The "bailout" of financial institutions: thoughts?

[Mr. Pathetic]

How do you feel about the bailout of financial institutions ....which is about 700 billion just for starters?

Personally I am very strongly against it, "partisan" or not it is a bad idea that is just helping executives who robbed people blind and are asking to be rewarded for their blatant idiocy. Both parties are blind if they think the majority of the American people want to pay more taxes to help along corrupt ideals when these companies should fall because they cannot run the business honestly. Sure, we are going to hurt one way or another, but I see far less good coming from bailing these guys out than using our money to help the average man in this nation who does not have investments in these corporations. That's a sample of my thoughts.

[Clangador]

I am against it too. I keep my own business in order and it's not my problem if those people and companies don't.

[charlietango]

Unfortunately it is necessary. Those of you who think otherwise fail to have any understanding of how fast this economy would begin to collapse were something not done. Large financial organizations that underpin everything from Main Street to Wall Street are already on the verge of collpase, and smaller organizations collapsing would make those teeter even further.

Consider, one of the banks in serious trouble right now is Washington Mutual, which is the fifth largest bank in the country. You have something like that collapse and you will have runs on the bank beginning to start. See Depression, Great....

The problem is that in 2000 something called the Commodity Futures Modernization Act of 2000 was passed. It banned gthe government from regulating credit default swaps, (which is the "bad debt" that all these things that are having to be bailed out had taken on). This meant banks could trade these without any sort of oversight. It also exempted most over-the-counter energy trades and trading on electronic energy commodity markets. This was done at the behest of a company called ENRON by their pet Senator, Phil Gramm of Texas (he who is now one of Senator McCain's primary advisors). Remember what happened to them?

This bill basically allowed to happen what has happened. It allowed these banks to trade around all this bad debt, gambling that they would be able to collect on all of it and make money. Guess what? It didn't work, and when the housing market collapsed, and all the property that this debt was collateraled on dropped in value, the bill came due and the investment banks didn't have the cash to pay. (It's involved about how these swaps work...).

How the bailout should work:

The company executives get NOTHING.

The government money should go first to taking care of the pension funds and the small investors. The fat cats should come last if at all. Main Street first, Wall Street second.

[Motown Scrapper]

Well first we have to understand the reasons for the collapse it's pretty much known that it's caused by bad loans...But here's the dirty little secret. starting with the Carter administration and expandin during the Clinton administration it was decided that loans should be provided to people who can not afford it to purchase homes for 'social justace' lenders were told make htese loans of suffer consequences then the government created agencies to pick up the pieces when the people who were given loans they could not afford defaulted. Now these people who never should have recieved the loans in the first place because they could not afford them were unable to pay them back. The financial institutions that were forced to make bad loans have started to collapse and the two government entities created to bail them out have been swamped resulting in the current disaster. So in an attempt to provide homes for poor people the people that were supposed to be helped are not getting burnt instead.

[ghost0402]

Let them fail. If you haven't noticed, this crisis is of a limited scope. Only those institutions that wrote alot of bad mortagages are affected. There are still plenty of banks out there that are financially sound and the rest of the economy isn't exactly tanking like folks want you to think. Frankly, this isn't as bad as folks keep saying. Once we get a clear picture, and I stress clear, it will be limited to a couple of institutions, granted, big foundational institutions, but just because one corner of foundation of the house is cracking doesn't meant he entire house is automatically going to fall apart

[ghost0402]

Sept 25, 2008 19:15:08 GMT -5 Motown Scrapper said:

Well first we have to understand the reasons for the collapse it's pretty much known that it's caused by bad loans...But here's the dirty little secret. starting with the Carter administration and expandin during the Clinton administration it was decided that loans should be provided to people who can not afford it to purchase homes for 'social justace' lenders were told make htese loans of suffer consequences then the government created agencies to pick up the pieces when the people who were given loans they could not afford defaulted. Now these people who never should have recieved the loans in the first place because they could not afford them were unable to pay them back. The financial institutions that were forced to make bad loans have started to collapse and the two government entities created to bail them out have been swamped resulting in the current disaster. So in an attempt to provide homes for poor people the people that were supposed to be helped are not getting burnt instead.

There is a reason why owning your own home is part of the American Dream. It's a dream. Not a given. If you can't afford a house you have no business getting a loan to get into one. Course, the idiot banks who hoped the folks getting the loans could actually pay for it didn't really help any either.

[Motown Scrapper]

Sept 26, 2008 9:25:37 GMT -5 ghost0402 said:

Sept 25, 2008 19:15:08 GMT -5 Motown Scrapper said:

Well first we have to understand the reasons for the collapse it's pretty much known that it's caused by bad loans...But here's the dirty little secret. starting with the Carter administration and expanding during the Clinton administration it was decided that loans should be provided to people who can not afford it to purchase homes for 'social Justice' lenders were told make these loans of suffer consequences then the government created agencies to pick up the pieces when the people who were given loans they could not afford defaulted. Now these people who never should have received the loans in the first place because they could not afford them were unable to pay them back. The financial institutions that were forced to make bad loans have started to collapse and the two government entities created to bail them out have been swamped resulting in the current disaster. So in an attempt to provide homes for poor people the people that were supposed to be helped are not getting burnt instead.

There is a reason why owning your own home is part of the American Dream. It's a dream. Not a given. If you can't afford a house you have no business getting a loan to get into one. Course, the idiot banks who hoped the folks getting the loans could actually pay for it didn't really help any either.

Well here's the problem The banks were under duress when they issued those loans. the government told them they had no choice, If they did NOT issue loans to people who were to poor to pay them back they would be penalized so the banks were Forced by idiot politicians to issue loans to people who were too poor to pay them back in the name of 'social justice.' This is the work of the Left wing 'social engineers' that control the Democratic Party.

[Mr. Pathetic]

Oops, almost edited out your post... didn't change anything though.

Anyhoo, Motown, both parties are in this mess together, they both profited and are both equally guilty.... not some left or right wing, but all wing. Everyone wants to point a finger, but none want to admit they are wrong.

[charlietango]

Then why didn't it collapse during the Clinton years? Oh yeah, because there was a CAP on how much banks could do in terms of selling off this high-risk debt.

Once the CFMA was passed, these caps were gone. Banks could feel free to loan out as much as they wanted at the high risk because they could then sell off those high-risk loans to other investment houses. This debt built up and up and up until the system did exactly what it has done.

Collapse.

This isn't due to Democratic social engineering and the goal of the American Dream. This is due solely to Republican greed.

[Motown Scrapper]

Wel the thing is these loans should never had been made in the first place. After the loans were made the banks were handed a way to dump them off so instead of trying to fix the problem they were able to dump them off ...as long as the economy was charging along at a good clip this paper was sound, but when the energy crunch hit the economy slowed down and the chickens came home to roost. The big problem was is that there was no cushion as soon as the money market tightened and people who were living on the edge lost just a small portion of thier income the collapse began all you have to do is take a look at who is loosing their homes, they are people who in many cases have not lost any income but instead saw their expenses increase and had no reserves to absorb that. The other group are people that were caught whith variable rate mortgages that saw the interrest when the market tightened because of the first groups bad paper the second group also caught with out reserves. The seeds of this problem were sowed in the 70s if those bad loans had NOT been made in the first place the Commodity Futures Modernization Act of 2000 would not have had the effect it did. What happened was not so much the effect of the mythical 'Republican Greed' rather than Banks that had been sstuck with bad debt trying to get out from under it. We should look at the French system While I am not a fan of a lot of what the French do on loans they DO have it right. If you don't have the means you don't get the loans...Right now France is one of the few places that is not suffering a financial meltdown. The real solution is don't loan money to people who won't be able to pay it back...Incidently I practice what I preach and own ZERO credit cards. Right now what is going on is people are going bankrupt because they have been able to get loans they had no way of repaying. or were in a position that all their spare resources were tied up paying back loans and when somthing unexpected came up they had nothing to fall back on so the mortgage went unpaid and the house was forclosed. That is the real problem. If these people had not been able to get those loans.....they would have been renting and still living happily in their rented home instead of loosing the home they could not afford in the first place. I bet if you could turn back the hands of time they would rather be living happily in that rented home instead of loosing the one they took the loan out on and trying to find another place to live while saddled with this HUGE mountain of debt.

[atlas3060]

Sept 25, 2008 12:49:03 GMT -5 charlietango said:

How the bailout should work:

The company executives get NOTHING.

The government money should go first to taking care of the pension funds and the small investors. The fat cats should come last if at all. Main Street first, Wall Street second.

Pretty much my feeling about the situation.

In short I believe that if a business is willing to take risks and fail then they FAIL. However I do also think the government should set some limits on how much someone should get based on current income.

I don't like the idea of a bailout, it seems like the big fat cats wants to scream "Do over do over!" However it might be needed now, but in the future if we have limitations or recommendations on how much a person should get and a bank decides to disregard this and fail then oh well. Your financial carcass will be used to grow the next bank.

Of course I'm slightly jaded and PO'ed at the idea of the economy going down the frack hole but hey those CEOs got a sweet going away present thanks to golden parachutes.

*grumbles* Should've distributed that money to people below the CEO level that way they have a cushion when they look for another job.

[Clangador]

I still fail to care what happens. A new great depression would add some character to people these days. Put some hair on your chest and such.

[Mr. Pathetic]

I suppose my biggest annoyance is that the tax payer is basically footing some kind of money to pay for something they get nothing out of... hell, throw me some stocks, promise me they'll pay me back or something.... here's a recent Market Watch article... www.247wallst.com/2008/09/for-700-billion.html

[Motown Scrapper]

I noticed the internal link to Nancy Pelosi's speach is dead. Having heard it from other sources I can see why she would have that sickingly biased speech suppressed. I had to be one of the most politically selfserving attempts to try to blame the other party for her parties own failures....You can add this fiasco to the list of failures that has caused this crisis.

[ghost0402]

Sept 26, 2008 20:04:36 GMT -5 charlietango said:

Then why didn't it collapse during the Clinton years? Oh yeah, because there was a CAP on how much banks could do in terms of selling off this high-risk debt.

Once the CFMA was passed, these caps were gone. Banks could feel free to loan out as much as they wanted at the high risk because they could then sell off those high-risk loans to other investment houses. This debt built up and up and up until the system did exactly what it has done.

Collapse.

This isn't due to Democratic social engineering and the goal of the American Dream. This is due solely to Republican greed.

Yes, let's ignore Sarbanes-Oxley and the other damage Clinton did that pretty much opened to door to where we are now.