Cheney on predatory lending: ‘the markets are working.’
Cheney on predatory lending: ‘the markets are working.’
In a new interview with Fortune magazine, Vice President Cheney says that the government shouldn’t intervene to curb predatory lending practices because it would interfere with the “working of the markets“:
“The fact is, the markets work, and they are working,” said Cheney in an interview in his White House office. “And people - some of the big companies obviously - have taken risks. Risk means risk. And there’s an upside as well as a downside in some of the choices they’ve made. We have to be careful not to have this set of developments lead us to significantly expand the role of government in ways that may do damage long-term for the economy.”
The same goes for Democratic efforts to curb the predatory lending practices that left naive homeowners in trouble, says Cheney: “We don’t want to interfere with the basic, fundamental working of the markets.”
A few nights before the interview, “Cheney had dinner with [Alan] Greenspan at the home of friend, mentor, and deposed Defense Secretary Rumsfeld.”
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MARKETS ARE DOING VERY WELL FOR TRAITOR CHENEY…
November 26th, 2007 at 2:03 pm“The fact is, the markets work, and they are working.†And this quote is coming from biggest crook in the Bush Administration that has profitted since day one in office from his old company as CEO: Daddy Warbucks Dick.
November 26th, 2007 at 2:04 pmA few nights before the interview, “Cheney had dinner with [Alan] Greenspan at the home of friend, mentor, and deposed Defense Secretary Rumsfeld.â€
they were served human babies for dinner.
November 26th, 2007 at 2:06 pm“You would be more respected and taken more seriously if you tried to at least tame your bias.”
Pot, meet kettle.
November 26th, 2007 at 2:08 pmSince the predatory lenders thrive near military bases, this is just another way for the Cheney/Darth/Assaholic crowd to screw the troops and their families.
November 26th, 2007 at 2:10 pmYou know what? I mostly agree with Cheney. The homeowners signed contracts. If they didn’t hire a lawyer and couldn’t abide by the tenets of their loan, they deserve to get screwed. Home ownership isn’t for everyone. However, some basic “front page” disclosure laws need to be amended.
I read a story about a California man who bought a $550k house with a $24k income. Of course he couldn’t pay for the house. Some say this is a tragedy, I say a poor man got to live in a luxury house for a year (for free).
November 26th, 2007 at 2:10 pmSpoke by someone who cannot ever spend all his blood money in his or his children’s lifetime.
November 26th, 2007 at 2:12 pm-7 Please, what about the complicity of the lending instituition that authorized lending to those who couldn’t afford the mortgage?
Tell me they didn’t know or care if the consumer could afford the cost. Everyone was in it for the quick buck, short and sweet.
Punish the lenders along with the consumers who didn’t bother to educate themselves.
November 26th, 2007 at 2:15 pmYou would be more respected and taken more seriously if you tried to at least tame your bias. The New York Times and CBS teaches this to their writers.
Comment by Southern Man — November 26, 2007 @ 2:06 pm
And we see how much this has helped the NYT and CBS earn your respect. Point taken.
November 26th, 2007 at 2:17 pmPredatory lending is basically legalized loan-sharking. Just like paycheck cashing places are. Yes, people should act responsibly when they enter contracts and take out loans. But what keeps these places in business is misleading advertising aimed at our weakest and most uneducated citizens. There’s enough blame for both sides here.
Cheney apparently supports legalized loan-sharking. So why stop there, Dick? Why not come out in support of numbers rackets? Drug pushing? And any other practice that allows the strong to make money off the weak?
November 26th, 2007 at 2:18 pmHaving dinner with those 3 would make me lose mine.
November 26th, 2007 at 2:20 pmThe real question is simply whether or not he thinks that dishonest lying on the part of giant corporations and politicians is part of the “basic fundamental working of the markets”.
There is no such thing as a free market. There is always manipulation. Otherwise we would not have a fed.
November 26th, 2007 at 2:23 pmJust like the S&L crisis, huh?
November 26th, 2007 at 2:23 pmDarth should know all about “predatory lending” since he’s the largest predator in this country - bilking billions into his offshore accounts and helping to tank this country.
November 26th, 2007 at 2:26 pmlefty: Cheney wouldn’t know truth if it hit him right between the eyes. He’s a corrupt thug through and through. Hard core thug who has sold his soul to the dark side.
November 26th, 2007 at 2:27 pmBush - scarecrow - no brain
November 26th, 2007 at 2:27 pmCheney - tin man - no heart
Rumsfeld - lion - no courage
Greenspan - pay no attention to the man behind the curtain
Ron Paul has explained this much better than Cheney… The markets took risk because the Federal Reserve promises to print more money for the risk takers at the top (Wall Street/Big Bankers) if they lose on their risks… so they get bailed out and the home owners get dumped in the street.
November 26th, 2007 at 2:29 pmYou heard it here first folks!!!
Darth Cheney is endorsing the Great Depression II: The Housing and Credit Bust.
Apparently, Cheney (and all of his dittoheads on this and other blogs) think that the next Economic Depression is a wonderful thing!
This is Reason #192 to impeach Bush, Cheney and Co.
November 26th, 2007 at 2:32 pmtell it to Neil Bush!
November 26th, 2007 at 2:33 pmAnd we all know who bailed out the S & L crisis don’t we? Funny how the taxpayer gets taken everytime while the Ken Lay’s, Bush brothers make the money on your back and run.
November 26th, 2007 at 2:35 pmSo essentially a certain core of very wealthy elite desire that the only government that they have is one based entirely on militarized security that controls all venues of information (except their own), all levels of coercive force (except upon them), and all manner of repressing and oppressing 90% of the population (leaving their precious 10% alone) in order to continue to suck out every last penny of value from the nation… They only want a market system that extracts wealth from the masses with no redistribution other than upwards towards greater monopolization. They want to own all property and resources, marginalize opposition, and use whatever means necessary (militarized security) to subjugate the rest of the population into compliance and quiescence.
November 26th, 2007 at 2:36 pmHey the housing market has been holding up the economy for 6 years so that Bush could pretend we had a strong economy. With all jobs, engineers, higher paid positions being outsourced foreclosures are happening to all level incomes not just the first time owners. Take jobs away and the consumer stops buying.
November 26th, 2007 at 2:40 pmSummed up nicely, spyder.
November 26th, 2007 at 2:41 pmAll markets are driven by speculation and insider trading.
Does your stock feel safer today than in 2000?
November 26th, 2007 at 2:43 pmHere is something else I have learned from Ron Paul… he always says that after the new money gets printed up the first people to spend it get all the benefit of the new money and the first people to get it are always the bankers and the military industrial complex…
Why? Because when the money gets “printed” it is not yet in the economy. So they then “give” this money to the bankers via manipulation of interest rates or by Congress giving it out in no bid contracts to the military industrial complex. THEN these “first holders” get to go out and buy stuff with this new money and THEN it IS in the economy… and that makes the entire dollar market go down because it just got watered down by a huge influx of new dollars… and everyone that spends them from then on are spending dollars that are dilluted and so worth less… it is one huge scam for all the elites at the top which includes the big bankers and… Congress with their military industrial complex pals…
November 26th, 2007 at 2:43 pmRon Paul has explained this much better than Cheney… The markets took risk because the Federal Reserve promises to print more money for the risk takers at the top (Wall Street/Big Bankers) if they lose on their risks… so they get bailed out and the home owners get dumped in the street.
Comment by ggibson1 — November 26, 2007 @ 2:29 pm
Ron Paul is not correct about this. The Fed is not in fact bailing anyone out (yet… hopefully it stays that way). The liquidity injections into the market have not made any institution more solvent or ensured any institution has avoided losses.
Cheney is perhaps correct in the classical economic sense. In the long run, the market should work this one out. But to quote a famous economist: “In the long run, we are all dead”.
And the if the systemic impact is as bad as real economists like Larry Summers fear, then “the market” Dick is referring to will succeed in taking out a heckuva lot more than the bonuses of a few Wall St brainiacs. That might be the market “working” in a wrecking-ball kind of way, and not how anyone who cares about the country would want.
November 26th, 2007 at 2:46 pmIt’s like a religion for them. Facts and history don’t matter. In the early 30’s, long after unregulated capitalism had ruined our economy and even after Roosevelt’s policies had put hundreds of thousands to work, Hoover was still touring the country and writing criticisms of FDR policies saying “let the markets remain free of regulation.”
November 26th, 2007 at 2:47 pmInteresting how the politicians and corporatists want Americans to be ignorant, in order to take advantage of them. Then when it blows up, they blame the individual for being uninformed.
November 26th, 2007 at 2:47 pmWhere is the ghost of Jacob Marley when you need him?
Next Cheney will ask that we close the consumer product safety commision, because it interferes with the free market, oh, and do away with family medical leave, minimum wages, OSHA, maximum work hours, the EPA because the market will work out how best to dispose of poisons responsibly — you know, by dumping them in poor neighborhoods where there won’t be any significant loss of paying customers. Thirty years from now we can make more money cleaning it up when the area gentrifies.
November 26th, 2007 at 2:48 pmWith the American public more interested in Dancing with the Stars and where to buy the Elmo doll, does it surprise us that the money changers are comfortable screwing around with the economy?
Americans will not wake up until their job or mortgage is affected. And then it will be too late.
November 26th, 2007 at 2:50 pmGibson reminds us that libertarianism is also a religion. Unregulated capitalism ALWAYS ruins itself with cronyism, corruption and monopoly. Moreover, it always results in more poverty. ALWAYS. Ron Paul’s solution? Why unregulated capitalism, of course. Can Ron Paul or his disciples point to ANY example of unregulated capitalism being a success for ANY society in history?
November 26th, 2007 at 2:51 pmFDR’s policies put over 200,000 people to work in less than 30 days during the depth of the Great Republican Depression. Every one of those hundreds of thousands went out and bought milk, eggs and radios. Every one of them bought shoes which were manufactured here in the U.S. THAT’S HOW YOU STIMULATE AN ECONOMY!
November 26th, 2007 at 2:55 pmHoover was still touring the country and writing criticisms of FDR policies saying “let the markets remain free of regulation.â€
Comment by Ret. Col. Jack Ripper — November 26, 2007 @ 2:47 pm
Colonel, to me this sounds a lot like Kevin Bacon’s character in Animal House. When the homecoming parade had turned into a disaster and people were panicking amid smoke bombs and Deathmobiles, Chip stood on the sidewalk in his ROTC uniform insisting “All is well”. Until he got run over by a mob.
November 26th, 2007 at 2:57 pmA main problem is the media that should be pointing out Bush lies on everything from not finding Bin Laden to how many wounded troops or even the true count of troops killed are not doing their job.
How many headlines were there on Scott McClellan’s books about the Plame incident? Nothing gets printed about Bush or Cheney. If it were not for the Internet, even those who want to be educated would not be.
November 26th, 2007 at 2:57 pmHoover treated his war vets the same as Bush is treating today’s vets.
November 26th, 2007 at 2:58 pm…said the VEEP as he reached into a coat pocket, pulled out a squirming puppy, and bit its head off in one motion.
November 26th, 2007 at 3:02 pmIn an aside, Vice President Cheney noted that it was “perfectly reasonable to significantly expand the role of government in ways that might enrich me and my buddies.â€
November 26th, 2007 at 3:04 pm“We don’t want to interfere with the basic, fundamental working of the markets.â€
Then he should’ve told Exxon and BP to field their own armies if they wanted Iraq’s oilfields.
November 26th, 2007 at 3:09 pmAnd according to the lions, the colliseums were working just fine.
The question is, working for whom ?
November 26th, 2007 at 3:18 pmStuper fu*k.
November 26th, 2007 at 3:23 pmGibson reminds us that libertarianism is also a religion. Unregulated capitalism ALWAYS ruins itself with cronyism, corruption and monopoly. Moreover, it always results in more poverty. ALWAYS. Ron Paul’s solution? Why unregulated capitalism, of course. Can Ron Paul or his disciples point to ANY example of unregulated capitalism being a success for ANY society in history?
Comment by Ret. Col. Jack Ripper
Sorry but you are wrong on two counts… one is I have been here on this site for the past few years and didnt know anything about libertarianism until after I got into Ron Paul so there is no religion here.
2) What causes the corruption is the power of the people being in the hands of Congress. They can call it anything they want.. what they have been doing is still bribary….
This is where I really see a possible win win from Ron Paul… If you reduce the power in the hands of the Federal government then you take away the need to bribe them… instead all 50 states would have to be bribed… which would be much more difficult.
The justice system is not made just for violent assualts.. it is also for the people to get justice against companies… this IS regulation… by the people… as it was intended.
Take a look at the simple fact that there IS more than one way to skin a cat. YES over powerful corporations are dangerous. But there is more than one way to solve that problem. The Founding Fathers had all these same problems and they already created a solution called the Constitution. We simply have been ignoring the Constitutions rules and the layout of the system way too much ever since the civil war. You have to really see that all these problems are related… The Constitution is a comprehensive solution to these related problems in a systematic and logical set of rules.
November 26th, 2007 at 3:25 pmSo….in other words, don’t stop the robbery, because you might interfere with the robber’s profits…?
OK. I see.
November 26th, 2007 at 3:27 pm“The fact is, the markets work, and they are working,†said Cheney in an interview in his White House office. “And people - some of the big companies obviously - have taken risks. Risk means risk. And there’s an upside as well as a downside in some of the choices they’ve made.”
Actually, this is proof that markets do not work. Two parties entered into a transaction: A mortgage lender took a risk on a prospective homebuyer. But this decision, repeated across the country as the policy of giant lender institutions, affects more than just the parties to the transaction. That is the market failure. The devaluation of my dollars, my inability to get a reasonable interest rate on home mortgage, despite the fact that I am in a good-risk category, and myriad other market distortions all flow from the transactions that the rest of us were not a party to and, yet, have to bare the effects of. That is the definition of a market failure. Now, if the market then corrects itself, you could argue that the market still works. But it does not. The externalized costs on society are never internalized by the particpants in the transaction.
November 26th, 2007 at 3:34 pmWhich points to the larger market failure which is that most corporate actors seek to externalize burdens, costs, and risks wherever possible, often with great success.
Two simple facts:
1. Record high, and rising, oil.
2. Record low, and dropping, dollar.
One simple conclusion:
Recession.
November 26th, 2007 at 3:41 pmCheney: “the markets are working.”
Translation: Leave it alone, I’m making a profit.
November 26th, 2007 at 3:44 pmThese predatory lending practices have taken out 188 finance companies and lowered the value of homes nationwide because certain greedy people didnt care about who got loans but what they made from the bad loans.
November 26th, 2007 at 3:56 pm“The fact is, the markets work, and they are working,†said Cheney ”
“The markets” are down over 120 points today, and they’re down over 2000 points over the last month.
November 26th, 2007 at 4:02 pmBreaking News: CNN is reporting that Dick Cheney is being taken to the hospital, yet again, for a fibrillation problem. He’s expected to be released this evening.
**He’s lucky he has socialist medical insurance. Is this an example of the market’s failure?
November 26th, 2007 at 4:15 pmThe markets†are down over 120 points today, and they’re down over 2000 points over the last month.
Comment by Proud American Liberal — November 26, 2007 @ 4:02 pm
Unfortunately the worst is yet to come. I wouldn’t be surprised to see a fall of 10% in a single day soon.
November 26th, 2007 at 4:22 pmggibson, I only compare libertarian philosophy to religion because it is steeped in dogma - in this case, the myth that there is some kind of beneficial magic to an unregulated capitalist market.
But let me add something else to the mix that I’m sure St. Paul would find ways to gloss over and obfuscate - modern libertarian philosophy is profoundly undemocratic and, as such, is not in concordance with constitutional values as libertarians are prone to assert. How do I know this? Simple. Whenever you say to an objectivist, “well, what if the majority of the people get together and vote for a single-payer health plan? What’s wrong with that?”, the true objectivist almost always something like “well that’s what’s wrong with democracy.” I’ve heard the Director of the Ayn Rand institute say this a number of times on the Thom Hartman show.
November 26th, 2007 at 4:27 pm2 million miles: “Unfortunately the worst is yet to come. I wouldn’t be surprised to see a fall of 10% in a single day soon.”
Evidently, the last time a housing bubble burst like this was in 1926. It was followed by a sharp decrease in market liquidity which was followed by the 1929 market crash and the onset of the Great Depression. I hate to be a doom & gloom kind of guy, but history is history.
November 26th, 2007 at 4:31 pmggibson: “The justice system is not made just for violent assualts.. it is also for the people to get justice against companies… this IS regulation… by the people… as it was intended.”
This is another fallacy of libertarian philosophy. If the government is there to promote the general welfare and insure the domestic tranquility, it needs to stop crimes before they happen with regulation. The regulation inherent in the justice system only provides punishment. If your child has died as a result of a bad product, all the justice system can offer you is revenge and possibly the knowledge that it may not happen to someone else. A regulatory system, by contrast might keep the product which may kill your child off the market.
November 26th, 2007 at 4:41 pm68 - RetCol Jack - I’ve been saying that it’s coming as well - a real 1929-style depression….
November 26th, 2007 at 4:52 pmYes, markets are doing well for the oil industry.
November 26th, 2007 at 5:22 pmFor oil industry bosses, it has been a bonanza for the last few years…with hefty returns and bonuses.
So when Cheney says markets are working, take his word as an experienced guy,he knows how oil industry works.
Citigroup planning major job cuts
CNBC:
No numbers set, but as many as 45,000 workers could lose their jobs
http://www.msnbc.msn.com/id/21975262/
Who needs employees anyway? When they lay them off Citigroup’s stock price will probably go up! Which would probably help their ex-CEO’s nest egg. Lord knows he needed the money.
‘Citigroup Inc, the largest bank in the United States, said on Thursday that its former Chairman and Chief Executive, Charles Prince, will take home roughly $40 million as he retires from the company.
The package is less than a quarter of what former Merrill Lynch Chief Executive Stan O’Neal was awarded when he was ousted from the investment bank last week.
The terms of Prince’s retirement include the vesting of options estimated to be worth $1.28 million, the vesting of deferred stock estimated to be worth $16.05 million and the vesting of restricted shares worth $10.7 million.
The package also includes a little more than 83 percent of his 2006 bonus and stock awards of about $23.8 million, adjusted for the total shareholder return for 2007, which is so far a decline of about 38 percent. That totals another $12.3 million or so.’
http://in.ibtimes.com/ articles/ 20071110/ citigroup-charles-prince-robert-rubin-merrill-lynch-subprime-crisis-mortgage.htm
November 26th, 2007 at 5:36 pmWhat’s wrong with that?â€, the true objectivist almost always something like “well that’s what’s wrong with democracy.†I’ve heard the Director of the Ayn Rand institute say this a number of times on the Thom Hartman show.
Comment by Ret. Col. Jack Ripper
Personally I think it has more to do with this being a Republican Democracy than anything. As the Founding Fathers said democracies are mob rule. Of coarse they meant that in a abstract sense. Which is why they set up a near democracy. A Republic based on democracy. That way it is the rule of law instead of the rule of the mob. Remember their big achievement in the Constitution was the seperation of powers to prevent any one group or person from violating the unalienable rights of any other individual.
It sounds like you prefer authoritarianism over freedom when you talk about our justice system like that. The way you have LAWS and Freedom is by letting people choose for themselves. If they choose to do something that harms people you punish them and THAT acts as the detering force to make it more likely that people choose FREELY to not take that same course of action. This is what freedom is all about. We dont need nor do we want a Minority Report society which is what it sounds like you are suggesting.
A regulartory system works in times of emergency and other than that it just becomes a bribary game. Have you been asleep that last few years? All the good intentions of the democrats from FDR on have become corrupted. The federal government has even falsified the words of scientists for their own corrupt ends…
FDRs New Deal should be looked at as a stop gap measure. It is time to get back to a sane system and IF the private sector blows up again THEN take extreme antiConstitutional measures. And only as long as neccessary so it does not become corrupt over time.
If you go over to CrooksAndLiars.com right now you will see an ad on the right hand side about FDR with a tear on his face. This ad is talking about what Ron Paul has been saying. Good intentions do not always make good policy. Too much power in too few peoples hands corrupts them… and we all know it.
November 26th, 2007 at 6:22 pmThomas Jefferson: “The will of the people is the only legitimate foundation for any government, and to protect its free expression should be our first object.” (Letter to Benjamin Waring, March 1801)
Gibson, most of the Founders were thinking of theocracies like Massachusettes when they talked about the “tyranny of the majority.” And when they talked about democracy, they were thinking of representative democracy with built-in checks on that “tyranny.” Libertarians have subverted the Founders words to give the impression that the Founders hated democracy. Except for Madison, the opposite is true.
When you say “It sounds like you prefer authoritarianism over freedom when you talk about our justice system like that,” you’re just repeating a tired old libertarian cannard. In the absence of regulation, corporations would be completely authoritarian without any checks to their agenda - and their agenda has nothing to do with the well-being of society. Our government is supposed to be there to protect us, to provide for the general welfare and to provide domestic tranquility. The regulation of capitalism is a necessary way to help do that because corporations, by nature, have no interest in the betterment of society or the wellbeing of our citizens. In fact, as they have shown over and over, corporations will ALWAYS take profit over what’s good for society. Adam Smith pointed this out over 200 years ago in “Wealth of Nations,” and it’s always been true. Libertarianism is a corporatist dream.
November 26th, 2007 at 6:48 pmBart: “Well I know I’m going to be unpopular in this thread, and I cannot believe I’m saying it, and my keyboard might melt, but yes, I actually agree with Dick Cheney on this one.”
That’s understandable because modern libertarianism is as right wing and corporatist as you can get. Libertarians want markets free of regulation - so does Cheney. Libertarians want corporations to have free reign - so does Cheney. Libertarians don’t believe in things like the minimum wage or labor laws - neither does Cheney. Libertarian philosophy is a corporatist’s dream - so is Cheney.
November 26th, 2007 at 6:55 pmgibson: “A regulartory system works in times of emergency and other than that it just becomes a bribary game. Have you been asleep that last few years?”
You’re confusing the corruption of our system by modern conservative libertarians with how our system SHOULD work. Modern libertarian conservatives do not believe in civil government other than a way to enhance their profits and the profits of the corporations for which they work.
November 26th, 2007 at 6:58 pmBart: “But Congress passing laws to control lenders will do one thing and one thing only.
Dry up the flow of monies that is keeping our economy going.”
If that were true, then we would have seen dried up capital markets during times of regulation and liquid markets during times of deregulation. But, the opposite is true. Unregulated periods have always led to the collapse of capital markets - unless, of course, you can give me an historical example.
November 26th, 2007 at 7:00 pmBart: “Lenders can and will make their own adjustments, and left alone they will work this one out too. The punishment is already there. The lenders lost money. That is not the time to come down on their heads.”
See, this is exactly what I’m talking about when I say “dogma.” We’ve just seen what happens when lenders “make their own adjustments if left alone” without regulation and it’s a disaster. But, you’re still pretending that it works. And your libertarian friend, Gibson asked me if I’ve been asleep for the last few years. Amazing.
November 26th, 2007 at 7:06 pmNothing personal, Bart, but if you believe in unregulated capitalism, you are, by definition, a libertarian. On the other hand, if you believe in minimum wages and labor laws, you’re not a libertarian. We’re at war. Pick a side! (just kidding)
November 26th, 2007 at 7:08 pmBart, how are people going to refinance if their property values have dropped by 25%? The entire shell game was based on expected appreciation.
November 26th, 2007 at 7:10 pmBart, the value of the dollar is at historic lows. Cutting the interest rate will not help unless we agree to start taxing the wealthy instead of borrowing money from them.
November 26th, 2007 at 7:12 pmI’m truly sorry, Bart, but I think that ship has sailed. We’re already at historic highs in foreclosure rates and unregulated lenders are NOT going to bail anyone out. The exist to make profit, not to help people.
November 26th, 2007 at 7:16 pmI’m not advocating “coming down on lenders.” I believe history shows that capitalism only works for a society when it is regulated. Again, during periods of regulation, lenders and the economy did just fine. The only people who don’t want regulations are corporatists. And, like it or not, this issue is steeped in philosophy. The economic philosophy which has held sway since the beginning of the Reagan administration has taken us from the worlds largest creditor nation to history’s largest debtor nation.
November 26th, 2007 at 7:20 pmYou’re confusing the corruption of our system by modern conservative libertarians with how our system SHOULD work. Modern libertarian conservatives do not believe in civil government other than a way to enhance their profits and the profits of the corporations for which they work.
Comment by Ret. Col. Jack Ripper
So says YOU. Strawmen arguments are BS. And you using them is really a shame. Or maybe Ron Paul just isnt a Libertarian. Either way you have not proven anything to me about how Ron Paul has been wrong about anything.
NEOCONED… and the progressives never brought up this video that I noticed over the past several years… why is that? Ron Paul was correct. We should have listened to him then… This stuff is all related and has a cure…the Constitution.
http://www.youtube.com/watch?v=aewpvcxAwTk
November 26th, 2007 at 7:21 pmgibson: “So says YOU. Strawmen arguments are BS. And you using them is really a shame. Or maybe Ron Paul just isnt a Libertarian. Either way you have not proven anything to me about how Ron Paul has been wrong about anything.”
Touchy, touchy. I’m not TRYING to prove anything and to say I don’t agree with Paul is not the same as “proving that he’s wrong.” He doesn’t like any regulation of capitalism. I don’t agree with that approach. He doesn’t believe in labor laws or minimum wage laws. If he could, he would dismantle the EPA, the Dept. of Education, the FAA, FCC, the CDC and stop funding for things like public libraries. He even advocates privatizing the nations highways into toll roads. I just don’t agree with any of that because I don’t agree with the central tenets of modern libertarian philosophy - that’s all.
November 26th, 2007 at 7:38 pmThanks, Bart. I’ve got many old friends who have been seduced by libertarianism. It’s usually because of the very attractive pieces of it having to do with foreign entanglements, gun rights and legal drugs, the only pieces of the puzzle that I don’t find repulsive. But thank you for recognizing that I’m not attacking you personally.
November 26th, 2007 at 7:41 pmgibson, I’ve reviewed my statement to you above: “Modern libertarian conservatives do not believe in civil government other than a way to enhance their profits and the profits of the corporations for which they work.”
And, I agree that in a way it’s not fair. Paul is a straight-ahead libertarian as opposed to a corporatist. He’s a “true believer” as opposed to someone using the philosophy to enhance corporate power. So, in a way, it was a strawman argument. But, I still don’t agree with his philosophy, even if he’s an honest man.
November 26th, 2007 at 7:48 pmAnd, Bart, I don’t agree that regulating capitalism is “coming down on” capitalism. I think regulation saves capitalism from it’s own destructive excesses.
November 26th, 2007 at 7:50 pmOK, Bart, but I think it already HAS melted down. Anyway, gotta go pick up one of my kids. Nice conversation and good luck with the lending business.
November 26th, 2007 at 8:00 pmYou sure are taking it pretty easy on Microsoft’s jackbooted approach to those who tried to do exactly what you described, though.
November 26th, 2007 at 10:19 pmI wonder if the dinner meeting of Cheney, Greenspan and Rumsfeld delved into the significant lapses in each leaders management style?? Cheney’s misjudgements severely damaged our country by pushing for a war based on hugely erroneous assumptions. Rumsfeld’s autocratic management at DoD ignored all expert advice that post-war Iraq would need a great deal of attention. And Greenspan now has admitted that he didn’t see the severity of the sub-prime crisis coming and, in his ignorance as Chairman of the Fed, contributed greatly to exposure and serious cracks in the whole financial system.
It always interesting to note the comments of folks like Cheney (and Bartlbee) who claim to oppose “bailouts.” My perception is that folks who oppose bailouts might actually have differing views depending on who is being bailed out.
I guess that Cheney doesn’t like goverment “bailouts of stupid borrowers”, but he and Greenspan don’t seem to be opposing government intervention in “bailing out the lenders.” Now we have the government sponsored Federal Home Loan Bank heavily funding a formerly free-wheeling and irresponsible lender in Countrywide Financial. A few weeks ago, Hank Paulson of the Treasury Dept was instrumental in cajoling competitor banks into helping Citigroup with a super SIV fund. This isn’t exactly free-enterprise at work leading to the reported goal of Cheney to keep the government out of private business matters. Now that a goverment sovereign fund of AbuDhabi is going to bailout Citibank with a $7.5 billion capital infusion making a foreign government the largest shareholder in our largest financial institution.
It seems that even the most hardline right wing conservatives can’t find a way to keep governments out of the way in letting free enterprise operate. Not even at solving the Republican era free-market, low regulation, financial system approach that has now gone very much out of whack. Despite the fact that conservatives such as Cheney and Greenspan have noble intentions, their hard held convictions and judgements can be way off base and do significant harm to the USA as we now have learned the hard way.
November 27th, 2007 at 12:06 pmBartlebee said:
Lenders were giving people with lower credit scores and incomes a chance to acheive the American dream. You buy a house, then you spend your life figuring out how to pay for it. Poor people do it all the time, and make ends meet. So lenders are giving those people a chance.
Response (written by HopingForChange):
Yup. You are dead right in that some cases of mortgage lending, we had people who were being given “a chance.”
Maybe you didn’t intend your statement to be interpreted this way, by my view is that the “giving people a chance” perspective is a gross oversimplification.
My response therefore hopes to add to the understanding of the type of mortgage origination complexity we are dealing with in debating how much the govenrment and regulators should be involved.
Unfortunately, much more has now been exposed about the lending origination practices at Ameriquest, Option One, and Countrywide Financial, New Century etc. and it went way beyond giving “people a chance.” These firms were not banks under lending laws that regulate banks and lastly they had no fiduciary duty to the customer.
I personally think it is pretty damned dangerous to draw conclusions about millions of folks who will face foreclosure because their specific circumstances may all be quite different. This global problem just can’t be understood without looking granularity of these loans.
My understanding is that about one half of the foreclosures in my market area are being conducted on “flippers.” These are investors who hoped to make a quick buck. I haven’t got much sympathy for this ‘flipper”group and I hope that the Bush administration doesn’t do anything to help them.
But the other half of foreclosure activitiy is a very mixed bag.
Most consumers take out loans without knowing the right questions to ask. Many of the folks being now forclosed upon are lower income and much less educated and less able to understand the complex mortgages they were being sold. There are very few knowlegdable consumers who exist when it comes to complex option ARM mortgages tied to Libor interest rates. Do you actually know anybody who studied a pile of mortgage documents before signing them????
It is worth noting that about 20% of sub-prime loans were made to borrowers who could have qualified for a conventional loan. Irresponsible loan officers, however, pushed option Arms only requiring stated income that came with a big prepayment penalty that goosed up the prospective yeild to investors. The loan officers were making out like bandits….some earning a 4% commission on a half million dollar loan would get $20,000 for salesmanship and a bit of paperwork. Profits for these non-conforming loans were huge.
In some cases, I suspect that there were some borrowers who knew what they were getting into and loved the idea of an option Arm because it meant they could buy luxury cars and take trips to Vegas. This is the “don’t worry, be happy crowd” and government regulation isn’t likely to alter their behavior.
But a big share of sub-primes were made to the financially illiterate working poor and otherwise unfortunate folks who had no clue what would happen when a rate re-set happened. They were victims of an unregulated free-enterprise-commision- driven- mortgage-lending- industry. The Bush administration and the Fed and the Treasury let this disaster happen.
The CEO of Countrywide now says that the system would not have gone bust if housing prices kept rising. My view is that, in time, we wil find that a virtually unregulated mortgage lending industry (operating away from the oversight of banking regulators) who were so slick that they made disasterous underwriting decisions and knowingly lent money to borrowers who couldn’t pay it back…..UNLESS HOUSING PRICES KEPT RISING.
Guess what? The rising price scenario didn’t play out. Where were the consumer protections…..they simply didn’t exist. It’s sad. A hard lesson to learn when a home purchase blows up. Free enterprise thinking and market driven practices produced a terrible result for some segment of the foreclosed consumers. We just can’t globalize their indivdual circumstances and come up with a “one size fits all” solution when it applies to government involvement and or regualtion needed.
November 27th, 2007 at 1:39 pmHoping for change…amen.
and #7 above…shame on you.
Greedy loan officers with MBAs=Drug dealers/suppliers
Uneducated, low income customers=Drug users
Who’s the professional here? Who has the ability to inflict harm on America’s economny? With “liberal and proud’s” outlook, screw the entire country because of a few hundred thousand uneducated people wanting the “American Dream” and shame on them.
The ultimate foe in this are the greedy mortgage lenders/officers. Fudging paperwork to make a few thousand dollar commission, not the people being handed homes they can’t afford. They do bear some responsibility, but please…if the mortgage lenders HAD DONE THEIR JOB America wouldn’t be experiencing this.
Period.
November 27th, 2007 at 2:06 pmComment by BARTLEBEE — November 27, 2007 @ 2:30 pm
Its not that complex. Either you can read the terms of your contract, or you cannot.
If the contract says that your loans interest rate will “RESET†in 2 years and you’ll be paying more, I don’t know whats so complicated about that.
Either you’re prepared to pay it, or you’re not.
Response:
You really think that a reset rate is so completely black and white– I suppose????
Let’s say you personally took out an option arm with interest only terms (and variable levels of principal paydown or even negative amortization) and a 2/28 step up rate. Do you think you would really know the step up payment required two years in advance?
Before you answer the question, I think you need to have a great deal of ability to predict the most indexed option arm rate, which is the London Interbank Offered Rate (Libor)
My view is that its pretty damn hard to know if you are prepared to pay for a step up to any indexed rate in advance especially considering that it is Libor. And it matters not if you have an MBA.
It seems that the banking system in Europe is now so shaky that banks are afraid to lend to one another and so Libor is quite high. It takes more than an economist with any Ivy League degree to predict this stuff with any certainty and much more than the average borrower.
Good to know, however, that you got a 30 year fixed conventional mortgage and didn’t take the risk of getting an ARM as was recommended by Alan Greenspan a few years ago. The mortgage you have is pretty simple in contrast to an I/O option ARM and no doubt that could influence your view on this stuff.
I suspect that most people who own fixed premium whole life insurance contracts would have a great deal of difficulty in understand variable premium universal life insurance contracts………its a whole different level of complexity
November 27th, 2007 at 3:56 pmBartlebee:
I don’t have a clue where you fit on the political spectrum, but it really doesn’t matter. Whether or not the Democrats intervene in punishing lenders and/or bailing out borrowers is a different issues from what I am telling you in this note. But I hope you will do something to broaden your knowledge about real estate finance, credit standards, and the underwriting practices. It might be helpful.
As an example, I am really wondering if you did comprehend my comment about the “flippers” now driving a major share of foreclosures. While you jumped to the defense of the investor group of folks who buy properties that are in bad shape and they invest sweat equity to improve them, you missed the boat on the nature of another group of “flippers” that is actually being foreclosed in great numbers.
A typical “flipper” now in foreclosure bought brand new property in markets such as Miami, Phoenix, or Los Vegas. The game was that the property could be bought and sold at a quick profit because prices kept rising. For a few years running, a condo complex in Miami would be built and 90% sold to flippers who then dumped the properties at a profit. They did the flip for a few years and made money.
But when the system failed, now we have condo buildings in Miami that are 90% empty and the few real owners of units pay all of the maintenance while the “flippers” went in to default and foreclosure. Maybe you want to defend these short term flippers who add no value and even bail them out with government money, but I don’t.
But I am also astounded that you apparently think you understand how the finance world works in such black and white terms. You might note that there is a huge financial crisis going on these days with major players that was triggered by a lot of bad judgement on the part of the lenders. This financial meltdown is mostly the fault of the lenders……and the investment bankers who enabled loans exceeding 100 % of value. Mortgage bankers added piggy back second mortgages full well knowing they couldn’t be paid back, but the monkey was off of their back as soon as the loan was sold to an investor (many of them were foreign investors.)
Here is a basic question: If I (or someone else) put together a college level test about residential real estate finance covering subjects such as underwriting, interest rates, risk spreads and non-conforming loan funding ….would you pass or fail?
No doubt you have already an opinion about your level of knowledge about this stuff. But, in my opinion, nobody else who reads your posts can be too sure about it.
For myself, I am learning new things everyday in a Wall Street financial meltdown triggered by sub-primes that has carried internationally to off balance sheet structures at major banks which threaten the world’s financial system. I learned about the shaky practices in lending in the UK where Northern Rock wasn’t protected from its demise with the type of banking regulations that the US enacted after the S&L crisis in the 80’s.
FYI. The mortgage situation in the UK is much worse than it is in the US. Few borrowers in the UK borrowed at fixed rates because the UK doesn’t have the likes of a govenment sponsored GNMA that probably guaranteed the your 30 year fixed conventional loan. But, of course, you probably knew all or most of this before I posted it.
Regulation and government involvement in this stuff is necessary and much more complex than you probably ever imagined.
November 28th, 2007 at 10:52 amDon’t jump to conclusions too fast before we get all of the facts about why the mortgage system has melted down. The S&L crisis of the 80’s led to some necessary banking reforms. No doubt we will learn a great deal about the current mess in the future so it can be fixed on a bi-partisan basis in Congress.
Comment by BARTLEBEE — November 28, 2007 @ 9:18 pm
Being a “flipper†myself I can tell you don’t have knowledge in the area. You talk about Flipping like it means buying a house, then selling it a week later as it is, and making a quick profit.
Well it doesn’t work that way. Thats not flipping. Flipping has become an industry that improves the quality of communities across America. Flippers renovate neglected and condemned properties and make their profit off of hard work, risk and personal capital. Flippers put millions of people to work every year, and increase real wealth for everyone in the communities in which they work.
Response by HopingForChange:
It seems that your perspective as a real estate flipper has been flushed out. It perhaps also adds some color as to why you think in the narrow black-and-white mindset. You have given me little reason to believe that your knowledge of real estate finance is much more than a bit of this and that.
My impression of most of the folks who engage in this flipping activity are mostly amateurs and many of them feel shut out of the wider markets and more sophiisticated investments— because they lack skills and knowledge. If you fit into that category, I don’t know for sure.
It sure doesn’t impress me when you claim to have made a ton of money on one or more real estate transactions in the past. There are plenty of stock market day traders who make the same claim who have little idea about he risk they are taking. It’s more gambling than investing. Real estate flipping is also highly risky and now the folks who have been doing it have been crushed.
FYI. I retired from a career in real estate and mortgage finance. I know an amateur when I see one.
Although I love to debate folks on real issues, it seems that now you identified and even defending yourself as a flippitey flipper, I think I can find folks more worthy of arguing with. Thanks for the exchange.
November 29th, 2007 at 10:53 am