Bailout3: Hank Paulson says free markets don't work.

Parent Cafe
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<p>So the USA version of capitalism is the public doesn’t participate on the upside but pays for the downside.</p>

<p>[Paulson:</a> Taxpayers Should Bail Out Subprime](<a href=“http://www.fool.com/investing/general/2007/12/04/paulson-taxpayers-should-bail-out-subprime.aspx]Paulson:”>Paulson: Taxpayers Should Bail Out Subprime | The Motley Fool)</p>

<p>"Can you imagine this? Former Goldman Sachs (NYSE: GS) CEO Hank Paulson came out and said, “This nation’s taxpayers should bail out those who took risky home mortgages and cannot afford them.” </p>

<p>Those weren’t the words he used, of course. Doing that would have been political suicide. </p>

<p>Instead, Paulson capped his punish-the-public debtor bailout plan with a call to Congress to let taxpayers be bled by their local governments in order to fund the bailout. Hey, no one can accuse the administration of taxing the responsible to pay for the greedy and ignorant if they don’t do it directly, right? Sorry, Hank, but we’re on to you."</p>

<p>[Paulson’s</a> Plan to Punish the Public](<a href=“Paulson's Plan to Punish the Public | The Motley Fool”>Paulson's Plan to Punish the Public | The Motley Fool)</p>

<p>Bernanke doesn’t believe in free markets either, but his idea blew up with the problems of Fannie Mae and Freddie Mac. [Bernanke’s</a> Plan to Pick Your Pocket](<a href=“Bernanke's Plan to Pick Your Pocket | The Motley Fool”>Bernanke's Plan to Pick Your Pocket | The Motley Fool)</p>

<p>The joke is if USA lets the market work, the housing problems would be over sooner. Now we are doing things the Japan way and we aren’t going to get out of this housing mess for years and years. </p>

<p>People can’t afford houses. The best way for buyers to be able to afford a place is to lower the price. You lower the price, buyers can afford the house, they buy it, inventory drops, demand increases as more people can afford housing, supply decreases and the prices go back up after a time.</p>

<p>It’s a shame the former CEO of Goldman Sachs doesn’t believe in free markets.</p>

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<p>there is more underneath the subprime loan problem. Paulson is not working alone. And I pray that he isn’t. </p>

<p>HELOC loans set on valuation 2 years ago, variable, with collateroll now nonexistent. Banks prohibited in doing subprime could have done HELOC’s</p>

<p>Credit Cards. Need I say more.</p>

<p>Student Loans. $20,000 average debt of graduating student is the average, with ZERO collateral. PLUS loans with only a credit scoring and no assets. </p>

<p>Treasury Bonds based on the understanding that the Government can tax and the Citizenry the ability to pay and the need to pay the taxes. </p>

<p>Its not the fact that Paulson doesn’t believe in free markets, its that this administration’s belief that laissez faire works. Economics is above the thinking power of most of W’s crew and hence why we are in deep trouble. Even the Republican candidates know this and elude to this. Listen carefully.</p>

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<p>I’m not going to place the blame of the loan problems on Bush. The blame starts with Greenspan, the lenders, the borrowers, and the middlemen.
Plenty of blame to go around.</p>

<p>Reading your post though, getting credit sure was easy. Still is in some areas.</p>

<p>I think treasury bonds are still safe. ;)</p>

4

<p>I don’t disagree with you. The solution maybe harder and longer affecting the middleclass/working class, who are and will be sending kids off to college. </p>

<p>I personally think we should send a many of the brokers, lenders, underwriters, government regulators and CEO’s to jail for robbing, raping, and pillaging the public. I like how the Soviets and Chinese met out some of their sentences.</p>

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<p>“I like how the Soviets and Chinese met out some of their sentences.”
lol
In our country you get to keep the loot and get bonuses on top of that.</p>

<p>The middle class/working class, those that made prudent decisions and played by the rules, scre***.</p>

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<p>The Government Role:
[Fact</a> Sheet: Expanding Homeownership for All Americans](<a href=“Briefing Room | The White House”>Briefing Room | The White House)</p>

<p>The Government’s Responsibilty:
[President</a> Bush Discusses Homeownership Financing](<a href=“Briefing Room | The White House”>Briefing Room | The White House)</p>

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<p>I may be wrong here, but I do not think Paulson was proposing a government bailout using taxpayer money. I believe the proposal is to encourage or require banks to forego raising interest rates on some homeowner loans and thus limit the number of future foreclosures.</p>

<p>I cannot believe that banks would object to this because they dislike defaults as much as homeowners do. They hate being in the real estate business and their bottom line fiscals suffer because of write offs and cash set asides needed to cover problems in their loan portfolios.</p>

<p>In addition Paulson indicate that criteria would be developed to reset interest rates only for those loans where default is probable or likely.</p>

<p>This seems like a very common sense approach to ameliorate a bad situation in the home loan industry. And I fail to see where any taxpayer money would be involved. In fact if the proposals are successful, bank losses may be minimized and tax revenues enhanced.</p>

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<p>If the title of this thread were in a newspaper, it would be yellow journalism.</p>

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<p>Capitalism today:</p>

<p>privatize the profits.
Socialize the costs.</p>

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<p>No. It wouldn’t be yellow journalism. It would be the truth. The yellow journalism is telling the public we believe in free markets when we don’t. Garland has it right.</p>

<p>Paulson is proposing a taxpayer bailout. He wants state governments to issue tax free bonds and use that money to fund these mortgages. </p>

<p>This puts the state governments on the hook for the mortgages. This also lowers the rates for the homebuyers.</p>

<p>This also sets a bad precedent. The government is going to tell the private sector to rewrite contracts. I have no problem if the banks wants to do this on their own. I don’t want the government mandating the rewriting of contracts.</p>

<p>The government is also going to decide who gets help and who doesn’t.</p>

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<p>[How</a> low must housing prices go? - MarketWatch](<a href=“How low must housing prices go? - MarketWatch”>How low must housing prices go? - MarketWatch)</p>

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<p>I enjoyed garlands quip about capitalism. I agree w/ dstarks opinions.</p>

<p>Where are all the attorneys and their class action suits for all those people who were truely victims of fraudulent mortgage lenders? As for the house/condo flippers…tough.</p>

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<p>Sax, I think the lawsuits are going to happen.</p>

<p>Investigations are just starting.</p>

<p>[Wall</a> St firms subpoenaed by NY prosecutors: source: Financial News - Yahoo! Finance](<a href=“Yahoo Finance - Stock Market Live, Quotes, Business & Finance News”>Yahoo Finance - Stock Market Live, Quotes, Business & Finance News)</p>

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<p>[Possible</a> Moody’s Corp. Misled Investors Class Action](<a href=“http://209.85.165.104/search?q=cache:C76LX9pH6YkJ:www.lawyersandsettlements.com/case/moodys-subprime-mortgage-bonds.html+moody’s+lawsuit+class+action&hl=en&ct=clnk&cd=3&gl=us]Possible”>http://209.85.165.104/search?q=cache:C76LX9pH6YkJ:www.lawyersandsettlements.com/case/moodys-subprime-mortgage-bonds.html+moody’s+lawsuit+class+action&hl=en&ct=clnk&cd=3&gl=us):</p>

<p>“The suit alleges [Moody’s] ratings of bonds backed by subprime mortgages, including bonds packaged as collateralized debt obligations, were materially misleading to investors concerning the quality and relative risk of those investments.” </p>

<p>[cleveland.com:</a> Everything Cleveland](<a href=“http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/1195292055294310.xml&coll=2]cleveland.com:”>http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/1195292055294310.xml&coll=2):</p>

<p>“The lenders, [Judge Christopher Boyko] said, rush to foreclose on delinquent buyers. But when taking back the properties, they delay recording the deeds, leaving cities to board up empty houses and mow lawns. Boyko’s harsh words, written in an opinion issued last month, were footnotes in his explanation for dismissing 14 foreclosure cases filed by Deutsche Bank National Trust Co., a trustee for pools of mortgage-backed securities. The pools, some containing bad loans like the 14 from Deutsche Bank, are bought and sold electronically by Wall Street investment firms, leaving behind little or no paperwork showing who holds the notes. Boyko ruled that without written proof, Deutsche Bank has no right to foreclose.”</p>

<p>[State:</a> State revises fund’s rules](<a href=“http://www.sptimes.com/2007/12/05/State/State_revises_fund_s_.shtml]State:”>http://www.sptimes.com/2007/12/05/State/State_revises_fund_s_.shtml):</p>

<p>“The state fund’s meltdown has gained national attention as the first example of a major publicly managed fund struck by fallout from mortgage and credit crises.”</p>

<p>Dstark, I like Kellner’s commentary from Nov. 26, “Oldies but goodies that would have helped avert the subprime mess.”</p>

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<p>Mudder’s Mudder, nice links.</p>

<p>What is going on in Florida is scary. One of my supposedly safe money market funds is down over 5% this year. Maybe the government will bail me out. :)</p>

<p>Since you mentioned it, might as well put this link on here too.</p>

<p>[Oldies</a> but goodies that would have helped avert the subprime mess - MarketWatch](<a href=“Oldies but goodies - MarketWatch”>Oldies but goodies - MarketWatch)</p>

<p>Moody’s is trying to get ahead of the curve after their ratings fiasco.
[Bond</a> insurers fall; Moody’s warns on MBIA - MarketWatch](<a href=“Bond insurers fall; Moody's warns on MBIA - MarketWatch”>Bond insurers fall; Moody's warns on MBIA - MarketWatch)</p>

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<p>Agree with dstark and garland. Robbing the public, even the money people have in money market fund is not safe… Seems like Enron all over again.</p>

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<p>^Its different. The problems originated at the consumer level and vetted up the line, whereas Enron problem originated at the highest levels.</p>

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<p>I think the common theme is robbing.</p>

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<p>Here is an exerpt from yesterday’s news. It states quite clearly that neither Dems or Reps are in favor of a taxpayer bailout.</p>

<p>"Details of the Treasury plan, which could be formally unveiled later this week, stops short of a taxpayer-funded bailout for borrowers, an idea rejected by both Democrats and Republicans. Some specifics of the plan have trickled out, such as homeowners being given a break of two to five years if they are currently making payments on time but wouldn’t be able to do so when their mortgages adjust to higher rates.</p>

<p>Publicly, industry executives at a national housing conference sponsored by the Office of Thrift Supervision on Monday generally praised the concept.</p>

<p>Daniel Mudd, chief executive of government-backed mortgage finance company Fannie Mae called it a “positive step,” saying that many borrowers will be able to avoid foreclosure if they are given more time. “You need time to cure” the problems, Mudd said."</p>

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<p>[Paulson</a> outlines mortgage-aid plan - Yahoo! News](<a href=“http://news.yahoo.com/s/nm/20071203/bs_nm/usa_subprime_paulson_dc_3]Paulson”>http://news.yahoo.com/s/nm/20071203/bs_nm/usa_subprime_paulson_dc_3)</p>

<p>"WASHINGTON (Reuters) - State and local governments should be permitted to issue tax-exempt bonds that would fund programs to prevent foreclosures, Treasury Secretary Henry Paulson said on Monday. </p>

<p>“Today, we are proposing to allow state and local governments to temporarily broaden their tax-exempt bond programs to include mortgage refinancing,” Paulson told a housing conference sponsored by the Office of Thrift Supervision. “If enacted, this would reduce the cost of innovative mortgage programs.”</p>

<p>Last week, Paulson met with U.S. lending regulators and executives from several sectors of the mortgage industry to develop a plan to help subprime borrowers who could lose their home when their mortgage rate increases."</p>