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

[Freedomscap]

OK, TN, you are talking about your particular situation. With that credit rating, you are saying you can not get a credit line anywhere?

[ThunderclapNewman]

No.

I'm saying that the credit crunch is real and ongoing and dangerous to the survival of the US economy.

I only used myself as an anecdotal example of what's happening, even to those who have good credit histories.

You obviously aren't interested in knowing the facts.

[Freedomscap]

I am interested in knowing the facts. Obama is calling for oversight and transparency. The issue is: we don't know everything for certain, because there wasn't transparency with the numbers/books because of de-regulation.

[PumaAnn]

I THINK if we do the bailout, we COULD bridge over.

Without it?

We've collapsed.

It's already happened.

So the Dems best knock of the politicking.

This is already a hail mary shot.

[one4obama]

When replying to someone's comments why do you always make the reply in the form of an original comment? Why don't you hit the reply button beneath the comment and reply there?

Or is that too much trouble?

Or perhaps you want to make sure your comment does not get lost in the responses. But that is a bad way, as people have not idea what your comment refers to. So people just dismiss your comments as irrelevant.

[Freedomscap]

I do both. Sometimes, the response gets losts in the shuffle, so to speak.

[DonDavis]

Is This What They Mean by ‘The New Marxism?’
http://satiricalpolitical.com/?p=3318

[one4obama]

Everyone - check out this guy's profile and his comments. He posts a link to satricialpolitical.com in every comment. Guess what! That is his site.

DonDavis - to promote yourself here on HuffPo is against rules.

FLAGGED!!

[one4obama]

HuffPo Mediators - please pay close attention to DonDavis' comments. Every comment includes a link to his own website.

Please block this guy! He is abusing the HuffPo rules!

[Infiniti]

There are about 6-7 millions homeowners who are facing foreclosure because they can't meet their payments. It's these worthless loans which have been securitized and leveraged by Wall St and repackaged to other banks. Since no one knows their true value, why should the taxpayer make these securities whole again?

Let separate the issue into2 parts.

Banks, insurance, investment companies should carry these bad investments on their balance sheet and write it off against earnings like any other bad investments. Just like stocks, set a market value for these securities. This way all companies know exactly what their potential loss is. No government involvement needed.

- Certainly, they could write it off over X number of years to ease the burden. If they can't meet their obligations, then file for bankruptcy to restructure their debt. If a company is about to fail, then address these companies on a case-by-case basis. By no means, let these companies off the hook by making them whole.

- To restore confidence in the marketplace, setup a temporary company like the RTC to stop the bleeding of the distressed homeowners. Buy back homes for those that can't afford to make the payments. Only give the government X billion to buy back real estate. Currently, that $7 billion amounts to $100k for every single homeowner!! At the end of the day, the temporary company will have real assets (not funny money) to resell after the housing market bottoms out. Repay the Treasury with the proceeds.

[MourningDude]

You can't put the genie back in the bottle. Fannie and Freddie were gobbling up hundreds of billions of dollars of these high risk loans, which enabled the lenders to continue selling them. If the secondary market wasn't buying the loans up, the original banks and lenders would be the ones suffering now, since they would own their own loans.

In 2005 and 2006 Republicans attempted to force Fannie and Freddie to divest themselves of many of these higher risk loans, but Dems opposed it on a party line vote, saying that regulating the portfolio limits would "hurt the companies' ability to carry out their mission to increase affordable housing."

So now the federal government has taken them both over, and literally OWNS those bad loans. You can't just reverse all the sales contracts now, years after the fact.

[PumaAnn]

Sounds good, but I'm in a state where these loans were made non-stop. I have friends who knew they couldn't afford the mortgage, who aren't NUTS, and who still went for it.

Frankly, this is a lot like the war. People must take responsibility for themselves.

[fino462]

Ok, time to fact check:

The passage of the most sweeping banking deregulation did occur under Bill Clinton's presidency, that is when there was a majority of republicans in congress and the ones who authored the legislation.

And as a result of its passing, which it would have anyway because congress would have over turned Clinton's veto (the only thing Clinton could do was compromise to make the legislation less moronic), Phil Gramm, Chair of the Senate Banking committee yeah and that guy who said us Americans are nothing but a bunch of whiners and that the economy is fine (yes the same Gramm as in Gramm-Leach-Bailey act), got the biggest payoff as a result of the legislations passing: 1.5 million dollars in cash.

Yes, it is funny how deregulation is the republican buzz word when poor people are buying homes, but it is the 500 pond bear that no republican will touch, feed or acknowledge when those same poor people are being removed from said home and get to vote on Nov. 4.

[WLA]

You get it. Congratulations.

[Mogamboguru]

1. Paulson was Goldman Sachs-CEO, before he became US-Secretary of the Treasury.

2. Goldman Sachs is the only invesment-bank, which not only SURVIVED last week's bloodshed, but THRIVED on it. (Question: What did GS know to thrive, while others faltered - something, that other Investment Banks apparently didn't know - and HOW AND WHEN EXACTLY did they get to know this?)

3. Paulson now suggests that the USA shall unconditionally buy toxic debt from the remaining Banks and Investment Banks - aka Goldman Sachs.

4. If that law would pass, Goldman Sachs could shed all remaining toxic debt and sell it unconditionally to the taxpayer - while only keeping the good, profitable debt in her portfolio, and thus become the Shining Star on an otherwise very dim sky.

5. Paulson had $632,000,000 in Goldman Sachs stock when he left. See: http://www.forbes.com/lists/2006/12/VY36.html

1 + 2 + 3 + 4 + 5 = Goldman Sachs and Paulson are llaughing their sleeves up while celebrating their latest, reckless scoop in looting America...

[ThunderclapNewman]

Goldman Sachs didn't get involved in the o r g y of mortgage-backed securities, so its exposure to the downturn was very limited.

Nothing shady is going on.

GS and Morgan Stanley have asked for, and received, permission to become bank holding companies, which subjects them to much more stringent regulation and much higher capital reserve requirements.

Paulson isn't my favorite guy, but he's not an ideologue and he's calling the shots---not Bush or Cheney.

[princessofnowt]

Perhaps you might like to see this about that.

He absolutely is at fault, and the rest of the world knows well he is the 'fox in the henhouse'

http://www.marketoracle.co.uk/Article5480.html

[Chavez08]

The flying monkey trollers are getting pretty desperate, personally attacking Obama like this.

[lornejl]

I'm glad that the people that have sc rewed this up have stepped up and taken responsibility.

[lornejl]

I'm glad that the people that have screwed this up have stepped up and taken responsibility.

[mrJJ]

Paulson helped obtain the SEC exemption which allowed brokerages to increase leverage to 60:1 from 12:1.

The money is Paulson's to use for buying commercial and residential mortgages and mortgaged backed securities as he chooses.

No one has any oversight over him, and he can pay any price he wants to, including face amount of the debt.

Courts cannot review his decisions, not can any regulators. He has to report to Congress once every six months.

Bet on that 700 Billion dollars being gone before January 20, 2009. Bet on Treasury asking for more.

There is no bailout for mortgage holders. Banks get bailed out, but not ordinary people.

Banks bailed out by this plan need make no changes in how they do business.

Banks bailed out need not replace the management which drove them into insolvency.

Shareholders and bondholders of such banks do not lose a cent.

The securities which caused this crisis are still allowed.

Bush is asking you to trust his administration with 700 billion after spending 580 billion on the Iraq war. Do you trust him?

[MourningDude]

If every person that took out a mortgage simply paid them back, there would be no crisis. So although there was plenty of hanky-panky going on in the financial industry, the crisis was actually caused by the "ordinary people" you claim are the victims.

The reality is that most "ordinary people" didn't take out loans they couldn't afford, and are indignant that Dems are planning on bailing out the scofflaws that caused the crisis in the first place.

[PumaAnn]

Exactly.

[mrJJ]

Main St consumer get into financial problems, gets foreclosed on.Returns the key to the bank most probably goes bankrupt. end of story

Why is a financial institution different? Let them sell off their assets and go Bankrupt too. end of story.

Bailout? Go figure

[ThunderclapNewman]

If only it were that simple.

This is not about financial institutions, or about mortgages.

It's about the lack of liquidity in the credit markets, which will lead, inexorably, to a collapse of the US economy that will make the 1930s look like the good old days.

Allowing that many companies to fail would hasten the looming depression.

is that really what you want?

[mrJJ]

Share the pain... or share the wealth.

[lornejl]

Where is the responsibility ? Who is taking it ?

[mrJJ]

This is only the First shoe to drop

There is $596 trillion in derivatives debt (Thank You, Sen Gramm), over $2.5 trillion in credit card debt, and $58 trillion in credit default swaps

http://www.wallstreetdigest.com/hotline.php

[Freedomscap]

Yes, we understand that distinction. However, we the American people, are saying/asking, how do we know that there is a lack of liquidity. This is what Paulsen has said, that doesn't necessarily make it true.

Also, assuming it is true, it wouldn't hurt to institute a plan that incorporates help to homeowners and aborts foreclosures.

[Artos]

ThunderclapNewman,

Nope, don't want it and never asked for it, but I am not about to allow a bunch of weasels to get away with capital crime. Were you or I to steal a loaf of bread from a Corporation, they would think nothing of clamoring for us to receive prison time, Think I jest, I have read of such things. They will not brook the common man stealing from them, sets a bad precedent as far as they are concerned. Yet you would ask us to allow them to steal millions,no billions from us because of their lame arguement that they are so vital to our nation that we cannot afford to let them falter. Fine, if that be the case then we should take these institutions complete away from their owners and make them possessions of the American people, never to be returned to their former private owners. That is and must be the condition met in order for us to expend our wealth for it's rescue.

[Freedomscap]

Mr. Cleveland, I've worked in the entertainment industry and I'm a liberal and I take offense at being called: repulsive.

[booker52]

I vote no to the bail out. I have already called one of my Senator's and said so. All the rest of you should as well.

[fumes]

at a guess: you voted in '06 to stop the war and maybe remove a president. how'd that vote go?

[kid5rivers2]

It's on the record, ergo, it counts.

[booker52]

Neither time did I vote for Bush. So yes that's what I did.

[MourningDude]

Average folks are outraged that people who took on risky loans to buy big houses they can't afford are being catered to like THEY are the victims. Meanwhile, those who made responsible monetary decisions are asked to subsidize the irresponsible ones and make sure they get to keep the house.

Democrats should make that they new campaign slogan.

"Reward irresponsibility, punish responsibility."

[ZHarris]

So why is BushCo asking for ANOTHER trillion dollars?

[Artos]

MourningDude,

Aren't you laying this at the wrong door. It's the Republican Administration that is wanting this Bailout, with the help of a Treasury Secretary that they chose. The Democrats are being asked by them to rush into making this bailout. I wonder why the rush. Could their be more foul deeds afoot, methinks that something smells fishy in Denmark.

[ChiGuy]

John and Cindy McCain think that "Main Street" is a fictional place you only see in movies and on television.

[Freedomscap]

And it is all in black and white.

[williamg]

We need to reform the lobbyists who run McCain's campaign.

[lornejl]

He is on it, he knows how to fix his lobbyists.