Why should I expect my government to bail me out of a poor investment decision (adjustable rate mortages)?

Question

I bought some stock that I lost money on as well...should they reimburse me for that too?

Answer 1

The housing market has taken a real hit.

There are a lot of people losing their homes

If it gets too bad, we could be looking for serious problems

FDR stopped foreclosures to keep people in their homes.

One or more of three things causes revolutions

#1 Lack of shelter

#2 Lack of food

#3 Lack of safety

Your investment is not a home.

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Life is so simple, but we insist on making it complicated

Confucius

551 - 479 BC

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Peace

Jim

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Answer 2

Part of the rationale behind the government helping homeowners who were lured into a mortgage they could not afford is this; government regulation of banking and mortgage companies failed, and so some of the responsibility rests with government.  If mortgage lenders qualify someone for a $350,000 mortgage, when by sensible lending practices that person would only qualify for $120,000, several things happen.  One is that all these peole who were qualified for higher mortgages go out armed with wads of cash they do not have.  This excess cash drives the prices way up.  One of the functions of house prices is interest rates and maximum mortgage amounts prospective buyers can obtain.  If buyers can get  $100,000 or $200,000 MORE than they should, they will run around putting bids on houses at drastically inflated prices.  So bad lending practices had the effect of driving up home prices, and people then were lured ionto agreeing to pay far more than they could afford for an overinflated house price.  Since lax government oversight made all of this possible, government shares some of the blame.  The home buyers also share some of the blame, as do the lenders who made the deals in the first place.

Answer 3

I don't have a problem with the government helping out those who were truly scammed into those mortgages (that did happen in some cases), but I think the companies who scammed them should pay in the end, as well as a huge fine.

If people were just irresponsible and took loans they knew they couldn't afford, they should be allowed to fail.

And the companies that gave loans to people they knew could afford them should be allowed to fail too.  Bear-Sterns should give our money back!

For those of us who were and continue to be responsible, no good deed goes unpunished.

Answer 4

Because government bailouts have been happening since the Ancient Egyptians decided to store grain to feed people in time of drought.  Whether this is such a disaster is a matter of opinion.

Banks and accountholders expect the FDIC to bail them out if a bank fails.  Farmers expect the Dept. of Agriculture to subsidize them and  to bail them when there are crop surpluses and droughts.  New Orleans flood victims expect bailouts.  Bear Stearns got a bailout.  Why not homeowners?  

Otherwise, the loans will default and the homes will be sitting vacant, unable to be sold and everyone will lose.  But the guys who reaped the profits and are really being bailed out are the banks that misassessed the risks and lent to them.  

Oh - and the government does subsidize your stock loss by giving you a tax deduction.  Why should you get that?

Answer 5

You shouldn't expect the government  to bail you out.  But people do not want to take responsibility for their actions and decisions anymore, so they expect the government to do it for them.

L

Answer 6

No.

If you did that, it was you who screwed up.  People must take responsibility for their actions in a capitalist society.

But, the Federal Reserve also shouldn't bail out their bankster buddies when these loans fall through en mass.  (Like the bailout of Bear Stearns.)

The individual banks are just as much to blame for relaxing their underwriting guidelines and giving loans to risky borrowers.  Especially since it was the banks that sold these adjustable rate mortgages at 100% Loan-to-Value to people who were already considered credit risks.

The Federal Reserve is also at fault for not allowing the free market to control interest rates, but instead deciding that their "experts" in the figurative ivory towers in D.C. and NY know what interest rate banks should charge their customers.  Keeping rates at 1-3% for over a decade has resulted in over-borrowing and malinvestment across the board.

If banks keeps rates too low for too long, or they loan money to risky borrowers, they will start to lose money... then they will have to raise their rates and tighten their guidelines.  This is how the free market is supposed to work.  If you lose money as a business owner, you raise your prices.  

What did the Fed do?  They lowered them.  (Fighting inflation with inflation is like putting out a fire with gasoline.)

To allow Bernanke and his bankster buddies to arbitrarily set the lending rates for the entire banking system is essentially price-fixing.  This is why we are in this mess today, and the whole thing is starting to unravel on them.  The consumers are at fault for sure, but they did not start the problem.

In this case, everyone needs to share the blame.

But no one should be bailed out either.  This is what happens in a free market when you try to take advantage of the system.

Answer 7

It's an election year. Politicians are doing the thing they always do: buying votes.

Answer 8

Whatever.  We had no problem bailing out banks that made "poor investment decisions".  They were supposed to be PROFESSIONALS and they made billions on their sketchy loans.  I think there should be definite guidelines for who gets assistance but I do think there should be help for people.

Answer 9

if you'v always been bailed out, or pardoned for past errors, there is no reason you should not expect the same pattern to continue

part of the difference between an adolescent and an adult