I seem to remember several years ago that the left was crying because minorities were being turned down for mortgages at a higher rate than whites. They blamed it on raciscm and they basically forced the banks to make a lot of these sub-prime loans. Well the problem has come home to roost. That’s not all of the problem though. There were a lot of people that took out an ARM. They seem to forget that interest rates under Carter hit double digit percentage wise. I remembered them days so when I bought a house there was no way I’d take an ARM. I may pay a little more but it is locked in and I don’t have to worry about the interest getting out of hand. Thirdly, banks were greedy and loosened their standards on mortgages. To force the taxpayers to bail these people out is wrong. A lot of the problems in today’s society is we no longer hold people accountable for their bad judgement. These bailouts are only going to hurt us in the end and make the problem worse instead of fixing it.
Look guys....if the political winner is that somehow government forcing lending to poor credit minorities is what took down the financial system, that’s fine. Go with it. But we’ve had the CRA in place for 25 years before this subprime mess took off without any problems other than a few local bank presidents grousing about a risky loan or two they needed to make to comply with CRA.
The reason this situation is such a mess is that exponential leverage and complexity was created with Wall Street derivatives. If you read the article, you’ll see Greenspan defending the whole thing under the guise that it introduced “prosperity” In reality it just created a big credit bubble that exploded inside the economy.
Paulson needs the massive power granted him in that draft bill because I don’t think even he knows exactly what type of “bad debt” he’ll need to buy back and in what forms.
I worked with a gal last summer who was with her husband processing paperwork to buy a house. I didn't get into incomes with her but tried to explain ARM's and balloon payments to her. I told her I was trying to scare her so they would not get burned. Telling her about that lost money if you can't pay and loose the house. And told her of my experience with interest going from 7% to 21.5% before their run-up ended. It is a simple math problem to keep from being snookered into providing scum with unearned income.
They did not sign the paperwork and I am glad.
If you answered Barack Obama you win.