Posted on 09/13/2011 7:35:29 AM PDT by Notary Sojac
To accomplish their goals, what the Democrats did was remove RISK from the system for banks. If the banks would loan money to unqualified people, the government would assume the bank’s risk.
The money’s gone. That’s the one thing we’ll have to face up to if we’re ever going to get this turned around. Whoever assumed the risk on those bad loans is going to have to bite the bullet—and it looks like it’ll be the taxpayer.
If we can somehow do a reset on the system, and then put the RISK back in the system where it belongs, we’ll be OK. Somehow we’ve got to get the risk-to-reward ratio back in balance for banks.
We need more pride in America, not less. We are already in a de-facto state of default, and making that condition official might ease our economic woes, but it will do nothing towards making America great again. It will also do nothing towards shrinking government, the one thing that will have to be done to put us back on the right track.
I agree with you completely. Sure, the government ( mostly Barney Fag & Co.) were pushing the banks to make imprudent loans, but they didn’t HAVE TO make bad loans. They did it because they were greedy and probably had the idea that when the sh!t hit the fan, the government could be forced to bail them out. The other bunch that was reprehensible were the real estate brokers/salesmen. They were greedy bastards too. They lapped up fat commissions on sales they knew would not fly. So you have the three legs of the default stool. Gov’t, Banks, Real Estate Brokers. Sadly though, although the banks and the real estate folks are going under, the taxpayers are going to be the ultimate losers if the government is allowed to bail out the morons who were allowed to buy something they knew they could not afford. The other shameful piece is that this whole sorry episode has collected a big chunk of the decent homebuyers who are now, thanks to the tanked market, under water on homes that they could afford, but now will not likely ever recover their loss of equity.
You can purchase a home with 0% down--100% financing. The payments are comprable to what you are paying for rent anyway. Are you dumb to take that deal?
No, because (with the way home prices were increasing every year) if you could hold on for a while, you could sell the house and actually make serveral thousand dollars on the sale, all without putting out any money (other than what you were going to pay for rent anyway--which is a wash).
House fipping became a major problem that led to millions being underwater when the housing bubble burst.
Also consider that most people believe they will be better off in the future than they are today. So a young couple buys a house they can't afford with little money down, thinking "sure, it'll be a struggle at first, but after a few years there will be promotions at work; we'll be making more money; and then we'll have a easier time making the payments; in the mean time we're building up equity, so if we have to we can sell the house and get out from under it."
Then the housing bubble burst and their "last resort" plan of getting out by selling the house is no longer an option. Then on top of that, instead of the expected promotions at work (and pay increase), one of them loses their job (which cuts their income). Now their stuck underwater without the means to make payments.
This is simply a calculated risk that backfired. But hey, that's why they call it risk. Nobody that purchases a home knows for sure that they will be able to pay for it. Job loss, illness, injury, and death are all unpredictable reasons that someone might lose their home.
Thank you for pushing back on the “debt repayment is money sucked from the economy nonsense.” It’s neither a dollar created or lost, it’s just a dollar somewhere else.
This false notion of “lost dollars” is the same as tax cuts or deductions “costing the government money.”
Because the lowest lowest educated 10% of their citizens are in this country working below standard wages in our industries and services steeling benefits and jobs from our citizens and sending large amounts of cash back to Mexico. If we could export our poorest citizens to another country our unemployment would be very low indeed.
At this time, maybe we just need to let the forces work themselves through, to purge the system of them once and for all, and get back to growth.
The banks were placed in a hard spot. Government forcing them to loan. As far as I am concerned there only two entities that were responsible. Frankeeeee and Dodd, ie government, and those “intelligent” American that could not afford it.
“If the banks start forgiving principal, I am going to initiate a lawsuit”
Ha, that’ll get you far. Have you not been following the court cases throughout this housing fiasco. Don’t expect to get any justice. Our courts are as corrupt as our politicians. Good Luck with that....
My voice will be heard in some manner.
I'm sure there will be plenty of lawyers to accommodate you.
My house is down in value but I am not underwater.
For now.
Exactly what will be the grounds of your lawsuit (other than "Hey!! No fair!!!")
I don't think it's necessary that banks actually forgive the principal. What they do need to do is recognize that a loan, secured by a house which would sell today for $200,000, brings a value of exactly $200,000 to their balance sheet, notwithstanding that they may have a note in the amount of $350,000.
See posts 10 and 15.
So true. With $14.5 trillion or so in national debt we will be looking at a national default. We are Greece we just don’t realize it yet. The US has borrowed beyond any metaphysical ability to repay. We are heading toward a horrific collapse. Invest in food and ammo.
I bet there is a law firm that will come up with the angle for the basis of the class action lawsuit. Contract law is quite complex.
“We are already in a de-facto state of default, and making that condition official might ease our economic woes, but it will do nothing towards making America great again. It will also do nothing towards shrinking government, the one thing that will have to be done to put us back on the right track.”
What would really shrink government would be to default not on mortgage loans, but on US government debt. No one would lend the government any more money, and spending would have to conform to tax receipts, putting the government on a pay as you go basis. The debt would disappear, or be written down massively, and we could start again with a clean slate. However, the current world economy would probably collapse, since all money is based on government debt, especially US government debt.
“Contract law is quite complex.”
It sure is. Unfortunately so complex that our judges and presidents are ignoring them altogether.
Trust me, I was where you are now. I used to think that the first order of our justice system was justice for all. Unfortunately, not if your “too big too fail” and no, I don’t see a class action lawsuit being “too big too fail”. The Bankers, Unions, Wall street, Politicians & the IRS will always win against us, the average taxpaying citizen.
That is of-course who would be the defendants in your imaginary class action lawsuit, right?
Agreed. The lawyers’ real estate interests’ scheme of stopping foreclosures by judicial decree is doing more harm than good. Get it over with. Same for local governments and their dependencies on federal funding.
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