Comments on: The ethics of the Fannie and Freddie bailout http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/ Everything to do with thickening your wallet Wed, 01 Feb 2012 15:44:00 +0000 hourly 1 http://wordpress.org/?v=3.3 By: Mike http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16958 Mike Fri, 12 Sep 2008 21:04:09 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16958 It's not just Fannie and Freddie....include the banks, mortgage brokers, home builders, inspectors, insurers, and the media. They all hyped a product, (for their piece of the pie), and the market moved in that direction. With initiatives like 0% down, 105% cash on closing, 40-year mortgage with interest only for 10-years at 2% initial terms...it just wasn't going to end. That is what free-market enterprise is all about. But, bailing out Bear-Sterns, Fannie & Freddie and probably Lehman Bros., (and ultimately the family home owner too), will just delay an even more catastrophic financial ending. That has yet to be determined. Mike It’s not just Fannie and Freddie….include the banks, mortgage brokers, home builders, inspectors, insurers, and the media. They all hyped a product, (for their piece of the pie), and the market moved in that direction. With initiatives like 0% down, 105% cash on closing, 40-year mortgage with interest only for 10-years at 2% initial terms…it just wasn’t going to end. That is what free-market enterprise is all about. But, bailing out Bear-Sterns, Fannie & Freddie and probably Lehman Bros., (and ultimately the family home owner too), will just delay an even more catastrophic financial ending. That has yet to be determined.
Mike

]]> By: Jerry http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16953 Jerry Fri, 12 Sep 2008 09:14:58 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16953 Lots of people tend to make stupid choices with their money, for whatever reason. I think that leads me to view them less as victims. However, many people lack the education or language skills to discern between a legitimate mortgage (or insurance, or investment) product and a scam... perhaps they could use some protection? Jerry Lots of people tend to make stupid choices with their money, for whatever reason. I think that leads me to view them less as victims. However, many people lack the education or language skills to discern between a legitimate mortgage (or insurance, or investment) product and a scam… perhaps they could use some protection?
Jerry

]]> By: admin http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16872 admin Wed, 10 Sep 2008 04:45:34 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16872 ...one other galling point. The executives of both companies made out like bandits and will get away with all of this since if there was a crime of business stupidity, 80% of business leaders would be in jail. One wonders why a company how is supposed to deal with long-term holdings like mortgages was publicly traded which favors short-term returns. Did someone not figure out that eventually, this inconsistency between business model and structure would lead to this? …one other galling point. The executives of both companies made out like bandits and will get away with all of this since if there was a crime of business stupidity, 80% of business leaders would be in jail.

One wonders why a company how is supposed to deal with long-term holdings like mortgages was publicly traded which favors short-term returns. Did someone not figure out that eventually, this inconsistency between business model and structure would lead to this?

]]> By: Geoff http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16868 Geoff Wed, 10 Sep 2008 03:32:16 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16868 If there will be a mass of people having to vacate their homes, wouldn't that mean house prices will drop - allowing those who are renting and saving *right now* to buy those homes? Sure that hurts the current home owners. Must houses keep their value, using the heavy taxing hand of the state? Is a home a glorified guaranteed investment certificate? Consider the dot-com crash. For those who bought Nortel stock with margin, did the state bail them out? No, we let the margin calls lead them to cover. Did we try to prop up the stock again to protect the people who actually owned and were long Nortel? No. If there will be a mass of people having to vacate their homes, wouldn’t that mean house prices will drop – allowing those who are renting and saving *right now* to buy those homes? Sure that hurts the current home owners. Must houses keep their value, using the heavy taxing hand of the state?

Is a home a glorified guaranteed investment certificate?

Consider the dot-com crash. For those who bought Nortel stock with margin, did the state bail them out? No, we let the margin calls lead them to cover. Did we try to prop up the stock again to protect the people who actually owned and were long Nortel? No.

]]> By: The Rat http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16866 The Rat Wed, 10 Sep 2008 02:42:07 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16866 What I found to be totally deplorable, was how Fannie and Freddie had kept so many shareholders in the dark by completely denying the severity of the situation and reassuring people that 'all was well' up until the boiling point to the announced massive bailout. Just think about the prospective educated risk takers that bought shares thinking things have ' bottomed out' only to realize that they've been mislead or arguably even lied to! Crazy stuff if you ask me. What I found to be totally deplorable, was how Fannie and Freddie had kept so many shareholders in the dark by completely denying the severity of the situation and reassuring people that ‘all was well’ up until the boiling point to the announced massive bailout.

Just think about the prospective educated risk takers that bought shares thinking things have ‘ bottomed out’ only to realize that they’ve been mislead or arguably even lied to!

Crazy stuff if you ask me.

]]> By: Astin http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16848 Astin Tue, 09 Sep 2008 19:04:38 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16848 This is a special case based purely on the incredible size of Fannie & Freddie. Trillions in mortgages can't be easily doled out to other firms if these two folded. The bailout was necessary to prevent a complete collapse. Yah, it sucks for the people who can actually afford their homes, pay taxes, and weren't stupid enough to fall for the subprime crap, but millions of homes being left vacant hurts those people in the long run too, because some of their neighbours are the ones vacating. But generally speaking, I think that companies need to be allowed to fail. Bailouts only prolong the inevitable and do nothing to create a leaner, more efficient system. This is a special case based purely on the incredible size of Fannie & Freddie. Trillions in mortgages can’t be easily doled out to other firms if these two folded. The bailout was necessary to prevent a complete collapse. Yah, it sucks for the people who can actually afford their homes, pay taxes, and weren’t stupid enough to fall for the subprime crap, but millions of homes being left vacant hurts those people in the long run too, because some of their neighbours are the ones vacating.

But generally speaking, I think that companies need to be allowed to fail. Bailouts only prolong the inevitable and do nothing to create a leaner, more efficient system.

]]> By: Canadian Dream http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16846 Canadian Dream Tue, 09 Sep 2008 18:14:59 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16846 I gotta agree a bit with Geoff. This mess has been coming for a while, so by bailing people out you just drap out the mess over a longer period of time. The housing market needs to correct one way or another. Will it suck? Yes, but it needs to happen at some point. I gotta agree a bit with Geoff. This mess has been coming for a while, so by bailing people out you just drap out the mess over a longer period of time. The housing market needs to correct one way or another. Will it suck? Yes, but it needs to happen at some point.

]]> By: Paolo http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16843 Paolo Tue, 09 Sep 2008 17:25:54 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16843 Similar to the bailout of LTCM in the late 90s. If the Fed had not intervened, LTCM would have brought down the whole economy. It leads to bad precedent, since it will be expected that the government will help when things get ugly. It's a catch-22, since if the government does not intervene, things just get worse. Similar to the bailout of LTCM in the late 90s. If the Fed had not intervened, LTCM would have brought down the whole economy. It leads to bad precedent, since it will be expected that the government will help when things get ugly. It’s a catch-22, since if the government does not intervene, things just get worse.

]]> By: 45free.com http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16840 45free.com Tue, 09 Sep 2008 15:56:35 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16840 While I am not a big fan of bailing out speculators, I think Mr Spock said it best when he said "The needs of the many outweigh the needs of the few, or the one". Paulson is a smart man and I suspect that this move will start the unfreeze of the market and ultimately, the US taxpayer will not be on the hook for much if any of this and may even end up making money on the deal. While I am not a big fan of bailing out speculators, I think Mr Spock said it best when he said “The needs of the many outweigh the needs of the few, or the one”. Paulson is a smart man and I suspect that this move will start the unfreeze of the market and ultimately, the US taxpayer will not be on the hook for much if any of this and may even end up making money on the deal.

]]> By: Geoff http://www.thickenmywallet.com/blog/wp/2008/09/09/the-ethics-of-the-fannie-and-freddie-bailout/comment-page-1/#comment-16832 Geoff Tue, 09 Sep 2008 12:54:11 +0000 http://www.thickenmywallet.com/blog/wp/?p=397#comment-16832 I believe keeping out market forces will only make the mess worse. If not now, when? I believe keeping out market forces will only make the mess worse. If not now, when?

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