Given the recent turmoil in our financial markets and the ongoing negotiations around a bailout package for Wall Street, it's not surprising that much of the debate last night focused on the current economic crisis (instead of the planned foreign policy). Very early on, after starting this blog, I have been criticizing predatory and unsound lending.
During the debate Obama acknowledged foreclosures as the root of the financial crisis and has pledged to help homeowners. That of course should be a no brainier, so not much kudos to him for getting that much right.
Whatever the solution to this mess is, a bipartisan approach that includes help for ordinary homeowners who are on the verge of foreclosure, and not just the big financial institutions. Specifically, any bailout proposal must include provisions that assist struggling homeowners, including greater access to loan modifications and a change in the bankruptcy law to allow homeowners to restructure their mortgages in bankruptcy court as is allowed with vacation homes and yachts. It is my belief that we also need to make stricter regulations that would outlaw or severely limit such predatory products as ARM's, payday loans as well as other products that take advantage of the very people that they purportedly are suppose to help.
As ordinary taxpayers we are being asked to bail out financial institutions that caused this crisis. This is crazy. Main Street is being asked to foot the bill, if this going to happen, it should also reap the benefits as well.
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I completely agree... It's amazing how politicians get on television and say that if they don't bail out these financial institutions the "main street" Americans are going to suffer... that their mortgages and investments are in jeopardy.
ReplyDeleteThat's simply not true. Mortgage loans are assets, and would be sold to other financial institutions. Your home wouldn't be in jeopardy nor would your mortgage. The problem with the mortgage industry is the practice of subprime mortgages, which give people loans who normally wouldn't qualify. Fast forward a few years and now a lot of those people are defaulting on their loans, leaving the financial companies in trouble.
Even if these financial institutions go out of business and file bankruptcy, other banks will buy their remaining assets (including these loans).
The ONLY reason they are even offering the bailout is public perception. Fear mongering has people believing that we are going to go into a great depression if these companies go out of business. This is simply not true. Anyone with good credit and/or a good job and payment history can get a mortgage.
Some people shouldn't be able to get a mortgage... they need to get out of debt, raise their income or both. Everyone doesn't "deserve" to own a home... you have to work for it.
Regarding investments, when you invest in mutual funds, IRA's, and 401k plans your money is pooled with other investors and purchases a diverse portfolio of investments -- in different companies. One of these financial institutions might be managing your portfolio, but your investments are safe regardless... unless you've chosen to invest solely in the financial institution itself.
Dave Ramsey just wrote a great post outlining his thoughts on the bailout issue.
It is my belief that we also need to make stricter regulations that would outlaw or severly limit such predatory products as ARM's, payday loans as well as other products that take advantage of the very people that they purportedly are suppose to help.
ReplyDeleteWhatever happened to free market?? and that the market will correct itself without regulation, sounds to to me like you lost your conservative principles.
anonymous -
ReplyDeletethanks for your comment. Why is it that people think Conservative can't be conservative and still stand for something, like protecting the poor. I am a true Conservative, one that would be more like Jesus turning over the money changers tables in the temples. The Bible spoke harshly against those that don't help the poor. Those that take advantage of the poor.
These predatory loan products are just that, Predatory, and I will continue to rail against them, just like Dave Ramsey has done. Predatory loans has nothing to do with "Free Market."
I am also more moderate, when it comes to such issues as welfare. With no question, the Democrats free give away through welfare was disastrus, the Republican welfare reform of the 90's was very much needed, but went to far the other way. When they say someone has 3 years to get a job or lose their welfare, they neglect to solve the issue of someone being say a 3rd generation welfare recipient, who doesn't know how to work, doesn't know how to budget. These people need to be trained before just being kicked off. Sometimes, there has to be a middle ground.
thanks Brandon, I seen Dave's post and shared it on my facebook page.
ReplyDelete