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September 23, 2008

Brother Can You Spare A Trillion?

I am really disgusted by this whole bail-out by the Federal Government. I strongly believe in capitalism, but I also believe that people are fallen and greedy and need to be restrained; that's why in spite of Marx's Utopian dreaming the State has not withered away. We need laws to restrain us, and we must have punishments meted out to us when we violate them; it's the only way we learn to rein in our baser impulses. No company should be allowed to grow to the point where it is "too big to fail" and no appointed official, hell, no elected official either, should be given unquestioned, unreviewable authority to spend a trillion dollars (and you know damn well that once those...creatures...in Congress start handing out your money it will be well above that amount).

I've never missed a mortgage payment. Before we bought our house my Bride and I did our homework and budgeted very carefully on how much debt we wanted to assume and felt "comfortable" carrying. When we applied for our mortgage the company then offered us 2.5 times as much money, saying we could "afford" it. Say what? Look, I felt the Siren's call as much as anyone would; the money was awfully tempting. I mean, hey, the Bank says we can afford it, so we must be able to, right? So I do have some sympathy for the folks who said "ok." Some. I think there's lots of blame on both sides. People who didn't budget properly, people who ignored their budgets, people who lied on their applications and/or wildly over-estimated their earning potential got themselves into trouble. When you pair them up with mortgage brokers who didn't do due diligence but who were in fact only looking to make the commission on writing the initial mortgage, because they were immediately going to sell the mortgage to someone else to deal with, well, who's the chicken or the egg in this situation? This in turn encouraged them to inflate the amount they were willing to lend because they weren't lending it but only getting a fee based on the size of the mortgage. I think a good place to start would be requiring every company that wanted to buy or sell mortgages to have to re-verify them; reduce their liquidity (the of the mortgage in terms of being bought and sold) and require companies that write the mortgages to service/hang on to them for at least, say five years to further encourage realistic valuations and mortgage sizes.

None of which is any reason why the US Taxpayer should bail out people who made bad loans and people who took out bad loans; neither the people who refinanced their houses 3 times and bought fancy cars and trips based on ever-rising property values nor the ones who made millions writing flaky loans deserve or are owed one penny of assistance from the Government on these deals.

As my Bride succinctly put it the other night, this bail out privatizes the profits and socializes the losses, and that's just wrong. Oh, it's great business for the banks and just what one would expect from a corrupt Congress and corrupt political structure, but wrong none the less.

Posted by Mr. Bingley at September 23, 2008 08:41 AM

Comments

Amen.

"... this bail out privatizes the profits and socializes the losses...'

Double Amen!

Posted by: Jim - PRS at September 23, 2008 09:04 AM

What Hairboy said. A-freaking-men.

Posted by: Erica at September 23, 2008 09:39 AM

Which is why corporate officers should not have their private property shielded from liability if their company goes under. It turns my stomach to see people who have failed so spectacularly to not only get billion dollar bonuses but to retain billions of dollars of assets. Every penny of their property beyond bare subsistence should be attached to help pay off the debt that they created through their failed leadership.

Posted by: Skyler at September 23, 2008 10:51 AM

Guess it's time for me to dump all my debts. Congress says I can!

/idiot

Posted by: The_Real_JeffS at September 23, 2008 12:02 PM

Just another case of those of us who behave responsibly (paying off our mortgages, paying taxes, playing by the rules) gettin' screwed because someone else didn't play by the rules and is now needing help.

It pisses me off that a lot of the folks who are guilty of writing bad loans and such are going to get a golden parachute, while the American taxpayer is once again told "Flap your arms real hard after we push you out of this plane."

Posted by: ricki at September 23, 2008 12:38 PM

Can't believe I agree with anything Barney Frank says but his idea of snagging any pay and allowances from corporate/Wall Street bigwigs whose institutions get bailed out by the Feds is spot on. And I believe legal action is warranted in most of these cases even if the contracts have been written to be vault like.

Posted by: major dad at September 23, 2008 10:49 PM

I agree with everything Bingley said, so I have to take issue with some of the comments.

"Which is why corporate officers should not have their private property shielded from liability if their company goes under."

It isn't "their" company. It's the shareholders' company. It's the board's job to oversee the management and the shareholders' job to oversee the board: NOT the government's. Limited liability is a very big part of why corporations exist, why they were first created, and why they are still the world's preferred vehicle for large-scale investment. What you are proposing is throwing out the baby with the bathwater.

"Can't believe I agree with anything Barney Frank says but..."

But trust your first instincts, Major Dad. Every single word Barney Frank says is socialist bullshit, including "and" and "the." It's people like him and their "social justice" regulations that got us this mess in the first place.

"...I believe legal action is warranted in most of these cases even if the contracts have been written to be vault like."

Er, legal action is warranted if the law and the evidence provide for it. Otherwise it isn't.

Posted by: Dave J at September 24, 2008 07:00 PM