Should the Federal Govt. Spend $1 Trillion Bailing Out US Financial Institutions?

[rylan1]

Originally Posted by 1journeyman
http:///forum/post/2767693
More Marxist ideas...
The Government has NO Constitutional Right to limit private salaries.
If you want a bail out... then the gov't has a right to structure the loan with whatever terms.
2nd, I believe they do have a constitutional right... its in the 5th Amendment.. but what they might not be able to do is make execs that already collected pay back money... unless they can prove the business was already in financial trouble...

 

[1journeyman]

Originally Posted by Rylan1
http:///forum/post/2767795
we all know that a culture of predatory lending and falsafication occured. This was easy money... and bankers would probably say after they completed a deal...."got another sucker"
The lenders marketed these loans as the next great thing and approved people for loans that otherwise they would not be able to get... the blame falls on the lenders... they are the ones that utlimately assume the risk... and in doing these loans that multiplied their risk 10x
If a person is too stupid to realize they should read the fine print when they make $30,000 a year and are purchasing a $500,000 home then they should lose their house. Obviously they need to learn a lesson.
The fault is solely on the greed of the buyer living outside of their means. It is the buyer's responsibility to know what they are signing.

 

[stdreb27]

Originally Posted by Rylan1
http:///forum/post/2767798
2nd, I believe they do have a constitutional right... its in the 5th Amendment..
“ No person shall be held to answer for a capital, or otherwise infamous crime, unless he or she is on presentment or indictment of a Grand Jury, except in cases arising in the land or naval forces, or in the Militia, when in actual service in time of War or public danger; nor shall any person be subject for the same offense to be twice put in jeopardy of life or limb; nor shall be compelled in any criminal case to be a witness against himself, nor be deprived of life, liberty, or property, without due process of law; nor shall private property be taken for public use, without just compensation.[1]
Care to explain your claim. Because I'm not seeing it. Even if I was playing devils advocate.

 

[1journeyman]

Originally Posted by Rylan1
http:///forum/post/2767798
If you want a bail out... then the gov't has a right to structure the loan with whatever terms.
2nd, I believe they do have a constitutional right... its in the 5th Amendment.. but what they might not be able to do is make execs that already collected pay back money... unless they can prove the business was already in financial trouble...
*I don't want a bail out...
*5th Amendment? Right to Due process?? Please explain.

 

[rylan1]

Originally Posted by 1journeyman
http:///forum/post/2767816
*I don't want a bail out...
*5th Amendment? Right to Due process?? Please explain.
I shoud have restated... but the issue is either the 5th amendment exludes them to the right.... or they do have the right if "claw-backs" are written into previous contract... in addtion is this bailout essentially a gov't backed bankruptcy... here's more.
"Claw-back" provisions requiring executives to give up pay or severance benefits if corporate results prove to be misstated, for example, might be even trickier. Large companies have increasingly written claw-backs into executive-pay contracts, with triggers ranging from financial restatements to fraud. But where such clauses aren't already in place, the government's insistence on adding one could leave it open to a constitutional challenge under the Fifth Amendment, which bars the government from taking private property for public use without just compensation.
That's particularly true where the severance had already been earned by the executive or paid out to him. But even where the change modified existing severance promises by the company, executives could find plenty of room to sue, says Wiener, defending "takings" litigation in which plaintiffs argued that the government had taken property in violation of the Fifth Amendment. "I think there's merit to that case," he says.
In bankruptcy proceedings, creditors in some circumstances can seek to recover compensation already paid out, particularly if executives maintained the company was still solvent when it wasn't, says Paul Hodgson, a senior research associate at the Corporate Library, a corporate-governance research firm. Still, "if the company was solvent when it paid out the compensation, there's no real legal backing for recouping any of that" in bankruptcy court, Hodgson says.

 

[rylan1]

Originally Posted by 1journeyman
http:///forum/post/2767811
If a person is too stupid to realize they should read the fine print when they make $30,000 a year and are purchasing a $500,000 home then they should lose their house. Obviously they need to learn a lesson.
The fault is solely on the greed of the buyer living outside of their means. It is the buyer's responsibility to know what they are signing.
I don't think the loans were that egregious... and just like a used car salesman... people can be pushed into these situations on the promise that you can refinance in 3 years before your loan balloons... or that with the market... your 125K house will be worth $160K in 3 years... etc
There has been serious mortgagge fraud out there which includes mortagge companies, appraisers, and house sitters (owners). The mortagge people changed the qualifications... and the american dream is to have a nice home and to build wealth through home ownership... that is what we've been taught... so people were trying to capitalize on what seemed like a good deal and got took.

 

[stdreb27]

Originally Posted by Rylan1
http:///forum/post/2767845
I shoud have restated... but the issue is either the 5th amendment exludes them to the right.... or they do have the right if "claw-backs" are written into previous contract... in addtion is this bailout essentially a gov't backed bankruptcy... here's more.
"Claw-back" provisions requiring executives to give up pay or severance benefits if corporate results prove to be misstated, for example, might be even trickier. Large companies have increasingly written claw-backs into executive-pay contracts, with triggers ranging from financial restatements to fraud. But where such clauses aren't already in place, the government's insistence on adding one could leave it open to a constitutional challenge under the Fifth Amendment, which bars the government from taking private property for public use without just compensation.
That's particularly true where the severance had already been earned by the executive or paid out to him. But even where the change modified existing severance promises by the company, executives could find plenty of room to sue, says Wiener, defending "takings" litigation in which plaintiffs argued that the government had taken property in violation of the Fifth Amendment. "I think there's merit to that case," he says.
In bankruptcy proceedings, creditors in some circumstances can seek to recover compensation already paid out, particularly if executives maintained the company was still solvent when it wasn't, says Paul Hodgson, a senior research associate at the Corporate Library, a corporate-governance research firm. Still, "if the company was solvent when it paid out the compensation, there's no real legal backing for recouping any of that" in bankruptcy court, Hodgson says.
This argument in no way supports your claim that the government has the right to limit pay of a ceo.
It simply states that if the ceo was paid under false pretenses then it would be possible to get the money back.
If you want to make that connection that is a HUGE leap, and the article also uses the 5th amendment as a LIMITATION, not an opening to do this.

 

[reefraff]

I say we line up all the CEO's, along with 99% of the lawyers (You can stay Crimzy, you amuse me) and just shoot them.

 

[stdreb27]

Originally Posted by Rylan1
http:///forum/post/2767858
I don't think the loans were that egregious... and just like a used car salesman... people can be pushed into these situations on the promise that you can refinance in 3 years before your loan balloons... or that with the market... your 125K house will be worth $160K in 3 years... etc
There has been serious mortgagge fraud out there which includes mortagge companies, appraisers, and house sitters (owners). The mortagge people changed the qualifications... and the american dream is to have a nice home and to build wealth through home ownership... that is what we've been taught... so people were trying to capitalize on what seemed like a good deal and got took.
oh great, now we are back to people are stupid and have been conned into buying that house.

 

[rylan1]

Originally Posted by stdreb27
http:///forum/post/2767862
This argument in no way supports your claim that the government has the right to limit pay of a ceo.
It simply states that if the ceo was paid under false pretenses then it would be possible to get the money back.
If you want to make that connection that is a HUGE leap, and the article also uses the 5th amendment as a LIMITATION, not an opening to do this.
as I said.. I should have restated... but if the gov't bails them out.. this will be in play... because they essentially are taking on the bad debt as a business and will possibably hold it and resale it in the future... and as I have read Bush has accepted this as part of the bill

 

[rylan1]

Originally Posted by stdreb27
http:///forum/post/2767867
oh great, now we are back to people are stupid and have been conned into buying that house.

what I'm saying is you can't lump all these people into being stupid ... somewhere... some were conned... some where given the advise of the time that once credit improved with this purchase... that could easily refinance. Some just didn't have the 5,10,20% to put down... and when they learned about $0 down... took advantage... You can't blame the people for a bad product (that was coated with bells and whistles) but internally was bad... you have to blame the company for producing it and selling it..knowing it didn't meet their standards.

 

[stdreb27]

Originally Posted by Rylan1
http:///forum/post/2767798
2nd, I believe they do have a constitutional right... its in the 5th Amendment.. but what they might not be able to do is make execs that already collected pay back money... unless they can prove the business was already in financial trouble...

Originally Posted by Rylan1
http:///forum/post/2767882
as I said.. I should have restated... but if the gov't bails them out.. this will be in play... because they essentially are taking on the bad debt as a business and will possibably hold it and resale it in the future... and as I have read Bush has accepted this as part of the bill
This isn't even close to a restatement, more like a total reversal.

Originally Posted by Rylan1
http:///forum/post/2767885
what I'm saying is you can't lump all these people into being stupid ... somewhere... some were conned... some where given the advise of the time that once credit improved with this purchase... that could easily refinance. Some just didn't have the 5,10,20% to put down... and when they learned about $0 down... took advantage... You can't blame the people for a bad product (that was coated with bells and whistles) but internally was bad... you have to blame the company for producing it and selling it..knowing it didn't meet their standards.
Here is the thing, here in our market, we believe in personal responsibility. (I know it is hard to tell with this bail out business) But if you are going to go in and buy a house, and can't pay for it. Then it is your own damn fault.
But this does bring about an interesting point. Who has been out there in the past and trying to increase the amount of low income home ownership. (the government it is a sexy number to spout) They had regulations in place to force companies to meet certain "affordable housing quotas" you had a government owned "private" entity buying the crappy loans. It isn't the lenders fault they were just doing what they were required to do. This is what happens when you have government artificially playing with the free market.

 

[nano reefer]

changed my view on it. if they dont get the money, then they wont be able to give me money, then i wont be able to buy gas, cant get to work, and then the economy fails. i guess its the lesser of 2 evils for the government to give out 700 billion.

 

[1journeyman]

Originally Posted by Rylan1
http:///forum/post/2767885
what I'm saying is you can't lump all these people into being stupid ... somewhere... some were conned... some where given the advise of the time that once credit improved with this purchase... that could easily refinance. Some just didn't have the 5,10,20% to put down... and when they learned about $0 down... took advantage... You can't blame the people for a bad product (that was coated with bells and whistles) but internally was bad... you have to blame the company for producing it and selling it..knowing it didn't meet their standards.
I absolutely CAN blame someone for signing a contract as important as a Home M ortgage and not reading what they were signing...
Rylan, how stupid are people that didn't pay anything down, yet had loans that were less than rent in their apartments???
Sorry. I don't believe your premise that mass amounts of people were duped. They were greedy, stupid, and now they got burned.

 

[1journeyman]

Here's another point to ponder;
Freddy and Fanny were Quasi Government Agencies, heavily in bed with politicians with both Parties. They now need a major bailout.
SS is going bankrupt.
Medicare is going bankrupt.
Anyone still think the Federal Government can do a good job Socializing our Health, Higher Education, Energy, and M ortgage industries?

 

[jmick]

Originally Posted by 1journeyman
http:///forum/post/2768262
I absolutely CAN blame someone for signing a contract as important as a Home M ortgage and not reading what they were signing...
Rylan, how stupid are people that didn't pay anything down, yet had loans that were less than rent in their apartments???
Sorry. I don't believe your premise that mass amounts of people were duped. They were greedy, stupid, and now they got burned.
Journey, I agree with you that they were stupid and greedy but those those who lent them the money were just as greedy and didn't care because of the $$ they were racking in. Please remember that there are two sides to the story and neither is without fault and if there had been proper regulation this would not have happened.
Side note, our country is full of people who fail to realize if it's to good to be true you should walk away and instead they embrace it and suffer the consequences. Also we have an abundence of people who prey on the ignorant only to make themselves richer and these people should also suffer some consequence for this...which, I am sure you will disagree.

 

[reefraff]

I don't think people are splainin" this well enough. The fed is stepping in to buy the foreclosures. They will in fact own the houses that are in foreclosure and they are talking about getting them for 30 cents on the dollar. If they buy the paper on a house for 250 grand that sold for 600 grand there is plenty of room for the government to give the buyer a payment deal to keep them in the home and even turn a nice profit down the road.
One guy was saying once the feds start taking over the contracts their value will increase because of the new cash infusion into the banking system. In a really bizzare kinda way what he was saying makes sense. Not sure if that isn't a little too rosy a scenario but at some point these contracts will increase in price.

 

[1journeyman]

Originally Posted by Jmick
http:///forum/post/2768266
Journey, I agree with you that they were stupid and greedy but those those who lent them the money were just as greedy and didn't care because of the $$ they were racking in. Please remember that there are two sides to the story and neither is without fault and if there had been proper regulation this would not have happened.
Side note, our country is full of people who fail to realize if it's to good to be true you should walk away and instead they embrace it and suffer the consequences. Also we have an abundence of people who prey on the ignorant only to make themselves richer and these people should also suffer some consequence for this...which, I am sure you will disagree.
As I have stated, I'm against the bailout. I'm all for prosecuting anyone who broke the law...
Regulation is not the answer. Had the Feds not guaranteed the faulty practices of Freddy and Fanny and had the feds not pushed for low income loans we wouldn't be here.
The answer is more free market, not more regulation.

 

[bionicarm]

Now that it's only $700 billion, we can repay that with the money we were promised from Iraq by selling off their oil ventures. Oh wait, they aren't paying us back. They just took almost $600 billion from the US to rebuild their country. So US companies will go brankrupt, US citizens will lose their jobs, homes, and life savings, and the entire company may go into a depression. But hey, we're protecting our borders aginst those terrorists!

Also like the way the conservatives complain about giving free handouts to the people on welfare, yet we're now willing to give corporate millionaires a free handout by paying them for making bad business decisions.

 

[reefraff]

If the government buys these home loans for 30 or 40 cents on the dollar is it really a bail out? These companies just lost a lot of money,
For you guys with house payments figure out what you will repay the bank for your home before you own it. Somewhere around double what you paid for the house sound about right?
So say the government pays 40 cents on the dollar for a loan on a 200,000.00 house. Worst case scenario is the homeowner walks on the loan and the govt. is stuck with the house. So now you have this house the govt. paid 80,000 for that sold for 200,000 in the last few years. Home prices have dropped but they haven't dropped that much. Best case is that they renegotiate the loan terms so the interest rate is half what the original was. Say the reset on a loan was 7% and the govt. gives it to them for 3.5%. Instead of making 400,000 back on a 200,000 dollar investment the govt. will get back 320,000 on an 80,000 dollar investment.
I am sorry but I just don't see how even the federal government, even with liberals at the control can possibly

[hr]
this up so bad that the investment would not end up making a net profit.