I am a creature of Wall Street, and proud of it.
I have been in the financial services industry for almost 15 years. I wanted to be a stockbroker before I even knew what that meant, thanks to Alex P. Keaton on “Family Ties.”
I believe that anything business can do, government can do worse. Virtually everything except for the military should be privatized. Social Security should certainly be privatized.
I am a creature of Wall Street. My firm has an office on Wall Street. I work there from time to time.
I am a rah rah cheerleader for corporate America. I believe that what is good for big business is good for America.
Therefore, if you are a big business…and I don’t like you…then nobody likes you.
If you are Wall Street…and I am not defending you…then nobody should defend you.
Before getting to the recent financial inconvenience (it is not a meltdown or a crisis, so I refuse to call it that), keep in mind that the left in this country knows nothing about business. They would destroy every business if they could, because they believe business is evil.
Not all CEOs are corrupt plutocrats. CEO pay is not out of control.
Jack Welch, the former CEO of General Electric, was the gold standard for executives. Some criticized the fact that he received a golden parachute of about one billion dollars. Some people feel that no CEO deserves that much money.
That uneducated argument is nonsense. Jack Welch took a 14 billion dollar a year company and turned it into a 500 billion dollar a year company. Therefore, a one time payment representing approximately 1/5 of 1% of the companies revenues is quite reasonable.
What is not reasonable are when CEOs get paid for doing a lousy job. Michael Eisner received millions at Disney as the stock languished for a decade. AFter the tragic death of Frank Wells in a helicopter crash, Eisner was rudderless. The Ovitz debacle, where a 90 million dollar severance package was given to a man that was fired after 14 months, was Eisner’s undoing.
Another awful CEO that should never be on television is Carly Fiorina, the former disaster that headed up Hewlett Packard. John McCain should get as far away from this woman as possible. I never thought I would ever agree with Paul Begala, a man that is rarely right about anything. Yet he was absolutely correct when he pointed out that Carly Fiorina was incompetent. The Compaq merger was a debacle, and she fired 18,000 people, drove the stock price down, and was deservedly fired.
Yet Carly Fiorina and Michael Eisner are geniuses compared to some of the current CEOs on Wall Street. Neither of them destroyed their companies totally. Maybe they would have if they had been given more time, but this did not occur. As is usually the case with Wall Street, the system worked.
Where the system is not working is with the current bailout climate.
Investing in any financial product outside of U.S. Treasury Bills involves the risk of loss of investing principal. Risk is the concept of moral hazard.
Since the beginning of time, people have looked for riskless investments. Attempts have been made t remove the moral hazard from investing. This only makes matters worse.
The 1987 stock market crash nearly brought down the entire U.S. financial system. It was much more serious than the situation today. The 1987 crash was the result of too many people trying to use “portfolio insurance” to protect themselves from market downturns. Portfolio insurance was just a fancy way of describing a strategy of using options, which are risky themselves. The options were meant to be the equivalent of “stop loss orders.” Any trader will let you know that stop loss orders are not worth the paper ticket they are printed on.
When companies and individuals do not feel that there is a moral hazard to their decisions, they simply take bigger risks. What keeps individuals and companies in check is the notion that their actions could have adverse consequences.
This brings us to the notion of bailouts.
There may be a situation where a government bailout of a corporation is justified, but I cannot think of one. Companies should simply be allowed to go bankrupt.
http://michellemalkin.com/2008/09/24/illegal-immigration-and-the-mortgage-mess/
Most human beings have to depend on themselves or their families. If I fall on hard times, I do not receive a bailout. When tough times hit, I or most small businesses do what should be done. Costs are cut, and acquisitions are delayed or denied.
Airlines are a prime example. Now they blame the high price of fuel oil. Before that they blamed 9/11. Before that they blamed the Ides of March, one eyed Jacks, suicide Kings, and any number of mythical excuses to hide an unavoidable truth…the CEOs did lousy jobs. Thankfully, the government did not bail these pathetic excuses for companies out. The government let them sink or swim on their own. The government was right.
For some reason many on Wall Street should be rewarded no matter what. Wall Street absolutely should be rewarded for bringing in sky high profits. Multi-million dollar bonuses do not bother me in any way. However, incompetence should not be rewarded.
The government bailed out Fannie Mae and Freddie Mac. This was wrong.
The current crisis began because a bunch of home owners bought homes they did not understand and could not afford. It was not greedy lenders. It was greedy individual buyers. I have nothing but contempt for these people because I do not own my own home. I would love to own my home. Property in Los Angeles is simply too expensive. Do not buy anything if you cannot afford it or do not understand it. I do not understand real estate, and what little I know tells me that the prices are higher than what I can afford. Therefore, I do not buy real estate.
Americans are hooked on credit. The President said America is addicted to oil. Americans are addicted to credit. I own a 55 inch big screen television. I bought it factory refurbished after doing some research and getting a warranty. I paid $800, not $8,000. I drive a 1987 Oldsmobile Cutlass Siera. I paid $2,000 for it. I own it outright. No, it is not a fancy car. It is not sexy. On the rare occasions I have a high class function in another city, I rent an expensive rental car. I still come out ahead.
Fannie Mae and Freddie Mac simply took insane risks. The reason they did this is because they believed that the government would bail them out. These companies should not have existed to begin with, but try making that political argument. After all, what is the purpose of government if not to guarantee all Americans housing?
When these companies failed, the Federal Reserve should have burned the financial village. They did fire the CEOs, and they did take over the two entities, but this was not sufficient. They should have sold them to private corporations. Incentives could have been provided, but the current bailout only encourages further bad behavior.
The Fed got it right with Bear Stearns. The Bear Stearns situation was not a bailout. JP Morgan bought the company at a fire sale price. This was a smart business decision by JP Morgan, which has largely steered clear of the current inconvenience. Some lamented that Bear Stearns ceased to exist. After all, it was such a venerable institution. So what? So were my grandparents. We all die.
Then Lehman Brothers crashed. The Fed got it perfect. They basically told Lehman Brothers to (redacted) itself. Imagine that, an adult corporation being forced to take responsibility for their own actions.
Wall Street was making spectacular profits as little as a couple years ago. The stock market hit an all time in 2007. The problem was that some of the risks necessary to achieve these products was excessive. Some of the companies were leveraged to the hilt.
Merrill Lynch is being bought at a fire sale price by Bank of America. This is positive. Merrill Lynch had a choice of either being acquired or collapsing like Lehman. The CEO of Lehman refused to accept life as anything other than an independent firm. Pride wenteth before the fall. Luckily the CEO of Merrill Lynch did not have the emotional connection that plagued the CEO of Lehman. The CEO of Merrill was new to the firm. He would rather walk away then command a sinking ship.
Some will blame corporate greed, the culture of deregulation, and republicans all over the world for this tragedy. Those people do not know a stock from a bond from the inside of their own orifices, so answering them is unnecessary.
No government regulation can force people to obey moral hazard. What governments can do is reward companies for ignoring moral hazards.
The best example of a non-scandal was Enron. Enron was a corporate scandal, but not a government scandal. The critics of the President believed that he was corrupt because he was from Texas, and so was Enron. I am sure these same people ignore the fact that Jeffrey Dahmer and Barack Obama both had roots in Illinois.
Enron was simple. They went to the government and asked to be bailed out. The President and Vice President, supposedly friends of big oil, told them no. This was the right thing to do. The scandal would be if they had bailed Enron out. They let Enron collapsed. Good.
Some will argue that innocent workers get hurt. Yes, this does happen. Yet even many of these innocent workers could have made better decisions. They did not have to invest their entire savings in company stock. The word diversification is not a new concept. One of the stocks in my portfolio had a terrible week. Another one, even in this climate, had a fabulous week.
The solution is to leave business alone, and let bad businesses fail.
Now I will advocate something that will enrage many. We should let Social Security go bankrupt.
Some will be in shock at that comment, but nobody on the left truly wants to fix it. They think that this current financial situation justifies leaving it alone. After all, given the tough stock market conditions, why privatize it?
Because in this case inaction is what is hurting it. A lack of taking risk is a bigger risk. The solution is not to avoid all risk. It is to take reasonable, calculated, measurable risks.
Some corporations took obscene, wild risks. Social Security is too conservative. It is going bankrupt from lack of any risk at all. Putting it in some balanced Mutual Funds is not the same as investing it all in options on garbage.com.
So what if Social Security were privatized, and then it went bankrupt like Lehman?
People would suffer. Then others would step in and save it, not out of patriotic duty, but for the best reason possible…a financial incentive.
For every bad CEO, plenty of good ones exist.
Let Lehman burn. They did it to themselves. The CEO and the Board of Directors destroyed this firm. Yes, thousands will lose their jobs, but they will find other jobs. Times will be tough for them. They may or may not have legal action against the CEO and the Board. While some of them will be innocent victims, taxpayers absolutely cannot subsidize this firm. Not unless Lehman wants to pay my student loans.
The Fed is now loaning money to AIG. This loan should be at fair market value, and must be repaid. The CEOs must be forced out as a condition for this money. If this does not occur, then our government will be rewarding AIG.
Some will argue that these bailouts are necessary to calm nervous investors.
Investors are not nervous. The stock market has been resilient. It is down less from the high than the bear market of 2000-2002 was. There are plenty of value stocks, and some growth stocks, that pay solid dividends.
I did not own stock in Lehman or Bear Stearns. I do own shares of several financial stocks. Many of those shares are down. However, they are a portion of my portfolio, not the entire portfolio. Also, with rare exceptions, I won the shares outright. I did not purchase them on margin. I own less of them, but like my car and my television, I own them outright.
I will not miss Lehman. Nor should you.
I believe in Wall Street. I celebrate the success of Wall Street.
Like any industry, there will also be failures. Let those failures happen.
Capitalism involves winners and losers, and Wall Street is based on merit. The losers should be ruthlessly punished, not rewarded. The winners will be the ones that conduct their business ethically, successfully, and with a reasonable amount of risk.
The solution is to say yes to moral hazards.
There should be no more government bailouts. Not now, not ever.
eric
“…keep in mind that the left in this country knows nothing about business. They would destroy every business if they could, because they believe business is evil.”
Now that’s just plain uncivil. There have been plenty of “lefty” business people over the years who’ve done just fine, and it’s certainly no coincidence that 1929, 1987, and now 2008 have all followed extended rule by the Right. Looks to me like it’s not “the Left” who knows nothing about business, but rather a Right that lives in a comic book universe in which all private business is “good” and all government is bad. And it’s funny that you mention the military as being the one sphere that shoule be completely governmentalized – the recent GOP one-party state has privatized the military more than ever, and now we can barely win a war in the Third World. Looks like privatization is yet another failure you guys simply refuse to man-up and accept.
“I never thought I would ever agree with Paul Begala, a man that is rarely right about anything. Yet he was absolutely correct when he pointed out that Carly Fiorina was incompetent.”
Actually, I believe he called her an idiot. Actually, though, when it comes to the context of what Fiorina said that led to his, and I would assume your, reaction she was right… http://firstread.msnbc.msn.com/archive/2008/09/16/1407090.aspx
“The radio host asked, “Do you think she [Palin] has the experience to run a major company, like Hewlett-Packard?”
“No. I don’t,” Fiorina said. “But you know what? That’s not what she’s running for [laughs]. Running a corporation is a different set of things. I would just remind you that it is Barack Obama who is running for president, John McCain who is running for president. Sarah Palin has more executive experience than Barack Obama has. Barack Obama has never made an executive decision in his life. He has been a state senator and during his time there when a difficult issue came up, he voted present over 100 times instead of standing up and being accountable to a yes or no vote. He has been in the U.S. Senate for a very short period of time and has been running for office most of that time.
“Sarah Palin as a mayor and a governor has made executive decisions, challenged her own party, taken accountability for those decisions, so I find it quite stunning actually that the Barack Obama campaign is questioning Sarah Palin’s experience who’s got more executive experience than he does — and she’s the vice presidential nominee. Barack Obama is the presidential nominee.”
But later she told NBC’s Mitchell that neither McCain nor Obama nor Biden were qualified to run a major corporation.
“Well, I don’t think John McCain could run a major corporation; I don’t think Barack Obama could run a major corporation; I don’t think Joe Biden could run a major corporation.
“But, on the other hand, running a major corporation is not the same as being the president or the vice president of the United States. It is a fallacy to suggest that the country is like a company. So, of course, to run a business, you have to have a lifetime of experience in business. But that’s not what Sarah Palin, John McCain, Joe Biden or Barack Obama are doing.””
She’s right. none of these people are qualified to run a major corporation – not they theoretically couldn’t. But they don’t have the qualifications on paper. The three os them are career pols. Firoina is a career businesswoman, though probably not a great exemplar. And she’s right about the government not being a business. It isn’t. It’s more like a family. Families that run like businesses are miserable places – producers of sociopaths. Government is the same. And if you need proof, just look at the complete and total failure and unpopularity of our current MBA in Chief. Government exists to serve the people. Business exists to make money. While there is plenty of overlap between the two, the differences are plain. As with the church, there must be a separation of business and state, lest we have the sort of corruption and failure we now see today – as in 1929 and 1987.
Now, you lost me here. You said…
“Since the beginning of time, people have looked for riskless investments. Attempts have been made t remove the moral hazard from investing. This only makes matters worse.”
And then you said…
“The government bailed out Fannie Mae and Freddie Mac. This was wrong.”
I don’t get it. Which is it? Bailing them out was instilling the “moral hazard.” I don’t think you know what “moral hazard” is. Moral Hazard is not removing risk, per se, but rather it is allowing risky behavior and simply insuring it against loss. You do know this, right?
And you do realize that there is a lot more at stake with these bailouts than just the investors, and CEOs and their employees. There’s larger market concerns at stake. There’s larger socail concerns as well.
It seems to me you haven’t thought this comment out very well…
“There should be no more government bailouts. Not now, not ever.”
That’s just silly. Please be advised, as a good blogger-friend, that you need to brush up on the meaning of “moral hazard” and the broader implications of major markets.
JMJ
[…] “No government regulation can force people to obey moral hazard. What governments can do is reward …” – eric […]
Oh, and what we need are regulations to keep these kinds of things from happening. Look, I agree that we shouldn’t bail-out most failed investments. That would be moral hazard run amok. But when it comes to things like housing – a vital strategic and secuirty sector of the nation and economy – if we had proper regulation in place, we wouldn’t have to bail these guys out in the first place. You can’t have “credit” without credibility. The reason we’re in a credit-crunch right now is that no one trusts the markets and the people. In order to restore trust, we must have systems in place so that people can once again trust each other and the markets – to restore credibility. Once again, conservatism have completely and utterly failed to provide the regulations to the markets to make them credible. It’s time for you guys to realize this.
JMJ
Eric,
“Some will argue that innocent workers get hurt. Yes, this does happen. Yet even many of these innocent workers could have made better decisions. They did not have to invest their entire savings in company stock.”
I sort of remember hearing that the workers were given stock as their retirement plan, but weren’t allowed to sell it. Meantime, the execs were selling out (pun intended) for all they were worth. Disabuse me of this notion if you can.
The subject of “predatory” mortgage lenders is another one that you only mention part of the picture. Yes, many unscrupulous lenders did make loans that they knew could never be repaid. Jacking up the interest rates to unpayable amounts after bundling the shaky loans was asking for default. The whole practice of bundling garbage loans and selling them to third, fourth, and fifth parties was particularly unsavory, and those who did this are mostly beyond reach.
Yet the basis for all this chicanery was sown by government meddling. All these institutions were told to make mortgages more available to minorities and low income borrowers or to face large fines.
Makes me think that the “evil” lenders knew what would happen, if not when. We all know that covering your hind parts is a time honored practice. I wonder who would have done different.
Once again let me misquote Ronald Reagan – Government can’t solve the problem. Government IS the problem.
Grey post Eric
My brother has been talking about this for years. He knew that the bubble was going to break.
Do you mind if I post this on my blog in its entirety.
This little myth has been bandied about since this mess started…
“Yet the basis for all this chicanery was sown by government meddling. All these institutions were told to make mortgages more available to minorities and low income borrowers or to face large fines.”
It is a lie. It is not true. And it is a convenient excuse to bash poor and minorities for this disgusting mess born of greed and greed alone. The governemnet NEVER EVER EVER EVER put ANY ANY ANY pressure on lenders to make loans to ANYONE EVER who didn’t have the credit for the loan. It’s a lie. It’s racist. It’s classist. It’s a cheap excuse. It’s a strawman. And it’s wrong. And to think that this would happen under the auspices of a GOP one-party state and GOP majorities in most all the states now effected is just plain insipid.
JMJ
I agree with Eric even though in doing so I seem to be losing a large percentage of my 401k value. Good business succeeds. Bad business fails. Preventing failure rewards bad business.
Wall Street–Yes to Moral Hazard, No more bailouts ever!…
This is from my friend over at Tygrrr Express. I could not have said it better.Posted with his permission.I am a creature of Wall Street, and proud of it. I have been in the financial services industry for almost 15…
Joshua, having RULES helps prevent bad business in the first place.
JMJ
Jersey, It so rare I agree with you I will start with that.
When I heard that Carly Fiorina had said she would not hire McCain or Palin to run a corporation (that’s all I heard reported until I read your post here) my reaction is neither would I nor would I hire Obama or Biden or most senators. After reading he full quote I agree with her comments 100%
I noticed you failed to mention fall 2000 when the tech bubble burst after 8 years of Clinton. Coincidentally (?) the fall started the day after the anti-trust ruling against Microsoft. Nor the disaster of the 70’s under Carter. Even in 1987 congress had had control of Congress for decades so it was hardly years of republican rule. But that doesn’t fit your hypothesis so you throw out the data points.
JMJ;
“It is a lie. It is not true. And it is a convenient excuse to bash poor and minorities for this disgusting mess born of greed and greed alone. The governemnet NEVER EVER EVER EVER put ANY ANY ANY pressure on lenders to make loans to ANYONE EVER who didn’t have the credit for the loan. It’s a lie. It’s racist. It’s classist. It’s a cheap excuse. It’s a strawman. And it’s wrong.”
Fannie and Mac were subsidised and quasi backed by the government.
You dont think they were given some incentives by the government ?
Get real
Yea Parrot, he’s always leaving stuff out
Actually Parrot, I’m glad you bring the Tech Bubble up. (And I’m exceedingly glad you agreed with me about the Fiorina quote! You have restored my faith in humanity!) I was just talking about that with some people the other day.
I left the Tech Bubble out because there are variances in the theme that seem pretty clear to me…
1) Most astute lenders (and just plain reasonably smart people like myself) saw the tech bubble-burst from a mile away. That’s why few (really none that I know of) large institutions (banks, brokerage houses) failed because of it. While the tech bubble hurt a lot of people, most all of those people were unrealistic geeks and private traders who took their losses and swallowed them. Most of these folks have since bounced back just fine.
2) The tech bubble was like a gold rush – nothing to lose, everything to gain, no reason to stop people from taking their chances. Like a gold rush, if you don’t hit a lode, so what? If you do, great. Other than a lot of private capital, there just wasn’t anything to lose. Most funds, especially large funds, avoided these stocks. Unlike say mortgages, the losses were mostly only felt by the investors, start-uppers and their workers. Yes, it hit a few tech towns pretty hard, but again, they have all bounced back pretty well since then.
3) The trouble with the tech bubble was that it involved speculation on an intangible: the internet. The internet – really the computer itself – , as I’ve often said, is really nothing more than a telephone/camera/library/file desk/fax machine/television rolled up into one. It is a communication device. You can not eat it, live in it, drive it, drive on it, heat or cool yourself with it, wear it, drink it, rub it on your skin, wash yourself with it, heal yourself with it, etc. You can find out how to do those things with it, but so can you too with the telephone, camera, library, file desk, fax machine, television, etc. And that’s where the internet hit a wall: there are some things you can do better without it. You can’t try a dress on online. You can’t taste a steak online. You can’t get a physical exam online. Etc. There are some things we still have to get up an actually do. This is why I and many others avoided the tech bubble – we understood that there was only so much one could do with the internet. It is not tangible.
I remember, back when the bubble burst, I read that some 25% of all internet hits were for porn, and some 75% of all internet profits came from porn. I’m not sure what the numbers are today, but I’d better they’re still in that range. Pornography was the one tangible the internet offered that was unique. You didn’t have to go to the video store anymore. You didn’t have to have nasty video tapes and discs laying (no pun intended) around the house. You didn’t have to get caught purchasing things. You can just go online and look whenever it was convenient. Again though, no great loss there, only gain (if you want to call it that).
4) What could anyone do to stop it? There really just didn’t seem to be a way to regulate the tech bubble. There was no tangible thing to loss, other than dumb people’s money. There was no crime taking place – people “knew” what they were getting into. The trades themselves – except those tipped by insiders who’ve since been driven out of the business – were on the up-and-up. The government just didn’t have a say. It’s like a snake-oil salesman selling water and saying that the water has “healed him.” There’s no way to prove him right or wrong. There’s nothing inherently dangerous about water. The only loss would come to the idiot who buys the water thinking it might cure themself even though they are not promised such a thing would happen. There’s nothing illegal about it and so there’s nothing the government can do.
HHHHHHHHHHUUUUUUUUGGGGGGGGEEEEEEE difference.
Let me addresss one more thing here though – just because Clinton did something stupid, or sleazy, or illegal, or wrong – that doesn’t mean it’s okay for Republicans to do it. That is the lowest and dopiest form of moral equivication and I see it all the time from the Right. Just last night I saw Brit Hume remind us that Clinton too did deregulate banking back in 1999 as if somehow that makes it okay that the GOP did again under Bush 43. As if somehow that makes all of this disaster okay! That’s pathetic.
If you want to point the finger at Clinton, look at the insider trading, rigging, embezzling, lying and conflicts of interest that went on under his auspices – the Worldcomms, Enrons, Adelphias, Tycos, Global Crossings. But then, of course, you have to look at the GOP too. They were no better. I always laugh when I see Righties point the finger of blame at Clinton for everything except what he did that was the same as what the GOP did, then it becomes the finger of equivication. And that’s really pathetic.
JMJ
Micky,
Show me one single solitary example of the government (and a GOP government at that!) pressuring mortgage lenders to make loans to minorities who didn’t have the credit. Please. Otherwise, please realize that you’re being taken in by a racist strawman.
JMJ
Hey &*^%$$&
Spare me the race card alright ?
What does that have to do with a company spawned by goverment not having some oblogation to them in some adverse way ?
Every time you guys get put in a corner or something is questionable its blamed on racism.
Ya know, Freddie and Fanny wrote paper for white folks who couldnt afford the the place also ya know !!!
Fannie and Freddy did what they did in exchange for political support, they are both government creations.
Fannie and Freddie were targeting mortgage activity by congressional districts. And what was happening was the crappy/poor parts of the country were getting lines of of credit, thanks to Fannie and Freddies efforts. They knew they weren’t lenders of a last resort.
That was the Fed which is now gonna take it outta my wallet.
There are unsubstantiated rumors out there that in an efoort to create Bush’s “ownership society” that there was some concerted effort to get as many people into their own homes as possible with the belief that homeowners are more likely to become Republicans.
Again, though, there’s no evidence that it took place. I mean, the Bush administration can barely pick it’s own nose successfully, let alone pull off some kind of secrte massive national restructurization.
And Fannie and Freddie were quasi governmental but became pretty much entirely private but with government oversight later on. Now they are back to where they were.
Again, though, please show me some evidence or please realize tha you’re being taken in by a racist strawman.
JMJ
A Racist strawman ?
Fanny was set up in the 30s by FDR for the sole purpose of catering to lower income minorities so they could get into homes.
The risks were substantialy higher which is why it was government back company.
OK, fine, race has everything to do with it.
Because the majority of the people who took advantage of a company set up to help them were mostly minorities.
Can you put 2 and 2 together ?
Have you ever watched a Fanny or Freddy commercial ?
And you want to tell me that they are not inspired to cater to low income minorities ?
Thats why the government created them in the FIRST PLACE !!!
Where do you get this stuff from?
http://www.sptimes.com/2004/04/04/Perspective/Is_Fannie_Mae_softwar.shtml
http://www.socialfunds.com/news/article.cgi/179.html
http://online.wsj.com/article/SB122162063022546651.html?mod=googlenews_wsj
Get real.
Fannie and Freddie did try to assist minorities as most minorities fall under what they call the “secondary market.” Just the same, most mortgages in all markets belong to white people. If anything, there has been widespread rumors that the F@F were prejudiced against minorities during the GOP years, not the other way around. And there is NO evidence whatsoever that there was pressure to make loans to uncreditworthy consumers. It’s a sleazy, racist lie and it should be above you to fall for it.
JMJ
I dont see how you get me supportuing racist lies into this unless your arguement is so weak that its all you got.
Like I said, the pressure was there since FDR introduced Fanny Mae.
Not directly, but who else would of taken advantage of the lowered requirements of Fanny and Freddy.
Rich whites ?
No, its not “above me” to fall for it.
Its beneath you to not accept the reality that people who couldnt afford what they signed up for had to foreclose.
And that the majority of those people were minorities of low income.
Who else would fanny and Freddy be attractive to besides them ?
I have nothing against people who are in low income brackets or minorities.
But like Eric said; Freddy and Fanny took insane risks.
I believe minorities with insufficient income were that risk.
Its like the loan shark.
Hes dumb for loaning to someone he knew couldnt pay it back. Instead of him going to jail and the client loosing his house.
I have to pay extra taxes to bail them both out.
Ignorance and stupidity are getting rewarded at my expense.
On another note, I feel the same way about AIG.
I hold an auto ins policy with them.
Now I have to pay more taxes to them be bailed out ontop of making a larger monthly payment to help them pay off the fed loan.
JMJ:
“If anything, there has been widespread rumors that the F@F were prejudiced against minorities during the GOP years, not the other way around. ”
You accuse me of supporting racist lie and then you ramble off a statement like that ?
RUMORS ???
You’re talking out of both sides of your mouth and being a hypocrite
Micky, I’m not acussing you of anything but repeating a lie I’ve heard bandied about the Rightwing since the mortgage meltdown. If you have some proof that the government, at any level, was pressuring lenders, of any type, to make loans to minorities even if they had bad credit, then put down your hand and let’s take a look. I don’t care about your silly generalizations about F&F (most poor and working class Americans are white, by the way). I want proof. Either you have it, or you don’t. I think you don’t and that’s why I think you ‘re just repeating a racist lie.
JMJ
JMJ;
“Micky, I’m not acussing you of anything but repeating a lie ”
Thats exactly what I said you were doing, right here, read it again;
“I dont see how you get me supporting racist lies into this unless your arguement is so weak that its all you got.”
I dont need anymore proof when its evident that the whole purpose behind Freddy and Fanny was to cater to those who have a harder than average time getting into a house.
Which as a fact are minorities which as a fact are more prone to financial difficulty which as a fact are more tempted to take a deal thats too good to be true.
The fed was obligated to help Fanny and Freddy since it was the fed who initiated the whole institution with the purpose of helping less fortunates.
But, you cant sit there and accuse me of supporting what you think is not true when at the same time you come out and say that its “rumored” that F&F were being prejudiced because the GOP was pulling the strings ?
Is that accurate ?
I mean jeez, you even said yourself it was a rumor.
I dont think its too far a stretch to think that the fed said “well, we know this caliber of client is risky, but go ahead anyway. If your bottom falls out we’ll help you”
And its most certainly not racist !
That accusation by you guys is getting awfully thin and weak and only creates problems for the left as race mongers.
Lets not forget that I’m well aware of poor white folks who are subjected to many of the same problems as minorities.
Its just a fact that most of the failures are within minority households and communities.
Sadly, because still, thats where the majority of poverty and lower incomes reside.
So spare me the race crap. I’m just dealing with the facts.
Micky, you really don;t sound too good here. I’d quit while I was behind if I were you. Minorities are not any “more tempted to take a deal thats too good to be true” than anyone else. Really, you should listen to yourself here. It’s easy to blame the less educated, the less informed, the less endowed. It’s hard to admit that the educated, informed, endowed people you thought were good people turned out to be sleazy con artists.
JMJ
Nope, I aint gonna quit facing facts just to please your hypersensativities.
prove to me I’m wrong or stop banging on your chest.
“It’s hard to admit that the educated, informed, endowed people you thought were good people turned out to be sleazy con artists.”
Since when do you know who I put my trust in ?
Its not so much the con artists as it is people who wanted something for nothing.
You are trying to confuse the facts only so you can get up on your righteous pulpit and act like you’re talking down a case of racism here.
Give it a rest.
A lot of these people werent so misfortunate as much as they were greedy.
Yes, poor people, most of which happen to be minorities do so as a matter of fact are more tempted to take advantage of deals that are too good to be true.
Thats life, get used to it.
They buy cheap foods that cost them their health later. They buy cheap cars that blow up or cost a fortune in maintenence, they borrow money at ridiculous rates because they are of limited income and a higher risk.
And they buy motgages that have open fluctuating r adjustable rates.
Which as any half wit knows rarely if ever go down.
No one is saying that their predicament is their fault, but only to a certain extent.
I’ve been poorer than dirt and did just fine without a bailouts and dumb risk.
Trust me, if anyone lived in poverty for years it was me.
Priorities got me straight.
And what we see happening is a result of people with bad priorities.
Try you race baiting over sensative cheap typical lib ploy on someone else.
I aint buyin it here.
Besides that.
You never answered to your hypocrisy in suggesting that its “rumored” that F&F were being prejudiced because the GOP was pulling the strings ?
There you go again.
Saying that race was the cause.
The GOP instructed F&F to withold on the minorities.
Good for you that you threw in that little clause saying its a “rumor”
But you know what ?
I wouldnt put it past you to believe it. Because libs are the first ones to start screaming racism everytime the slightest hint of ethnicity comes up.
You’re the one who should quit while you’re ahead, as you’ve already contradicted yourself into hypocrisy and spoke outta both sides of your head
I wasn’t pointing a finger at the Clintons. I was pointing out that it is really not a partisan issue. I also think 1987 was hardly “after years of Republican rule.” Democrats had control of both houses of congress for all but two years of Reagan’s Presidency and they never had control of the house. Even these latest problems didn’t crop up until Democrats had control of both houses of congress. So I could say just as easily they both (1987 and 2008) happened when Democrats had control of both houses of Congress. This would be just as accurate as your statement although neither is likely a causal relationship
On a side note about 2000-2002 as you pointed out many from the Clinton administration were up to their necks in the problems at Enron, Global Crossing, etc (even calling regulators on their behalf to tell Bush administration people to lay off), I also think going after Microsoft was ill advised and contributed to the fall. But both of those are far different issues.
Prior to re-entering the military full-time, I was a Mortgage Broker. Fannie Mae loans had typically higher interest rates because they accepted more risks from lower income, minority, and people who had “glitches” on their credit. It is common knowledge that Fannie Mae’s sole purpose in life is to make loans for people who would have been otherwise unqualified to get them…which is why their interest rates are higher and there are pages and pages of additional documentation required to get loans approved. No one has a corner on greed, but the simple laws of ignorance, supply and demand, and accountability interacted to make for an interesting few months…homes were steadily increasing in value – some at obscene amounts, so lenders were willing to take greater risks by offering sub-prime mortgages to otherwise unqualified borrowers because they were betting on the come that even if the borrowers defaulted, they could still profit by re-selling the homes at higher rates…and borrowers were betting on the come that they would either get raises and/or their homes would increase in value, so if they ran into a crunch, they could either borrow against the home (mortgage their future) or sell for a profit, and start fresh someplace else… when one buys on the margin, one sometimes gets fried…
p.s. “In 1994, Clinton established the President’s Fair Housing Council and by executive order directed “the Secretary of Housing and Urban Development and the Attorney General and, where appropriate, the heads of the Federal banking agencies to exercise national leadership to end discrimination in mortgage lending, the secondary mortgage market, and property insurance practices.” And so emerged the preeminence of subprime loans, primarily to minorities.”… (Anton Kaiser)…more where this came from…