Bankers, who get rich and cause problems

[Bern80]

So,,,,,,all those hard working yet relatively uneducated house buyers are at fault? The contracts were and even remain difficult for lawyers to understand. And you want to blame the good people that just wanted to buy a house and home for their families?

You suck, seriously, you suck.

Why is it someone else's responsibilty to make up for the fact that you are uneducated?

 

[BaronVonBigmeat]

I don't really buy the whole "people were stupid" and "bankers were greedy" arguments. People have been stupid and greedy since the beginning of time. The federal reserve supplied a glut of cheap credit, that's the problem. Of course bankers were going to be sloppy--that's what you do when you've got more money to loan out than you know what to do with. Of course people were going to take out oversize loans, the interest rates were stupidly low.

Also the repeal of Glass-Stegall didn't help. We have a system of privatized profits/socialized losses when it comes to banking. You can't deregulate stuff like this but then still bail the banks out when they do stupid shit, otherwise you are encouraging risky behavior. This is what's known as moral hazard.

It's like handing the keys to a Dodge Viper to your teenage son, giving him a case of whiskey, and telling him to go have fun at the beach. Oh and you've got full insurance coverage paid for and you'll pay for any traffic tickets too. Should you be surprised when he wrecks the car? Either go hands off and don't pay for his car (that way it's his money at stake and he'll be more cautious), or sit in the passenger's seat and watch him like a hawk.

 

[Psychoblues]

So the multi billion dollar government salvation of Bear Stearns doesn't disturb you yet you resent assistance offered to common people with common problems?

 

[Zoomie1980]

Should these guys/gals be held accountable for the colapse in the housing market, by the manipulation of loans, and the rules that made this fiasco possible?? I don't see why the public has to pay, and be negatively effected by the mortgage scandals... It was not done in the best interest of the public, but for the enrichment of the players who stacked the deck. Make them pay, and pay hard.. Carelessness and greed should not be rewarded.. These MONEY men are "professionals", so, they should be held accountable to much higher standards.

Now, do I feel bad for the dopes who bought homes, expensive homes, who couldn't afford them to begin with? Hell no!!! They are at fault too.. If they didn't understand the small print, then they shouldn't have entered the contract. Their lawyers who ok'ed the deals should be disbarred as well..

Inflated property taxes don't come back down easy. In the mean time,, WORKING MEN, and WORKING WOMEN, who do try to live within their means are being hit from multiple angles. The REASONABLE working class should not be bled of their savings in order to bail out the rich and stupid.

Both sides are culpable. Greedy lenders basically "scamming" uneducated, gullible barrowers with teaser rates and baloons, and, of course, the borrowers, who in the end, are responsible for their own actions.

No need to "punish" either. The market is doing that for us.

 

[Zoomie1980]

I own a fair amount of gold but the death of the dollar is vastly exaggerated for reasons you can read here.

http://runningofthebulls.typepad.com/toros_running_of_the_bull/2007/11/has-the-dollar-.html

I bought gold steadily the last three years. Euro's, too. But since Feb 1 I've been slowly taking the profits. I'll have my position at least halved in both near zero by years end, if the market turns the way I expect it to.

 

[Shogun]

I don't really buy the whole "people were stupid" and "bankers were greedy" arguments. People have been stupid and greedy since the beginning of time. The federal reserve supplied a glut of cheap credit, that's the problem. Of course bankers were going to be sloppy--that's what you do when you've got more money to loan out than you know what to do with. Of course people were going to take out oversize loans, the interest rates were stupidly low.

Also the repeal of Glass-Stegall didn't help. We have a system of privatized profits/socialized losses when it comes to banking. You can't deregulate stuff like this but then still bail the banks out when they do stupid shit, otherwise you are encouraging risky behavior. This is what's known as moral hazard.

It's like handing the keys to a Dodge Viper to your teenage son, giving him a case of whiskey, and telling him to go have fun at the beach. Oh and you've got full insurance coverage paid for and you'll pay for any traffic tickets too. Should you be surprised when he wrecks the car? Either go hands off and don't pay for his car (that way it's his money at stake and he'll be more cautious), or sit in the passenger's seat and watch him like a hawk.

This is my vote for Post of the Week

 

[Psychoblues]

I hope your gold keeps you warm at night, zoomie.

I bought gold steadily the last three years. Euro's, too. But since Feb 1 I've been slowly taking the profits. I'll have my position at least halved in both near zero by years end, if the market turns the way I expect it to.

I prefer cotton.

 

[TopGunna]

I'll give you 2 scenarios from a blog I enjoy:

1) Businesses recognized an opportunity to expand the mortgage market by offering mortgages to poorer, riskier borrowers and managing the risk by securitizing these loans and reselling them in the increasingly robust institutional market for such loan packages. While certainly in it for the profit, this move was consistent with the long-term trend in the US to wider home ownership. It turned out, however, that almost everyone involved were working off some poor assumptions. Borrowers over-estimated their ability to pay and counted too much on the continued upward trajectory of real estate values. Lenders made a number of bad credit decisions, something not wholly surprising in a new market. And institutions and other investors under-estimated the risk in these packages, particularly the systematic risk associated with falling housing prices. The sub-prime market will likely re-emerge, but with everyone smarter the next time around. Huge losses give lenders and institutions all the incentive they need to change their behavior in the future.
-- OR --
2) Unscrupulous lenders created the sub-prime market as a way to make a quick buck off of naive and inexperienced borrowers. They tricked these borrowers into taking on more debt than they could handle in order to get large up-front fees. Institutions were not arms-length investors, but were explicitly knowledgeable and "in on" this con. Their goal was to sell worthless bonds to unsuspecting investors. The fact that the lenders and institutions are taking the biggest losses in the market collapse is not a sign that they are innocent, but that the market fell apart faster than they expected, so they had not had the chance to unload the securities on duped individual investors. Without regulation, lenders and institutions will continue committing these same crimes and poor people have proven that they need outside help to make good decisions with their money. Congress needs to step in and prevent poorer borrowers from being offered mortgages in the future, and institutional investors need to be held financially accountable when borrowers take on more debt than they can handle.

Couple that with the fact that foreclosure is usually a net loss for all parties to the transaction - I can't see how anyone can think scenario #2 is what's really at work here.

 

[AllieBaba]

Yep, some people are too stupid and they get taken advantage of. You think it cool that people who are dumb get taken advantage of? I don't. Not only that though, the loan officers purposely undersell the bad side. Just because YOU can read doesn't make you're King Shit on the subject. It just means you can read.

As for not being your problem, guess again buddy. IF - and it is an IF - there is recession in the near future like some predict, it is directly related to the sub-prime mortgage fiasco - and that'll affect the average folk. If you're some multi-millionaire, then you'll be fine..

And if they are stupid, and they DON'T get the loans because they're stupid and poor, then whining liberals pass laws to force the government to subsidize their home loans and ...GUESS WHAT? You're in the same stupid ship.

Stupid, poor people do get taken advantage of all the time. It's NOT the government's responsibilty to bail them out when it happens.

And now, thank you very much, I intend to capitalize on the incredibly cheap housing available right now and pick up a home I can afford. And laugh when the prices start to soar again, as other poor folks buy up the houses and the rich folks realize there's no housing to be had...and value goes up.

It's the way it works. The market goes up, down, up, down. Ride it out and quit boo hooing.