Forum Post: They should go to jail!
Posted 13 years ago on Oct. 29, 2011, 1:30 a.m. EST by Someguy
(12)
This content is user submitted and not an official statement
Americans with no job or very little credit were given home loans. Wall street packaged up the loans and sold them as securities and then other people who saw the flaws bought insurance against the mortgages assuming they would fail. The ones who bought the insurance made a lot of money. They should not be faulted for anything nor should they be punished. They simply saw the flaws in the system and figured out a way to make money from it. One the other hand, the mortgage companies, mortgage brokers and several bank officials should find themselves standing in front of a judge and jury on trial for fraud. Many of the sub-prime loans were just completely bogus. They would use no doc or stated income with no proof. Many people got loans that made 14k a year and stated they made 100k per year. No underwriting was done the loan was simply made. Many of the loans the first payment was never even made. This caused home prices to inflate due to a simple process of supply and demand. Demand was huge and supply was dwindling as a result of free loans for everyone. When the loans started defaulting the banks began losing significant amounts of money and stopped lending. The foreclosure rate rose rapidly as more and more of the loans were issued. This killed housing prices. Now most of us see a large supply of homes in our communities with very little demand.
Everything started during the Clinton administration and carried over through Bush and into Obama. The correction in the market began during Bush but has continued through Obama. The bailouts only prolonged the agony. The bankers learned that no matter how crazy they are with leading that the fed will bail them out.
I've read a lot about the evils of capitalism on this forum but we do not live in a capitalist environment now. We have some strange rendition of capitalism. Capitalism is simple. The government stays out of it. If the government stayed out of it then most of the banks that had been completely nuts would be gone now. The CEO's that we are all agitated with would be penniless and homeless because there companies would have gone completely broke. The lesson would have been learned. Capitalism is allowing the system to work itself how. Goods and services are produced and sold for profit. If there is no need for that good or service then the company will fail to exist. Get government out of our businesses and we strive as a country again.
This country was founded by businessmen and commoners alike with a single goal that it should be run with very little regulation from the government and without taxes that create a burden on the people. Taxes-we started a revolution over taxes and over leaders that felt like they were more powerful than the commoners. WHO WON?
The idea of the banks recovering the loss thru selling the property is, at this time, ludicrous
Idea: Banks should be required to ' Suspend' payments and interest accumulation if a person loses their job during an 'economic downturn' until that person finds a comparable paying job or until the national unemployment rate is less than 5%.
this would force the economy to create jobs in order to survive
I've seen you post this several times. People have for many years lost their jobs and houses. It is the nature of the world and it sucks. I'm personally am fighting right now. The problem with the idea you have is that corporations can not be made to hire. They will simply close the doors and go away very rich if someone attempts to make them hire. A corporation is not controlled by the government. This also blows up my thought on capitalism. You have to let people fail in order for them to later succeed. Lose your house and go rent something, an apartment or house. This leaves the mortgage holder with a deeply undervalued property to unload thus they lose significant amounts of money. They then go broke and fail. No more crappy company making crappy loans to people who should have never owned that house anyway. The American dream has always been to own a home but we took that dream and made it much to easy a reality for many undeserving people. You as an individual can buy insurance on your note if you become unemployed or disabled that can make the payments for you but you have to be employed when you buy it. Many people that got these loans were not employed or were "self-employed" when they got the loans and therefore could not get the insurance. There are plenty of protections in place for the individual in the event of something catastrophic.
im sorry but the idea you can buy insurance for job loss is not true. thats a new ploy being used by some credit cards and the auto companies. people have not lost jobs at this rate in many many decades. you must see this is an out of the ordinary amount of job loss. There have not been 5000 people lose their jobs in one day in this country since the Depression.
the way it would force jobs to be created is because they do not want to go out of business. the banks would only loan to the companies that create jobs and the business that do not create jobs would go out of business but banks would be solvent because they are now getting the money from the mortgages after all.
I sell it so I know it exist. Don't speak on things you know nothing about. They don't care if they go out of business. Most companies are family owned and operated and if they are profitable they will just retire and start over under another name. Most corporations do not get loans from banks. They issue bonds and investors lend them money. Your solution will not work. You obviously no very little about running a corporation. I own a very small corporation and have no money to hire at this point. If I got a bank loan I could hire but still have no need to hire. I would not hire unless I had a necessity. I am not the 1% but I am an intelligent business owner and I know when to hire and when not to hire. The rule of thumb is to keep over head low and cost low so I don't have to borrow.
yes, this is because your small business only makes enough money for you and a few others. while that is good for a few, it will not reemploy 450000 people . \ if this would not work, because housing does not have a big impact on banks then what was the bailout money for? whose money did that replace for the banks?
And by sell it I mean insurance against unemployment. It is not new and has been around since the 90s. In the 90s I also watched thousands of people lose there jobs in one day. In 1983, roughly unemployment was higher than we are seeing right now. You see this is all a vicious cycle. The economy shrinks because of some event, usually increased inflation or a diminishing dollar or a rise in oil prices or a multitude of other things. Then people quit spending money (because they do not have it). Then corporate earnings fall. Then people begin to lose their jobs. Then the cycle starts to turn. Corporations have thinned out and are not profitable again. People start getting hired again. Then they start spending again and then the corporations really grow again. The cycle repeats itself about every 10-20 years. Unemployment is not the problem. It is politicians who believe they can fix everything by throwing money at it or making a new policy to complicate it.
Thats basically it, in a nutshell
Well put.
Go to jail? For doing what congress told them to do?
But other than that, your spot on. Our current system is actually more like corporatism or crony capitalism because its the govt who decides who wins and loses and who gets the tax payer's money.
Oh one more thing, the reinvestment act began with Jimmy Carter, no clinton. Clinton and Bush did their fair share to make things worse, especially Bush's no doc loans. And Obama is just stoking the same fire, because more poison will cure ya, right?
No I want the congressman and women in jail too. It is fraud any way you look at it. Congress said make loans, the lenders said okay and made what ever crap they could come up with. It was then sold to wall street with a AAA rating from the ratings agency and sold off to investor who believed they were buying AAA paper. Funny thing is was really junk paper.
You are right about Carter my fault but it ran rampant starting with Clinton and then moving on. The repeal of Glass-Steagall (probably spelled wrong) made it all that much worse.