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Members of Congress are suppose to represent their constituents.
And it is very obvious that many members did what they were suppose to.
LoL if this is the case what is the difference between your 'democratic' government and mob justice?
What if the majority of the American citizens want to legalize rape? Should the government then listen to their constituents and legalise rape?
If you ask me the American (republican) government does not work on what caused the credit crisis because they believe that the free market will regulate itself.
I mean only in America can bank CEOs gamble with other people's money without running any risk themselves.
Every time they are successful they demand a raise and other perks, but whenever they experience great losses they don't have to compensate for it and simply declare their company bankrupt. I mean how else can you explain that bank presidents receive millions of $ while their bank collapses?
Though I'm sure all of them have read it, and that all of their staff have read it as well, the issue raised is not one that has escaped anyone's attention. The fact is that we are in some uncharted waters. There is no certainty to be had as to what full range of outcomes we should expect. There is quite a bit of evidence that every day's worth of delay allows the situation to grow worse, while there is no real prospect that rework after time-consuming rework will leave us in any situation of certainty that is materially different from the one we have right now.
...
I'll take the liberty of assuming that you have a credit card, and therefore have at some point signed the credit crad agreement that made your card effective. Please explain then whether that agreement establishing a 25-day grace period in fact obliges the company to post a payment received on the 25th day on that day, or whether they may in fact hold the payment for posting on the following day, then imposing late fees and an increased rate on any remaining card balances. Having read all the fine print, I'm sure that was an easy one for you, so please explain your card-issuers privacy policy. What information about you disclosed by parties other than yourself may the company collect and maintain, what if any opportunity must they offer you to identify and correct any errors in that information, and whether corrected or not, what limits may apply on the company's ability to sell or otherwise disclose part or all of that information at its discretion to so-called financial partners or to other third parties without your prior knowledge or approval?
No, I didn't read the privacy policy the last time I accepted a credit card offer. Nor did I read many of the legal papers the attorney slid under my pen in rapid succession at the signing of my first house. A year later I was struggling to make mortgage payments I could barely afford. It never affected my credit, but it certainly affected my lifestyle. A couple of years later I sold the home and bought my second home. Not only did I read everything carefully at signing the second time around, but I also did a lot of research before I ever contacted a bank or realtor. The experiences have thus far been night and day. I owe them in both cases to the responsibility (or lack thereof) I took for myself.
My point, however, wasn't to place blame on the borrowers. Instead, it was to stress that the bailout the senate is proposing should be passed only after they've had time to make informed decisions. This isn't hurricane Katrina. No one is without water. This is economic policy that may affect the entire world in ways collectively congress, the senate and our president may not have begun to analyze. If there was abundant evidence to suggest that our leaders needed to intervene, that they had to do it quickly to prevent a collapse of the economy and that their intervention wouldn't make things worse for us over the long term, I'd be in favor of them making a decision this week. Economists aren't in agreement that such evidence exists. Yes, there is evidence to suggest that the economy is in trouble, but I haven't seen anything that compels immediate intervention.
Why would you be certain of that? Is this all a dependent process? Does having one pass intercepted increase the chances that the next one a QB throws will be intercepted also?
I was referring to any bailout plan they might legislate this week--not their activity in general. I think it's reasonable to assume that some of them are only just now getting up to speed. My certainty stems from what I've briefly seen on cspan, because of their approach to this whole thing and from common sense.
Regarding your last question, I understand that each time I flip a penny and it lands on heads the probability increases that on the next flip it'll land on tails. Perhaps if they pass enough legislation they'll eventually pass something that does more good than harm (or vice versa) independent of their intent. I think a better approach is for them to think through the problem logically. That being said, let's hope the quarterback isn't running the same play over and over.
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Originally Posted by saganista
Because it rained in Seattle doesn't mean that there wasn't still a drought in Atlanta. Lack of sufficiently rigorous regulation and lax oversight and enforcement of such regulation as did exist were primary causes of this problem. There is virtually no one left who will deny the premise.
I'll address this in my next post regarding the first link you read.
Myself, I'm not such a big fan of the Mises Institute in general, nor of the well-wroughtedness of the Thornton piece (the only one I read) specifically.
Thornton notes correctly that the dollar volume of real estate loans held by commercial banks increased rapidly over the period in question, but then claims that all these new loans had to be extended to people with lower credit ratings. His bubble theory depends on this having been the case, but he offers no evidence in support of the claim, apparently hoping the reader will take it on faith. But is there a reason to do so? Over the period in question, interest rates declined markedly and stayed declined for an extended period. One would expect that this made cash-flow refi's, cash-out refi's, move-up loans, and equity loans and lines more attractive to already existing real estate loan holders whose credit ratings would not have been different merely for having engaged in new transactions. Additionally, changes in the distribution of wealth over these years would have accelerated growth in the number of borrowers having high credit ratings, while at the same time boosting the ratings of those whose ratings were already high. In brief, there would be several reasons to expect that at least a significant part of the growing dollar volume in real estate loans went to borrowers of equal or higher credit rating, but Thornton doesn't address any of them. An actually rigorous analysis would have. Thornton merely makes his claim, and then sticks to it. This is not good form.
I actually agree with part of what you said in this post. However, I'll take it further by stating that you could have amended his statement to also account for high risk real estate speculation by people with good credit ratings. The amended statement would have more or less addressed most of what you said above. Also, I believe the author was referring to the Community Reinvestment Act and its effect on bank ratings when he said "credit had to be extended to people with worse credit ratings".
No, I didn't read the privacy policy the last time I accepted a credit card offer. Nor did I read many of the legal papers the attorney slid under my pen in rapid succession at the signing of my first house. A year later I was struggling to make mortgage payments I could barely afford. It never affected my credit, but it certainly affected my lifestyle. A couple of years later I sold the home and bought my second home. Not only did I read everything carefully at signing the second time around, but I also did a lot of research before I ever contacted a bank or realtor. The experiences have thus far been night and day. I owe them in both cases to the responsibility (or lack thereof) I took for myself..
What happened to you your first time, is exactly what happened to myself and a lot of other people.... believe me.. I won't make the same mistakes again. Unfortunately, when this happened to me it was at the wrong time!!!
Perhaps so, but there's also this place known as the real world, and over there, it's pretty well understood that all the preaching and lecturing isn't going to make it happen. At that point, do we just decide that it's open season on borrowers, leaving them to learn the hard way whatever free-market lessons they need to learn? Or should we say that having either a law degree (or the money to retain someone who does) shouldn't be a necessary precursor to purchasing a home. There is outrage all around if lead paint is found on imported toys, yet we can't endorse the equivalent of lead-free home purchasing policies? I'm not sure there's such a good balance there.
The issue is that people put themselves in the care of "sales" people who in the end are only trying to close the deal. However, note that one of the most important things that is recommended when looking at property is to hire an experienced and professional home inspector to evaluate and explain the condition of the property. In fact, it's not unusual to hire inspectors who specialize in termites, roofing, plumbing, etc.... before making the decision to finalize the purchase.
It seems that perhaps stressing the importance of hiring, if necessary, someone to evaluate and explain the process and paperwork, is basically the same thing. Does the home buyer generally do the home inspection themselves? Almost never, they hire an experienced person to do it. So it seems that doing the same for the paperwork process would be highly advised.
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Originally Posted by saganista
Plenty of fixed-rate borrowers are underwater or upside-down or whatever buzzword might be attached to the condition, and that's not a good thing if the need to move comes into play. Variable-rate contracts were meanwhile written to balance two needs...affordability and recoverability. As the result of events not anticipated by anyone, neither of those needs is currently being met with respect to thousands and thousands of contracts. A means to restore both in these cases would be beneficial to all.
What percent of people are in this position? Probably a very small percent. If someone chooses a fixed loan that is within their budget then they will have to stay put or perhaps rent it out to not take a loss by selling. Because the payment is fixed, there are many other ways to deal with the issue. I know people who rent out their rooms, some people take additional jobs, etc...
If someone chooses a variable loan, then they have to be aware of the possibilities of what could happen.
Then straighten and define it please. What is "sensible, market-based terms". With all due respect, I'm not asking for examples; I'm asking how you define it.
With all due respect backatcha, the term market-based is not exactly a controversial one. Whether defined exclusively or inclusively, there is a generally accepted understanding of its meaning here, just as there would be with respect to salt and pepper to taste among chefs. An increasing resort to open-ended questions and ever finer rhetorical parsings (of which this post is comprised in virtually its entirety) over actual response and discussion is certainly noted. As used here, market-based means market-based. Terms means terms. Sensible means sensible. If you can't work at that level, very little actual discussion is going to occur here.
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Originally Posted by One Thousand
The reason I don't understand that as a definition is because the rates were market-based for the risk assumed. There seems to me an implied contradiction: If you take out some of the market's assumed variables, then we can find market terms.
I suspect there is another typo here. I also suspect that the reason you report misunderstanding is that it affords cover and wiggle room against the forum's expectation for actually dealing with the topic of the thread in a responsible manner. As used here, btw, responsible means responsible.
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Originally Posted by One Thousand
FWIW: My bank was CRA approved. The question you asked is based on the fallacious assumption that an organization was a store-front or CRA bank. I didn't know what you were talking about because I never heard of a CRA bank... and naturally assumed that if I never heard it around the office, we mustn't be one. I had to email an old manager.
CRA covers depository institutions, i.e., deposit-taking banks and S&L's. The difference between these and "pretty much" a storefront is pretty much substantial. I'm starting to think that you're pretty much confused on this particular matter.
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Originally Posted by One Thousand
What-- and whose-- rule do you use to establish responsibility for context?
The discussion was government intervention. Therefore, the context excludes private sector assistance. Please rephrase.
It doesn't matter to me if it's done by private sector companies.
For clarity sake, how do you draw the line between what should and shouldn't be shared? (Risk and financial cost of consequences?)
Define "self-centered isolationism" please.
Please refer to notice of increasing resort to open-ended questions and rhetorical parsings appearing above.
Quote:
Originally Posted by One Thousand
Was this a perspective of a Founder? If so, which one and where was it cited and described by that person? Otherwise, is it accurate to say that you're indifferent to the principles America was founded upon and prefer something else? (If so, please cite.)
See the above again, while noting that the Constitution refers to the political structure of this society while the actual point was related to socio-economic purposes that underly all societies.
Quote:
Originally Posted by One Thousand
I assume you attempted to understand the definition of the term used by the poster and, therefore, responded under the assumption of the intended meaning. What meaning did you assume the poster to mean by "Reagan legacy"?
The question is completely irrelevant. It doesn't matter how the original speaker or anyone else interprets Reagan's legacy. The point is over a particular Congressman's having put defense of whatever that fading legacy might be ahead of something as important as defending the nation against potentially looming economic collapse.
Quote:
Originally Posted by One Thousand
And what conclusion were you trying to support with the example? I don't understand what you're trying to say.
Many people are able to connect the dots correctly when there are only two of them on the paper, just as many politicians are able to put other interests ahead of that of re-election. Does that make the matter any clearer?
Insurance may be viewed as redistributionist, but you're ignoring the difference between government redistribution and market-based redistribution.
You're ignoring the fact that the point is that all insurance is for purposes of risk-sharing and income redistribution. Attempting to draw a distinction between public and private insurance is a canard. It doesn't matter who runs it. Its functions are exactly the same either way.
Quote:
Originally Posted by zman0
In market-based redistribution, I purchase a service from the insurance company (reducing financial risk), and they receive compensation. They then take that money and engage in wealth building. The terms of the agreement are negotiable, and if I don't like my insurance policy, I can cancel it.
Government forced redistribution has none of these aspects. No services (looking at the % of taxes going to welfare), no negotiation, no wealth, no chance to go to another service. Most importantly, there's no recourse.
Yes, thank you, AIG, for your leadership in the area of wealth-building. Otherwise, privately run insurance is hardly optional or negotiable. Try driving or financing home-ownership without it. These are not the only examples of mandatory coverage requirements. Welfare is meanwhile not insurance. Insurance is insurance, and those publicly run insurance schemes which address similar risks as those typically addressed in the private sector operate on a similar model. See for instance the Overseas Private Investment Corporation as an example. It has a portfolio in excess of $6 billion and reserves in excess of $4 billion. The fact that taxes are mandatory does not make any tax-funded government program mandatory. The need to establish, continue, or terminate government programs is regularly debated by your various elected representatives. You have access to all of these and may inform them of any and all arguments you feel are pertinent or compelling with regard to their decisions in this area.
You don't understand what happens. Fannie's back end ratio (total debt to income) was in the mid-thirties before things started to go. (That means to buy a house, all things considered, you couldn't have more than about $350 in debt for every $1,000 of gross income.) By the end, the back end ratio was in the sixties when compensating factors were taken into account. (Obviously, that means you could have over $600 in monthly debt for every $1,000 of gross income... That means you were spending $600/month on housing and credit and then you had $300 in taxes and then you had $100 left to live on.)
Yes, I could see where a compensating factor such as having half a million bucks in the bank would make me more willing as an underwriter to accept a higher back-end ratio. These and an array other such variables were refered to earlier as being among the factors that naturally vary against themselves and over time in considering finance applications and making decisions about creditworthiness and estimated ability to repay. There is no news here.
Quote:
Originally Posted by One Thousand
Fannie uses a program called Desktop Underwriter. This program is what allowed the bad loans. It wasn't shady brokers... Fannie controlled DU; not brokers. It was the government who f'ed up.
Fannie Mae does not so much use Desktop Underwriter as it maintains and distributes it for field use by individual bankers and brokers in obtaining a quickie Yes/No/Maybe determination regarding the accepability of a particular loan application. The obvious Yes's will be accepted, the obvious No's (if submitted) will not, the Maybe's will be routed to a human underwriter for further and more detailed analysis. DU is a time-saver (and a significant one), not a decision-maker.
Quote:
Originally Posted by One Thousand
To swing this back to CRA's, the government used Fannie's DU for approving CRA loans... which, again, has nothing to do with brokers and the "standard practices" you're suggesting.
CRA notes are in general set on a separate path within Fannie Mae through the My Community Mortgage program which leads to targeted bundles being made available in secondary markets to satisfy the demands of such as socially conscious investment funds and depositories seeking to shore up their qualifications with regard to the CRA investment test, what with CRA ratings being an important marker for urban banks and S&L's in terms of community image and reputation. There are distinctive guildelines for CRA's owing to their distinctive legislative and administrative contexts.
Quote:
Originally Posted by One Thousand
You're just totally wrong here... the best I can figure is you're just posting links because you don't understand how it works. The government was in charge of Fannie. Fannie set the "standard practices".
You're adopting a vague and scattershot approach to the matter that might be typical of one not having acquired a big-picture perspective that could have served well in terms of establishing context. Noteworthy perhaps in the light you seek to cast here is the fact that one of the major concerns that Fannie Mae has had with respect to the aforementioned Destop Underwriter over the time periods in question has been how to upgrade the product so as to better detect proliferating attempts at broker fraud. Interesting, wouldn't you agree?
No, I didn't read the privacy policy the last time I accepted a credit card offer. Nor did I read many of the legal papers the attorney slid under my pen in rapid succession at the signing of my first house. A year later I was struggling to make mortgage payments I could barely afford. It never affected my credit, but it certainly affected my lifestyle. A couple of years later I sold the home and bought my second home. Not only did I read everything carefully at signing the second time around, but I also did a lot of research before I ever contacted a bank or realtor. The experiences have thus far been night and day. I owe them in both cases to the responsibility (or lack thereof) I took for myself.
An interesting case history, and certainly no one is discouraging borrowers from becoming fully informed as to the nature of the obligations they are undertaking. Discouragement isn't necessary -- people just aren't going to do it for a variety of reasons of their own, and no amount of preaching and lecturing is going to change that fact. In practical terms, it's one we simply need to recognize and deal with.
Quote:
Originally Posted by GhostInTheShell
My point, however, wasn't to place blame on the borrowers.
You distance yourself from many in that regard then. Too much of the discussion here and elsewhere involves a binary, essentially right-wing, obsession with categorizing between good and evil. Any facing or having faced foreclosure are automatically and irrevocably classified as evil and therefore deserving of no help at all, but rather much scorn, abuse, and as much actual punishment as the law will allow us to heap upon their pitiful heads.
Quote:
Originally Posted by GhostInTheShell
Instead, it was to stress that the bailout the senate is proposing should be passed only after they've had time to make informed decisions.
The approach is actually that of Paulson and Bernanke, and pleas for a more deliberative process would have made more sense if their plan had been put on the table 12 or 15 months ago, as it ought to have been. Politically, we are now at a point where if something is not done this week, it will not likely be done until January or February, and financially, it really can't be said that it would be advisable to wait that long.
Quote:
Originally Posted by GhostInTheShell
If there was abundant evidence to suggest that our leaders needed to intervene, that they had to do it quickly to prevent a collapse of the economy and that their intervention wouldn't make things worse for us over the long term, I'd be in favor of them making a decision this week. Economists aren't in agreement that such evidence exists.
Economists are never in agreement. There are few however who will not concede that alarm bells are going off all over town and that this isn't just a drill. Look beyond the mortgage and ABS markets into what's holding the world of CDS's (credit default swaps) together. Very little at this point. Those are in essence what ruined AIG (their basic insurance programs were doing as well as ever), and there is currently somewhere between forty and fifty trillion dollars at risk in that market. It would be good to stop the ping pong balls before any more of them bounce in there and start setting off chain-reactions.
I'll make a note to look at it if I have time. I have a period upcoming where the lurk part of work-and-lurk may be considerably diminished, but I'll see what I can do.
Quote:
Originally Posted by GhostInTheShell
Regarding your last question, I understand that each time I flip a penny and it lands on heads the probability increases that on the next flip it'll land on tails.
No, this is the exact opposite of the case. Coin flips are one of the classic examples of independent trials. The outcome of one flip has no effect at all on the probabilities of the next one. Every flip has exactly the same 50-50 odds as every other. Even if you've flipped 100 heads in a row, the odds on flip #101 are still 50-50. What may seem intuitively to be a question here hangs on the difference between a priori (or ex ante) probabilities (i.e., before the fact), and ex post probabilities (i.e., after the fact). To save a much longer post, I'll simply say that while the a priori odds against flipping 101 heads in a row are staggering, the odds of flipping 100 heads in a row and then a head are exactly the same as flipping 100 heads in a row and then a tail. Hence, having flipped 100 heads in a row, the odds on flip #101 remain at 50-50.
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LoL if this is the case what is the difference between your 'democratic' government and mob justice?
Should the government then listen to their constituents and legalise rape?
If you ask me the American (republican) government does not work on what caused the credit crisis because they believe that the free market will regulate itself.
