Mortgage "Crisis" and Bailing out banks?

It is an opportunity for the rich to get richer, JP Morgan Chase will reap the benefits of this "bail out", while the tax payers bear the burden and the victims (home owners) are left to their own devices. Our Government is about big corporations making bigger profits, not the welfare of the Citizens.

It's a double edged sword. Our economy is failing right now, so if we neglect the large corporations that produce (or have produced) these loans in the past, then investors will not support these companies, they will fail, as will millions of investments made withing their portfolios. This would cause an even larger collapse because several million Americans would see their retirement funds fold out from underneath them, as well as the price of their home.

Now, I fully understand the other side of the sword, where you are coming from. Right now, millions of Americans are losing their homes over faulty loans that were written for them at a time when it seemed that our economy would prosper for many years to come. What I mean by that is all of these loan underwriters basically told the borrowers not to worry because in the future they could simply refinance their home and settle any type of debt they might get in for a crappy loan (neg-am, option arm, interest free, etc.). That itself, imo, is a travesty. Any loan writer worth his weight in dogsh*t knows that housing bubbles MUST correct themselves. In fact, any economic cycle must ALWAYS correct itself. However, the job of the Fed is to ensure that these corrections are as minor as they can possibly be.... However (again), this housing cycle was incredibly out of proportion, and anyone as close to the cycle as a loan underwriter should have seen it coming. The problem was (and still is) regulation. There was NONE. So, therefore, these loan underwriters, many of them young upstarts branching away from their large employers to make even more money, decided to squeeze every penny that they could from the wealth of new buyers that all of a sudden could enter into the market. Terrible, terrible, terrible regulatory problems have lead us to where we are now.

So, to answer your question, we are currently bailing out the lenders because everyone who is in charge of regulation was put there by our current administration. The same ones who still insist on giving all of the large businesses more and more tax breaks and less and less regulation. As you can see by true life examples, money is the root of greed. Less regulation equals more chances for people to squeeze others for money. This, in turn, breeds greed. It's now up to us to elect someone who will put the right people in the right positions to fix this problem. We also need more regulation, especially in the housing market. So, logic would say, we need more Democrats in office to achieve more regulation. The Senate, where Dems are the majority now, has already inacted discussions on a measure that would bring $15 billion into the mix to help avert foreclosures and help those getting foreclosed on. So, our government isn't completely sitting on their hands right now... just our President.

Bank failures are too closely tied with the great depression, and they spark panics. The bail out had to be done.

The US government has been put in a weakened financial condition by the borrowing to finance the war combined with tax cuts.
Yes, we should help the lenders, but how can the government buy off the bad loans and give better terms when it is borrowing to do it?
The piper must be paid and the current administrations ONLY legacy may be that they "cut taxes".

Tax, tax, tax.
This burden will rest squarely on the backs of people like me that fought for a fair and reasonable mortgage deal. It will also rest on the backs of those that don't even own real estate!

This is an unfair situation, at it's core! Investors should bear the risk, not the public!

If you lied on your loan application, you deserve to loose your house.

If you invested in questionable mortgage paper, or a financial institution holding questionable mortgage paper, you deserve to have your investment go down in value. Where is the risk for investors when the government forces us to bail them out?

Yes, John K
"Fannie Mae and Freddie Mac now have billions more to lend to people facing foreclosure." But more what? More paper with ink? Flooding the market with additional money dilutes the value of the money that's already out there. Have you seen the Dollar against the Euro lately? We're all getting "taxed" from the back-end!

While I agree this is ridiculous, this is sadly not new. When the Great Depression first began, President Hoover responded with a huge garbage truck of money to dump on the so-called experts who had over-leveraged themselves and put the entire economy into the sewer. Of course, as no one should have been surprised, the money did absolutely no good because it went mainly to executive compensation.

In response to pleas from the public in general for some sort of relief, however, the only (literally) response from the White House was the Treasury Secretary suggesting that restaurants VOLUNTARILY sort their trash into 'edible' and 'inedible.'

Oh, and Donald Trump recently released a new book, stating that the collapse in the housing market is going to be one of the greatest windfalls for the upper class, as they will be the only ones with the resources to snatch up the hordes of abandoned properties when the market finally hits rock bottom.

I prefer the analogy, its more like the shepherd protecting the wolves while the sheep get slaughtered.

Even though I am a big advocate of personal responsibility it was the banks who set their own credit standards and who preyed upon the unsuspecting public. No one forced them to give out those loans and they should have known better. It just shows that greed can take advantage of anyone, even the so called smartest people in the room.

But let it be a warning to home buyers, before you put your signature on a 30 year loan that is going to take up a large portion of your income, have an independent professional look over the contract first.

I hear what you're saying and from a right/wrong perspective you're right. But, the fact is if these banks go under they drag us all down. The country's economy can stomach Joe Sixpack losing his house, it can't survive a meltdown of the major financial institutions because the dollar will plummet even further, there will be no lenders left for the loans necessary to get the economy back on it's feet, and interest rates will have to be cut further. It's just the reality of the situation.

You don't need to be a financial professional to know you are overextending themselves. Your view is a huge cop out on personal accountability.
I do not agree with the bail outs.
The government is not stepping on laymen. In fact, Fannie Mae and Freddie Mac now have billions more to lend to people facing foreclosure.
Your glass seems to be half empty.

$500 to an attorney would have prevented this. I was always told never ever to sign papers I didn't understand fully.

Actually many states are now putting in place safety nets to catch the people falling.

OMG, I actually agree with Agnes for a third time. This lending debacle and subsequent bailout is appalling. The Dems in Congress are upset a larger assistance package wasn't approved...that is even more appalling.