Posted on 09/29/2008 4:29:45 PM PDT by r-q-tek86
RE : “PMI did not insure most sub-prime mortgages. PMI did insure many of the Interest only mortgages”
So the interest only loans are OK?
See my post on what caused all this. The problem with the interest only loans is their unrestrained adjustable nature and the fact that they allowed people to way over spend.
Sure, as long as home values appreciate 4-5% a year. Oops, home values went down.
That’s still OK unless the owner decides it’s a bad investment and walks away killing his credit, but the insurance should cover that case, ideally.
Greed explains the mad dash for short term mega-profits with the result of mid-term bankruptcy.
Capitalism and the free market system is supposed to reward long term profitability, not get-rich-quick schemes.
Apparently you didn't comprehend a word I said. Greed drives capitalism. Both short and long term. Greed is the motivation behind entrepreneurial spirit and innovation. Greed is the motivation for employees to work hard, get promotions, get paid more. Greed is what drove me to open my own business. When I went to hire workers, I wanted them to be motivated to make money (i.e., be greedy). Without greed, the system collapses. Greed only becomes bad when it drives people to do bad things. There are a lot more wealthy people who got there by doing the right things, working hard, and being ethical in their business practices, than there are wealthy people who took advantage of others for the sake of making a "quick buck in a get-rich-quick scheme."
The crisis we're in right now was set up by bad government policies that FORCED banks to issue risky loans to borrowers who had poor or no credit, and no means to pay back the loans. That has nothing to do with greed. That is social engineering at its worst. If the "greedy" banks and lending institutions had been allowed to do what they did before the CRA (community reinvestment act, passed in 1977, then amended several times under Clinton Admin), then we wouldn't be in this mess. THAT is the bottom line.
No. Profit motive does not equal greed.
Those who condemn the pursuit of profits as "greed" are as mistaken as those like you who proclaim greed a virtue rather than a fault.
Greed caused executives to take unwise risks to further their personal enrichment. Greed is antithetical to prudent business practice. Imprudent business practice can pay off, but it is likely to fail in the long run.
And that is why insurers and lenders lost a lot of money on IO loans and will lose more and are unwilling to insure new IO loans. The pricing needed to cover the risk of potentially negatively amortizing loans negates much of the point of the loans in the first place. I'm sure there's still a place and price for it, but, like pay option mortgages, the appropriate market is much smaller than the volume written the last few years.
So I assume that ends IO loans. In a way doesnt letting these depts retire naturally solve the problem, even if it’s painful and not politically acceptable?? Wouldnt a Bush/Democrat type bailout just encourage more?
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