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Why more bail outs? I thought prices have stabilized and we are in recovery. Obviously for them to do this, they too realize that they have a bit too much inventory to handle, and wants to stop it at another source.
The answer is simple. It's politics. They don't want to lose the House and Senate so bailout underwater home owners at the expense of our future and kid's futures.
I don't understand how you can just "forgive" billions of dollars of loans. I mean where is this money going to come from?
Why not just forgive all the "poor" "unfortunate" people who ran up credit card debt too?
I think this is something that the right wing has conjured up to stir the pot........The above is almost an exact quote that was made by Rush Limbaugh this morning (about 10 minutes ago) so now I see that he got it from Matt Drudge. From time to time I tune into the right wing radio to know what the other side is up to and talking about. I'm with you......I would be outraged if this happened, and so would millions and millions of voters, but I don't think it will happen, and I am very skeptical as to whether or not it's really even being considered by anyone that could make this happen.
Cautious1
2010 Aug 5, 2:38am
This would be stupid, IMHO. The focus should be on job creation. A reduced mortgage doesn't help someone without a job. A reduced mortgage doesn't help people who already lost their house. A reduced mortgage doesn't help the renter or the responsible person who didn't get in over his/her head. If any "political calculator" honestly thinks "grateful Americans" would outnumber the offended ones in the voting booth, he's got a dead battery.
rob
I don't think another stimulus/bailout plan is something the right wing "has made up".
There have been talks about this the past month or so because the Obama administration did not expect 9.5% unemployment in August of 2010 (who knows might be 9.8% with tommorow's report)
I don't think these rumors are just to whip up "right wingers" but I feel there is merit to them.
I don’t think these rumors are just to whip up “right wingers†but I feel there is merit to them.
We shall know in the fullness of time. There is only one thing in this lifetime where I feel comfortable using the word "never," and that's in conjunction with peace in the Middle East.
toothfairy
2010 Aug 5, 3:45am
This would be stupid, IMHO. The focus should be on job creation. A reduced mortgage doesn’t help someone without a job. A reduced mortgage doesn’t help people who already lost their house. A reduced mortgage doesn’t help the renter or the responsible person who didn’t get in over his/her head. If any “political calculator†honestly thinks “grateful Americans†would outnumber the offended ones in the voting booth, he’s got a dead battery.
This isn't about people who got in over their head though. Most of those people and other scammers are long gone by now. So what about the people who bought within their means and are sitting in a house where the value has plummeted 50% thanks to irresponsible lending?
I'm against bailouts in general but I think those people deserve something especially since wall street banks got their bail out.
I’m against bailouts in general but I think those people deserve something especially since wall street banks got their bail out.
The "bail out" were funds to cover depositors accounts... You, me, our employers, small business and many other institutions who had funds in the bank.
Wall Street wasnt bailed out, We were! That is the reason your employer can issue you a salary check and you can make withdrawls from your bank. Why? the funds that were borrowed to homeowners were not being paid back into depositers accounts where they were borrowed from.
As for Obama's foregiveness of debt.. we will see.
So what about the people who bought within their means and are sitting in a house where the value has plummeted 50% thanks to irresponsible lending?
In SC we been in a bubble since 1998 long before any toxic lending. Anyone with half a brain should have seen this. You dont have prices leaping from $200K to 700K in 10 years. Of course prices were going to fall in the Bay Area back to long term trend.
Bap33
2010 Aug 5, 4:23am
""So what about the people who bought within their means and are sitting in a house where the value has plummeted 50% thanks to irresponsible lending?""
They live their life and stop thinking abouit a house as an investment tool ... or they walk and kill their credit ... but at no time should tax payers be made to cover the loses of a gambler.
""I’m against bailouts in general but I think those people deserve something especially since wall street banks got their bail out.""
What does a responsible person that seen the bubble and stayed out of the market and paid off debt and collected a good downpayment (me for example) "get" from this bail out crap? We get to help those that had no idea of a dollars worth stay wealthy .... we get to cover the loses of liar-buyers, liar-lenders, and wallstreet. When do we collect the profits made by every REwhore, Lender, Inspection guy, appraiser .... there have been a lot of hummers and plastic boobs purchased with the bubble bucks ... when do we go collect from the friggin winners in this game and leave the tax payers alone?
welfare ... it's just more welfare. And welfare sux.
Why can't our president do what a typical crooked president would do? Hold prices high so that he and all his friends, families, and associates can unload their properties at high prices; then afterwards, let it collapse.
Too much effort is being put into this and the results are not good enough. But I guess it's okay because all the money they lose, they'll just print it. Then they will also deny any inflation. Put a picture of Obama with his mouth open and his finger pointing at something looking serious in the news article and it will be believable.
Market Ticker covered the reasons this will not happen, mostly because it will cost more votes than it gains:
http://market-ticker.org/archives/2557-Dont-Bet-On-It-Mass-Forgiveness.html
tatupu70
2010 Aug 5, 5:11am
For me, I would just let the banks fail, and watch people be shocked at how little Finance is actually necessary on the economic level most Americans operate on. Not saying it would be painless, but it wouldn’t be the end of the world. In 4-5 years, the economy would be back to normal. Right now we are in slow decay mode, that won’t ever fix itself without a RADICAL change in the system. The market could do it if the government didn’t prop up R/E and Finance. Or the government could do it itself. But the current status quo is unsustainable.
I don't understand this view--I see it quite a bit on this board. How do you know what would happen if the banks fail? Why do you think we'd recover in 4-5 years??
tatupu70
2010 Aug 5, 6:50am
Imagine if every mortgage and credit card was wiped out, or even just the interest forgiven. There would be a short-term disinvestment, but then there would be rapid, domestic-fueled growth. People free of mortgages and debt can spend spend spend! And the US economy is not an exporting dependent country, so we have little to worry from retaliation.
People wouldn't be free of mortgages. If banks go under, their assets are still divided among their creditors and mortgages would definitely be considered assets.
What you're missing is that businesses would lose all of their short term financing/commerical paper markets. It would kill a good deal of business and put a lot of people on the unemployment rolls, probably causing a deep depression. Who knows how long it would last...
I'm not a fan of defaulting on the national debt, but I'm even less in favor of letting all the banks fail...
HousingWatcher
2010 Aug 5, 7:01am
This idea was either made up by Republicans or perhaps it was a trial balloon by the administration... throw it out there and see what peopel think of it while being able to deny it if the idea is unpopular.
klarek
2010 Aug 5, 7:06am
The answer is simple. It’s politics. They don’t want to lose the House and Senate so bailout underwater home owners at the expense of our future and kid’s futures.
How will that gain them votes? That will benefit, what, 10% of the population? Dumbass bubble flippers that put nothing down? That will kill their chances for re-election.
klarek
2010 Aug 5, 7:08am
This isn’t about people who got in over their head though. Most of those people and other scammers are long gone by now. So what about the people who bought within their means and are sitting in a house where the value has plummeted 50% thanks to irresponsible lending?
I’m against bailouts in general but I think those people deserve something especially since wall street banks got their bail out.
They deserve shit. And I'm sick of the whole "banks got bailouts" excuse to reward every other jackass out there with a de facto winning lottery ticket.
FWIW, I was watching CNBC programming as well as the Kudlow Report this afternoon and both the White House and the Treasury officials deny this as just a wild rumor.
The answer is simple. It’s politics. They don’t want to lose the House and Senate so bailout underwater home owners at the expense of our future and kid’s futures.
How will that gain them votes? That will benefit, what, 10% of the population? Dumbass bubble flippers that put nothing down? That will kill their chances for re-election.
Hard to tell how people would react. A lot of people would be jumping at free money. How would you like it if suddenly the gubbament shaved $20k off your debt?
It might also have a short-term positive effect on the economy. Underwater homeowners go out and buy ipads on money they thought they'd need for the mortgage.
Of course, long-term, just means the day of reckoning on our debt comes sooner, and any last remnants of moral hazards suddenly become laughable.
Then again, people hate the idea of welfare for idiots, and the Republicans (if they have any political competency at all) could use this to drown Obama if they play it correctly.
HousingWatcher
2010 Aug 5, 9:45am
"That will kill their chances for re-election."
So what? The Dems are not exactly going to do well in Novemeber anyway.
tatupu70
2010 Aug 5, 10:00am
This would result in the assets only selling for a fraction of their pre-crash worth. The few Investors that would or could buy them would only do so in return for a massive discount, and then work out a very good deal with the borrower. A $200k loan at 7% that is hardly paid off, and already 3 mos overdue, a high bid for it might be $50k. The investor takes it, calls up the borrower, and says “Hey, tell you what. Sign this paper, I’ll forgive $150k of your $250k loan, but I will raise your rate to 10%. Now you only need to pay me about a thousand, instead of the about $2000 you were paying before!†That’s the elimination of almost half the mortgage payment.
I highly doubt that scenario would play out. More likely, they would buy cheaply as you suggest and just foreclose on people. Otherwise everyone would want the principle reduction deal.
And Lots of cash-and-carry, mom and pop, local market-wise businesses would flourish in the gap, relieved of having to content with economy-of-scale, well capitalized international and national corporations with regulatory capture over the Government.
Again--I don't think so. Mom and pop businesses would be the first to go under as they would lose their working capital that helps them through the low seasons.
You have to say “No†at some point. Otherwise the Banksters are going to do it again, 5, 10, 15 years down the road. if the powerful people who run and own these Banks can get away with bad investments and then sticking the taxpayer for it, the country is doomed
I agree. But I think we need to break up the huge banks so that we can let them fail without potentially destroying the economy. We're screwed this time, but we can take steps to make sure it doesn't happen again.
The national tax revenue already is barely enough to pay the interest on the national debt.
Now you're just being ridiculous.
Communism is dead in 1990s.
Capitalism is dead in 2010s.
What is the next ism?
inflection point
2010 Aug 5, 1:31pm
I am sure we are due for another suprise from the one term wonder. I am also sure we will never guess exactly what it will be. The one thing you can count on is that it will be good for the banks not anyone on main street.
This isn’t about people who got in over their head though. Most of those people and other scammers are long gone by now.
Cite?
So what about the people who bought within their means and are sitting in a house where the value has plummeted 50% thanks to irresponsible lending?
What about them? If they can still afford their mortgage payment (which they should be able to do if they "bought within their means"), then where's the problem? A house is supposed to be a place to live, not an investment with a guaranteed return.
I’m against bailouts in general but I think those people deserve something especially since wall street banks got their bail out.
Why? Because two wrongs make a right?
zzyzzx
2010 Aug 6, 5:15am
I am sure we are due for another suprise from the one term wonder. I am also sure we will never guess exactly what it will be. The one thing you can count on is that it will be good for the banks not anyone on main street.
And probably good for increasing the price of gold.
I hope this rumor isn't true, that Obama wants to bail out homeowners to help democrats maintain control of congress so he can get his agenda passed until his re election campaign in 2012.
This will keep home prices at unreasonable levels and prevent RESPONSIBLE people who are waiting for home prices to drop, from getting a home.
I am tired of all the bias in the MSM complaining about how bad it is that home prices are falling and that peoples homes are being foreclosed. What about the millions of responsible people that will benefit from this? What about the millions of people who don't own homes because they can't afford it? What about the millions of people who want a home, but are waiting for an affordable house by being responsible, by making sacrifices like living with their parents, brothers, sisters, room mates etc. until they are in their thirties or forties to save money? Yes, it's bad if you lose your house but it's not the end of the world, it's not like you are going blind or getting cancer. If you lost your house, learn from your mistakes and move on with your life. If you lose your house that doesn't mean you can NEVER get a home in the future. Just save your money, build up your credit rating and buy a house (probably smaller than the one you lost) when you can afford it.
Bap33
2010 Aug 6, 1:35pm
lol .... I must admit, my favorite set has been adjusted a bit. Just a taste, not too much. They rock. Not that anyone really cares!! lol
I think this is something that the right wing has conjured up to stir the pot……..
Ding. It's complete nonsense. You've really got to wonder about people that continue to read blogs that regularly crank out nonsense.
I think this is something that the right wing has conjured up to stir the pot……..
Ding. It’s complete nonsense. You’ve really got to wonder about people that continue to read blogs that regularly crank out nonsense.
Isn't that what blogs are all about?
HousingWatcher
2010 Aug 7, 8:08am
This story is not true. Obama is not forgiving mortgages.
HOWEVER, this story is TRUE:
Fannie Mae's 'Affordable Advantage' Program Offers Mortgages For Only $1,000 Down
http://www.huffingtonpost.com/2010/08/05/fannie-maes-affordable-ad_n_672248.html
toothfairy
2010 Aug 17, 9:25am
wow it's looking more and more like this is going to happen.
From what I'm reading most people at the Fannie Freddy restructure meeting today
seem to agree with this idea.
the original story probably was a leak or trial balloon.
Barney Frank said on CNBC that Fannie and Freddie "Will not finance underwater loans"......"It won't happen" as well as "We should toughen lending standards." A lot of this was all on the Kudlow Report today.
toothfairy
2010 Aug 17, 10:34am
yeah I was watching it. I dont think Barney Frank has final say on this. Mark Zandi and Bill Gross have both recommended it and they were at todays policy meeting.
Barney Frank is someone who when speaks shouldn't be taken seriously.
Him and Chris Dodd stood there behind Obama while they were signing the "financial over-haul" bill and it was Chris Dodd and Barney Frank responsible for THE NEED for a financial overhaul. It's almost too comical like the old pictures of Rumsfeld and Saddam
I really hope this isn't true. Seems like a lot more taxing responsible people to bail out irresponsible people again.
bubblesitter
2010 Aug 21, 9:54am
I really hope this isn’t true. Seems like a lot more taxing responsible people to bail out irresponsible people again.
It is always true in America. Keep the system up and prolong it's self correction by artificial insemination.
http://blogs.reuters.com/drudge.html
Main Street may be about to get its own gigantic bailout. Rumors are running wild from Washington to Wall Street that the Obama administration is about to order government-controlled lenders Fannie Mae and Freddie Mac to forgive a portion of the mortgage debt of millions of Americans who owe more than what their homes are worth. An estimated 15 million U.S. mortgages – one in five – are underwater with negative equity of some $800 billion. Recall that on Christmas Eve 2009, the Treasury Department waived a $400 billion limit on financial assistance to Fannie and Freddie, pledging unlimited help. The actual vehicle for the bailout could be the Bush-era Home Affordable Refinance Program, or HARP, a sister program to Obama’s loan modification effort. HARP was just extended through June 30, 2011.
The move, if it happens, would be a stunning political and economic bombshell less than 100 days before a midterm election in which Democrats are currently expected to suffer massive, if not historic losses. The key date to watch is August 17 when the Treasury Department holds a much-hyped meeting on the future of Fannie and Freddie. A few key points:
1) Republican leaders believe this is going to happen since GOPers and Democratic moderates in the Senate are unwilling to spend more taxpayer money on more stimulus. But such a housing plan would allow the White House to sidestep congressional objections and show voters it is doing something tangible about an economy that seems to be weakening.
2) Wall Street banks are alerting their clients privately to this possibility. Here is what some are cautiously saying publicly. This from Goldman Sachs:
GSE policies are one of a dwindling number of policy levers the administration has left to pull, so it is conceivable that changes could be made, though there is no sign that a policy change is imminent. The Treasury’s essentially unlimited ability to provide financial support to the GSEs creates an interesting situation over the next twelve months: the GSEs could potentially be used to provide additional support for the housing market and, to a lesser extent, the broader economy in 2H 2001.
And this from Mizuho Securities:
As policy makers ponder their next move the data suggests that they face not only a stalling recovery but a growing risk of deflation taking root in the economy. As a result, the Administration has turned back to industrial policies by approving the purchase of a sub-prime auto lender by GM as a means for pumping up domestic sales, especially since the latest auto sales data indicates that consumers are still responsive to incentives. This precedent increases the risk that the government will use its control of Fannie and Freddie to increase consumer cash flow and juice the economy again.
Moreover, Morgan Stanley is pushing a mortgage relief plan directly to Congress. On August 3, a top Morgan Stanley economist recommended to the Senate Budget Committee that Fannie and Freddie ease their lending standards to allow millions of Americans to refinance their mortgages.
3) Keep in mind the political and economic context. The nascent recovery is already running out of steam. Wall Street economists just downgraded the government’s second-quarter GDP estimate of 2.4 percent to around 1.7 percent. And as even Treasury Secretary Timothy Geithner is warning, the unemployment rate may well begin to rise back toward the politically toxic 10 percent level given such sluggish growth. Many in the White House thought the unemployment rate would be dropping sharply by this point in the recovery.
But that is not happening. What is happening is that the president’s approval ratings are continuing to erode, as are Democratic election polls. Democrats are in real danger of losing the House and almost losing the Senate. The mortgage Hail Mary would be a last-gasp effort to prevent this from happening and to save the Obama agenda. The political calculation is that the number of grateful Americans would be greater than those offended that they — and their children and their grandchildren — would be paying for someone else’s mortgage woes.
4) And don’t think the White House is worried about financial market reaction. If they thought it would pass Congress, they would be submitting a $200 billion Stimulus 2.0 (3.0?, 4.0?) right now.
August is supposed to be a slow month for Washington politics. But maybe not this one.
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I would be outraged if this happened. I'm already mad this is being considered.
thoughts?
#politics