Why do some people insist on absolving people for making bad financial decisions regarding the housing crises?

Question

If you want to argue that the lending industry is largely responsible for the economic effects brought about with bad loans based on easy qualifying. I will agree with you. However, it does not absolve the consumer from taking the time to become informed about the terms, conditions and ramifications prior to entering into the loan agreement. Nor does this failure on their part entitle them to be bailed out at tax payer expense.

Thoughts?

Answer 1

i agree in personal responsibility, but the banking industry can be guilty of the hard sale.  (ya know, like military recruiters)  

i don't think these debts should be absolved, but maybe work out a percentage ...  ??  the bank should lose the interest they would normally get   ??  i know they better not be getting full price from the tax payers!  

all the "??" are because money and finances are far from my strong suit,  and i still didn't fall for the easy mortgage.

Answer 2

I'm never suprised to see our government bailing out anyone.  We as a country have relied on uncle Sam so hard, that if we were forced to live by ourselves, without the feds saving for our retirement, saving us constantly from terrorist threats,  protecting our food, water, air, guns, Tv, what would we do!!

The people of this country need to realize that every time the goverment helps....stuff gets worse....period...since the beginning of time.

Answer 3

I absolutely agree with you. This is a basic consumer protection law issue, that forgets about personal responsibility and accountability. While lenders and vendors shouldn't lie or commit fraud on consumers, consumers should be responsible for educating themselves and making informed, smart decisions. I don't really feel bad for the people that buy ridiculous things that they really can't afford and then blame someone else when they encounter financial problems.

Answer 4

Because, republicans don't want to bear responsibility for a hard crash.   The housing market is infused with our economy.  Pensions, IRAs, and 401ks were heavily invested in the secondary mortgage market.   So, when a homeowner looses his home, it also dings the economy in a miniscule way.  If you multiple that by hundreds of thousands it can actually effect your investments as well.  

Republicans also, hope you everyone will forget that they are also responsible due to their animosity towards sensible regulation.

Answer 5

Both parties are guilty of making bad decisions.  On a case by case basis, one will be more responsible than the other, but you can't make blanket generalizations that all of these or those people are at fault.

They are not the least bit entitled to a bailout, the lenders or the mortgage holders, but the fact is that it is bad economic policy to allow them to outright collapse.  You could s***w the homeowners for making bad decisions without too much economic loss, but I say if the large corporations get the bailout, then so should the homeowners.

Answer 6

Do you feel the same way about corporate bailouts like the bailout of Bear Sterns?  The media always criticizes and judges regular people who were victims of fraud from those who are supposed to be the experts that can be trusted, yet no one ever says anything about these companies that get bailed out by tax money after what they did.  And no one could have really predicted this inflation--what was within someone's budget back then, may not be today.  If some assistance (not a bailout or handout) is needed to keep families and the eldery in their homes (who are facing foreclosures not just because of bad decisions but because of inflation and rising property taxes) then I'm defintely am for it.  They can take those billions back from bailing out Bear Sterns and other banks, investment companies, and corporations that messed up.  Other businesses aren't that lucky when they fail or mess up, so why do they get special treatment?

ynot: That's not really true because after the Bear Sterns bailout, JP Morgan annouced thousands of layoffs for Bear Sterns employees.  JP Morgan also benefitted from this deal with the Fed (and got zero-risk loans, too!) and they paid taxpayers back with massive layoffs and more foreclosures and unemployment!

http://www.nydailynews.com/money/2008/03...

Answer 7

Agreed if you can not afford a 1% increase in your loan payment you have no business being that house.

Answer 8

This is response to dum dum the reason why government bail out some institutions is because it is cheaper to bail them out than let them go under...I will give you an example in the 70's Chrysler was near bankruptcy and needed a billion dollars to remain solvent most people was against it  but I bought stock when it went to $3 dollars a share...why? If Chrysler went under that would mean 10 of thousands of Chrysler workers out of work and probably 100 of thousands that work for their suppliers government would have to pay billions in unemployment not to mention increase in welfare the bailout was a no brainer to me I hope I was able to give you a different perspective.....by the way my stock went from $3 a share to $41 in 2 years.

Answer 9

If the United States was not already a nanny state (thanks to F. Roosevelt and others) this would be a very easy question to answer. Every real estate loan in question had an accompanying contract. I would council people to do what my father taught me to do. Read every word before signing and make sure you understand it. Your signature means you agree to the terms of the contract. If you cannot fulfill the obligation, you must give back the property and go rent.

In 1913 Woodrow Wilson allowed the banks to take over control of our money. They started the Federal Reserve System, a partnership between the banks and our government. To insure the banks solvency, the IRS was started in the same year and the US Constitution was amended to allow taxation without apportionment.

XVI Amendment

"The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several states, and without regard to any census or enumeration."

In other words, a green light to take however much they need, whenever they need it. Right up to the point of citizen revolt if necessary.

Wilson (a Democrat btw) was a busy beaver that year. The Fed was promoted as a market equilizer. They were to balance out the highs and the lows. Turns out, they do a pretty good job but they can royally s***w up too. In 1929, they wrongly chose to tighten the money supply when what we really needed was a cash infusion, sending us deeper into ressession. But I digress...

Before the Fed, and before the Federal Deposit Insurance Corporation(FDIC), two glaring features of the nanny state, if a bank made bad loans or bought questionable loans from a third party, the bank was on its own--sink or swim. Investers were at risk, as it should be, not the American people.

So before the nanny state, the contract stood as the full force of the transaction and the courts stood as remedies for breach. People and businesses minded their business, and the government minded its business.

But...  You asked this question in 2008. The complexity of the nanny state makes it impossible for simple minds like mine to figure out what the heck is the right move. Trouble is, Bernanke probably doesn't know either.

Alan Greenspan, 20+ year Chairman of the Federal Reserve (retired), was recently asked "Is the Fed good for America?" To which he responded "That is the question."

I read Iacocca's autobiography years ago. I remember as CEO of Chrysler, he was paying himself $1 per year. I also remember that one Tuesday all of Chrysler had $700,000 dollars in the bank and untold zillions of people were expecting a paycheck on Friday. The government came to the rescue. Should they have? 2020 hindsight says, in our nanny state, yes.

Should we have bailed out Bear Stearns? Ask me in 20 years. My gut says no.

Should we bail out homeowners that made bad deals? Again, ask me in 20 years. Again, my gut says no.

Answer 10

You will find somebody on any side of any issue. Why are you surprised that people's opinions vary over the mortgage crisis?

Look the reality is that we will probably bail out a bunch of banks who spent YEARS operating under very poor business judgment. We will probably also provide aid for a fraction of the home owners who are at risk.