Strict policies needed before bailout approval
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David Core
Published: September 27, 2008
What is the federal government doing bailing out banks that made questionable loans? How is bad debt now going to be “good” in a few years?
The federal bailout of $700 billion is a bad idea if it gives money to those who don’t deserve it. Basically, the U.S. government will pick up all the near worthless mortgage-backed securities of large banks,
financial institutions and turn them over to you and me. Thanks, but no thanks. Isn’t that rewarding bad behavior? It’s the bad behavior of lenders for doling out subprime mortgage loans like they were
penny candy to people who could not afford them. In many instances, borrowers were misled and basically given homes with little-to-no money down. In many instances, borrowers’ income and legal
residence status were not verified. How many of you noticed neighbors packing up in the middle of the night and leaving their houses in foreclosure? And, oh my, the banks never saw that coming? Give
me a break!
I fully recognize that credit must be freed to allow legitimate individuals and borrowers to get loans, but not so that taxpayers must foot the bill. If the government wants to take the bad debt off the banks’
hands, then they should lend them the money. Or the government should take the bad debt at such a deep, deep discount, so if in the future these mortgage-backed securities are still worthless, the hit
to our wallets will not be as severe. Or if the government wants to give away $700 billion, it should make significant cuts in other programs to offset some of this cost.
I recognize that something must be done. The government does not want to be accused of acting like Hoover when an FDR-type action is needed. But banks’ lending practices and the large number of
subprime loans in their total portfolio of so-called assets need to be severely scrutinized. The worst offenders should be given nothing and be allowed to fail. That’s how capitalism has worked over all
these centuries. We shouldn’t change that now. Contact Congressman Wolf to let him know to vote against the bailout UNLESS there are very, very strict policies in place to protect the taxpayer’s money.
DAVID CORE
Manassas
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Reader Reactions
Posted by ( raywilliams ) on September 29, 2008 at 4:08 pm
Nancy Pelosi puts her head on the chopping block at the request of President Bush - hoping to clean up the mess his administration failed to police - and now the Republicans take pot shots are her. I guess I’ll never figure Karl Rove and his legion of supporters out.
Instead of invading Iraq, President Bush should have kept his eye on the terrorist in Afghanistan and perhaps another eye on America.
He missed Enron, Katrina, Fannie May et al and sat ignorantly by while the housing ballon got bigger and bigger until it busted. You’ve done a heck of a job Georgie.
No, the plan is not a good one, but President Bush requested something “quick”. Now perhaps he’ll sit back and let congress take the necessary time to do their job - this time without threat of a presidential veto.
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Posted by ( blue_doggette ) on September 29, 2008 at 2:27 pm
Listening closely, it sounds like some house Republicans got their feelings hurt by Nancy Pelosi. That makes no sense. Suck it up and act like an adult.
We have not thrown 700 Billion at this problem. This amount is unprecedented. There are scary times ahead. People are more about being reelected than they do about doing the right thing.
Investment and international banking is an entire college major. The average American simply doesn’t understand all the ramifications.
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Posted by ( rafaelva ) on September 29, 2008 at 1:24 pm
It isn’t really that, it’s just that the idea that 700B will fix it, considering the size of the mess, is like trying to use a teaspoon to clean up a mess when a shovel is needed.
We’ve already thrown close to 700B at the mess already, to no avail.
The other central banks have already declined to intervene, or assist. They are watching their own banks, and the Soverign Funds declined to intervene as well.
Look at the market today, National City Bank just took a fatal nose dive,
Soverign Bankcorp took a massive loss.
BankAmerican and Chase stocks are now
beginning to head down. The only big bank, Wells Fargo, which has yet to reach out and buy up some failing entity, has a rising stock value.
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Posted by ( blue_doggette ) on September 29, 2008 at 12:31 pm
Listen to the experts, not the politicians and those who stand to gain.
Something must be tweaked.
Those who don’t want EESA to pass have nothing to lose in the first place. Perhaps this is just bitterness?
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Posted by ( jVA ) on September 29, 2008 at 10:32 am
If we used that $700 billion to secure all of those subprime mortgages, maybe force the banks to renegotiate them to standard and fair fixed rates, wouldn’t that be a better solution?
As Mr. Core asks, wouldn’t that go farther to making the bad debt “good” and address the underlying issue?
I’m not hyped about this bailout deal either.
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Posted by ( rafaelva ) on September 29, 2008 at 10:07 am
Read the following letter from the Congressional Budget Office, analysing
the “Emergency Economic Stabilization Act of 2008” (Bailout Bill)
http://cboblog.cbo.gov/?p=173
Note: It appears that the bill has tax changes in it, thus the House of Representatives MUST vote first.
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Posted by ( rafaelva ) on September 29, 2008 at 8:58 am
Nothing will change, there will be a brief flurry in the market place, and it will resume the slide downward. We the American People will be stuck with a bunch of worthless bank paper. Foreclosures will continue, because nothing will be done to stop that, and who really cares if the fat cats walk off with golden parachutes, and big severance payschecks.
The rank and file members of the Congress will make the final decision, and if they go with their constituant
concerns, they will vote no.
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Posted by ( phdee ) on September 28, 2008 at 10:10 pm
And the winner: (You get 3 guesses, and the first 2 don’t count.)
Ans: Wall Street and the banks.
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Posted by ( raywilliams ) on September 28, 2008 at 6:15 am
One of the media outlets reported calls to congress from citizens were 300 to 1 AGAINST the bailout, so I think we are all on the same page here.
While the credit crunch may be dire, it certainly can go another 10 days or so until a pro-taxpayer program can be developed. And certainly any bailout can be done in stages until we’re sure we are protected against loss.
Remember, we have to borrow these funds from the Chinese. This is not cash that’s just laying about.
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