caveat emptor. It's unfortunate that some people bought house that were overvalued or that they couldn't afford, but it's not the governments responsibiltiy to bail out the minority of inviduals that bought the equivalent of fools gold. On the other hand, it is the governments resonsibility to protect the banks and financial institutions that almost every american depends on.
What a wise idea. Protest the shoring up of the economic system that provides all the benefits of the Federal Government free of charge to the least wealthy 40% of the population.
I really have to wonder how much less than zero do 40% of people need to pay, or how many more than 40% should pay nothing, before groups such as these will be satisfied.
Couldn't agree more Lastcall4am. If I knew the gov't would be bailing out individual homeowners, I would have gladly bought a house that I couldn't afford on an interest-only or adjustable rate mortgage. It's too bad people are losing their homes (and I have no doubt that there is a small % of the population that were victims in predatory lending practices), but this whole thing was a risk and people lost. That's too bad... but if you bailout the people who took these risks, then you are essentially punishing the responsible people that held tight and didn't overextend themselves financially while everybody else was.
It should be expanded to include a domestic policy thats pro growth stateside and anti off shoring. Its should include the rebuilding of American cities devestated by 30-40 years of disinvestment, plant closures, etc. It should include a focus to clean up war torn American city streets of drugs and violence. It should include fixing the problems of Appalachia that were recognized 40+ years ago but have yet to be addressed fully and effectively with an HONEST and fruitful effort to actually fix the problem rather than talk about it.
The people who rewrote the rules so they could hand out loans to people who realy shouldn't get them should be held responsible....the CEO's of those companies still get golden parachutes irregardless of how the company performsas AIG....why should they get bailed out?
Flyguy - Don't believe the victim mentality that offshoring killed American jobs, Americans killed American industries, the offshore resources just helped us to drive the nail in the coffin a lot quicker. The heavy manufacturing industries were losing their shirts before offshoring and NAFTA were even feasible. Don't believe the hype that the media has pumped you full of.
i agree with both the above who say that homeowners shouldnt be bailed out and truestar who says ceos and companies shold not be bailed out. why should anyone be bailed out? why should i, the taxpayer, pay for anyone who screwed up? yes credit would be tight, but it would not be non exsistant. it would hurt the economy no doubt... but help it greatly in the long run. why are we giving 700 billion dollars to people who dont know how to run a company?? if we did not do this bailout our economy would be hurting greatly, but inflation would lower and the dollar would be eventually strengthened. we can only pump our economy with government funding for so long. no one should get a bailout. the people who bought 300,000 dollar houses making 40,000 dollars a year will get to keep them, while the smart ones who bought houses with sensibility wish they were more reckless. companies who have been risky will be risky again because instead of dying like they should they are being supported by the government. isnt that what got us into this mess in the first place? the government giving billions of dollars to fannie and freddie, giving them a virtual monopoly and letting them go crazy? in the words of the great philosopher steven colbert, buisnesses have learned a lesson during this crisis. they have learned that if you are going to screw up, "screw up royally."
lastcall4AM & UnionAMG "It's unfortunate that some people bought house that were overvalued or that they couldn't afford, but it's not the governments responsibiltiy to bail out the minority of inviduals that bought the equivalent of fools gold. On the other hand, it is the governments resonsibility to protect the banks and financial institutions that almost every american depends on."
Clearly there were people that bought 1st and 2nd homes on speculation and bought homes only to flip them on speculation hence the rampant foreclosures in high speculation areas that tolerated it like CA, AZ, NV and FL to name a few. The deserve to lose their homes.
However, if the banks failed to verify information on the application, then the bank should be liable because it was they who accepted the risk in order to get the loan origination fee and was allowed to avoid responsibility for a bad loan by selling it to another party.
However, it was the government that allowed no interest loans and predatory balloon payments and failed to audit and lets not forget that it was the congress and senate that repealled glass steagal (deregulation), setup fanny & freddie, allowed mortgages to be sold and demanded of banks to loan not by credit scores and credit history but by quotas of race, religion, ethnicity, immigration (illegal, legal, temporary, etc), gender, etc. The government has a huge role in creating this mess!
BUT IF ONE IS SMART ENOUGH TO LOOK AT THE BIGGER PICTURE...THIS ISNT ABOUT BAD HOME LOANS BECAUSE EVERY ONE OF THESE TROUBLED LOANS WITH NO DOWNPAYMENT HAD TO PAY PMI MORTGAGE INSURANCE.
Then where did this crisis come from? It came from hedge funds, credit default contracts, derivatives and various forms of unsecured credit that was unregulated by the government allowing finance companies to take a mortgage insured by PMI and leverage it an additional 30x...in some cases 40x.
for example if you had a $100,000 no downpayment and paid your PMI insurance, then the bank was issuing in some cases $3,000,000 to $4,000,000 in derivatives and contract defaults on it and the government didnt regulated it or investigate it. It wasnt the mortgage that crashed it was the derivatives bet against the mortgage.
BASICALLY PEOPLE SHOULD BE GOING TO PRISON FOR BRIBING, LOBBYING AND DEFRAUDING THE PUBLIC AND THE GOVERNMENT.
another word, Banking/Finance/Insurance and back office work for those industries are a MAJOR employer in Buffalo so please take off that smug chip on your shoulder because your sending the wrong message.
Buffalo, WNY and Upstate did not build on speculation nor did we allow people to take out no downpayment or predatory balloon payment subprime mortgages. Our real estate markets were stable and had no froth to leverage although we did suffer from delinquent house flippers.....SO OUR LOCAL BANKS LIKE M&T, FIRST NIAGARA, CITIZENS, ETC....SHOULDNT BE THE BANKS SUFFERING.
WHAT SHOULD BE HAPPENING IS THE GLASS STEGAL SEPARATING INSURANCE, BANKING AND BROKERAGES SHOULD BE RE-INSTITUTED.
WHAT SHOULD BE HAPPENING IS THE BANKRUPTCY OF NATIONAL AND INTERNATIONAL BANKS.
WHAT SHOULD BE HAPPENING IS RAMPANT GROWTH IN LOCAL AND REGIONAL BANKS INTO NATIONAL AND INTERNATIONAL PLAYERS.
THIS CREDIT CRISIS SHOULD BE TAKING BUFFALOS STRONG LOCAL AND REGIONAL BANKS AND PROMOTING BUFFALO TO THE EQUIVALENT OF CHARLOTTE, NC!!!!
Dont piss and moan about bailouts for all banks....because local and regional banks deserve bailouts because they are suffering adversely from the fraud of the big national and international players (of which local national and international banks such as HSBC and Bank America by the way..on the whole did not engage at all or significantly)
The government corruption because all treasury and fed reserve heads came from Wall Street and in particular goldman sachs....so the government bailed them out and as I said....the local and regional banks should have been allowed to replace them.
Why didnt it happen that way? Insider government corruption for one. The other? Yes, those hedges and credit default contracts, and derivatives and other unsecured credit debt were held by foreign treasuries and foreign banks. YOU THINK THIS BAILOUT WAS CORRUPTION...OF COURSE IT WAS CORRUPTION AND FRAUD BUT IT WAS ALSO A BAILOUT FOR FOREIGN BANKS AND FOREIGN GOVERNMENTS THAT WERE THREATENING TO BAN THE PURCHASE OF US TREASURIES, CORPORATE BONDS, MUNICIPAL BONDS AND MORTGAGE BACKED SECURITIES. THEIR THREAT WORKS AND COUNTRIES LIKE CHINA, JAPAN, MIDDLE EAST, EUROPE ALL GOT THEIR BAILOUTS.
Bravo! To all the brave men and women who are taking a stand against the oppressive Republican machine. I applaud those who will not stand for more corporate welfare and golden parachutes for do nothing executives. I celebrate those who are looking out for the less fortunate who may be left out on the street due to foreclosure. It is good to see people rise up to take a stand against this national tragedy, because it can be prevented!
The people who live in these house are just like the rest of us. They bought their property in good faith and with trust and assurance from their bank. They weren't going in to this to defraud or cheat, it wasn't their intention and it isn't their fault that they were cheated and defrauded by the behemoth banks that only look at the bottom line. These people are nameless and faceless annoyances to the banks, just a mere mark on a spreadsheet that keeps the executives from getting richer on insider trades and collusive deals. The executives want to get rid of them even more now that people are looking into executive compensation.
Stop this national tragedy now before it creates even more victims. I wish that we were in 2009 and that Obama's progressive policies were already in place to help people in need instead of the greedy executives who always want more regardless of how much they already have. Put a stop to the Republican tyranny and vote for Obama, he is the real people's candidate and the genuine candidate for change. A change we desperately need in order to turn the country back around and offer equal opportunity and treatment to everyone!
Last two lessons on and this one is on off-shoring which really began in the eisenhower 50s. I think it was 1958 steel strike to be exact.
What happened? US Steel Unions decided to go on strike (you can look up why) but because there was no imported steel and everything had steel in it (this was before plastic).....it shut down every domestic industry...the entire economy was held ransom forcing the President to step in to save the economy.
After Eisenhower got the strike settled he opened the door to imports. The result was that companies started to redirect their profits from R&D, manufacturing and new product...to wages and benefits making them uncompetitive with foreign imports from lower std of living nations....since then every union that has gone on stike against a domestic industry has seen their doors open to imports. The only unions left are civil service unions because they legislate their raises upon the taxpayer.
Second lesson! The financial industry then kicked in with oh you know the typical big nosed downstate corporate raiders and wall street types...they got in on the act...financing the break up of companies and off shoring them...for huge share price gains....and merger/acquisition fees, as well as, share offerings and corporate bonds and new types of credit meant to bypass federal and state regulators (aka hedge, contract default options, derivatives, etc).
The result was within 50 years domestic manufacturing (aka non-financials) went from 90% of all corporate revenue to 10% while the new fangled unregulated credit financial industry grew from 10% of all corporate revenue to 90%.
The financial industry was offshoring US industry and the stockholders were keeping the rates of return and the fees etc.
Then others found advantages...such as the state department trading US jobs as bargaining chips for US foreign policy. Ever wonder why your politicians seem not to care about the US anymore and yet are so focussed on foreign countries, foreign policy and immigration...because all the money was in foreign lobbies and foreign nations and multi-nationals.
Then others found business strategies like walmart forcing US manufacturing overseas for ever lower prices or Meat Packing plants wanting cheap foreign labor rather than US workers, etc.
Eventually the wealthy and the powerful 90% and our politicians didnt care about their own US citizens....cant fix the schools because of the teachers unions so let the kids in public schools receive substandard education and we will import our doctors and scientists...we will simply import our solutions rather than fix our problems. Give them a social program and shut them up...this is how the system is working. Dont bother me with bridges and railroads....daddy needs a condo is shezuean or mumbai
There you have it....
We should not be subsidizing irresponsible buyers who were not realistic when evaluating their own ability to pay for whatever it was they were purchasing. We should also not be subsidizing irresponsible corporate behavior. Subsidizing either will simply encourage more of the same. We cannot privatize profit while socializing loss.
The solution is that the US Gov't should 'act more like a business', as Republicans love to advocate. That is, they should swoop in and buy up banks with the intent to make a profit. Buy the banks themselves, not their bad debt. Act like a corporate raider: if the prey is weak, take advantage and buy cheap. Build the stock back up and sell for big profit later. Profit taxpayers in this way. Buy the banks, not the debt. I am shocked and pleased to see W's administration heading this direction.
In the future, don't allow mortgages to be parsed into commodities. Time was that banks lending mortgages held the debt until it matured. That made banks conservative and helped to hold real estate bubbles in check. Now the bank is little more than a broker, writing a mortgage and then selling it immediately after issue. Because the risk is passed on to some future buyer of the mortgage, the bank has little incentive but to process more and more mortgages, earning for itself more fees. Because the bank isn't worried about the future value of the home (they won't own the debt by then), there is little in the way of checks and balances in the system to keep a lid on inflation of home values.
Buffalo 21st: sounds like you need to get out of the classroom and into the real world. Talk about over simplification, yet sooooo wordy.
Quijibo- represive republican machine? no. if bush were a true conservative we would not be in this position. we would not be bailing out these people. and heres a little fact for you... and for the media in this country... it was the DEMOCRATS who gave freddie and fanny the basic monopoly in the home morgages... in order to give people with low incomes "good" homes. execept the phrase give an inch take a yard has some truth... these "less fortunate" people turned around and invested in houses they could never afford. and as for obama... if you want 1 trillion dollars of extra spending, higher taxes, higher consumer prices, higher gas prices, and a government take over of your health, go right ahead and vote for him. ugg. i will never understand some people in this country... especially people in WNY who witnessed the democrats kill this city.
oh please, bought houses in good faith? I have no sympathy for people who bought property well above their means with low interset only loans and leased cars that they would normally not be able to afford. The banking system did allow this so yes thay are at fault also, but now it is time to correct itself all the way around. I find it a pity that people are trashing the homes that they could ill afford out of simple anger of their own stupidity. As to the protesters...do something useful and volunteer your time at childrens hospital.
Buffalo21Century - Thanks for your response, but I take some excpetions to your 3 stanzas. There is no "smug chip" on my shoulder. I am employed by one of the major financial institution in WNY that writes Credit Default Swaps, structures Collateralized Debt Obligations, and issued bonds from banks and insurance companies like AIG and Lehman Brothers. Therefore, I am quite sympathetic to people employed by this industry in WNY. With that said, the government took the only viable option that it had and did what it needed to do. Your idea of letting the big national and international banks go out business is idiotic. The mess we are in right now would be incomparable if a large bank went out of business. The larger and more inernational the bank is, the more customers it conceivably has and I just don't mean you, me, and Joe the plumber (sorry Joe). Corporations have much more than the FDIC max tied up in banks. If a large bank went out of business, most if not all of the companies that depended on their services would be treading water while some judge decided how much money they would be entitled to. BANCRUPTCIES are BAD...VERY BAD, especially in the banking industry! Most of this mess that we are witnessing right now is still from the fallout from the Lehman Brothers bancruptcy and they weren't even a commerical bank! I would much rather swallow my pride and let the federal government bail out the banks they see as fit, than watch a massive bank run in America that shuts down the financial industry for a decade rather than a few quarters. One bancrupcty would lead to countless others and a lack of confidence and panic would ensue. Haven't you learned anything from the Great Depression???...I'm glad Paulson, Bernanke, Bush, and the Congress has.
I'm glad B-R gave 1 hr and 28 minute notice on this...
2 Comments: Read Buffaloritz and onestarmartin...
These protesters and basically all protesters across the US need to find something better to do with their lives...like a job, to buy a house you can afford to live in...
OnestarMartin - You are painting with a very broad brush. You may want to look into the demographics of those who are being foreclosed upon; many bought well within their means, but were enticed and lured into using questionable and sometimes fraudulent mortgage products that were aimed at getting the purchaser to sign as quickly as possible. These people would struggle to own a house on the traditional 20% down and finance 80% at a fixed rate over 30 years model. Others were precluded from getting a mortgage due to racist practices of the banks and mortgage companies, this was addressed by our last great President (Bill Clinton) and the last great one before him (Jimmy Carter). Without these two Presidents challenging the status quo of big business and profiteering, most people would not be able to afford houses anywhere in America. In fact, over 60% of current home owners wouldn't be able to secure a basic mortgage if laws weren't enacted to put racist and exclusionary practices in check.
It is unfortunate that you can't see the amount that some people struggle from your ivory tower. I bet George Bush and John McCain suffer from the same myopia that clouds your vision of America.
"These protesters and basically all protesters across the US need to find something better to do with their lives..."
Like when they tried to prevent a disastrous war . . . just sayin'.
lastcall4am, well for the most part I was defending local banks in Buffalo. Bank of America is actually one of the best banks in the nation and so is HSBC and M&T and First Niagara....we are really blessed in that sense and I WAS DEFENDING OUR LOCAL BANKS AGAINST THESE PROTESTS.
However, if you have been involved in these derivatives and credit default swaps and other forms of unsecured credit..then you will no that they are unregulated by the government and there is no trading floor for them, there is no way to price them to market, there is no transparency, there are no reserve requirements regarding the their value or their risk. Some were leveraged as far as 40:1 and more.
You will admit that the reason Libor went sky high and banks wouldnt lend even to each other was because no one could quantify another banks risk. why? no transparency.
Greenspan had the choice of regulating the unsecured credit markets and he refused.
It wasnt the low interest rates or subprime mortgages. Yes, low interest rates fueled real estate speculation. Yes, subprime mortgages and minority based loans instead of credit risk based loans was a factor but both were mitigated by PMI. NO SIR! NEITHER WOULD HAVE CAUSED A GLOBAL COLLAPSE BECAUSE RECONSTITUTING PMI FUNDS AS ONE WOULD RECONSTITUTE FDIC WOULD HAVE SOLVED THAT PROBLEM.
NO SIR! THE 40:1 LEVERAGE IN HEDGES, DERIVATIVES, CREDIT DEFAULT SWAPS, ETC...IN WHICH THESE FORMS OF UNSECURED CREDIT WERE OFF THE BOOKS, UNREGULATED, NO RESERVES AND NOT EVEN MARKED TO MARKET.
THATS WHAT CAUSED THE GLOBAL COLLAPSE.
These companies that lobbied, gave political donations (bribes), etc not to have the most profitable area of their company regulated are now being rewarded via the taxpayer when they should be in prison for fraud.
Glass Steagal separating banks, insurance and brokerages needs to be re-enacted
Unsecured credit needs a trading market and needs to be regulated.
Companies that engaged in unsecured forms of credit should be allowed to fail and those banks that were properly managed should be encouraged to take over their failed business.
I will never forget when Warren Buffett, Berkshire Hathaway purchased a major insurer and his first action was to deleverage the entire company and he said it would take nearly a decade to remove all such liabilities but as he described it "if regular debt like a mortgage is bomb, then derivatives are the equivalent of thermonuclear bombs"
Why is a everyday people who engage in the american dream by buying a home or flipping an invetment property more worthy of scorn than the finance industry that repealed glass steagal, deregulated finance and bypassed government regulations with creative forms of derivatives....in which by all accounts was entirely fraudulent (fraudulent because it was sold without any transparency or regulation to legitimize it)
Has anyone heard anyone (in DC) suggest lengthening the terms of loans that are being defaulted? This would lower payments without discounting the original commitment — is this too simplistic?
no ivory tower here, buying a home is one of the most important things a person will ever do, most people that are being forclosed on did not do their homework. if people had gotten a staight forward tradional bank loan with a locked in 30 year rate for a home they could afford with 20% down would not be in this situation [unless they got layed off which well may be the case for many, sypathy there for sure]. to many people got sucked into the whole "get a 300k mortgage for only 800 a month bulls**t" with "no money down". many actually took out a second mortgage on these homes with the over inflated gains they made to "live the life". why do you think in a city like buffalo you see very little forclosures? becouse these people are hard working, went to M&T, B OF A or HSBC got a loan for a house they could afford with a tradional loan and interest rates. so no, i have little respect for those that live beyond their means and less for those that are looking for handouts from the government to pay their mortgage for them becouse they can't accept the fact that they should be in a 95k home instead of a 250k home.
onestarmartin, then you sir have no compassion or sympathy for those that are actually the evil doers.
onestarmartin, have you ever talked to a public school student or public high school student in america today...these are the people who will be applying for mortgages in 5-10 years. They dont even know who the Vice President is or what 2 nations border the US much less the ability to judge between a ARM vs a FIXED RATE. Its not all about the middle class and the rich and the flippers.
onestarmartin, you are smart enough to know that every mortgage under a 20% downpayment must pay PMI (mortgage insurance) and that PMI can be recapitalized just like any other insurance such as FDIC.
sure subprime mortgages are a problem, especially in high speculation boom bust states like CA, AZ, NV, FL, etc.
onestarmartin, you should be smart enought reallize that it wasnt the subprime mortgages or the credit cards or the corporate bond or the municipal bonds BUT THE UNREGULATED UNTRADED OFF THE BOOK UNSECURED ASSETS CALLED HEDGES, CONTRACT DEFAULT OPTIONS, DERIVATIVES, ETC WHICH ALLOWED BANKS TO LEVERAGE A DEBT 30X, 40X...AND HIGHER....THATS THE REASON FOR THE CRASH!
I see this as an extension of a larger issue with society. Let's take a look at the recent shooting of a 15 year old on the East Side. I read through the Buffalo News stories on the matter, and heard the local news reports, and all of them blame hyperactivity and oppositional defiance disorder for the child's actions. They say that "THE SYSTEM" didn't respond fast enough or do enough for this troubled youth. Then we look at the facts that although the was 'emotionally disturbed'; he was out on the streets at 2:00 AM with a gun, wearing a ski mask and bandanna, looking for someone to rob. We don't read that anywhere in the paper, instead we hear about how this is such a tragedy because the police officer should not have killed him. We hear from the community that the police officer should not have shot the youth, despite the fact that the youth had a gun pointed at the officer's head. BB gun or not, the intention to intimidate and kill was there, but we do not read about that. Instead we hear about the distraught parents and relatives, who before this incident let their 15 year old child out on the streets of Buffalo at 2:00 AM. The Buffalo News even goes as far as saying that he is "Disabled" due to ADHD and ODD, seriously now!
This is very similar to the blame game that we are playing with the mortgage and banking crisis. We no longer hold individuals accountable for their actions and decisions, instead we create elaborate stories about how the odds were stacked against them by some nameless, faceless, and otherwise unaccountable entity. In this case, it is easier to blame "The Government" or "CEOs" than it is to say, "You overextended yourself and got in over your head, you lose everything and start over due to your own actions and ignorance".
We will see protests due to the shooting of this youth by the police officer; we will probably see people screaming about gun control and the lack of opportunity for the children in Buffalo, and we will probably hear about how all of this could have been prevented if only someone had intervened sooner. I predict that we will hear the more of the same about the mortgage crisis, and listen to more hard-luck stories about people who just didn't know better or lost their job and now they are losing their house. We will create a scare campaign around it, and much like the book "Bias" describes, we will make it sound like the average individual is only one step away from having this happen to them.
It is sad that we live in a world where accountability and personal responsibility have become antiquated concepts, replaced by government taking responsibility for individual actions of the average citizen. I know that all of this is a tragedy, from the micro scale of the East Side shooting to the grand scale of the mortgage collapse, but all of this starts with the actions and decisions of individuals who made bad decisions and now want someone else to pay for them.
Anyone that says that there is only one cause for this mess is just being ignorant. The government, banks, and consumers all dropped the ball, granted in different ways and severities, but we they are all at fault none the less.
I also think that the people who planned this protest should have been a little more informed on the situation, in that M&T is not even a part of the bailout, yet the protest was right out front of one of the best businesses that Buffalo has ever had. That's ignorance, and disgraceful to the citizens of Buffalo.
Oh, I know I am going to get one star for this but I feel a little crazy today. Are these the same people that forced us to have 'Caution Coffee Might Be HOT' on our coffee cups? Or 'please don't place this place this plastic bag over your head it might lead to death'. Is math that much of a mystery for people? Only in america do we fight Darwin.
One star!
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