Obama's Mortgage Bailout Plan

[Shady]

I have quite a few times. You are the liar here.

It was the Bush administration that weakened oversight. They let bills they had control over die in committee as well in 2005 regarding housing.

http://iarnuocon.newsvine.com/_news/2008/1...subprime-crisis

So, suck it up. You lost. It was your Republicans who let this happen and are desperate to blame the Democrats 100% for it.

Even if we accept your scenario as true, it still doesn't discount the facts that Bush and Republicans tried to reform said issues 1 year later, and were entirely blocked by DEMOCRATS under the guise of hurting so-called affordable housing. So your suggestion that somebody in the prior Administration should have seen this coming completely untrue, because they did see it coming, and they tried to correct the problems. The fact is Democrats in congress blocked said corrections.

Again, from 2003:

'These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Melvin L. Watt, Democrat of North Carolina.

Sorry.

[eyeball]

Obama's policy is going to bail those people out at the expense of the honest people who paid down their mortgage rather than refinance it. This is the kind of policy that people can grasp easily.

Perhaps the people that are bailed out should not be allowed to deduct the interest portion of their new mortage payments (in the US at least) from their income tax. Would that make it more rational?

What I'd like to see is an exploration of different ways that government held mortages could be re-paid. Perhaps the borrower could repay all or some of the amount through in-kind contributions of labour or services that benefit society or the environment. There are still a lot of disturbed ecosystems out there that could benefit from restoration and there are many volunteer organizations that hurt for both money and people, especially during hard times.

There are people in my region in BC who also face foreclosure right now and while I doubt we'll see the kind of bail-out Obama is proposing there is certainly going to be federal and provincial money spent hereabouts on different things. I expect various environmental restoration and fishery and forestry renewal projects will be amongst them. The local network that received and administered public funds that were spent during hard-times 10 -15 years ago around here is certainly astir. I've been approached by it and asked if I might be available to help resucitate and coordinate an old fishery that DFO managed into oblivion.

Edited February 20, 2009 by eyeball

[jdobbin]

Even if we accept your scenario as true, it still doesn't discount the facts that Bush and Republicans tried to reform said issues 1 year later, and were entirely blocked by DEMOCRATS under the guise of hurting so-called affordable housing. So your suggestion that somebody in the prior Administration should have seen this coming completely untrue, because they did see it coming, and they tried to correct the problems. The fact is Democrats in congress blocked said corrections.

And the Republicans withdrew their bill in 2005 when they controlled the committee that would have passed it.

This has been gone all over by the American Enterprise Institute, hardly a left wing organization. They blame both parties and all the states.

In fact, the problem really accelerated in 2004 and the Republicans had the initiative at that time but withdrew it in 2005 in part because Bush was promoting home ownership.

http://www.aei.org/publications/pubID.29419/pub_detail.asp

The fact is that neither political party, and no administration, are blameless; the honest answer, as outlined below, is that government policy over many years caused this problem. The regulators, in both the Clinton and Bush administrations, were the enforcers of the reduced lending standards that were essential to the growth in homeownership and the housing bubble.

The article is too focused on the housing part of the equation and not as much on the banking regulations in general that packaged up these mortgages so that whacked every nations on the planet. Very little oversight and no accurate determination of the solvency of the loans led to unprecedented money pouring in.

So, sorry if you want to stick to the argument that 100% blame for the Democrats on the issue.

Edited February 20, 2009 by jdobbin

[eyeball]

In fact, the problem really accelerated in 2004 and the Republicans had the initiative at that time but withdrew it in 2005 in part because Bush was promoting home ownership

Why was Bush doing this? For the same reason his Dad did when he said "Come on America, spend". I think the unsustainable cost of Jr's military misadventures has certainly helped fuel the profound crisis of confidence that's gripping the world. A little bit of healthy and appropriately bridled greed is one thing but a need for greed seems a little too much like something out of control, more like Frankenstein. Perhaps this is why this recession seems so surreal compared to previous one's I've experienced.

[msj]

Garbage? The final link above comes to the very useful conclusion that bankers were unethical. WTF?

That amounts to saying that bankers are greedy. Really? I suspect that bankers have been greedy for at least several centuries or more.

No doubt humans have been greedy throughout our history.

The point is to have a proper system in place where fiduciary duties are met and, if they are not being met, then a regulatory regime curbs the worst excesses, and, when even that fails, then those responsible for taking such risks either go to jail (to the extent that fraud is involved) and/or see themselves out on the street for misfeasance or nonfeasance.

The US does not (did not) have a system in place to curb the worst excesses. Not even by a mile.

I found Phil Gramm's explanation more plausible, and it also blames the guy you love to hate: Alan Greenspan.

Link

Gramm even goes on to show that deregulation (such as it was) cannot be blamed:

Of course you would and of course Gramm would (why does it not surprise me that you would seek comfort from a man who called the US a "nation of whiners" for being in a "mental recession" when, as we all now know, the US has been in a real recession since December, 2007? [Gramm stated this back in July 2008 when only the most die hard of recession deniers were still denying the recession])

Gramm was one of the many architects to bring about a screwed up regulatory regime in the US in the first place.

That is, Gramm is on the list, with Greenspan right behind him, as one of the chief causes of this system breakdown.

[msj]

For myself, I think Phil Gramm's article (while self-serving) makes sense. Unfortunately, it doesn't explain the real estate bubbles in the UK or Spain. It doesn't explain the financial meltdown in Iceland. So, I'd say the jury is still out.

Just because we don't know the particulars of what has happened in those countries does not change the facts of what has happened in the US.

For all we know, there is an enormous amount of improper regulation and/or moral hazard inducement thanks to central bankers from around the world.

The fact is you don't know the details in these countries so to try and pass the buck in this way is just plain intellectually dishonest.

[Shady]

So, sorry if you want to stick to the argument that 100% blame for the Democrats on the issue.

Oh, I've never once said that Democrats were 100% to blame. Just 80% - 90%. I'm glad we could find some common ground in this new era of bipartisanship.

[jdobbin]

Oh, I've never once said that Democrats were 100% to blame. Just 80% - 90%. I'm glad we could find some common ground in this new era of bipartisanship.

Utter BS and the American Enterprise Institute has called Republicans on it.

[WIP]

So far Barack Obama, and his economic team have been a complete disaster in terms of running the economy. They've inspired no confidence, and as a result, the market has tanked every week since his inauguration. And his mortgage bailout plan is more of the same. He wants to reward people for acting irresponsibly, while making those who act, and acted responsible, support the others.

So much for a new era of responsibility!

Yes it's all Obama's fault!

George Bush never existed! Democrats have run the Whitehouse from Clinton to Obama without interruption, and the still growing U.S. economic disaster has nothing to do with Republican policies of banking deregulation and permanent deficit-spending!

[bush_cheney2004]

....the still growing U.S. economic disaster has nothing to do with Republican policies of banking deregulation and permanent deficit-spending!

...to be solved by "Democrats" with even more permanent deficit spending !!!

[Oleg Bach]

...to be solved by "Democrats" with even more permanent deficit spending !!!

BC ! I questioned a banker on the reasons why - and this old guy is very wise. Myself I have always believed that the systems have become so huge and complex that they can not be humanly managed. I asked him about the American administration - the Cheney_ Bush team....He said they had nothing to do with it..This is what he said caused it all including the granting of massive bonus's ---privately and now govermentally in the form of bail outs. "It was stupidy, greed and lazyness that brought this mess about" - SIMPLE.....I believe him...it was the mind set and attitude...a system is only as sustainable as it's managers.

[WIP]

...to be solved by "Democrats" with even more permanent deficit spending !!!

To be honest, I really wonder whether the debtload at all levels of government, business and industry, and even consumer debt, can be solved.....other than by a long, steady decline in per capita income. But no politician is allowed to be gloomy and pessimistic, even if it's the truth.

[WIP]

It is rare to see such a groundswell of reaction to something where the MSM goes one way (generally in favour) and the comments of ordinary people is so negative.

This policy was obviously not focus-grouped (or whatever the new verb is).

This video says it all but a quick glance at the comments after any news report will say the same thing. Obama's poll numbers are going to take a hit with this.

Here's the NYT article with the posted comments.

I don't think I got the same impression you did about those "ordinary people" who added their comments. My thinking is that they are selfish, greedy bastards for just being jealous if they think someone else has received help to avert disaster!

Is this what it means to be a conservative, or a libertarian? Not giving a shit about anyone else's hardships and blaming them if they got suckered into an interest-only mortgage or one with escalator payments -- things that no honest person would ever have agreed should have been legal in the first place!

Every time one of these homes is foreclosed, the owners are evicted, and have to hope they can afford some sort of rental unit for their family. They aren't likely to find anything in the same neighbourhood, so in almost every case of a family with children having their homes foreclosed, the children are uprooted from the neighbourhood, and have to say goodbye to all of their friends and be placed in a strange new school. It's hard enough to do this with school-age children when you are able to plan a move to a new community -- in my case, we still go back to Niagara Falls once or twice a month to touch base with old friends when we visit family. A bankrupt family that has had their house foreclosed will not likely have that opportunity.

From what I've read of the home-foreclosure crisis in the U.S., a very significant number are happening in predominantly black neighbourhoods, so I wonder if unspoken racism doesn't lurk underneath some of the attitudes expressed here and continually on rightwing radio. Even if it isn't, it reveals that a lot of people are only motivated by personal greed and accumulation of wealth.

But there is a price to pay for practicing Social Darwinism -- the increasing income gap, and the disappearance of a middle class will lead to growing crime rates. In the U.S. right now, the wealthy, like Limbaugh, Hannity, and their billionaire business buddies have to live in gated communities and have security guards to protect them. In many Third World countries, the rich are afraid to send their children to school because of kidnappers who will hold their children for ransom. They have to send them to private schools in safe havens like Canada. Is this the kind of world wealthy investors and the wannabes like "Joe the Plumber" want to live in? Maybe it sucks to have to give money to people who don't seem to have a lot on the ball -- but the alternative that economic libertarians are pushing us towards, is a world of a few rich and a vast poor class with nothing in the middle. And the rich will have to become as authoritarian as the Third World dictatorships to protect themselves and their money from an impoverished underclass that despises them............I would say putting up with a social safety net and income redistribution is a small price to pay to maintain some level of social harmony.

[GostHacked]

Why was Bush doing this? For the same reason his Dad did when he said "Come on America, spend". I think the unsustainable cost of Jr's military misadventures has certainly helped fuel the profound crisis of confidence that's gripping the world. A little bit of healthy and appropriately bridled greed is one thing but a need for greed seems a little too much like something out of control, more like Frankenstein. Perhaps this is why this recession seems so surreal compared to previous one's I've experienced.

http://www.foxnews.com/politics/first100da...-raises-alarms/

In the last two years, the United States has run up deficits that amount to a combined $2.5 trillion dollars -- almost a fourth of all the debt the nation has taken on in its entire history.

You can blame Dems and Reps alike ...

And at some point, someone has to pay it back, and some are concerned the cost will be passed on to future generations.

"It's easy to spend somebody else's money," said David Walker, CEO of the Peter G. Peterson Foundation and former comptroller general of the Government Accountability Office. "It's easier to spend someone else's money who's too young to vote and hasn't been born yet, and that's exactly what's going on."

My parents did not hand me down any debt. I won't put my future children in the hole either ... Future generations should only get inheritances .. not a debt load they have no hope in paying back ... and maybe not the will either to pay it back.

[bush_cheney2004]

I don't think I got the same impression you did about those "ordinary people" who added their comments. My thinking is that they are selfish, greedy bastards for just being jealous if they think someone else has received help to avert disaster!

Nope...we already know who the selfish greedy bastards are....now they are broke!

Is this what it means to be a conservative, or a libertarian? Not giving a shit about anyone else's hardships and blaming them if they got suckered into an interest-only mortgage or one with escalator payments -- things that no honest person would ever have agreed should have been legal in the first place!

Stupid is as stupid does.

Every time one of these homes is foreclosed, the owners are evicted, and have to hope they can afford some sort of rental unit for their family.

Look....it's not rocket science.....30% of gross in come for housing....duh!

From what I've read of the home-foreclosure crisis in the U.S., a very significant number are happening in predominantly black neighbourhoods, so I wonder if unspoken racism doesn't lurk underneath some of the attitudes expressed here and continually on rightwing radio. Even if it isn't, it reveals that a lot of people are only motivated by personal greed and accumulation of wealth.

Nobody gave a shit about racist red-lining for mortgages before, but they sure are excited now !

But there is a price to pay for practicing Social Darwinism -- the increasing income gap, and the disappearance of a middle class will lead to growing crime rates. In the U.S. right now, the wealthy, like Limbaugh, Hannity, and their billionaire business buddies have to live in gated communities and have security guards to protect them.

Crime rates are down (just ask Dancer)....30 year lows.

In many Third World countries, the rich are afraid to send their children to school because of kidnappers who will hold their children for ransom. They have to send them to private schools in safe havens like Canada.

They can and are killed in Canada too...not so "safe" after all.

Is this the kind of world wealthy investors and the wannabes like "Joe the Plumber" want to live in? Maybe it sucks to have to give money to people who don't seem to have a lot on the ball -- but the alternative that economic libertarians are pushing us towards, is a world of a few rich and a vast poor class with nothing in the middle.

Nope...just stupid people without any taxpayer money.

And the rich will have to become as authoritarian as the Third World dictatorships to protect themselves and their money from an impoverished underclass that despises them............I would say putting up with a social safety net and income redistribution is a small price to pay to maintain some level of social harmony.

Great...please stay in Canada.

[Oleg Bach]

Nope...we already know who the selfish greedy bastards are....now they are broke!

Stupid is as stupid does.

Look....it's not rocket science.....30% of gross in come for housing....duh!

Nobody gave a shit about racist red-lining for mortgages before, but they sure are excited now !

Crime rates are down (just ask Dancer)....30 year lows.

They can and are killed in Canada too...not so "safe" after all.

Nope...just stupid people without any taxpayer money.

Great...please stay in Canada.

So they come to Yankabudda on the hill for advice do they? You always end your advice with the same soft slap in the face ...that everybody wants to live at your house and we all envy your very happy and prosperious existance! How long is the pull out in the living room?

[eyeball]

My parents did not hand me down any debt. I won't put my future children in the hole either ... Future generations should only get inheritances .. not a debt load they have no hope in paying back ... and maybe not the will either to pay it back.

We live in an age where children sue their parents for past wrongs and even to be left alone which is similar to a divorce. I would think a debt-load such as the one we're generating would be valid grounds for a person to similarily disown their nation and wash their hands entirely of something that was not of their making or choosing. There will no doubt be many apologists in the future who will deny them this of course.

I've often regarded the geo-political quagmire past generations left in their wake as an unforgivable debt that's more like a reverse inheritance. I think the time is more than ripe for some sort of social movement in which individuals disown their countries and come to regard themselves as simply being humans or Earthlings. This is an inheritance that would be worth leaving behind.

[bush_cheney2004]

So they come to Yankabudda on the hill for advice do they? You always end your advice with the same soft slap in the face ...that everybody wants to live at your house and we all envy your very happy and prosperious existance! How long is the pull out in the living room?

Has nothing to do with the pull out..and everything to do with zero debt. None. Nada. Modest living and steady income will do that. Never took the sucker's bet just to buy a boat or get a bigger house.

People like me are hopping mad at Obama because we may not be high falootin' Wall Street bankers, or automobeal executives, or even hedge fund moguls, but we sure as hell are not gonna also get rolled by the stupid neighbors with foreclosure signs in their ex-yards. Nope...that is the last straw!

[Oleg Bach]

Has nothing to do with the pull out..and everything to do with zero debt. None. Nada. Modest living and steady income will do that. Never took the sucker's bet just to buy a boat or get a bigger house.

People like me are hopping mad at Obama because we may not be high falootin' Wall Street bankers, or automobeal executives, or even hedge fund moguls, but we sure as hell are not gonna also get rolled by the stupid neighbors with foreclosure signs in their ex-yards. Nope...that is the last straw!

You have made it perfectly clear. Resentment for YOU having done the right thing and put work into creating a reasonable life that is not dependant on an over load money...then suddenly those that were greedy come to take what is your meger life - because your plan was successful and their immoral behaviour was not - pissed off are we? Now I get who you are - normal> Good luck my friend and God speed!

[August1991]

Maybe it sucks to have to give money to people who don't seem to have a lot on the ball -- but the alternative that economic libertarians are pushing us towards, is a world of a few rich and a vast poor class with nothing in the middle.

As BC notes, I think the posters to these threads are asking whether they should subsidize, as you put it, people without alot on the ball making dumb decisions. It is one thing to help confused people but it is quite another to let them drive the taxi.

We live in an age where children sue their parents for past wrongs and even to be left alone which is similar to a divorce. I would think a debt-load such as the one we're generating would be valid grounds for a person to similarily disown their nation and wash their hands entirely of something that was not of their making or choosing. There will no doubt be many apologists in the future who will deny them this of course.

A disheartening aspect of Obama's proposal affects renters. They are taxed to help other people without money to live in houses.

Yes it's all Obama's fault!

Of course it's Bush's fault too.

But Obama is the guy in the White House now and he's had several months to decide what to do. This current mortgage proposal is a non-starter. Ordinary, honest Americans are not going to pay the mortgages of deadbeats with refinanced plasma screens and Escalades down the street. It doesn't take an MBA in Finance to understand this.

When Obama changes his mortgage bail out plan, he'll then fall victim to the "he's making this up as he goes along" criticsm.

Karl Rove has already started.

Edited February 21, 2009 by August1991

[August1991]

No doubt humans have been greedy throughout our history.

The point is to have a proper system in place where fiduciary duties are met and, if they are not being met, then a regulatory regime curbs the worst excesses, and, when even that fails, then those responsible for taking such risks either go to jail (to the extent that fraud is involved) and/or see themselves out on the street for misfeasance or nonfeasance.

The US does not (did not) have a system in place to curb the worst excesses. Not even by a mile.

WTF?

The US Constitution is designed precisely with your concerns in mind. msj, I suggest you skip the financial headlines and go back and read a little more of the Enlightenment. You may have identified the problem but when it comes to the State, it is hard to do what you ask.

Of course you would and of course Gramm would (why does it not surprise me that you would seek comfort from a man who called the US a "nation of whiners" for being in a "mental recession" when, as we all now know, the US has been in a real recession since December, 2007? [Gramm stated this back in July 2008 when only the most die hard of recession deniers were still denying the recession])

Gramm was one of the many architects to bring about a screwed up regulatory regime in the US in the first place.

That is, Gramm is on the list, with Greenspan right behind him, as one of the chief causes of this system breakdown.

I was the first to admit that Gramm is self-serving.

But he makes a good case that deregulation was not the problem here. (We in Canada have had Gramm's deregulation too.) OTOH, Clinton and Bush (and Fannie/Freddie) pushed home ownership. I disgaree with Gramm in blaming Greenspan. Inflation largely determined monetary policy over the past 30 years, with Greenspan twisting knobs on occasion.

To blame Greenspan for the collapse of the housing bubble is like blaming the iceberg for the sinking of the Titanic.

[msj]

WTF?

The US Constitution is designed precisely with your concerns in mind. msj, I suggest you skip the financial headlines and go back and read a little more of the Enlightenment. You may have identified the problem but when it comes to the State, it is hard to do what you ask.

Sure, whatever.

I am talking about detailed regulations that would have to be implemented.

Given that in another thread you did not appear to even know what Tier 1 capital is I have very little desire to get into detailed regulations when it comes to implementing a proper regulatory regime.

Frankly, with the way you spin your straw, it would be a complete waste of my time.

I was the first to admit that Gramm is self-serving.

But he makes a good case that deregulation was not the problem here. (We in Canada have had Gramm's deregulation too.) OTOH, Clinton and Bush (and Fannie/Freddie) pushed home ownership. I disgaree with Gramm in blaming Greenspan. Inflation largely determined monetary policy over the past 30 years, with Greenspan twisting knobs on occasion.

To blame Greenspan for the collapse of the housing bubble is like blaming the iceberg for the sinking of the Titanic.

There is lots of blame to go around.

A self-serving politician is nothing new.

And, once again, just because Canada has deregulated does not make it equivalent to any other jurisdictions regulations. That kind of "reasoning", without going into details of the similarities and differences with other jurisdictions, is just plain garbage.

The US has some very good and effective regulations. They also have some very poor ones and lack some others.

Guess what? So does Canada. BFD.

Perhaps if Gramm had an ounce of credibility I would give his "arguments" further thought. However, I have provided enough links through enough threads to demonstrate just how bogus this line of thinking is.

Once again, perhaps if our history was different, then perhaps I would take the time to argue more vehemently but, frankly, it is like arguing with a brick wall that keeps moving, spinning, and creating straw and, frankly, I'm tired of the wasted time.

[Shady]

Utter BS and the American Enterprise Institute has called Republicans on it.

Even under your scenario, Republicans at least recognized there was a problem. Democrats refused to even accept that idea. They stuck their collective heads in the sand. And unfortunately for you, it's indisputable, no matter how hard you try.

'These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.''

''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Melvin L. Watt, Democrat of North Carolina

[msj]

It is rare to see such a groundswell of reaction to something where the MSM goes one way (generally in favour) and the comments of ordinary people is so negative.

Can you provide evidence that the MSM is generally in favour of this bailout?

What you have linked to does not support your assertion.

This policy was obviously not focus-grouped (or whatever the new verb is).

This video says it all but a quick glance at the comments after any news report will say the same thing. Obama's poll numbers are going to take a hit with this.

I wonder how many traders would be standing behind Santelli if it were not for the governments' bailout of Wall Street?

I wonder if any of them will wake up one day and realize that not only should the mortgagees be taking a haircut but everyone should be taking a haircut (whether it is through letting the market fail and rebuild or through nationalizing banks).

[jdobbin]

Even under your scenario, Republicans at least recognized there was a problem. Democrats refused to even accept that idea. They stuck their collective heads in the sand. And unfortunately for you, it's indisputable, no matter how hard you try.

Republicans had no interest is solving the problem. They withdrew it even when they had a clear path to passing legislation.

Moreover, they refused any type of regulation on the packaging of these loans and other financial instruments responsible for much of the crisis. And unfortunately for you, that is indisputable, no matter how hard you try.