like, duh!

[chhotii]

Obama's campaign sends out an e-mail yesterday, saying that any economic recovery plan should include (quoted exactly here):

• No Golden Parachutes -- Taxpayer dollars should not be used to reward the irresponsible Wall Street executives who helmed this disaster.

• Main Street, Not Just Wall Street -- Any bailout plan must include a payback strategy for taxpayers who are footing the bill and aid to innocent homeowners who are facing foreclosure.

• Bipartisan Oversight -- The staggering amount of taxpayer money involved demands a bipartisan board to ensure accountability and oversight.

Like, of course. I can't believe that these points would even be up for debate. What kind of insane fools would disagree with any of this? (And do I really have to continue to share a planet with said insane fools?)

Comments

[quietann.livejournal.com]

From what I have heard, the bill as presented by the Shrub administration is basically another power grab, removing Congressional oversight from the federal banking/financial system whenever the president says so. I *hope* the Congress gets its back up about this. We can hope; both parties are screaming bloody murder, and in a lot of ways they *agree* on how the bill should be changed.

[koshmom.livejournal.com]

The one objection I have is the reference to "innocent homeowners facing foreclosure". They aren't so innocent. They are people who knowingly got into debt over their heads. yes, the financial institutions should not have given them loans in the first place, but the homeowner is also at least partially at fault for allowing themselves to be coerced into signing up for a loan they couldn't handle in the long run.

Remember, these people have been living without paying rent (just a mortgage) and at a higher standard of living than what they should have been able to afford for at least a few years. So they have benefitted from the loan, in at least non tangible ways. Yes, I feel bad for them, but I don't think that the government should subsidize their higher standard of living which was due to poor planning. It's like rewarding them for getting into debt. And then there's those of use who have been able to keep up on our mortgages, what will we see for being responsible? Zippo. So the people who make poor economic choices get a reward, and those who made good choices get essentially punished for being responsible.

How to fix this inbalance? I have no clue.

you're right

[chhotii.livejournal.com]

Oh, I agree. If homeowners are not innocent-- i.e. they knowingly took a big gamble on the housing market when they bought their homes-- I'm not necessarily all for bailing them out. But, a couple of points:

1) Perhaps some of them are innocent? I.e. it didn't seem like an out-of-line gamble at the time? Surely not everybody who bought a home in recent years was reckless.

2) Given two economic players who both took a gamble-- one on a home purchase, the other on Wall Street-- I think bailing out the homeowner probably avoids more economic disruption than bailing out the Wall Street guy. And I think this is really all about avoiding economic disruption, for the sake of the rest of us, not anything to do with justice or compassion.

It's just the broad overall point that I think is so obvious anyway-- the broad overall point being that there are people hurting all over, but the government just seems to be looking out for those with business on Wall Street. The details, OTOH-- well, there's an endless amount of detail to quibble over.

Re: you're right

[koshmom.livejournal.com]

The problem with bailing out the homeowner is that the homeowner will use the money to try to keep them going at their same standard of living, when what they really need to do is to use that money to offset the loss they are about to take when they sell their home. And they NEED to sell their home and downsize. $2,000.00 will not help them if their monthly output is $3K and their monthly income is $2K. All it will do is put off the inevitable another couple of months. Which, apparently, is EXACTLY what the "economic stimulus" package did!

[jim-p.livejournal.com]

They aren't so innocent.

I'm not sure it's as black and white as that. While it's true that in theory every borrower needs to do their due diligence, in years past it was a safe assumption that the bank could do your due diligence for you. In other words, "traditional" lending standards were designed to ensure repayment of the loan, which meant that if the bank approved your loan then you did indeed have a high probability of being able to keep up with it. I'm sure a lot of those "innocent" folks thought to themselves "Hey, the bank says it's OK, let's go for it!"

[koshmom.livejournal.com]

Well, the bank encouraged me to find a house that was double the size of my own. They wanted me to have a $2K-3K a month mortgage. I wanted around a $1K a month mortgage, and right now I'm just a twitch over that. If I had taken their "experienced judgement call" I would be in the same circumstances that all those others currently are at.

Those people who believed the banks/mortgage companies/real estate agents (who want you go get a bigger house so they get a bigger commission) were either foolish or naive. The ones I feel very badly about are the ones that had some personal misfortune along the way: a death/accident of the main wage-earner, or getting laid off with no comparable job available.

I'm sorry if I'm a bit of a hard-nose on this point, but assuming a stranger who has known you for all of a few days will do the best thing for you financially for the next 30 years, when they themselves are being encouraged to make loans or get higher commissions, is totally naive. Yes, many homeowners are naive when it comes to buying a home, but heck, can you really expect that an economy on the upswing won't have a downswing once in a while?

And "traditional" lending standards were gone decades ago. All that was traditional in the past 10 years (which was when most of these people got their loans) were Balloon loans, or having the lending institution sell the loan to another larger company ASAP. Most of people don't say "Hey, the bank says it's OK" they were saying "hey, the mortgage company says it's OK, and they're in the business of giving out mortgages" not realizing that the mortgage companies will sell it ASAP.

(I'm repeating myself, time for more caffeine).