[GeneV]

They could have bought a less expensive home One that they could actually afford instead of one to big to keep. It falls back on the Gov. When Barney Frank and his over site committee force Fannie mae and Freddie Mac to approve loans to low income people that could not afford them. because it wasn't fair that they could not own a home. Then had the balls to blame the banks. Or have we forgotten that part of the story

Please put "Inside Job" on your Netflix que or read a bit from a news source that goes beyond talking points.

[shooz]

Everyone got greedy, not just the banks. Everyone. They are all to blame.

I know of no one who bought a home out of greed. No one.
I see evidence of wallstreet greed all around me.
I must ask. Do you live in a cave?
You would have to, to miss it.
So please, don't call me bat shit again.
You didn't watch the video.
You just keep up with the same old tired conservative excuses time and time again. Lame.
Limbaugh crap.
When will you admit that Bush/Cheney's policies bought this country to it's knees, instead making excuses?
They did it in cahoots with wallstreet.
Not some young couple trying to put a roof over their heads.

Watch the video and learn at least a little truth.

[mikemike]

Policies should be made so that they are as easy to understand by most of the people, I think it would be a dangerous for society if our policies required the general citizenry to have more than say a 9-10th grade education. Certain areas of policy, like the tax code, have already jumped the shark in terms of complexity and expectation for universal understanding and compliance.

[shooz]

How would that change usury by the banks?
It wouldn't.
Proper regulation, would.

[jeffkrol]

There were plenty of greedy sub-prime loans given to the developers/speculators. Of course those "captains of capitalism" failed miserably.................

[jeffkrol]

Policies should be made so that they are as easy to understand by most of the people, I think it would be a dangerous for society if our policies required the general citizenry to have more than say a 9-10th grade education. Certain areas of policy, like the tax code, have already jumped the shark in terms of complexity and expectation for universal understanding and compliance.

There were plenty of speculator/investors that completely understood what they were doing. There were plenty of banks that would have "run away fast and far" from some of the financial products IF they weren't rated AAA when in reality they were ZZZZZZ (sorry bit of fun). Even if they knew it didn't stop them from selling them to others based on the rating.
ANY """Certificate of approval" no matter how bogus has the psychological effect of granting legitimacy.. just human nature apparently.
Take the certifications in the diamond industry.. to be completely honest they are worthless.. paid to grade up.... EGL, GIA.. ect. are NOT standards nor guarantee accuracy.. IF you read the fine print they clearly state they are an "opinion", one that honestly can be bought or sold...........I've yet to read a EULA or ANY financial document that would be comfortable reading for a 7th grader..... nor expect to never ever see one. THEY like it that way.......best start w/ cleaning up the "invisible hand" first. .
The invisible hand of the market will RARELY ever give you an "impartial" assessment of anything ever.........and the role of the gov. SHOULD be to at least attempt to take the burden of "life" off to some degree.. IT IS IT'S REASON for existence. That's why you don't need your own private army ect....

The right wing wants smaller government. They want us to be forced to be self-sufficient, to do with a weaker, less effective tool. Exactly wrong. Self sufficiency is not a goal; it is one means to a goal, and a terrible means it is. We created government specifically so we would not have to be self sufficient. We created government to improve our lives. We created it and we can modify it, not be enslaved by it.

Yes, the Big Question we must ask is, “DOES THIS IMPROVE OUR LIVES, NOW?” not later, not eventually, not someday, but now. Life is short and death is forever. We cannot wait for a distant, unknowable, unpredictable future. We cannot wait for politicians’ promises or guarantees. They know nothing. Ask the question, “Does this improve our lives, now?”

http://rodgermmitchell.wordpress.com/2011/10/04/the-one-big-question-in-econ...wrong-answers/

Before you say that is selfish.. think about what you've said in the past about "living comfortably" now...... The gov. is (or should be) nothing more than an extension of our (collectively) NOW.......

[GeneV]

Policies should be made so that they are as easy to understand by most of the people, I think it would be a dangerous for society if our policies required the general citizenry to have more than say a 9-10th grade education. Certain areas of policy, like the tax code, have already jumped the shark in terms of complexity and expectation for universal understanding and compliance.

We are not talking about incomprehensible regulatory policies with the subprime mess, but incomprehensible contracts prepared by private financial corporations. For many of them, even a degree in math would not bring you an easy understanding. However, in general, people who were better at math were less likely to default. Working Paper 2010-10

Most people understand a fixed loan, and know whether they can afford the payment. An ARM is more complicated, and many of these were designed by very bright people to be time bombs. There was no incentive from top to bottom to make a good loan, and every incentive to steer people to more complex, higher-interest loans.

[GeneV]

There were plenty of greedy sub-prime loans given to the developers/speculators. Of course those "captains of capitalism" failed miserably.................

Actually, not so much. Developers generally did not get "subprime" loans. There was a tendency to look the other way at the actual numbers associated with developer loans, though. The same incentives against making a good loan existed. Volume and interest rates determined the compensation of everyone involved.

Homes and lands were sold by RE brokers, who worked with mortgage brokers and title officers who handled closings, who sold the loans to commercial banks, who sold the loans to investment banks, who bundled them into complex CDOs, which were sold to the public, while the investment banks bet against the CDOs with CDS products. Not one person or company in this food chain has an interest in making a good loan for the long term. Not one person in this food chain has any incentive not to steer the borrower into higher cost loans which the borrower cannot afford in the long term. Even the sale of the security did not seem to depend upon the underlying quality of the loans, since the investment banks somehow got the ratings agencies to rate these CDO products A2 or even AAA--equivalent to Treasury Notes.

Now, if Rick Perry really wants to talk about a Ponzi Scheme.....

[mikemike]

We are not talking about incomprehensible regulatory policies with the subprime mess, but incomprehensible contracts prepared by private financial corporations. For many of them, even a degree in math would not bring you an easy understanding. However, in general, people who were better at math were less likely to default. Working Paper 2010-10

Most people understand a fixed loan, and know whether they can afford the payment. An ARM is more complicated, and many of these were designed by very bright people to be time bombs. There was no incentive from top to bottom to make a good loan, and every incentive to steer people to more complex, higher-interest loans.

I didn't realize how far OT the thread drifted. When it comes to private businesses, they should base their policies on their target market. Anyone buying a house should be financially literate enough to understand what they are getting into for the next 30 years. If you require too much hand holding and servicing trouble it will be hard to get a good rate. One thing that the City of New Orleans has done is setup a program to help low income people buy homes but in order to qualify you have to pass a financial literacy course before you even start house hunting.

[shooz]

you have to pass a financial literacy course before you even start house hunting.

And if they fail the test, they are handed over to predatory landlords.....................
Just another reason for highly improved public education.

[mikemike]

.I've yet to read a EULA or ANY financial document that would be comfortable reading for a 7th grader

The problem with EULA is that the intellectual property laws do a very poor job at protecting software and algorithms. What EULAs usually boil down to is that you are buying a key to the software and permission to use the software, not the source code or to delve into the algorithms behind the software or decomplile the software. They also usually limit the amount and type of support you can get, the software does what it does regardless of whether or not what it does is what you want it to do.

Content providers like movie studios and music companies have been trying to treat there products (DVDs and CDs) more like this but they fail to follow through with their end of honoring that you have a perpetual license to consume that content instead of complete ownership of the disc they sold you. A good example was that after Katrina, my apartment was flooded and every disc was left unreadable. I contacted the owners of the content and was able to get replacement discs for all of my computer software and almost all of my playstation games but was basically told to f**k off by the movie studios and music companies (I had MP3 rips of my CDs though). Now I keep FLAC backups of my music and don't feel bad about backing up my movies either since they refused to replace unreadable discs of content which I had a license to.

[Aristophanes]

They could have bought a less expensive home One that they could actually afford instead of one to big to keep. It falls back on the Gov. When Barney Frank and his over site committee force Fannie mae and Freddie Mac to approve loans to low income people that could not afford them. because it wasn't fair that they could not own a home. Then had the balls to blame the banks. Or have we forgotten that part of the story

Except that Fannie and Freddie, badly run as they were, were responsible for a very small minority of insured loans in sub-prime, Alt-A, etc.

The vast majority of bad mortgage loans were entirely private sector, securitized products with no relationship to housing equity legislation.

[mikemike]

And if they fail the test, they are handed over to predatory landlords.....................
Just another reason for highly improved public education.

Home ownership is not for everyone and all people will have a period in their life where it is in their best interests to rent instead of own. Not all landlords are "predatory" and not all tenants are without blame for why they can't get a decent housing situation if a landlord gives you enough rope to hang yourself, they are not a predator.

[shooz]

Not all landlords are "predatory"

Maybe not, but the market surely is.

$700 a month in a trailer park isn't going to work at minimum wage.
And you claim to understand math?

[GeneV]

Except that Fannie and Freddie, badly run as they were, were responsible for a very small minority of insured loans in sub-prime, Alt-A, etc.

The vast majority of bad mortgage loans were entirely private sector, securitized products with no relationship to housing equity legislation.

Bingo. And the quality of the subprime loans which were entirely private sector was worse. Fannie and Freddie had relaxed some standards, but their standards were still higher than the private securitizers.

Dr. Raghuram Rajan, University of Chicago's Booth School of Business, pegged the problem at the height of the bubble in 2005-2006, but was basically derided by the economics establishment. There is no incentive for long term stability. All compensation in the system was based on a percentage of the loan value, and the loan was passed on. The bigger the interest bomb in the loan, the higher its price, and the quality of the documentation or the borrower was not all that important.