Performance Boats Forum banner

1 - 20 of 59 Posts

·
Registered
Joined
·
3,012 Posts
Discussion Starter · #1 ·
SO it appears "BIG BUSINESS" will get the lions share, and we get nothing AGAIN! Weren't we told this was to help the "WORKING PEOPLE" ?




By Tom Raum, Associated Press Writer

Financial industry a big winner in bailout proposal, but not so troubled homeowners


WASHINGTON (AP) -- The proposal to bail out U.S. financial markets to the tune of up to $700 billion creates a lot of potential short-term winners, as well as some losers.
Wall Street and the banking industry are perhaps the biggest winners. Scores of banks and other financial institutions faced with going under stand to gain a lifeline that should allow them to start making loans again.

ADVERTISEMENT


Under the plan that congressional aide sought to put into final form Sunday, the Treasury Department can start buying up troubled mortgage-related securities now held by these institutions.

These securities are clogging balance sheets, leaving banks without the required capital to make new loans and putting the banks dangerously close to insolvency.

Banks not only have slowed lending to individuals and businesses, they have stopped making loans to each other. The rescue plan should help restore confidence to financial markets.

There are other winners, too, if the bailout works as intended: anyone soon trying to borrow money -- for cars, student loans, even to open new credit card accounts.

Top executives at troubled financial institutions, on the other hand, are in the losing column because the proposal would limit their compensation and rules out "golden parachutes."

Of course, these executives may take solace in knowing their jobs still exist.

Investors, including the millions of people who hold stock in their 401(k) and pension plans, should benefit. Failure to reach a deal over the weekend could have sent stock markets around the world tumbling on Monday.

Homeowners faced with foreclosure or those who have lost their homes get little help from the agreement. Nor will it help people whose houses are worth less than what they owe get refinancing or take out equity loans.

It would do little to halt the slide in home values that are one of the root causes of the current economic slowdown.

"It doesn't deal with the fundamental problems that gave rise to the problem -- or alleviate the credit crisis," said Peter Morici, an economist and business professor at the University of Maryland

Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke are potential winners.

In just a few months, they have remade Wall Street. If the plan helps to get the economy moving again, they may be remembered for having kept the financial crisis from spreading throughout the economy.

"When I see Hank Paulson and Ben Bernanke on TV, I see fear in their eyes. Like on a battlefield when people are shooting at you. I think they are afraid to say how serious the problem is for fear of making it worse," said Bruce Bartlett, an economist who was a Treasury official under the first President Bush.

Bartlett said the plan is flawed, yet the alternative of doing nothing could be catastrophic.

After the heavy dose of new regulation in the agreement, New York will have a hard time claiming it is the center of the financial universe. That title may have shifted to Washington.

If the plan stays together, Congress -- with approval ratings even lower than those of President Bush -- may be seen as having acted decisively at a time of national emergency.

Congressional leaders added new protections to the administration's original proposal. That was only three pages long and bestowed on the treasury secretary almost unfettered powers.

Instead, the agreement would divide the $700 billion up into as many as three installments, creates an oversight board to monitor the treasury secretary's actions and set up several major protections for taxpayers, including a provision putting taxpayers first in line to recover assets if a participating company fails.

The president, on the other hand, probably would get little credit for the deal. He allowed Paulson and Bernanke to do the heavy lifting. The only time he called all the players to the White House -- late Thursday afternoon -- the wheels almost came off the process entirely.

It's hard to tell which presidential candidate benefits the most from an agreement they tentatively endorsed Sunday, a little more than five weeks before the Nov. 4 election. Democrat Barack Obama and Republican John McCain each sought to claim some credit for the deal, even though they played active roles only over the past few days.

Hard economic times traditionally work against the party that holds the White House, and in recent polls Obama has inched ahead of McCain. Furthermore, there is widespread consumer resentment over being asked to bail out Wall Street and lawmakers have learned the proposal has not been popular with their constituents.

That may help Democrats in general. The strongest opposition to the original bailout plan came from House Republicans.

Lawmakers and presidential candidates alike are "trying to orchestrate everybody jumping off the cliff together," said Robert Shapiro, a consultant who was an economic adviser to President Clinton. "I think we'd have a different plan if we weren't five weeks out from the election."

And ordinary taxpayers?

Nothing that potentially adds $700 billion to the national debt -- already surging toward the $10 trillion mark -- can be considered a winner for those who foot the bills.

But lawmakers did put in taxpayer protections, including one to require that taxpayers be repaid in full for loans that go bad.

The package could even end up making money for taxpayers, supporters claimed.

But only if the loans and interest on them are repaid in full. Few expect that provision to be a winning proposition, however.
 
G

·
Aside from the umteen billion going to the ACORN people & special interests, I don't understand how this bailout will help the average American.

Maybe this is oversimplification, but if an investment company (this is bs in my opinion, trading mortgages like stocks is just wrong) receives $500K to cover a defaulted mortgage, how is that money applied and what happens to the property?

Example: John Doe defaults on his $500,000 house and walks. It goes back to the bank. The bank applies for Federal relief and receives $500K to cover the default. THe bank then auctions the property for $300K. Is the bank responsible to repay the Feds for the $300K? What happens to the $200K loss? or does the bank claim the entire $500K citing lost revenue, operating expense, etc??

John Doe is still on the street (if he lied maybe he belongs there, but the banks probably lied as well)
The banks are not going to relax lending requirements for fear of imprisonment.
The banks are not going to be too concerned about what a REO will be resold for if it's gravy. So the market may continue to slide.

Will the bailout money allow the banks to take their skin out of the game?

:)sphss:)sphss
 

·
Rubbing is Racing!!
Joined
·
2,837 Posts
It's a joke....

Tax payers will be paying this off for ever. The goverment has the chance to profit 10 fold. I can't imagine us getting a huge tax rebate when they pprofit in the trillions off this $$$.

This will do nothing to help the housing crunch or economy.:|err:mad:
 

·
Registered
Joined
·
8,347 Posts
It's a joke....

Tax payers will be paying this off for ever. The goverment has the chance to profit 10 fold. I can't imagine us getting a huge tax rebate when they pprofit in the trillions off this $$$.

This will do nothing to help the housing crunch or economy.:|err:mad:

If it was not election year I think the results would be different. Timing sucks.:|err

That tidal wave is still coming I don't care what the nay sayers say...500 Billion atleast out there in ALT-A's. I do not know what that amounts to in number of homes.

I don't feel like doing the math.:|err

Sounds like Colorado is number 5 on the list for spectators screwing it all up.



Never pay again for live sex! | Hot girls doing naughty stuff for free! | Chat for free!
 

·
Registered
Joined
·
5,487 Posts
It's a joke....

Tax payers will be paying this off for ever. The goverment has the chance to profit 10 fold. I can't imagine us getting a huge tax rebate when they pprofit in the trillions off this $$$.

This will do nothing to help the housing crunch or economy.:|err:mad:
What, you don't buy the sales job for this bill? Me, either!
 

·
Registered
Joined
·
246 Posts
Wallstreet Welfare at it's worst !

I believe this bailout is going to make the markets stabilize for the short term. For the Long Term this is actually going to make the problem worse, than if they did nothing at all.

This now allows the Banks to reposses mortgages without worry of loss on their part, further depleting the market value of the homes that all the people who actually qualified for Fixed Rate Conventional loans.

This will then lead to even more REO's in the future as these upstanding people who need to sell their homes will not be able to do so, as their property will become upside down as well.

This deal is a bandaid, on a laceration !
 

·
Registered
Joined
·
28 Posts
Maybe The Average American Shouldn't Have Been Dumb Enough To Buy A House He Couldn't Afford And Do An Arm Mortgage On A Home When Interest Rates Were At An All Time Low And Were Only Going To Go Up. All The Average Americans That Are Smart Enough Not To Buy Things They Can't Afford Aren't In Jepordy.
 

·
Registered
Joined
·
5,487 Posts
Maybe The Average American Shouldn't Have Been Dumb Enough To Buy A House He Couldn't Afford And Do An Arm Mortgage On A Home When Interest Rates Were At An All Time Low And Were Only Going To Go Up. All The Average Americans That Are Smart Enough Not To Buy Things They Can't Afford Aren't In Jepordy.
I don't disagree with you, but wheres your words of scorn for the companies that profited off this crap.
 

·
Registered
Joined
·
2,122 Posts
And when is enough - enough?

"We'll just keep foreclosing" - yes, that seems to have worked out real good thus far.
 

·
Nordic 35' Flame
Joined
·
529 Posts
Maybe The Average American Shouldn't Have Been Dumb Enough To Buy A House He Couldn't Afford And Do An Arm Mortgage On A Home When Interest Rates Were At An All Time Low And Were Only Going To Go Up. All The Average Americans That Are Smart Enough Not To Buy Things They Can't Afford Aren't In Jepordy.
For a 1st post, that is a stupid statement. Everyone is going to be in jepordy over this, if you don't think so, than you might want to read up on the subject. Should the banks have loaned money to people that can't afford it? NO, should people have put themselves into this situation, NO. BUT, that is all said and done with, now everyone gets to share the pain for those mistakes. If you think that you will be untouched by the fallout from this market, than go back under your rock or crawl back into your bubble and live your happy little life....and pray for the rest of us.
 

·
29812
Joined
·
6,873 Posts
Agreed, IF they really want to help out they should pay off all the homeowners mortgages.
and then the AMERICAN public will help the entire country grow and regain its financial strength
 

·
29812
Joined
·
6,873 Posts
Example: John Doe defaults on his $500,000 house and walks. It goes back to the bank. The bank applies for Federal relief and receives $500K to cover the default. THe bank then auctions the property for $300K. Is the bank responsible to repay the Feds for the $300K? What happens to the $200K loss? or does the bank claim the entire $500K citing lost revenue, operating expense, etc??

John Doe is still on the street

:)sphss:)sphss
This is the best example yet!
And then the banks are safe and they just made 300K
 

·
Registered
Joined
·
3,496 Posts
It is ugly.

Truth be known, it has to happen, but.......

1) It's not a bailout. It's a risky investment by the government.
2) If this doesn't happen, liquidity is lost and your credit card will not work, your line of credit will be pulled(If this hasn't happened to you already). More importantly, your company may not have the credit it needs to fund payroll, purchasing, etc. etc.
3) This is because the value of the "assets" has declined to a point where the financial institution in question cannot meet it's ratios and cannot allow cash out of the "bank."
4) First to go under are those with "overvalued" properties with upside down mortgages. Countrywide's IndyMac Bank and Wachovia and WaMu.


Bottom line, like it or not, this needs to happen. If not, you will see unemployment in the 10 percent or better range, business's closing all over and learn the word "Depression." Forget about your company, what if the people your company is doing business with can't pay their bills? This could get really ugly really fast! :mad:
 
G

·
Banks are pulling LOC's and cancelling unused credit cards accounts like wildfire.

I dont approve of the bailout, but I'm not sure what the cure is, or if there is a cure.

I think heads need to roll. If you defrauded (and I don't care if you were a homeowner, broker, or bank manager) you should be held accountable. Those buy and bail people need to end up with squat. Those CEO's who knew what was going on need to be living in a $400/mo apartment or in jail.

If this goes through, we can't let this be the biggest heist the world has ever seen. People go to jail for selling $100 worth of pot, but steal $700B and you're potected by the federal gov't? No, someone needs to be held accountable.
 

·
Registered
Joined
·
3,496 Posts
Banks are pulling LOC's and cancelling unused credit cards accounts like wildfire.

I dont approve of the bailout, but I'm not sure what the cure is, or if there is a cure.

I think heads need to roll. If you defrauded (and I don't care if you were a homeowner, broker, or bank manager) you should be held accountable. Those buy and bail people need to end up with squat. Those CEO's who knew what was going on need to be living in a $400/mo apartment or in jail.

If this goes through, we can't let this be the biggest heist the world has ever seen. People go to jail for selling $100 worth of pot, but steal $700B and you're potected by the federal gov't? No, someone needs to be held accountable.
If it doesn't go through, the result can be much, much worse. And it's going to hit the very people you think need to be protected. :)coffee
 
G

·
Negative. The government gets the asset in the auction. So they get the proceeds as well. :)coffee
Same thing imo. John Doe loses his $300K house with a $500K mortgage on it. Gov't bails out the bank for the full $500K. Gov't auctions the house for $300K. Who gets to eat the $200K? we the people?

I don't undertand how this is going to work. Someone has to lose.
 

·
Registered
Joined
·
5,487 Posts
Same thing imo. John Doe loses his $300K house with a $500K mortgage on it. Gov't bails out the bank for the full $500K. Gov't auctions the house for $300K. Who gets to eat the $200K? we the people?

I don't undertand how this is going to work. Someone has to lose.
None of this bill makes the banks deal with the homeowners to keep them from going into foreclosure. This bill simply lets them dump those "bad" assets. Theres no incentive in this bill for the banks to try to turn those assets around. Fox news has the bill online if you want to read it. Its about 120 pages, predomenantly procedural language.
 

·
@ The Islander
Joined
·
4,182 Posts
It is ugly.

Truth be known, it has to happen, but.......

1) It's not a bailout. It's a risky investment by the government.
2) If this doesn't happen, liquidity is lost and your credit card will not work, your line of credit will be pulled(If this hasn't happened to you already). More importantly, your company may not have the credit it needs to fund payroll, purchasing, etc. etc.
3) This is because the value of the "assets" has declined to a point where the financial institution in question cannot meet it's ratios and cannot allow cash out of the "bank."
4) First to go under are those with "overvalued" properties with upside down mortgages. Countrywide's IndyMac Bank and Wachovia and WaMu.


Bottom line, like it or not, this needs to happen. If not, you will see unemployment in the 10 percent or better range, business's closing all over and learn the word "Depression." Forget about your company, what if the people your company is doing business with can't pay their bills? This could get really ugly really fast! :mad:
Very true, great post.
 
1 - 20 of 59 Posts
Top