is not desireable unless you wish to return to the days of a few upperclass landowners being the only ones that can buy real estate, and only those already rich could ever get a business loan, etc...

When has it “never worked in history?” Source?

[Rockitz]

What about those who have been dutifully saving during the recent run up in house prices and are waiting for a housing market crash prior to making a responsible investment? Such a policy would punish them.

No bail-outs for anyone- banks or homeowners. I say let the market sort this out.

[RockinRight]

They’re already going down. Just the fact that lending standards are tighter is making them go down.

[dalereed]

“This plan has an appeal.”

Not to me, the banks and the irresponsible borrowers should both suffer with no help!

[Pelham]

The word on Friday was that the White House and the Treasury Department are negotiating with major lenders, including CitiGroup, Wells Fargo, Countrywide Financial, and Washington Mutual. The goal is to come up with a plan that would freeze (for up to seven years?) at least some of the low 'teaser-rate' mortgages lenders used to entice homebuyers into mortgages they won't be able to afford once the rates reset.

Tell them to wait!! I need a couple of days to withdraw all of the equity out of my house via a teaser rate ARM so that I can scam the system, too.

[Rockitz]

This kind of policy will prevent prices from going down as far as they should, will injure responsible savers and investors, and will reward irresponsible lenders and home buyers.