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A New solution for the housing crisis
Posted by: mcq on Wednesday, January 23, 2008

Another in a long line of warnings about what may be coming after November:
The chairman of the U.S. Senate Banking Committee is proposing to set up a government-sponsored company that would buy distressed mortgages in an effort to save Americans from foreclosure.

In a letter to Senate Majority Leader Harry Reid released on Wednesday, Sen. Christopher Dodd said he envisioned an entity with an initial capitalization of $10 billion to $20 billion that would buy troubled mortgages, give them a markdown and pass on the "discounts ... to homeowners in the form of new, lower-balance mortgages."

"Mortgage lenders, investors and other stakeholders would all feel a loss in order to push the home loan value down to a more affordable level," the Connecticut Democrat said in the letter.

Those new mortgages would either be insured by the Federal Housing Administration or backed by Fannie Mae and Freddie Mac, he said, two government-sponsored enterprises which guarantee mortgages.

"The difference between the old mortgage and the new mortgage would be sufficient, after initial capitalization, to fund the program and cover possible losses," Dodd said.
Go out, buy too much house, take an adjustable rate mortgage at a time when loan rates are at historic lows (and then expect it not to go up) and if you're timing is right, the Democrats will use government to save you from being responsible for your own choices.

How? By using the money of people who played by the rules, did their homework, bought responsibly and are weathering the housing crisis in fine fashion to subsidize your poor choices. Don't forget, the vast majority of Americans have no "housing crisis".

And, of course, for the nanny state crowd, the upside is it will be another government agency which will never go away:
The new entity proposed by Dodd would not "be part of a short-term stimulus package," he said.
I don't expect this to go anywhere, but in today's pandering atmosphere, you just never know (and please remember, Dodd was a presidential candidate for a short time).

We could call it the "Department of Unpaid Mortgage Bailouts" or DUMB for short.
 
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Comments
Hilarious. On the very day that the Dow goes up due to rumors that the government is going to bail out nond insurers, McQ complains that the government should not be bailing out homeowners.

Typical right wing propaganda. Only complain about bail outs of the little guy. Government bail outs of corporations? Well, we can’t be complaining about that, now can we? After all, that’s just free market capitalism.
 
Written By: mkultra
URL: http://
What’s the matter MK? Which one are you? Are you one of those stupid enough to fall for an interest-only loan only to wake up one day and find out it wasn’t money for nothing? Or are you one of those sub-prime dolts who basically did the same thing?

In one case you are right,
Government bail outs of corporations? Well, we can’t be complaining about that, now can we? After all, that’s just free market capitalism.
Because corporations hire those very same little guys and give them jobs and pay salaries. But that doesn’t matter to you one whitt. All you see through your "Typical Left wing propaganda" eyes is the people at the top getting "bailed out" and not the little guys at the bottom who would be on the dole otherwise.

Markets go up and markets go down. It’s a fact of life but a nanny-state sh*t like you can’t see that because in the socialist paradise you want to create the government controls the markets. And life in those worker’s paradises are so good that you can point to all sorts of success stories out there as evidence. Such as . . .
 
Written By: SShiell
URL: http://
What’s the matter MK? Which one are you? Are you one of those stupid enough to fall for an interest-only loan only to wake up one day and find out it wasn’t money for nothing? Or are you one of those sub-prime dolts who basically did the same thing?
Neither of the above. I’m just one of those who enjoy illustrating the hypocrisy of the so-called "free-marketers" who whine about government subsidies to individuals and families but who make no complaint when it comes to subsidies to corporations.
All you see through your "Typical Left wing propaganda" eyes is the people at the top getting "bailed out" and not the little guys at the bottom who would be on the dole otherwise.
If you got a nickel, why don’t we make a bet: I bet the bond insurers are going to see government $ long before any homeowners will. I’ll even give you 2-1 odds.
Markets go up and markets go down. It’s a fact of life but a nanny-state sh*t like you can’t see that because in the socialist paradise you want to create the government controls the markets.
Ha ha ha ha - that’s rich. So let me get this straight: Those who want to bail out the bond insurers are not seeking government control over the markets?

You are clueless. Without the government bailing them out, the insurers are likely to go under due to their poor underwriting skills - the very same criticism McQ levels at the homeowners he makes fun of. Yet, in wingnut land, this isn’t socialism; it’s free market capitalism.

But of course, wingnuts are for the little guy against big government. What a load.
 
Written By: mkultra
URL: http://
Government bail outs of corporations? Well, we can’t be complaining about that, now can we?
I don’t know where you’ve been (but I’m pretty sure I know what you’ve been sniffing) but I’ve never, ever supported corporate bailouts. Ever.

However, the fact that you’re clueless in that regard and don’t let facts stand in the way of one of your typical off-topic rants isn’t surprising in the least.
 
Written By: McQ
URL: http://qando.net
I can see a lot of Dodd’s rich friends who will find a way to soak the stuffin’ out of any agency like this proposed albatross.

The smell test here is to imagine a Republican (or Ron Brown) proposing this.
 
Written By: Neo
URL: http://
It certainly does appear that in modern America those who are irresponsible reap the harvest of the hard work of the responsible. While I disagreed with the US government’s pay out to victims of 9-11 to the tune of a maximum of 1.85 million dollars, I did find it ridiculous that those who had no life insurance received the most. Having to prepare for a possible untimely death, usually from a car accident, was beyond so many of those highly educated people. They took the money over the benefits and had their loved one died in a car accident of their own making, their family would have had little other than SS benefits.

With ~ 50% of the working population exempt from income taxes but not from voting, the “give me what is owed me” attitude is now stronger than ever and the politicians are responding in each of their ways to buy that vote. So, who is going to pay for all of this largess but our grandchildren via European style massive taxes or anarchy?
 
Written By: AMR
URL: http://
I don’t know where you’ve been (but I’m pretty sure I know what you’ve been sniffing) but I’ve never, ever supported corporate bailouts. Ever.

However, the fact that you’re clueless in that regard and don’t let facts stand in the way of one of your typical off-topic rants isn’t surprising in the least.
The topic is government subsidies.

Here is what you said:
the Democrats will use government to save you from being responsible for your own choices
The implication is that the GOP won’t. But I point out an instance where the real GOP - the financial sector - is doing precisely that, today, and affecting the stock market as a result. The GOP is perfectly happy with saving corporations from being responsible for their choices. It’s called a corporate bailout. In other words, your claim that it is only the Dems who will use government to rescue bad choice makers is BS.

And, as usual, you complain that point does not conform with your topic.

Well, duh. That’s the point. It’s almost as if you are unable to compute information that counters your assertions. It’s weird.
 
Written By: mkultra
URL: http://
Mk,

I’ll admit, maybe I missed it, but from what I understand the insurers are not being bailed out by the government, but the idea is for private banks to provide capital, for which they will exact a price, if they agree to it. Nor is this being driven by Republicans or conservatives. The only government involvement is jawboning by New York officials, not exactly a right wing bunch.

Maybe the government will step in, but for now you are just spewing.

Besides, the stupidest proposal for solving the housing crisis comes from Hillary.
 
Written By: Lance
URL: http://riskandreturn.net
mkultra your initial response seems to indicate you think this bailout will be for the little guys - totally wrong - which is at it’s core McQ’s point and the harsh reality of why he has based on my reading opposed all bailouts. If this were about little guys it would be handled privately because private groups target individuals not statistical groups and the overall needs of society.

Thus any bailout will by definition help the lenders as much or more then it helps any individual - even those who manage to keep their homes because of the ’bailout’. If corporations weren’t going to make money on the deal they wouldn’t play - which is also true for this latest proposal which will ’share the pain’ they are feeling for being stupid, by lending to the stupid, by having me pay for both parties stupidity.

FOr example the current bailout package isn’t for little guy mortgages: under jumbo - which would target the little guys - in fact it explicitly calls for an expansion into jumbo loans, you know the ones where the banks will lose real money. Those loans aren’t little guys they are supposedly responsible adults - let’s face it if it were just the little guys the banks wouldn’t be squealing.
another piece of legislation that would expand the availability of so-called “jumbo” mortgages, loans higher than $417,000.

The two giant government-sponsored mortgage companies, Fannie Mae and Freddie Mac, cannot presently back these jumbo loans, which restricts their availability.
The people qualifying for loans in excess of $400K are not the little guys but now we want Freddie Mac and Fannie Mae to back these loans - how about no thanks we already have firms to back mortgages which should be available to high risk borrowers. If you can ’afford’ a $400K house you can be responsible for your own risk thanks very much. In fact that’s why we have Freddie Mac and Fannie Mae - so I think the little guy is already covered.

McQ’s post didn’t address this but rather another step to expand on the already bad ideas being proposed by the administration. In this case by a Democrat who wants to ’one-up’ the current proposals and go even further then the current give-away. As for "government subsidies" I don’t see that mentioned anywhere in the post or one of the responses until you claim it’s the focus of someone else’s post... where did that come from. Fact is want to impress me, let’s see the Democrats oppose the bailout and propose a smaller one.

Why is Baltimore suing banks - because they are foreclosing on the "small" mortgages faster then on the "big" ones. Unfortunately for the bank which probably has no idea of the race of the ’owner’ the cheap mortgages are in one racial neighborhood and the expensive ones in another...

What’s interesting is that by your last point you are saying this could be republican’s proposing this - well duh - but here’s the question why should anyone be proposing this because any such proposal can be gamed - so it should be minimal like the existing tools.

This brings us to why should we bail out the banks and what should the real price be. If my bank (or other financial institutions) fail then I lose my savings, potentially in totality. Frankly the little guys aren’t the risk to society. So as a society the little guy isn’t the focus, the lender is - she’s the real big target - bigger then even those jumbo loans. As a society keeping the banking industry solvent is a reasonable priority. Thus any bailout should be accompanied by job loses to all corporate officers at the effected banks - with real blocks on those people holding positions of responsibility again - yeah we can just cut their salaries for the next year or so while we kick their butts to the curb. It should come with regulations to prevent stupid banks (and other financials) from being placed at risk again and it should be painful for the people who are taking chunks of my money, painful for a real long time.
 
Written By: BillS
URL: http://bills-opinions.blogspot.com/
First mkultra:
Government bail outs of corporations? Well, we can’t be complaining about that, now can we?
When McQ responds on point with:
I’ve never, ever supported corporate bailouts. Ever.
mkultra then says:
The topic is government subsidies.
and then this bit of irony:
It’s almost as if you are unable to compute information that counters your assertions
One hopes that when mkultra’s head finally stops spinning it is correctly aligned with his body.
 
Written By: Steverino
URL: http://

 
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