Treasury, Fed to Unveil Major Consumer Lending Program

[NOBama]

I used to think the same way. If you do some reading on the Great Depression you see that Herbert Hoover had the same "hands off" approach to the situation. He figured just as you do that companies will fail and others will form in their place but it just didn't happen. Banks were failing and no longer able to give loans for the start up businesses, and as a result the recession deepened. Herbert Hoover was actually known as a great humanitarian in the pre-depression days. There's some interesting reading there.

Anyway, as much as I hated the 700 billion stimulus plan at first, I'm now certain it was necessary and I think more bailouts will be needed in the coming months. The only question is when do we stop? I really don't know.
I think in February there's gonna' be another dip in the stock market when commercial real estate starts to tank. It has nothing to do with Obama but more to do with the lousy Christmas season most retailers are gonna' have. The quarterly reports come out in the end of January, begining of February and I'd bet they aren't gonna' look good. Big retailers are gonna' declare bankrupcy and/or ask for bailout money which may dwarf what we are seeing now.

What are some of the things us little guys can do? Start paying off as much of your debt as you can, credit cards first, autos and mortgages next. I wouldn't worry about student loans too much as those are normally very low interest. At least mine were.
So stop spending and start saving more. Go out to dinner and movies less, take local vacations. But unfortunately the very behavior that will insulate you from the coming recession will actually worsen it!

I understand your point but, back in the day the world was a much bigger place, people were isolated compared to today. We didn’t have the financial instruments we have today or the laws that make them legitimate/enforcable. Nor did the country have the wealth we have today.

I think it’s a whole different ballgame. Actually, I believe Hoover’s ideas would be more applicable today than they were back then. I know for a fact that there’s enough money (private equity) in this country to keep the US from going into a depression. Putting that money to work could really make a difference. If that money had something to invest in, it would invest.


All IMO, as usual.

 

[KMAN]

Out of curiousity, has anyone been turned down when trying to get a loan lately?

I don't know of anyone... Is the credit crisis happening because the banks stopped loaning to people who can't pay them back???? If so, can someone tell me what is wrong with this?

 

[Andrew2382]

My neighbor just got a home equity loan with no problems

 

[Mad Scientist]

I understand your point but, back in the day the world was a much bigger place, people were isolated compared to today. We didn’t have the financial instruments we have today or the laws that make them legitimate/enforcable. Nor did the country have the wealth we have today.
I think it’s a whole different ballgame. Actually, I believe Hoover’s ideas would be more applicable today than they were back then. I know for a fact that there’s enough money (private equity) in this country to keep the US from going into a depression. Putting that money to work could really make a difference. If that money had something to invest in, it would invest.
All IMO, as usual.

Well "back in the day", the 1920's, Americans had far less credit and more savings than they do know. We weren't mortgaged to the gills back then either and for that reason alone I think this is far worse.
I hate to be such a downer but I really don't see the upside of all this. Unless of course you can pick all the stocks that are down now but will rebound in 5-10 years, then you may get ahead when this is all over.

 

[Toro]

It's just a piece of paper they are tossing around. Of course there is valuation involved. And banks wouldn't have problem lending a piece of paper. If it were gold, they would be stringent.

History always repeat itself. How many credit crises do we need to finally cure us of all potential problems in the future?

There were credit crises during the gold standard.

A monetary system that bases itself on the profitability of the mining sector - and a badly managed one at that - is a poor one.

 

[gonegolfin]

My question is though,, since we are in this mess because of lending and not paying back,, ie,, living way beyond our means both as citizens and as a government, how is borrowing from China and forcing the banks to loan to lenders who may or may not pay it back gonna fix this??? I am way confused!

You are not confused. You are on the mark.

Brian

 

[gonegolfin]

The U.S. Federal Reserve, in another massive life-support intervention for the U.S. financial system, Tuesday announced a $600 billion program to buy mortgage-related debt and securities and a $200 billion facility to buy consumer debt securities. The U.S. central bank said it would buy up to $100 billion in debt issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, the government-sponsored mortgage finance enterprises.


The Fed also said it would buy up to $500 billion in mortgage-backed securities backed by Fannie Mae, Freddie Mac, and Ginnie Mae.


So that's 1.4 trillion dollars being spent in just a matter of minutes. My god.

This is not correct. The $500 billion for the purchase of GSE mortgage backed securities is part of the $600 billion above ... as is the $100 billion used for Agency debt. The total is $800 billion, not $1.4 trillion.

Brian

 

[gonegolfin]

I used to think the same way. If you do some reading on the Great Depression you see that Herbert Hoover had the same "hands off" approach to the situation.

Incorrect. Hoover had anything but a "hands off" approach. His Treasury Secretary wanted no intervention. Hoover went the other way.

Brian

 

[Zoomie1980]

My question is though,, since we are in this mess because of lending and not paying back,, ie,, living way beyond our means both as citizens and as a government, how is borrowing from China and forcing the banks to loan to lenders who may or may not pay it back gonna fix this??? I am way confused!

Well, that's about this whole thing, in a simple nutshell. Too bad Paulson, Congress, the incoming and outgoing President don't seem to get that...

 

[Toro]

Incorrect. Hoover had anything but a "hands off" approach. His Treasury Secretary wanted no intervention. Hoover went the other way.

Brian

A couple years into the Depression after it became clear the economy had collapsed. His earlier policies were both too small and he signed the Smoot-Hawley Act.

 

[BaronVonBigmeat]

Incorrect. Hoover had anything but a "hands off" approach. His Treasury Secretary wanted no intervention. Hoover went the other way.

Brian

Interestingly enough, FDR ran on a platform of sound money and cutting spending, taxes, and tariffs, which he promptly abandoned of course. I think I read somewhere Ayn Rand even voted for him.

 

[eots]

Treasury Secretary Henry Paulson, seeking to ease strains in the consumer credit market, plans to announce Tuesday the formation of a program to increase the availability of auto loans, student loans and credit cards, according to people familiar with the matter.

The lending facility, which will be operated by the Federal Reserve, is expected to provide loans to investors who want to buy securities backed by credit cards, auto loans and student loans, these people said. Treasury will contribute between $25 billion to $100 billion to the facility from its $700 billion Troubled Asset Relief Program.

The program is aimed at making it easier for consumers to borrow money. Government officials, including Mr. Paulson, have grown concerned about "distress" in the consumer finance market, as the availability of household loans has ground to halt amid a broader credit crunch.


FOXNews.com - Treasury, Fed to Unveil Major Consumer Lending Program - Local News | News Articles | National News | US News






We seen to be stamped with stupid.. I think.. So we got in this mess casue the banks were forced to loan us peoples money even when some of us did not have jobs, income, or assets.. so now the feds are setting up a program to make it easier to borrow more money we can't pay back!

its free stuff silly....free !..god I love SOCIALISM they even send you
checks sometimes..free !!!...and soon all your medical care will be free !!!
god bless Obama ...god bless.. America..god bless ..socialism ..for making this truly the land of the free !!!

 

[Zoomie1980]

Out of curiousity, has anyone been turned down when trying to get a loan lately?

I don't know of anyone... Is the credit crisis happening because the banks stopped loaning to people who can't pay them back???? If so, can someone tell me what is wrong with this?

No, it's mostly banks not loaning money to other banks. And yes, if you have a sub 650 or so rating you aren't going to get a loan, or at least a very attractive loan. If you are in the 750+ range you haven't noticed a lick of difference at all!

Hell, I've got 18 credit cards, all with $10,000-$30,000 credit lines, all sub 10% rates, but none with balances. I could buy a decent house with credit cards right now...

 

[editec]

Screw those consumer loans.

I want a grant...a big one.

I can't help but think if I were a citizen of a sane country, I'd already have one.

 

[NOBama]

Screw those consumer loans.

I want a grant...a big one.

I can't help but think if I were a citizen of a sane country, I'd already have one.

 

[Toro]

Interestingly enough, FDR ran on a platform of sound money and cutting spending, taxes, and tariffs, which he promptly abandoned of course. I think I read somewhere Ayn Rand even voted for him.

In 1937, even though the economy was tipping into recession, increased taxes to balance the budget, which promptly pushed the economy into recession.

Investors feared a repeat of the 1929 crash and a return of the Depression. Stocks were crushed and fell in a manner not seen since, well, today!