<p>I am sick of this heasds I win, tails you lose.</p>
<p>Bank of America wants the federal government to buy mortgage loans. If the federal government is going to buy bank loans, and they already subsidize bank loans, why should the banks exist?</p>
<p>I don’t think the banks should. If the federal government (which means us) is going to take the risk off the banks hands, then we should get the reward. We should get the reward of all the loans, the good ones too.</p>
<p>So BofA, maybe it is time for you and others to go out of business (after I take my money out :)).</p>
<p>The federal government loans money to the banks at low rates, around 3 to 3 1/2 percent and then the banks loan the public money at 5 1/2 % or higher. Time to cut out the middle man. Time to get rid of the banks. Let the public borrow at low rates. I’m sure the public will be happy paying 4% for loans.</p>
<p>Disintermediation has been going on for a long time. One of the problems for the housing bubble is that disintermediation was a cause of the bubble and subprime lending. Mortgage brokers and financial institutions removed the intermediaries that vetted the loans.</p>
<p>I suppose the banks would close, assets would be liquidated, creditors would get what they could under bankruptcy laws, and that’d be it for that bank unless some other company wanted to take it over. Why should it be any different than any other business?</p>
<p>"But as losses from bad mortgages and mortgage-backed securities climb past $200 billion, talk among banking executives for an epic government rescue plan is suddenly coming into fashion.</p>
<p>A confidential proposal that Bank of America circulated to members of Congress this month provides a stunning glimpse of how quickly the industry has reversed its laissez-faire disdain for second-guessing by the government — now that it is in trouble.</p>
<p>The proposal warns that up to $739 billion in mortgages are at “moderate to high risk” of defaulting over the next five years and that millions of families could lose their homes.</p>
<p>To prevent that, Bank of America suggested creating a Federal Homeowner Preservation Corporation that would buy up billions of dollars in troubled mortgages at a deep discount, forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates."</p>
<p>We went from a $100 billion problem to a $739 billion problem? The public is not told the truth.</p>
<p>As for what happens if the banks blow up… New ones will take their place. New banks with new rules.
Rule No.1… Do not lend money to people that can’t afford to pay the money back.
Rule No.2…Do not loan money to people or companies that are putting nothing down in the deal.
Rule No.3 Do not use excessive leverage.
Rule No.4 You screw up, you are out of business.
Rule No.5 Executives have to pay back their bonuses, if within 5 years, the bank loses money after it was stated it would make money.
Or Rule No. 6 If you need a government bailout, sell out. You are out of business. </p>
<p>“forgive debt above the current market value of the homes and use federal loan guarantees to refinance the borrowers at lower rates”</p>
<p>What is this crap? Are we just going to hand our taxpayer money to people that overpaid for their homes? Are we going to bailout private institutions for their poor judgments?</p>
<p>I may be wrong but when we bailed out the S&Ls almost 20 years ago, those S&Ls closed up shop or were sold to new owners.</p>
<p>If we use taxpayer money to “keep American industry competitive”, why not bail out the people who work for it?</p>
<p>We are all that “somebody else” - that’s how corporate socialism works. So bend over, and, if our education systems work well, you’ll learn to like it.</p>
<p>You better watch that lol business and get with the program…the only reason you haven’t been turned over to the rendition folks as of yet is because your local communications company is refusing to cooperate…</p>
<p>dstark: I agree. I don’t want to bail out either the home buyers or the banks. They should all suffer pain in proportion to their mistakes. I hate it when the government (i.e, me) has to cover other peoples’ losses while never getting to share the profits.</p>
<p>I doubt that you hate that at all. Over time, the NIH spends tens of billions of tax dollars and supporting drug research of private pharmaceutical companies. Ninety percent of the time the drug never reaches the market, and the money simply supports the company’s loss. Why is this different? The government (i.e. you) has determined that it is essential that there by a liquid market for home that supports buyers, realtors, builders, and banks. Occasionally, some of these get into trouble. It’s better than providing rent support, or much larger deductions for purchases of small starter homes, isn’t it?</p>
<p>So now I am hearing about mortgage default swaps and that this could also be mismanaged to the tune of trillions. Do you folks have a handle on what this is because I am a bit lost but am getting concerned w/ the safety of all my assets. Seems like something much bigger is happening than anyone wants to share. Am trying to research and understand.</p>