These are tulmultous times. No more investment banks on Wall Street

AsSiMiLaTeD wrote: »

Well, with all the political and financial experts we have here on the board, maybe WE should be running the country

We would come off as "No Heart" and not always "Politically Correct" at the time.

This should not have been allowed to happen...


" Congress wants to crack down on CEO mega-salaries for banks participating in the bailout. And while the politicians argue how best to do that, Alan Fishman of Washington Mutual is headed for the doors with $19 million in his pocket.

If that wasn't outrageous enough, consider this: Fishman started the job three weeks ago. I never saw the employment ad Fishman answered, but it must have read something like this:

WANTED: Top executive for train-wreck bank about to be seized by federal regulators. Must be able to look busy while FDIC sells business from under you. Previous experience with angry shareholders sitting on worthless stock a plus. Perks: $7.5 million hiring bonus and $11.6 million cash severance. "

I guess the banks in trouble have gotten a little better with their money management since this started :rolleyes:

By the way...very informative thread.....

I fully agree that there should be a limit put on CEO's that are on their way out as part of this plan. I also think that something should be put into place that limits what CEO's get when they run a company into the ground.......

BaggedLancer wrote: »

We're on the path to becoming Soviet America. An America where you don't work for the state, the state works for YOU!

The state never worked for the Soviets. A popular saying there used to be "We pretend to work, and they pretend to pay us."

Wow...read this today.

"We're back to more normal underwriting standards," Casey-Landry said. "People will need to have good credit to get a loan."

Holy ****, now there's an idea! BTW, Casey-Landry is the chief operating office of the American Bankers Association.

http://money.cnn.com/2008/10/04/news/economy/will_it_work/index.htm

-Cody

BaggedLancer wrote: »

NO WAY! People are going to have to have good credit to get a loan? Tell me it isn't true!

I know! Such a novel idea, why hasn't anyone thought of this sooner?
-Cody

They're both morons. However, I blame the lender more for pushing such a big mortgage in the first place to get more initial money in his pocket.

bobman1235 wrote: »

It's kinda telling that everyone blames the lenders for giving out loans to people who couldn't afford them, rather than blaming people for borrowing money they couldn't pay back.

Who knows better what your financial situation is than you? You know how much you can afford, and if you're a moron, you borrow more than that.

If someone who makes 35k a year walked into a Ferrari dealership and mortgaged away everything he had to buy a Ferrari, would you blame the Ferrari dealership for selling him a car he couldn't afford, or would you blame the guy for being a moron?

First off, yes the borrowers are morons, however... SERIOUSLY? These people working at the banks handing out the loans have ONE job. Assessing the risk of a lender. If I made $35k a year and asked you to lend me $400k for a Ferrari ...and you gave it to me, I'm pretty sure you'd be the bigger idiot.

Most people don't know how much they can afford. The bank does know and up until this thing hit, most people would be surprised to learn that the bank would just give them more money they they could afford. Used to be that it was hard to get a loan.

So, yeah. The borrowers were stupid and should have looked at their payments and made sure that they really could afford it, but there's NO excuse for a professional to be making these kind of stupid decisions.

The borrowers need to be held accountable for the money that they owe. The Lenders need to be held accountable for their stupid and illegal practices.


Edit: Dead on, cody and much more succinctly.

Hope this isn't considered political.

I didn't mean to imply that the lenders are innocent. It's just funny that the people who are actually defaulting on the loans are considered victims rather than complicit in their own downfall and the ensuing economic problems. Saying everyone is stupid is just a cop-out. Saying the lender should know better than you what you can afford is ridiculous. Yes, it's the lender's business to know your risk level, but only you know what you can truly afford. Plenty of people who would be considered "risky" are capable of making their payments. Banks lend money based on a risk assessment, not some innate knowledge. They would never take those risks if it were IMPOSSIBLE for those people to make payments. We tend to exaggerate things like unemployed people were taking out half-million dollar mortgages. It's more like banks would say "we're willing ot give you up to X dollars" and people take the maximum they can, rather than recognizing that that upper bound is probably a difficult thing to pay back. A friend of mine bought a house a few years ago, and he was told by the bank he could have up to 300k or something, and bought a house that was 300k, and now he's struggling (though making it work with roommates and whatnot), where he would have been just as happy and much more financially comfortable with 250k. The bank just knows he's been a responsible person and makes enough money to afford up to 300k, but until he starts paying (or not) they don't know if he can REALLY afford it.

I think the borrowers are largely to blame for getting in over their head, but I think the banks took a huge risk in doling out the low variable interest rate mortgages and assuming that the borrower could refinance in a few years to get a better rate. I view banks like car dealers -- both will do anything they can to make a sale. And make no mistake, securing a mortgage with a client is the same to a bank as selling a car is to a dealer. If there's any way for the bank to make a deal happen, they will find a way -- they do NOT have the best interest of the borrower in mind.

From my personal experience in dealing with mortgage lenders, I'd be willing to bet that most of the lenders didn't fully explain to the borrower the implications of what a variable-rate mortgage could mean should the market take a downturn. Or if they did, they downplayed the significance.

Both are to blame,except you'll never hear most politicians put any blame on the voteing public.We are all the victims dontcha know.Banks became greedy for sure until the housing market took a dump and they were stuck with all these high risk loans with no good ones to bundle them with.Add to that good old uncle sam mandateing banks lend money to risky consumers to try and get more minorities into homes and you have a recipe for disaster.Seems like it all started to come apart when the price of gas took off towards the sky.As an....adult,is it not our responsibility to know what we are signing up for? Don't most have attorney's at closeings to represent our interests? Alot of people are more concerned with keeping up with the Jones's than reading the small print on a contract.Personal responsibility.....these days.....seems to be chained to a cinder block at the bottom of the lake.

The mortgage mess has hit home with me:

I just received a letter in the mail from my original mortgage company where I have a Home equity loan. Basically they are saying that I can no longer draw off of that account with the checks they send me. Now I never wrote checks from that account anyways, but the value of my home has dropped 16% from when I refinanced 3 years ago..:mad:

Nice...Figures...all I ever heard when I was growing up was that buying a home is a great, sound investment...it will NEVER drop in value..then I buy a house 5 years ago and it's worth less than it was when I bought it:rolleyes:

I guess should just be happy that I didnt get an ARM loan.

bobman1235 wrote: »

Houses drop in value all the time, it's just over a long enough period of time that they never go down. Assuming you want to stay where you are, I'm sure in another five years you'll be back up.

At least your property taxes should go down!

exactly...I was saying the same thing to my wife..if our property taxes go up, I'm raising holy hell