Mortgages
Moms View Message Board: The Kitchen Table (Debating Board): Mortgages
. The Bush administration announced Sunday it was seizing troubled mortgage giants Fannie Mae and Freddie Mac in a bid to help reverse a prolonged housing and credit crisis.
This is why I am voting for the other party. I don't think this was the right choice. I feel like this helps big businesses, not people. And businesses got into this problem by unethically leading people to buy more house than people can afford. I know people should be smarter, but they aren't. And we have first hand seen a lender encourage us to do a different loan so we can afford more house.
Any thoughts on this?
I have no idea how taking control of fannie and freddie is a bad thing if the system is in as bad of shape as it appears to be. If fannie and freddie were to go belly up, it would be devistating to all aspects of lending, not just mortgages. Not taking it over would be the wrong thing to do in a already troubled market.
I guess I don't understand why this is making you vote for the other party. Obama feels this is necessary also.
I don't agree that this is being done to just help big business. These two groups own almost 1/2 the mortgages in the United States. If they go under, it will cause major problems for us, and for the nation. My understanding is that if this happens it could wipe out the common stockholder, and make loans for mortgages, cars, and basically anything almost impossible to get. This would have a devastating effect on our economy.
Did I want this to happen? No, but I guess I don't know why President Bush is to blame for this. These 2 companies were in place well before President Bush. People need to be accountable for taking out loans that they can't afford. Most of the loans that are now causing people problems were taken out way before Bush even took office. And, really what do they have to do with him. Unfortunately, now that the housing market dropped(which does happen) Bush has no other option, it seems, then to do this. If people didn't take out loans that they couldn't afford, this wouldn't have happened. Why is this Bush's fault? I have not agreed with everything that Bush has done. But, it seems that people want to blame him for all the problems in this world.
I have not heard one politician on either side say it is a bad idea. In fact, all the politicians that I have heard speak, say it was necessary.
Yes, at this point it is better to bail Fannie and Freddie now, rather than wait longer for a really huge catastrophe. And it is going to be very costly. The S&L bailout in the 80s was at that time about $150 Billion; estimates are for this to be possibly in the trillions. A lot depends on the final value of the loans being backed by or purchased by Fannie & Freddie and how many of the mortgages go into foreclosure.
Who is to blame? There's a wide range of characters. First and foremost I blame Phil Gramm and the Republican leaders who got elected along with Reagan. They were huge on deregulation, especially Gramm, and deregulation is most of what got us into this mess. There was no such thing as a "no doc" loan in the 80s. When there was strict regulation of banks and mortgage lenders, you couldn't get a mortgage where the monthly payment was much more than 40% of your monthly income.
Another piece of it was the deregulation, in many ways, of the Security & Exchange Commission. Banks/mortgage lenders sold the mortgages they had issued to securities companies, which bundled them up and split them up, and then sold the bundles as "sound" securities, because they were mortgage based and heck, housing values can only go up.
Banks and lenders also believed housing values can only go up, so they made loans to developers to build more houses - especially more McMansion type expensive houses.
A lot of financial experts saw this coming at least a couple of years ago, and wrote about it and tried to persuade legislators and regulators that more regulation was needed, that the rules need tightening. But neither the administration nor most of the members of Congress would listen - and the bank/lender/investment company lobby is very, very powerful, contributing multiple millions to political campaigns.
Yes, if people hadn't taken loans they couldn't afford, this wouldn't have happened. And, if lenders had not made loans the borrower couldn't afford, this wouldn't have happened. In my opinion, the greater blame lies with the lenders, because they are supposed to be financially sophisticated, they are supposed to assess financial risk, and they knew (or should have known) better. But the fees and commissions were awfully tempting. Stricter regulation would have helped them resist temptation better.
Will it help the housing market? Probably not much. It will, however, ease the "credit crunch" because it will alleviate the fears of a major financial crash (and it would be major and one heck of a crash). Tight credit, tight money availability, raises the cost of doing business for all businesses, and that would spiral into a lot of damage into a lot of areas.
My one hope, and I am not going to hold my breath on this, is that the next Congress will take the time to seriously consider the problems that led to this bailout, and develop some serious laws that will regulate banks, lenders, and investment companies much more strictly. It is folly to expect any business to police itself (does the phrase "fox - henhouse" ring a bell?). Some do, and do an admirable job. But it is not the job of business to police itself, it is the job of business to make goods and make a profit. It is the job of government to make it possible for business to make goods and make a profit AND stay within certain bounds so that the general population is not harmed while business seeks a profit.
Ditto Debbie.  Much better said than I could have come up with!
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