Treasury staffers began conversations with congressional aides by saying the administration supported cramdown and would then “follow up with a whole bunch of reasons” why it wasn’t a good idea, said an aide to a senior Democratic senator.
Homeowners, Treasury staffers argued, would take advantage of bankruptcy to get help they didn’t need. Treasury also stressed the effects of cramdown on the nation’s biggest banks, which were still fragile. The banks’ books could take a beating if too many consumers lured into bankruptcy by cramdown also had their home equity loans and credit card debt written down.
“Lured into bankruptcy?” Seriously? What a load of crap.
Where is the Great Progressive Hope?
Please share widely!
The “cramdown” would be a gift to millions of people who don’t deserve it and a slap in the face to those who did the right thing. I would rather a program to renegotiate loan terms and interest rates.
…but that just shows this was a band-aid rather than major surgery. The “too big to fail” crowd should have been broken up.
<
p>If we have to choose between risking the banks survival by forgiving homeowners and risking homelessness to fatten bank accounts, I’ll choose the former in a heartbeat.
I too believe that the “too big to fail” threat by these companies are not only intact but even bigger than they were. Why didn’t our Democratic leaders do something about it?
<
p>I fI have to chose between the banks with my money in them, the banks holding my loans, my CDs, lending to the companies I do business with surviving vs. the people who borrowed money foolishly to finance their lives with “home equity”, I’ll take the banks.
See, two can play this game. Some of these mortgages are years old and taken out when people had every reason to believe they could handle them. Shelter is a more fundamental need than any CD you might hold, and if I lost a CD, I’d still blame the bank for taking too many risks and tanking our whole economy in the process.
with a bank taking the house of someone who isn’t paying their mortgage payment, which is what they agreed to do (when they took the bank’s money). But we won’t solve this one since we have some very fundamental differences on “ownership” and “rights”.
is actually money they have rewarded themselves with by ripping off Americans. They didn’t earn it; they stole it. How many times does one actually pay the principal amount of their morgage within the life of their mortgage. The big banks can never seem to get enough money, always having to find new ways to rip people off.
Go start a bank yourself. I know “you” can’t go start a bank but maybe similar thinking lefties like yourself could find some rich liberal and start the “People’s Bank”. You could charge low rates on mortgages, high rates on CDs, no fees for anything and run the bank exactly how you want it run.
<
p>Does this bank exist? Has it been tried? I think we all know a bank like this would go belly up in about a week.
<
p>I am perfectly happy to borrow money at reasonable rates from a bank so I can buy a house and pay it back over 20-30 years. That’s how George Bailey ran the “olde” Bailey Building and Loan…
There’s no comparison between the suffering of a family thrown out of their house and the big banks losing out on a loan.
I have been predicting a disaster in the commercial strip-mall/office park real estate sector for 2 1/2 years. If it comes, it will be a substantially larger shock to the economy than the residential sector was in 2007-08.
<
p>Mercifully, I have been wrong (so far). I think that the reason I was wrong is that bankruptcy provides a mechanism to reduce the value of secured debt to the value of the security. This is economically very useful.
<
p>That gives the owner of a $5.0 million commercial property burdened with $8.0 million of debt the ability to offer the bank $5.2 million as payment in full of their $8.0 million debt; the bank will often accept, especially lately, because they might wind up with substantially less at a foreclosure sale.
<
p>The result is that the secured debt on the property is re-aligned to the value of the property, with as little disruption to the larger economy as possible. The bank (or mortgage pool) takes a loss that it is going to take anyway.
<
p>This kind of workout negotiation happens every day, all the time, with every kind of collateral that exists, save one: residential real estate.
<
p>Residential real estate is the ONLY kind of collateral in which the only way for the debt to be re-set to the value of the property is for the bank to foreclose, evict the borrower, and re-sell. That produces: (i) substantially greater losses for the lender; and (ii) substantially more drag on the overall economy. I see zero justification for making a special exception for residential real estate in this manner, other than that the mortgage industry lobbied for special treatment.
<
p>The irony is that this special treatment has harmed the mortgage industry more than it otherwise would have been harmed, and, sadly, harmed the rest of us more than we would have otherwise been harmed as well.
They can only pay it back because of another $12+ trillion in loan guarantees that were made more quietly then TARP was.
<
p> The bankers are borrowing against one taxpayer account to pay back another one.
was last seen in the White House in 1945.
<
p>Until there’s a big ideological shift in this country, you have to expect any Democrat in the White House to disappoint early and often.
<
p>Still better than the alternative.
“Under democracy one party always devotes its chief energies to trying to prove that the other party is unfit to rule – and both commonly succeed, and are right.” –H.L. Mencken, 1956
The problem, my friend, is regarding the Democratic Party as synonymous with “us”. Democratic Presidential candidates only seem to get elected on the basis of moving rhetoric.
<
p>Progressives are ill-advised to be taken in by that rhetoric. Hard to do since we tend to work to get such Democrats elected. In 2008, I remember commenting that Obama’s victory actually required more not less work from progressives than a McCain victory.