Senate Weighs Aid to 2.2 Million Subprime Borrowers

[adios]

Senate Weighs Aid to 2.2 Million Subprime Borrowers

From the article:

U.S. lawmakers will have to consider providing aid to about 2.2 million subprime mortgage borrowers who are at risk of defaulting and losing their homes, Senate Banking Committee Chairman Christopher Dodd said today.

``The impact of losing 2.2 million homes I suspect will be in a lot of areas of our cities and towns that are already pretty hard hit, so we clearly want to look at that and legislate,'' Dodd, a Democrat from Connecticut, told reporters in Washington after a speech to the National League of Cities.

Proper role of the federal government? Probably just political posturing but maybe more subsidization of home buying in the U.S. I don't think the Democrats would entertain introducing any such legislation when the Republicans held the majority in Congress. IMO this is one type of issue where there is a real difference between Republicans and Democrats. I note in the article that lawmakers are going to introduce bills targetting "preditory" lending pracitices:

Representative Barney Frank, a Democrat from Massachusetts and chairman of the House Financial Services Committee, reiterated today that he intends to introduce a bill to deter lenders from offering consumers mortgages they can't afford.

``We plan to legislate to restrict those kinds of mortgages going forward,'' Frank said after a hearing in Washington. He declined to elaborate on the timing or details of such legislation.

I wonder how the government can make rules and regulations pertaining to what people can afford and what they can't afford? I mean will they state that a potential borrower will have to submit a budget and that only a certain part of their budget can be allocated to make mortgage payments? Granted lenders currently look at income, employment history, credit scores, and the percentage of income that will go towards the mortgage payment. But since is the status quo, it seems that Congressman Frank is proposing something that is more extensive than the checks lenders to now i.e. what lenders do now is not enough. That seems like an incredible usurping of government authority to me.

[natedogg]

Good god, it never ends.

Note that this "aid" to borrowers with subprime loans is actually a huge payoff to banks and lenders.

natedogg

[pvn]

[ QUOTE ]
Good god, it never ends.

Note that this "aid" to borrowers with subprime loans is actually a huge payoff to banks and lenders.

natedogg

[/ QUOTE ]

Ding! Bailouts only increase the incentive to lend to those who "can't afford it". And if government prevents people from getting these loans in the first place, they'll have nowhere to live!

[cardcounter0]

Proper role of the federal government?
Yes, I think keeping the whole financial system from imploding is something the fed gov should be interested in.

I wonder how the government can make rules and regulations pertaining to what people can afford and what they can't afford? I mean will they state that a potential borrower will have to submit a budget and that only a certain part of their budget can be allocated to make mortgage payments?
Sounds good. Now the lenders are able to just throw the loans out there, they are then all bundled into a tradable instrument, and sold.

These loan bundles get passed around, and then somebody gets stuck with the bad debt. But before it blows up, the intermediate handlers collect interest, and the final guy palms the loss off on an insurance company who merely raises premiums for every one.

Hey, wait a minute. This isn't a bailout for the Borrowers. It is tax money going to the lenders who created the problem!

[AzDesertRat]

Government insurance programs are always EV- propositions. It would be better to have the government act as a "safety net" instead of a catchall. While the people who took these mortgages may have been misled, it is still their fault for not looking at the numbers and they should be able to go after the brokers and companies that misled them. I know that's harsh, but we can't have the government become this global entity for every whining person or group.



IMO, the government giving out money to those who lost loved ones during 9/11 set a bad precedent. It tells everyone that "we the government" were somehow responsible for the event. That is a dangerous precedent and cannot exasperated by something like this or having United Airlines bail out of its pension liabilities---guess who's stuck with the bill?

If people aren't smart enough to accept the responsibilities of their decisions, that those abilities should be stripped from them.

[natedogg]

[ QUOTE ]
Hey, wait a minute. This isn't a bailout for the Borrowers. It is tax money going to the lenders who created the problem!

[/ QUOTE ]

So, someone takes out a loan that ends up being too onerous for them and it's the LENDER's fault? Do you believe that individuals can be responsible for anything at all? If not responsible for your own borrowing, then what?

natedogg

[lehighguy]

Methinks the reason people where willing to lend to these people is because it was secretly believed they would get bailed out if it went bad.

[pokerbobo]

Pay your Mortgage First...just something my parents taught me while growin up.

How much you wanna bet that these delinquint payers spend 80-100 a month on cable or sat TV, Drive cars that are too expensive for thier budget, have several pairs of $100+ shoes and closets full of designer clothes. Not to mention spoiled kids with a ton of crap we never had growin up.

Now you are late on your Mortgage? I wondor why.

I always wondored why my mom squeezed every nickel to turn it into a dime, maybe my parents were smarter than I gave them credit for. Now mom and dad get to help pay other peoples mortgages...aint it grand?

[The once and future king]

Is there anyone who agrees with this?

Is it not obvious to anyone of any stripe politically that this just puts off today for today a problem that will return in the future but this time even worse. In fact this is just the returning of a problem that was put off at some point in the past.

At some point you have to strap your self in and take the hit and let the economy return to some kind of natural equilibrium.

The caveat of a fiat currency is that it must be managed with some degree of responsibility. This proposal is just bat [censored] insane, and can only help lead to fiscal meltdown as some point in the future.

[lehighguy]

Unless these people are incapable of multiplication and division, I don't see how anyone can be misled on a mortgage.