Comments on: Bailout: Don’t forget consumers

By: Fletcher Phelan, Benicia, CA

Fletcher Phelan, Benicia, CA — Wed, 05 Nov 2008 20:08:52 +0000

One plan to “help homeowners” calls for them to get lower rates, but they have to give up any later rise in value. In effect they will be renting, as they are protected on the downside and the upside. So, why bother “helping” people who in most cases paid nothing down and cannot win nor lose? Kick them out if they do not pay. The rest of us struggle, but pay what we owe, mainly because we did not borrow to buy luxury SUVs or other goodies.

By: Pat, Los Angeles, CA

Pat, Los Angeles, CA — Sat, 18 Oct 2008 11:13:44 +0000

I am so sick of the term “STRUGGLING HOMEOWNER”.

Freeloaders is more like it! Begging the government to pay their bills. “Whoa is me, I got duped by the big bad wolf. As I sit here in my cozy home”. HA! Just about every home in trouble has been refinanced with money taken out. WHERE’S THE MONEY!!! Oops, you spent it! Give us a break.

MANY PEOPLE RENT!

You are crazy to expect those who do not own a home to care about you being a “Struggling Homeowner”.

Prices are still too high where I want to buy.

By: Pat, Los Angeles, CA

Pat, Los Angeles, CA — Sat, 18 Oct 2008 10:41:33 +0000

I COULD CARE LESS IF SOMEONE OWES MORE THAN THEIR HOME IS WORTH. I DON’T CARE IF THEY CAN’T AFFORD IT.

I RENT!!! JOIN THE CLUB !!! I’M SURVIVING!!! SO, WILL YOU !!! YOU ARE NOT BETTER THAN ME. I DO NOT CARE MORE ABOUT YOU THAN MYSELF. DEAL WITH YOUR OWN PROBLEMS.

I DESERVE HELP MORE THAN YOU. I AM NOT ONE OF THE PERPETRATORS OF THE SUBPRIME MESS.

I WANT TO BE INCLUDED IN THE $100,000 -$200,000 WIN-FALL.

OTHERWISE, FORGET ABOUT IT !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

By: Rose, Boston, MA

Rose, Boston, MA — Thu, 16 Oct 2008 01:19:10 +0000

I think the European approach to handling this crisis is far more sensible. If the government puts money in, then taxpayers (via the government) should have a say in the operations and salaries of the Wall Street firms getting bailed out. Paulson is too sympathetic to his band of greedy brothers. If he believes that his plan is the best, why doesn’t he invest some of his $700 million into his plan to save America. Surely, this is a great investment opportunity for him! I want to see the government show some concern and STOP the middle class squeeze, PLEASE!

By: Edward, Santa Ana, CA

Edward, Santa Ana, CA — Wed, 15 Oct 2008 22:22:50 +0000

As a baby boomer that has payed my mortgate for 14 years, have excellent credit, inherited a small amount fromn a parent only to have a supposedly good broker invest it too agressively, so in 3 months time I loose in excess of $100,000. Now my retirement is questionable for the near future and who is bailing me out? I agree we need it due to only trusting Jim Kramer on Mad money, who has been warning about many things that have happened, but as he jokingly says about the FEd” they know nothing.” I need a middle class major tax write off for between $100-150,000. Does anyone running for president understand the consequences of failure to bail out those baby bomers in my situation? I am lucky to still have a small pension,buit it would be too small to live on withoput 3 other sources of income.
People in Washington: Wake up before another revolution!

By: Mike, Traverse City MI

Mike, Traverse City MI — Wed, 15 Oct 2008 20:50:03 +0000

We (American people) should not be bailing out these investment banks, commercial banks, insurance companies etc. If my small business fails, nobody will bail me out. It’s a free enterprise, the foundation of our society, and now our government (remember “we the people”) is taking our money, money that’s printed without support or merit, and propping up these giants. Why? If they don’t, the foundation upon which our economy is setting on will collapse. How does that make you feel? Our government is spending our money to prop up giant corporations which failed due to poor decisions by the executives that ran them into the ground and the feds in charge of our money. If we had the guts our founding fathers had, we would put an end to this madness and take back our country. We have not seen the bottom or the worse of this mess. God bless the average American and good luck to them!

By: Mike, Rio Rancho, NM

Mike, Rio Rancho, NM — Wed, 15 Oct 2008 18:39:40 +0000

No – it hasn’t. It stands by and lets the robbers that stole the money (mtg. companies and others)take a pass, and then tells the American people to pay for it. What about the criminals that sole the money? What are the mortgage companies doing to help resolve their problems? Are they re-negotiating with home owners? Maybe a very few, but most are sitting back and waiting for the dole. The problem is that most Americans let the mortgage companies tell them what they could afford. They made stupid loans to even stupider people – so here we are.

By: Ed, Saint Louis, MO

Ed, Saint Louis, MO — Wed, 15 Oct 2008 18:09:52 +0000

“I AM SICK & TIRED OF YOU PEOPLE BLAMING THE HOME OWNERS WHO ARE IN TROUBLE~! YOU DO NOT KNOW WHAT HAS HAPPENED TO THAT FAMILY. WE LIVE IN MN & OUR HOUSE IS NOT AN EXPENSIVE HOME, IT IS ONLY WORTH 140,000 NOW & THE LOAN IS 225,000 NOW.

Perhaps the homeowners in some situations have been affected by forces beyond their control (medical bills, disability, job loss, etc). Those are the people I feel sorry for. If the mortgage on your home is greater than three times what you make in a year, then yes, it is in fact an expensive home for you.

Yes, lenders were far too easy loaning money. But people were either very naive or very stupid in thinking that housing could continue to enjoy double digit appreciation indefinitely when wages are stagnant. It’s also incredibly foolish to assume that inflation would not be in the picture.

Traditionally, debt-to-income ratios of 28-33% were considered normal and serviceable. During the boom, I understand that ratios of 40-50% or even higher were quite common. This is ludicrous. For people who did this or otherwise schemed up some kind of creative financing (ARMs, negative-amortization loans, taking a loan for the down payment, or making no down payment), I have absolutely ZERO sympathy. These are the people who kept bidding up home prices to the point that they aren’t affordable for any of us who wish to live within our means. Let them fail, let the market return to a rational level, and let the economic chips fall where they will.

ONLY when this happens and people return to saving instead of spend, spend, spend will the economy truly shape up.

“EVERYONE IS AT FAULT, ESPECIALLY THE LENDERS & SERVICERS!!!!”

True to a point, but banks aren’t in the habit of creating products that people won’t buy. If people had been able to see through their own greed and think “Hey, I really can’t afford this!,” then the banks wouldn’t have been able to make any bad loans. The fault is not “especially on lenders and servicers,” the fault is on “irresponsible lenders AND irresponsible borrowers” equally.

“DOESN’T EVERYONE WANT A CHANCE TO HAVE AN AMERICAN DREAM LIKE YOU PEOPLE?”

Yes, everyone wants a chance at the American dream. But that means you work for it. You save a 20%+ down payment on a home you can afford. You sacrifice to make it happen and you sacrifice to hold onto it. If you purchased a home you knew you couldn’t afford and now can’t make the payments, then you deserve to be in foreclosure. The sooner people accept that, the sooner they can start over and do things properly.

By: Eric, Houston Texas

Eric, Houston Texas — Wed, 15 Oct 2008 16:59:29 +0000

It’s a joke. When Wall Steet Henry Paulson finishes, the fat cats will laugh. America (average citizen) needs to wake up. When fat cat Paulson and his Fed agreed to guarantee an $8 billion foreign investment by a Japanese company and let the investments of average americans fail, the true colors of Paulson greed came forth. Everyone has to wake up. The nilly willie temporary protections of the middle class are a joke.

By: Dick. Lindenhurst NY

Dick. Lindenhurst NY — Wed, 15 Oct 2008 12:56:43 +0000

The money would be better spent funding NEW CLEAN banks or setting up a National Bank to loan the money directly to business and consumers

Great idea Walter. While we are at it, let’s also set up a federal real estate agency (make sure all consumers don’t overpay for homes. Hey, and federally operated hospitals and nursing homes too. What the hell, let’s eliminate the entire free market system and let the government take care of everything.

By: Steve, San Bernardino, CA

Steve, San Bernardino, CA — Wed, 15 Oct 2008 12:47:34 +0000

Since Paulson came from Wall Street he is the ultimate insider about he toxic paper. Why isn’t he being questioned about his lack of lean forwardness into resolving the issues early in his government position?

By: PAM ANOKA MN

PAM ANOKA MN — Wed, 15 Oct 2008 11:41:41 +0000

I AM SICK & TIRED OF YOU PEOPLE BLAMING THE HOME OWNERS WHO ARE IN TROUBLE~! YOU DO NOT KNOW WHAT HAS HAPPENED TO THAT FAMILY. WE LIVE IN MN & OUR HOUSE IS NOT AN EXPENSIVE HOME, IT IS ONLY WORTH 140,000 NOW & THE LOAN IS 225,000 NOW. WHY YOU PEOPLE BLAME US IS BECAUSE YOU HAVE MONEY & YOU DO NOT HAVE TO LIVE PAYCHECK TO PAYCHECK, NOW. WE DIDN’T EITHER UNTIL EVERYTHING WENT UP & MY SON LOST HIS JOB. WHAT ARE WE SUPPOSE TO DO? DOESN’T EVERYONE WANT A CHANCE TO HAVE AN AMERICAN DREAM LIKE YOU PEOPLE? WE ALL MADE THE PAYMENTS BEFORE THIS ECONOMY WENT DOWN THE TUBES. WAIT SOMEDAY SOMETHING IN YOUR LIVES WILL GO WRONG & THEN YOU WILL KNOW WHAT US PEOPLE ARE GOING THROUGH! WE DON’T LIKE IT EITHER~! WHY DO THEY HAVE TO BAIL OUT THE RICH, IT IS THE LITTLE PEOPLE THAT MAKES THE WORLD GO ROUND & IF IT WASN’T FOR US THERE WOULD NOT BE MILLIONAIRES!!! WE NEED HELP NOW JUST LIKE EVERYONE ELSE IN SOMEWAY! IF THEY HELP THE HOMEOWNERS WE WOULD HAVE MONEY TO PUT BACK IN THE MARKET.SO QUIT BLAMING US! EVERYONE IS AT FAULT, ESPECIALLY THE LENDERS & SERVICERS!!!!

By: Walter Drake, Green Cove Springs, Florida

Walter Drake, Green Cove Springs, Florida — Wed, 15 Oct 2008 11:06:25 +0000

The government is injecting money into the big Wall Street Banks that will just use it to pay their CEO’s and NONE of it will ever be loaned to anybody.

The money would be better spent funding NEW CLEAN banks or setting up a National Bank to loan the money directly to business and consumers rather than filter it through Wall Street where it will be dissipated. Of course, Mr. Paulson is from Wall Street and so is benefiting his friends there.

By: ACL, Glendale, AZ

ACL, Glendale, AZ — Wed, 15 Oct 2008 01:51:31 +0000

The US Government plans to marry 5 (maybe +) major banks and all others will fail and/or fall to the way-side.

If our government had any sense or regard and respect for the American people, it would have let, beginning with Bear Stearns, fail.

Instead it gave $34 billion to JP Morgan Chase to aid [a major player in the banking industry] to buy up majority of good assets from Bear Stearns. (Most of the information pertaining to this deal is sealed and is not made public to the American people.) Why not? Because it is shady!

The liability would be covered by the $34 billion, the 1st $1 billion to come from Chase. Oh my!

Now JP Morgan Chase gets another piece of the pie. A wedge of $250 billion. Talk about greed and no remorse. But we already know that Jamie Dimon wants to see his competitors “BLEED”!

No one can tell me that our government and big business are not trying to become a dictatorship by combining power (government) and money (banks).

Why in the world isn’t the government helping small banks and small businesses? Every big business was once small. I say help the little business and let the big ones fall. Then we can grow and prosper once again.

Look out people–don’t count on having it so good in the future! Times are changing and the American people are going to suffer for the mistakes (or intentional acts) of our government.

By: terry bonds pittsburgh

terry bonds pittsburgh — Wed, 15 Oct 2008 00:55:31 +0000

just a few weeks ago paul was cheerleading for the economy telling us things werent that bad-now he wants to bail out every tom dick and mary on the planet

when is this bailout insanity going to stop

By: Spock_rhp, Miami, FL

Spock_rhp, Miami, FL — Wed, 15 Oct 2008 00:01:33 +0000

Alan Blinder and most of the posters here are missing the fundamentals.

The housing market can’t become healthy until the average worker can afford the house. That means that either 1) wages have to go up by about 30%, or 2) home prices have to go down another 20%, or 3) we have to go back to making bad loans to everyone [forcing the inevitable loan losses onto someone -- presumably the government].

I’m in Miami. The average worker hasn’t been able to “afford” a home here since about 2002. They bought them anyway with easy money and are now losing them since they can’t make the payments.

Mortgage “modification” isn’t going to fix the housing market. Workers still won’t be able to afford to buy and so there’ll be no demand for houses at the present prices. Ergo, prices will fall.

**
On a national level, we overbuilt houses in the 2000s because money was so cheap. What we need to do is refrain from building more houses until demand catches up with supply [another 6 years by my reckoning].

Meanwhile, the workers who used to have jobs building houses need work. I strongly suggest that they build energy production facilities. Wages in that field are good, some of the skills are transferable, and we sure need the price of energy to go down — which it will if we increase production.

By: Mariann, Queen Creek, AZ

Mariann, Queen Creek, AZ — Tue, 14 Oct 2008 23:57:52 +0000

It’s really not that hard to figure out! I don’t understand why everyone has to make it so difficult. I believe now since the banks will be able to loan money again they should really start concentrating on their borrowers. The banks get to borrow money for 1.5% so why not refinance everyones mortgages (1st and 2nds) to lower interest rates say 3-4% (with no closing cost/fees) and without writing down the mortgages. They still make a profit. Make it a brief time period and standard for all banks. Most buyers know what their house cost when they bought it and was willing to pay for it, so I see no reason to lower the amount borrowed. This would help everyone…all the people who bought bigger homes, all the people who cash out refinanced, and all property investors. No write downs for owner occupied homes, just refi everyone who owns a home to a lower affordable rate whether they are underwater on their loans or not. I believe this would make the property values rise again. More people would be willing to buy houses at a super low percentage rate. And do what ever it takes to quickly buy before the rates go up. The vacant homes would be sold quicker and people would be happy that their homes are increasing in value again. It should be short term and builders of new homes should cease for a time period.

By: Debrah, Eagle Nest, NM

Debrah, Eagle Nest, NM — Tue, 14 Oct 2008 23:54:16 +0000

We The People, need to eventually “wake up” to the fact that the govenment is not here to “bail us out”, that is a give away of personal power. Besides, when we do the math, our country does not have the $$$ (x10+ digits to the negative) or energy of Good Will (Unity like the EU)like it once had….hang on the your seats for the ride is only going to get rougher, unless we take our personal power back and start with ourselves and our communities…

By: Beverly, Hammond, In

Beverly, Hammond, In — Tue, 14 Oct 2008 23:13:28 +0000

Down thru the history of this country the government has helped nearly every country that needed help. Now there are people in this country who need some help and some people just don’t get it. Charity begins at home, then spreads abroad.

By: James, Denver CO

James, Denver CO — Tue, 14 Oct 2008 22:30:23 +0000

Why not help everyone and just reduce all debt to a 4% interest rate, then everyone can actually start reducing their debt and have a little extra to put back into the economy.

The problem I have with this is it treats prime and subprime borrowers the same. IOW it still rewards people who have a proven history of not paying their bills.

At first credit was used to determine if you received a loan. Then, until recently, it was used to determine at what cost you would receive a loan. The more of a risk the higher the cost.

By applying an equal rate of 4% to everyone you are in effect rewarding the subprime borrowers by giving them the same rate as prime borrowers.

I would suggest the lenders do the following:

- Convert all interest only/variable rate mortgages to 30 year fixed (possibly 40 or 50 years).

- Apply an interest rate appropriate for the borrowers credit worthiness. At no time should the interest rate of a subprime borrower be less than or equal to a prime borrower.

We cannot set a precedent where a subprime borrower obtains better terms (either interest rate of principle reduction) than a prime borrower.