So let me get this straight … Georgey and the American Securitization Forum are planning to implement a 5-year rate-freeze on millions of subprime loans taken out by citizens that, once the actual consequences of the loans they opted for were realized, are having trouble making their payments, right? Doesn’t this seem to be rather counter-capitalistic to anyone else? And since when did the government ever want to help out the layman at the expense of big business? Something seems fishy here…
For one thing – and at the risk of sounding a bit cynical – where’s my payola? I mean sure, I could have opted into one of those ARM loans when I purchased my mortgage (or when I refinanced it – on two occasions) but I understood the risk and chose the safer (and what I thought was much more intelligent) alternative – a fixed-rate mortgage. Hell, if I knew the government was going to step in and change the “rules” for the subprime option, maybe I would have chosen differently. But no … I thought I understood the risk and opted to select the higher fixed rate for the main reason that it was fixed. Now that it appears there’s a life-vest being thrown to those that chose incorrectly, it seems that my sound financial planning was in err…
And how, exactly, is this going to be a good thing for the nation’s economy? I think any somewhat reasonable person is aware of why the financial institutions were so quick to push the variable rate loans on pretty much everybody – they stood to make a lot of money if the economy took a downturn, right? Well, now that this downturn has occurred, the government is going to (at least temporarily) punish these financial institutions for bad choices made by borrowers? Yeah, I’m sure that’s going to please investors. I don’t think missing projected profits because the government decided to basically nullify the contract terms on millions of loans will sit too well with the people that were supposed to be making money with the original terms…
The main reason that this whole idea bothers me is because it’s just one more situation where ignorance is being rewarded in this country. It’s no wonder that other nations hate us when we keep getting away with such blatant stupidity. And since when was ignorance a viable candidate for charity? If they choose to “help” those that made the wrong loan choice, exactly when are they going to “help” those that chose correctly? Oh wait, those that chose correctly don’t need any help. For those that didn’t, I’m of the opinion that “you made your bed – lie in it”.
bis später,
Coriolis
Wednesday, December 05, 2007
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For months, I was yelling at the tv, radio, and co-workers when I heard the ads, for the come and get your love loans. Now, oh no, were in a crisis, because crooks peddled money to people who mostly didn't really need it for the appropriate reasons. Loans to pay off loans, to go on vacation, etc..I am sure there are a few honest people out there who needed it and were ready to pay the piper. But I've seen people driving around in Hummers and Escalades who can't even afford to maintain them. Wake up America! I hope the corporate lenders pay with jail time, but I'm sure they'll just lose their job and land on their cushy bonus butts.
ReplyDeletePeace out........
Mr. Books brings up another, slightly unrelated, yet still controversial issue and I whole-heartedly agree with his acrimony toward the over-abundance of “easy loan” ads obviously marketed toward the completely wrong audience. The thing that I don’t necessarily agree with is where he places the blame.
ReplyDeleteSure, I wouldn’t call selling loans to people who obviously shouldn’t be taking these loans a good business practice (in fact, as with the subprime mortgage loans I was discussing in my original post, it very well can come back to bite you…) but I still believe the blame rests on those that ignorantly signed on for these loans. Nobody was pointing a gun at their heads and forcing them to get further in debt – which, of course, is exactly what these loans are – more debt.
I guess it all basically comes down to reasons why the American economy appears to be doomed to another recession – and the main culprit is pure, unadulterated ignorance. I’ve already seen a couple articles that were suggesting this subprime mortgage bail-out will most likely lead to a recession (hmm, sound familiar?). Now I’m wondering when the government will be stupid enough to attempt saving all the idiots that are currently drowning in their “easy” loans. If this happens I’m thinking it’s going to be a long time before these loan sharks will attempt these questionable business techniques again … and that will be the only good thing to come out of it…