Breaking an ARM

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