Jul 23 2008

Mortgage Bailout – For A Price

Published by at 7:26 am under All General Discussions

I know we have to bail out the mortgage giants who couldn’t operate on government subsidized money, but I have one condition to it all: The top managers are booted and THEIR retirement plans annulled. No Golden Parachutes – only the Led Zeppelin. If the US Taxpayer has to come in and fix the mismanagement then there should be some punishment. What do you folks think?

5 responses so far

5 Responses to “Mortgage Bailout – For A Price”

  1. lurker9876 says:

    Agreed! This whole thing is simply ridiculous. May I add two things: congressional hearings and subject them the same way those Enron people were subjected to. Seems that to escape the persecution by the federal government is to have a job in the public sector.

  2. hey norm says:

    holy crap…there is something we agree on. they are renting skates in hell this morning.

  3. dave m says:

    If twelve months from now, we are even remembering when we
    were worried about mortgages, I will be amazed.

    1938 and all that.

  4. WWS says:

    This is far too simple a solution – they are nothing but enablers for Congress. They have done exactly what Congress has pushed them to do for the last 30 years. Congress was the one that set up the GSE system in which all profits went to private parties, but all risk was born by the public. Of course any business in that situation pushes the risk envelope to the limit! It’s a natural byproduct of the dysfunctional system structure.

    Congress, especially members such as Chuck Schumer (but this problem goes back much further) thought it was a great idea to increase homeownership and felt the best way to do this was to make credit much easier to get for everyone. Incentives were placed in the system over the years to allow this – the financial world loved it because they saw the opportunities for massive profits in these new products, and we were off to the races. What we saw over the last 10 – 15 years was an application of Gresham’s law; just as bad money drives out good, bad credit drove out good credit, by taking market share away from any bank that wished to stick to the old, stringent credit issuance guidelines. If a bank didn’t play the new game, they got bought up by someone who did.


    The really big problem with blaming a handful of people, no matter how deserving they may be, is that it implies that this was a properly designed system that would have worked if only these evil people wouldn’t have shown up and broken it.

    That is not true. This was a horribly designed system (and I am talking about the entire guarantee/mortgage resale system that underlies the housing market) and it was guaranteed to accumulate and hide exceses until they built up and toppled the system. We now have the choice of massively debasing the dollar, bringing about inflation, or allowing the system to collapse, which will take everyone with it. Looks like we’re choosing currency debasement and inflation to monetize the debt, so get used to it. There is no happy ending to this story.

  5. WWS says:

    Paul Gigot this morning has another excellent explanation about why Fannie and Freddie are political problems as much as financial problems.


    He’s been pointing out the rot in the system longer than anyone, as he recounts. If he had been listened to 6 years ago, this collapse need never have happened.