Bailout Bill

[sois]

Well that is grim. How long can we last without a bailout then? A month? A week? A few more days?

[Homer_Rice]

[quote name='sois' post='706948' date='Sep 30 2008, 11:28 AM']Well that is grim. How long can we last without a bailout then? A month? A week? A few more days?[/quote]
Depends on the sort of measures that are taken in the near to medium future. Don't need a "bailout" at all. What we need is to return to sound economic practice and stop all this FIRE economy shinola. My suggestion, if this is a topic of concern, is to voraciously read until you cannot read any more. Then take a short break and read some more. Refine and then trust your judgement. This is all very complex and there are lots of variables involved.

But bottom line is as I suggested, imo. I don't like it, but calling it as I see it.

[BengalBacker]

So you guys are against Pelosi and the democrats who are trying to push this through?

There are some strange dynamics at work here.

[Sox]

I thought the bill sucked.It stunk of being nothing more than a money grab.

For those who are interested,here's how they voted.

[url="http://www.winknews.com/news/campaign/29901239.html"]http://www.winknews.com/news/campaign/29901239.html[/url]

[sois]

[quote name='Homer_Rice' post='706946' date='Sep 30 2008, 10:21 AM']System's dead. Either we fix it or we go fascist.[/quote]

I see alot of the "let them go bankrupt" attitude. Is that a dangerous point of view? Homer says the system needs to be fixed. Are people actually considering the consequences of letting the system fail or are they just speaking from emotion?

With so many people wanting these banks to fail, there has to be a hypothosis that explains what could happen in a world without a bail out. Does anyone have any info about this scenario?

[BengalBacker]

[quote name='Chris Henrys Dealer' post='706679' date='Sep 29 2008, 03:18 PM']I usually stay clear out of the dems / republican debate, but this is unbelievable if true....some republicans are coming out saying that they though Pelosi's speech before voting was too partisan, and made people change their votes and vote down the bill. (it's the breaking ticker on CNBC)

How old are these dudes? 5? you're voting on the future of the country and that's what affects your decision?

There isn't a big enough roll eye emoticon on the intraweb.[/quote]

What I heard of Pelosi's speech, she was laying all the blame for this at the feet of Bush and the Republicans. Not a smart thing to do right before a vote where the goal is to come up with a bi-partisan solution to a crisis. Now if this was definitely the correct solution, and Republicans were indeed just acting like 5 year olds because she pissed them off, I would agree with you. Most people seem to think this was a bad plan though, and something like 95 Democrats voted against it too. Pelosi is the one who made it Democrats v Republicans.

From what I'm hearing, Republicans were trying to warn everyone of this several years ago, and the Democrats were the ones who ignored/encouraged it. There's a clip of Bill Clinton saying essentially the same thing. I think they're all to blame. If they saw what was coming and didn't scream at the top of their lungs about it until it was fixed, they are just as much at fault as those who were profiting from it, whether they're Democrats or Republicans.


Edit: Here's the clip I was talking about.

[rudi32]

[quote name='Homer_Rice' post='706946' date='Sep 30 2008, 10:21 AM']System's dead. Either we fix it or we go fascist.[/quote]

lets do it

[Homer_Rice]

[quote name='BengalBacker' post='706960' date='Sep 30 2008, 12:13 PM']So you guys are against Pelosi and the democrats who are trying to push this through?

There are some strange dynamics at work here.[/quote]
Only strange in the sense that this issue cuts across different fault lines. This isn't really about Dems and Reps as much as it is about populists and insiders (especially those who depend on Wall Street for donations.) In my case, I've not liked Pelosi, or thought of Reid as very effective for a couple of years now. Insiders. On the Repub side, you have a large part of their caucus in the Republican Study Group which, for similar populist reasons as many Dems--especially those from the heartland, find this sort of give-away to the bandits to be inappropriate. That said, the solutions prosed by dissenting Dems and Reps differ widely, so that fight is still down the road.

As things stand now, there is a lot of arm-twisting going on and I'm sure there will be an attempt to push a revised version of this thing through, possibly as soon as later this week.

BTW, those who are interested can listen in to the conference call between Treasury and analysts on last Sunday night. Pretty interesting stuff.

[Chris Henrys Dealer]

LOL!

[img]http://www.techcrunch.com/wp-content/uploads/2008/09/septembermadnessb.jpg[/img]

[Homer_Rice]

[quote name='rudi32' post='706988' date='Sep 30 2008, 01:29 PM']fascism has some good points and isn't a bad goverment. <snip>[/quote]
You know, in his "Fifty Suggestions," Edgar Allan Poe said, "Ignorance [i]is[/i] bliss--but, that the bliss be real, the ignorance must be so profound as not to suspect itself ignorant."

[Homer_Rice]

[quote name='Chris Henrys Dealer' post='707003' date='Sep 30 2008, 02:16 PM']LOL![/quote]

Double LOL. The creator of this obviously put some thought into it! Good matchups!

[Jamie_B]

[quote name='Chris Henrys Dealer' post='707003' date='Sep 30 2008, 01:16 PM']LOL!

[img]http://www.techcrunch.com/wp-content/uploads/2008/09/septembermadnessb.jpg[/img][/quote]



:rofl::rofl::rofl::rofl::rofl:

[GoatGreen]

Agreed with Homer that the only solution is to fix the system.

But whether we bail out Wall Street or not, we aren't fixing the system. As said earlier, all we would be doing is restocking the chicken coup for the Fox.

[BengalBacker]

[quote name='Homer_Rice' post='706997' date='Sep 30 2008, 02:06 PM']This isn't really about Dems and Reps as much as it is about populists and insiders (especially those who depend on Wall Street for donations.)[/quote]


I keep hearing that Obama and Barney Frank are [b]the biggest[/b] recipients of those Wall Street donations.

Anyone know if that's true?

[Go Skins]

[quote name='Chris Henrys Dealer' post='707003' date='Sep 30 2008, 02:16 PM']LOL!

[img]http://www.techcrunch.com/wp-content/uploads/2008/09/septembermadnessb.jpg[/img][/quote]


:rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl: :rofl:

That is too funny....I busted out laughing when I saw this.

[Homer_Rice]

[quote name='BengalBacker' post='707030' date='Sep 30 2008, 03:23 PM']I keep hearing that Obama and Barney Frank are [b]the biggest[/b] recipients of those Wall Street donations.

Anyone know if that's true?[/quote]
Don't know about biggest, but certainly very substantial. Obama is pretty well tied into the folks like Rubin and Soros. Not to mention the Chicago nexus. Frank, Sen. Dodd (and I'm sure others on relevant committees) get lots of backing.

This is part of what I meant when I referred to getting on the "menu" (with regard to presidential politics.) It's also partly why Obama wasn't my ideal choice. Still gets my vote though.

[Jamie_B]

[quote name='rudi32' post='707273' date='Sep 30 2008, 07:21 PM']im sorry you feel that way, It shows your inability to think outside the box.[/quote]


oh the response to this is gonna be good.

[Homer_Rice]

[quote name='rudi32' post='707273' date='Sep 30 2008, 08:21 PM']im sorry you feel that way, It shows your inability to think outside the box.[/quote]
At first I thought you meant my coffin. But then I realized that guys like you don't need no stinking coffins, you just as soon shoot folks in the back of the head and kick 'em into ditches.

[Jamie_B]

[quote name='Homer_Rice' post='707297' date='Sep 30 2008, 08:05 PM']At first I thought you meant my coffin. But then I realized that guys like you don't need no stinking coffins, you just as soon shoot folks in the back of the head and kick 'em into ditches.[/quote]


*remembers your reference to the movie you had mentioned whose name escapes me*

[steggyD]

rudi32, it is you who are having trouble thinking outside of the box. This current economy does not need to exist the way it does. I don't like homer's answer, but yours sounds even worse.

[|Bunghole|]

[quote name='BengalBacker' post='706979' date='Sep 30 2008, 12:09 PM']What I heard of Pelosi's speech, she was laying all the blame for this at the feet of Bush and the Republicans. Not a smart thing to do right before a vote where the goal is to come up with a bi-partisan solution to a crisis. Now if this was definitely the correct solution, and Republicans were indeed just acting like 5 year olds because she pissed them off, I would agree with you. Most people seem to think this was a bad plan though, and something like 95 Democrats voted against it too. Pelosi is the one who made it Democrats v Republicans.

From what I'm hearing, Republicans were trying to warn everyone of this several years ago, and the Democrats were the ones who ignored/encouraged it. There's a clip of Bill Clinton saying essentially the same thing. I think they're all to blame. If they saw what was coming and didn't scream at the top of their lungs about it until it was fixed, they are just as much at fault as those who were profiting from it, whether they're Democrats or Republicans.


Edit: Here's the clip I was talking about.

[/quote]
How A Clinton-Era Rule Rewrite Made Subprime Crisis Inevitable
BY TERRY JONES

INVESTOR'S BUSINESS DAILY

Posted 9/24/2008

One of the most frequently asked questions about the subprime market meltdown and housing crisis is: How did the government get so deeply involved in the housing market?

The answer is: President Clinton wanted it that way.

Fannie Mae (FNM) and Freddie Mac, (FRE) even into the early 1990s, weren't the juggernauts they'd later be.

While President Carter in 1977 signed the Community Reinvestment Act, which pushed Fannie and Freddie to aggressively lend to minority communities, it was Clinton who supercharged the process. After entering office in 1993, he extensively rewrote Fannie's and Freddie's rules.

In so doing, he turned the two quasi-private, mortgage-funding firms into a semi-nationalized monopoly that dispensed cash to markets, made loans to large Democratic voting blocs and handed favors, jobs and money to political allies. This potent mix led inevitably to corruption and the Fannie-Freddie collapse.

Despite warnings of trouble at Fannie and Freddie, in 1994 Clinton unveiled his National Homeownership Strategy, which broadened the CRA in ways Congress never intended.

Addressing the National Association of Realtors that year, Clinton bluntly told the group that "more Americans should own their own homes." He meant it.

Clinton saw homeownership as a way to open the door for blacks and other minorities to enter the middle class.

Though well-intended, the problem was that Congress was about to change hands, from the Democrats to the Republicans. Rather than submit legislation that the GOP-led Congress was almost sure to reject, Clinton ordered Robert Rubin's Treasury Department to rewrite the rules in 1995.

The rewrite, as City Journal noted back in 2000, "made getting a satisfactory CRA rating harder." Banks were given strict new numerical quotas and measures for the level of "diversity" in their loan portfolios. Getting a good CRA rating was key for a bank that wanted to expand or merge with another.

Loans started being made on the basis of race, and often little else.

"Bank examiners would use federal home-loan data, broken down by neighborhood, income group and race, to rate banks on performance," wrote Howard Husock, a scholar at the Manhattan Institute.

But those rules weren't enough.

Clinton got the Department of Housing and Urban Development to double-team the issue. That would later prove disastrous.

Clinton's HUD secretary, Andrew Cuomo, "made a series of decisions between 1997 and 2001 that gave birth to the country's current crisis," the liberal Village Voice noted. Among those decisions were changes that let Fannie and Freddie get into subprime loan markets in a big way.

Other rule changes gave Fannie and Freddie extraordinary leverage, allowing them to hold just 2.5% of capital to back their investments, vs. 10% for banks.

Since they could borrow at lower rates than banks due to implicit government guarantees for their debt, the government-sponsored enterprises boomed.

With incentives in place, banks poured billions of dollars of loans into poor communities, often "no doc" and "no income" loans that required no money down and no verification of income.

By 2007, Fannie and Freddie owned or guaranteed nearly half of the $12 trillion U.S. mortgage market ­ a staggering exposure.

Worse still was the cronyism.

Fannie and Freddie became home to out-of-work politicians, mostly Clinton Democrats. An informal survey of their top officials shows a roughly 2-to-1 dominance of Democrats over Republicans.

Then there were the campaign donations. From 1989 to 2008, some 384 politicians got their tip jars filled by Fannie and Freddie.

Over that time, the two GSEs spent $200 million on lobbying and political activities. Their charitable foundations dropped millions more on think tanks and radical community groups.

Did it work? Well, if measured by the goal of putting more poor people into homes, the answer would have to be yes.

From 1995 to 2005, a Harvard study shows, minorities made up 49% of the 12.5 million new homeowners.

The problem is that many of those loans have now gone bad, and minority homeownership rates are shrinking fast.

Fannie and Freddie, with their massive loan portfolios stuffed with securitized mortgage-backed paper created from subprime loans, are a failed legacy of the Clinton era.

[|Bunghole|]

By STEVEN A. HOLMES
Published: September 30, 1999
In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.
The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring.
Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits.
In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans.
''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.''
Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market.
In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's.
''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''
Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.
Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings.
Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites.
Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent.

[steggyD]

Bunghole, you racist. You know the Democrats do no evil, they are for the people.

[Chris Henrys Dealer]

Now politicians are saying mark to market accounting is a bad thing...caramba. This takes the cake. *bangs head on desk repeatedly*

[BengalBacker]

[quote name='Chris Henrys Dealer' post='707330' date='Sep 30 2008, 11:16 PM']Now politicians are saying mark to market accounting is a bad thing...caramba. This takes the cake. *bangs head on desk repeatedly*[/quote]


CHD.

You're one of my favorite posters, particularly in this forum. The economy is your life and you know much more about it than most of us. Particularly me. Here's the but.

But, as far as your apparent belief that this bill should have been passed, I can't help but think that your perspective is very different than the rest of us.

You live in Canada, it's not your seven hundred billion.

The success of the market is, directly, your livelihood.




Now I know that the success of the market determines all of our livelihoods, and the entire world economy is at stake, but again, it's not your seven hundred billion. How 'bout you Canucks split it with us?