Bank Bailouts

[charlietwo]

Any thoughts on the recent bailout of Freddie Mae and Fannie Mac? I have to agree with the opinion that it's socialism in different clothes, being excused by both parties for personal gains.

Here's a good link, which is surprisingly from the NY Times -- http://www.nytimes.com/2008/09/08/business/08scorecard.html?_r=1&em&oref=slogin

I also heard good ole' Charles Schumer praising Bush for this. That should be enough to cause concern right there.

Sad day for America, in my humble opinion.

[cornelyj]

and just think all of this started with a couple arm and variable rate home loans... the moral of the story is don't buy things (homes) you cannot afford; or at least pay off the minimum payment every month. Bank companies should try and collect what is owed and the govt' shouldn't help.
my .02

[Slantwire]

the moral of the story is don't buy things (homes) you cannot afford; or at least pay off the minimum payment every month.

What? You can't expect personal responsibility in financial decisions! :rolleyes:

Bank companies should try and collect what is owed and the govt' shouldn't help.

Agreed.

[Box]

I have to say I don't understand how the failure of a company would effect us on a large scale but my initial response would be "fuck 'em". If these cocksuckers have mismanaged things knowing that Uncle Sam cant afford to let them fail, then there should be some 'fresh fish' in the nearest federal prison as a lesson for others who would be so reckless with this nations economic trust.
I think it is near criminal that in the wake of such a failure that Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay, retirement benefits and deferred compensation...
...Mt Mudd has already taken home $12.4 million in cash compensation and stock option gains since becoming chief executive in 2004
...Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million, largely because of a clause added to his employment contract in November of last year as his company’s troubles deepened. He has taken home $17.1 million in pay and stock option gains since becoming chief executive in 2003.
Again, I am just a meat eating knuckle dragger and I don't understand economics on a large scale I just understand that I can't spend more in any one month period than the number on my pay stub. I am in awe that these jokers are getting 20-30 million dollar severance packages after proving that they can't be trusted with a fucking checkbook. Its like the movie fun with Dick and Jane... only not funny.
How does this hit the average homeowner? How much will this impact on my tax money? What government programs will suffer because of this bailout? If the two firms were allowed to suffer the same fate as a taxpayer what would happen to mortgages? I don't believe a lot of what I hear because I dont know... They have competitors that I am sure will be glad to absorb customers for them. I also hear reporting that it will make new mortgages harder to get because of "payment risk" what about existing mortgages? How would they be effected?
I just know at the end of the day it leaves a sour taste in my mouth knowing that there are millionaires walking around with a smug look on their face that ought to be taking milk shake orders at Hardees but instead they are wondering how they will invest over twenty million dollars in severance pay...

Maybe there is an economics major out there that could explain it so I wont be so uninformed in the future. Until then I think I'll stand by my opinion of "fuck 'em"
just my two cents I could be wrong.

[charlietwo]

Well, what if they're bailed out prior to the discovery that the CEOs and leaders were involved in illegal activity? Then it wouldn't matter, because it's already been done. Even if the CEOs went to jail, which they never would, the damage has already been done and the government has given immense amounts of public tax dollars to criminals.

Meanwhile, the media is portraying this as a victory for "homeowners and taxpayers", the left AND the right are silent, and the sheep bleat on. Very negative view, but I have no other reason to believe that this is not the case. :(

Any points from the elder, wiser gents?

[ksgbobo]

This is my understanding and my opinion of it.

Frannie Mae and Freddie Mac are both Government Sponsered Enterprises (GSE), meaning they are to help the mortgage sector to be more efficent and to provide more money for that sector. Somewhere along the line, maybe with the banks, they decided to offer ARMs to pretty much everybody. By giving the ARMs (Adjustable Rate Mortgage) to people who would not normally qualify for a home loan, puts the bank, and eventually the Federal Home Mortgage Corporation in a bad place. So, what happens when these certain people who would not have normally qualified become deliquent on their mortgages. People start losing money. Most loans are backed by Freddie Mac and Fannie Mae, because they turn around and sell them to make money and to put more money in the mortgage market, but when people dont make these payments, they dont have money to make.
What I dont understand, is that this whole mortgage crisis is only for a little over one million homeowners who cannot pay their mortgage and somehow agreed to buy a house they knew they couldnt afford. The people to blame are the ones who gave out these loans to people they knew could not make payments on them. Mortgage brokers are the ones to blame in my opinion, and the whole Goverment takeover of Frannie Mae and Freddie Mac is understandable because they are a GSE, but it never should of happened in the first place.

[afchic]

I got to thinking about Freddie Mac and Fannie Mae recently because Freddie secured the loan on my home. Granted the loan was taken out through my bank, Wells Fargo, is a 30 year fixed rate, and we have never missed a payment, actually pay more every month than the scheduled amount.

Here is my question. If Freddie went under, what would have happened to the loan on my home? Would it just have been bought by someone else, or would I have been in a heap of trouble? Guess this is something I should know, but don't, and never thought I would have to.

[CDRODA396]

Normally I wouldnt have an opinion on this, but I'm building a home out in Hoke County right now and have been watching the interest rates for the past four weeks.

The bailout not only drove the rate down to ~ 5.5 per cent, but it has stablilized the market so that rates aren't changing, literally, hourly!

So in this case, I'm all for it!:p

[Paslode]

My perspective on the bail out is this, if I or any other average Joe Citizen defaults on our debt no one will bail us out. If my business fails for whatever reason no one is going to bail me out and I am not going to receive any sort of compensation in the form of severance, retirement etc.

It is absolute BS.

My opinion is that NO person should receive compensation other than serious fines and jail time when they run an institution or corporation in a manner which causes it to become insolvent and bilks shareholders and tax payers out of billions of dollars.

Lastly, I believe there is a law that was 'supposed' to make it illegal for the Governent to use Taxpayer funds for such mis-uses as bailing out private individuals and institutions.