Main Street's Resentment Over Wall Street Bailout

Washington Post :

The bailout doesn't smell right to the people of Manassas Park, where the foreclosure signs are as common as azaleas. They know all about bad debt here. This is a terrain of oversize dreams, misjudgment, financial calamity -- and empty houses. "Foreclosure. Foreclosure. Foreclosure," said Ed Merkle, 58, as he pointed to the "for sale" signs lining his street.

But Merkle, a defense contractor, said he has lived within his means in an era of easy credit. He didn't take on a huge loan even when his bank encouraged him to dream bigger.

Read the whole story: Washington Post

Comments

[Steelsil]

George Bush has completed the job of destroying US credibility and prestige in the world. What he started with the Iraq war, founded on lies and conducted as a boondoggle for Halliburton & Bechtel, escalated with the "Heck of a job, Brownie," fiasco, he has completed by destroying the US banking system, if not the entire economy. Congratulations! Four more years, anybody? I'm sure the Al-Qaida are rooting for McSame. What Al-Qaida couldn't do, the Republicans are doing quite well-destroying America.

[apeman637]

This must be the October surprize we've all been waitin for Bail out the theives and liars. Pardon all the President's men. And start the presses rollin over again. Gonna need more mints. Put that in the job creation bill for all those victims we didn't scam yet. Isn't economics fun we'll get the prisoners to print the money while we do the crime. Only in America.

[MourningDude]

Steve Forbes is calling the AIG bailout a "loan shark" deal, where the federal government could MAKE billions of dollars.

If the feds create an S&L bailout-esque entity that can buy risky loans at deep discounts, they will probably MAKE money again.

Why would banks give away money to the government? Simple. Today the credit markets are in a knot. So, these risky loans have no buyers, can't be sold, and are thus "worth" zero.

The banks have current non-zero valuations on this debt, but have been repeatedly forced to write down their value as the real estate market sours. This forces them into a downward spiral where they have to keep selling off profitable assets for cash to cover the writedowns. If this continues, the banks would eventually be forced into bankruptcy as they would not be able to raise more revenue.

This "downside risk" is creating panic in the credit markets now. If they could simply lock in some value for the debt, even if that value was pennies on the dollar what they think it's truly worth, it would break the cycle.

So, many of these banks would jump at a chance to lock in a value on these loans by selling them to the government, even at a steep loss. And the government doesn't have to worry about the short term fluctuations in the valuation of the loans, and can hold the loans to maturity. Win-win.

[one4obama]

And what happens to the little guys? You know - those that our government is totally overlooking in this mess? Are just to fend for themselves?

Win -win for who?

[MourningDude]

Well, since the feds took over Fannie and Freddie, mortgage interest rates have DROPPED, but you need to have very good credit to get the loans.

If the feds want to keep shoveling money into social engineering, I suppose they could renegotiate the loan terms more favorably, which would allow some people to stay in their homes.

The reality is that EVERYONE benefits from people staying in their homes and paying off their mortgages. If they default, everyone else is left holding the bag.

I think the government should offer favorable interest rates, but not renegotiate much on the loan amounts. If the people thought their home was worth $200k, they should still pay that amount. Having them renegotiate it to $150k because the market dropped doesn't make sense to me. If the home is only worth $150k now, then let the government give favorable loan terms to someone ELSE who is more responsible and let them buy it for that much.

They could also stagger the foreclosures, which would give the real estate market time to work through them. Maybe give some people a 1 year no-interest mortgage extension, others 2 years, others 3 years, etc, based on the type of loan perhaps.

If it's a liar's loan with a variable interest rate, I don't have much sympathy. We shouldn't "rescue" everyone. But for those who are willing to give a little on their end, we should work with them.

[GypsyRose]

FEMA trailers?

[GypsyRose]

Before everybody jumps all over me for posting this video (yes, I've been castigated by my own peeps not so long ago), this video is now "out there" and may go viral:

www.CatholicVote.com

Knowledge is power. Let's use it, shall we fellow Dems?

[one4obama]

No one is going to castigate you cause that link goes nowhere!

[GypsyRose]

Thanks for the head's up. Beats me why these things don't work. Anyway, it's out there and it's pretty powerful, go to the site and check it out. This shouldn't even be an issue, at least it wasn't during the primaries. Do you think it's the Biden/Pelosi factor? I do.

[mrsmdressup]

More discussion on the issue

http://www.huffingtonpost.com/2008/09/22/dirty-secret-of-the-bailo_n_128294.html

[YouThinkAndTalk]

After nearly 8 years of lies and deception, who can believe the Bush administration people, even if they appear so serious and concerned, wearing well tailored suites and matching ties, on the White House lawn? Nobody in his/hers right mind.

For months now we were told that the crisis is under containment, and now, a few days before Congress is scheduled for a break, Paulson and Bush come out and tell us that the sky is falling and they need - best estimate (you remember Iraq war's best estimate? - 700 billion dollars to do the job "right." I smell a rat, big rat.

So, this is what I propose: the taxpayers (you and me) step in and save the Economy not the Economists (read greedy investors). We will lend money to businesses to keep the Economy going, because we have assets, our own money, and private banks have no assets anymore. And if the private sector wants money to lend, too, we will give them money in exchange for assets. No blank checks.

But Paulson starts the negotiations by wanting everything. We will start the negotiations by giving him nothing, nada. We will wait until the next Administration to sort things out. And believe me, the sky is not going to fall, especially when the Economy knows that there are 700 billion dollars waiting to be used.

Don't believe a single word the Administration says, not a single one.

[alexis d]

Damn Straight.

[Fightnmad]

And a hearty "Amen!" to that!

[Freedomscap]

OK, TN, I'll agree with what you wrote below.

[Freedomscap]

TN: this is the quote that concerns the American people:

That a private banker from a large Wall Street investment bank is also Secretary of the US Treasury is no coincidence. It is also no coincidence that once again, public monies from the US Treasury are being used to rescue private bankers and to indemnify their losses

[mrsmdressup]

flagging myself for posting in caps

IS THIS A CHILDREN'S PLAYGROUND OR A FORUM FOR DISCUSSING POLITICAL ISSUES? WE ARE FACING THE MOST SERIOUS FINANCIAL CRISIS IN 70 YEARS AND ALL I SEE IS R ANTING ABOUT TV SKITS. IF YOU CAN'T DISCUSS ISSUES THEN I RECOMMEND YOU FIND A YAH00 GROUP.

ENOUGH!!!!!

[MIMom]

Here here.

[lornejl]

H itler got people to follow him. Mussolini got people to follow him.Saddam Husein got people to follow him The exact same dynamics are what make repubs follow their leader.

[lornejl]

Hitler got people to follow him. Mussolini got people to follow him.Saddam Husein got people to follow him The exact same dynamics are what make repubs follow their leader.

[Freedomscap]

TN, also, some financial experts have said it is time to buy, if you can -- a home. That position flies in the face to what you are experiencing.

[Freedomscap]

Mr. Cleveland, if you have a problem with the SNL skit, you call them and complain. Why shout fire here?

[WLA]

It's a tr0ll's job.

[one4obama]

MrCleaveland is no more. Shall we take a moment of silence in honor of his demise?

No? I thought not. Let him vanish with dishonor!!

[BradPittsburgh]

Published: February 23, 2008

A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.

The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.

To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates.

“We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,” the financial institution noted.

http://www.nytimes.com/2008/02/23/business/23housing.html?_r=2&ref=business&pagewanted=all&oref=slogin

Both parties saw this coming and did nothing about it.

[doctorwang]

The Repugs facilitated it. Google: McC Gramm Glass-Steagall

[PumaAnn]

Give it up. The Dems had their hands in the same ole' cookie jar.

[PumaAnn]

Agree.......if they allow the financial system to fail, then even those who are in solid mortgage states will start to also default.

They will lose their jobs. And......we're in a depression, not a recession.

If the Dems play games here, that's where we're headed.

Could be OK, frankly.

Let it fal. I'm not so sure we're not really a 2nd tier country already.

[apeman637]

I don't want to see everyone else lose their homes and jobs heathcare life insurance and mental state of being. I'll warn you of this though it will clear out your eye's and help you see that if you think this election is about skin pigment, or family values, or other wedge issues that amount to pig on a lipstick. You'll see from my position your country needs you to step up and do the right thing before it's too late and it will be to late. It took a Rome awhile to fall but it fell just like we will. .

[PumaAnn]

Exactly. I already live where the healthcare system literally dumps dying people on the sidewalks. I've been saying for 5 years.........wait until you're stepping over people on YOUR block.

Then.....maybe you'll get it.

[dagdavid]

PumaAnn, do you get it? I don't think so. I've read many of your other postings - if you cared about issues like healthcare, why would you support McCain?