Comments on: Bush’s Mainly Cosmetic Homeowner Rescue Proposals http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html Sat, 21 Nov 2009 22:38:01 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Yves Smith http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-6939 Yves Smith Wed, 16 Apr 2008 23:21:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-6939 The deleted posts were spam. The deleted posts were spam.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-660 Anonymous Sat, 01 Sep 2007 16:25:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-660 Thanks for the update, I hadn’t seen Dean Baker’s take on the FHA plan. This is the point I was trying to make in my comment “For every borrower in trouble, there is a lender in trouble as well.” Unfortunately it doesn’t seem to be a widespread criticism so I’m glad to see Dean Baker pointing this out (Accrued Interest is critical of this move as well: “We can't simply have the government make the bank whole when a loan goes bad, because then the bank wouldn't have any incentive to do good credit work. In fact, the bank would be incented to just make as many loans as possible, with no regard for quality.”) Hopefully this criticism will gain traction before the program is expanded under the rubric of helping the poor and needy. <br/><br/>JS Thanks for the update, I hadn’t seen Dean Baker’s take on the FHA plan. This is the point I was trying to make in my comment “For every borrower in trouble, there is a lender in trouble as well.” Unfortunately it doesn’t seem to be a widespread criticism so I’m glad to see Dean Baker pointing this out (Accrued Interest is critical of this move as well: “We can’t simply have the government make the bank whole when a loan goes bad, because then the bank wouldn’t have any incentive to do good credit work. In fact, the bank would be incented to just make as many loans as possible, with no regard for quality.”) Hopefully this criticism will gain traction before the program is expanded under the rubric of helping the poor and needy.

JS

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-655 Anonymous Sat, 01 Sep 2007 04:32:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-655 At least one mortgage industry insider appears to agree with the cosmetic take, FWIW:<br/><br/>http://www.housingwire.com/2007/08/31/bushs-fha-plan-may-only-reach-10-percent-of-at-risk-subprime-borrowers/ At least one mortgage industry insider appears to agree with the cosmetic take, FWIW:

http://www.housingwire.com/2007/08/31/bushs-fha-plan-may-only-reach-10-percent-of-at-risk-subprime-borrowers/

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-650 Anonymous Fri, 31 Aug 2007 20:00:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-650 Good that will muzzle Gross and the bond vigilantes, and judging by the markets set us up for Dow 17K by year end. Good that will muzzle Gross and the bond vigilantes, and judging by the markets set us up for Dow 17K by year end.

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-649 Anonymous Fri, 31 Aug 2007 19:47:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-649 Lipstick on a pig as they say Lipstick on a pig as they say

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-647 Anonymous Fri, 31 Aug 2007 17:06:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-647 I don’t think borrowers, who took out loans they never should have taken, and lenders, who loaned money on terms they shouldn’t have, facing a loss of capital, facing a foreclosure, being put out of business, etc. is “throwing them to the wolves.” People can’t take responsibility for their errors and poor judgment if you don’t let them. This isn’t about throwing people to the wolves, it’s about deciding what kind of society you want to live in. I’m fairly certain that I do not want to live in a society that fosters recklessness and irresponsibility, especially at the expense of the prudent.<br/><br/>For every borrower in trouble, there is a lender in trouble as well. I think this move, even if it is cosmetic, is designed to restore confidence in mortgage related debt vehicles because the government is telegraphing that the bail-out is beginning, and that lenders will be made whole. I think this is just the first step in what will be the greatest nationalization of the mortgage market since the Great Depression. The government is attempting to reprice risk for the markets by being the market maker of last resort. FHA will start the process by loading up on junk that no market participant would touch without a significant haircut, thus protecting lenders from steep losses. Securities that should lose value will be supported, homes that should have been auctioned on the market at a discount will not be auctioned and the prudent and the savers will pay for it. <br/><br/>The sad part is going to be the moral of the story for those who aren’t already on the reckless spendthrift bandwagon: Let this be a lesson to the cautious, to the careful, to those who live within their means and to those who save, your actions will be punished and your savings will be taken to the gain of reckless fools and those who know how to work the system. Act prudently and save at your own peril! <br/> <br/>JS I don’t think borrowers, who took out loans they never should have taken, and lenders, who loaned money on terms they shouldn’t have, facing a loss of capital, facing a foreclosure, being put out of business, etc. is “throwing them to the wolves.” People can’t take responsibility for their errors and poor judgment if you don’t let them. This isn’t about throwing people to the wolves, it’s about deciding what kind of society you want to live in. I’m fairly certain that I do not want to live in a society that fosters recklessness and irresponsibility, especially at the expense of the prudent.

For every borrower in trouble, there is a lender in trouble as well. I think this move, even if it is cosmetic, is designed to restore confidence in mortgage related debt vehicles because the government is telegraphing that the bail-out is beginning, and that lenders will be made whole. I think this is just the first step in what will be the greatest nationalization of the mortgage market since the Great Depression. The government is attempting to reprice risk for the markets by being the market maker of last resort. FHA will start the process by loading up on junk that no market participant would touch without a significant haircut, thus protecting lenders from steep losses. Securities that should lose value will be supported, homes that should have been auctioned on the market at a discount will not be auctioned and the prudent and the savers will pay for it.

The sad part is going to be the moral of the story for those who aren’t already on the reckless spendthrift bandwagon: Let this be a lesson to the cautious, to the careful, to those who live within their means and to those who save, your actions will be punished and your savings will be taken to the gain of reckless fools and those who know how to work the system. Act prudently and save at your own peril!

JS

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-646 Anonymous Fri, 31 Aug 2007 17:05:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-646 Martin, <br/><br/>I don't see why anyone, including the government, should attempt to intervene in the business cycle. I think we NEED a recession, if not a depression. It cleans out all the excesses and stupidity of mis-allocation of resources. Yes, there will be pain, but the people and the nation will be better off in the long run. Think of the Great Depression generation who knew of hardship, sacrifice, and value of simple things in life.<br/><br/>-pi Martin,

I don’t see why anyone, including the government, should attempt to intervene in the business cycle. I think we NEED a recession, if not a depression. It cleans out all the excesses and stupidity of mis-allocation of resources. Yes, there will be pain, but the people and the nation will be better off in the long run. Think of the Great Depression generation who knew of hardship, sacrifice, and value of simple things in life.

-pi

]]> By: Martin http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-645 Martin Fri, 31 Aug 2007 15:59:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-645 Ah Anonynous, Caveat Emptor rules. Not disagreeing as far as the crucial value to society of personal responsibility but "throw them to the wolves" can also be a destructive reaction in times of crisis (see Secretary of the Treasury prior to the Great Depression.)<br/><br/>I have no idea what should be done. But I think I can be certain that whatever Bush has proposed is just one more half-hearted attempt at appearing as though he cares about the "little people." (see FEMA, Hurricane Katrina.) Ah Anonynous, Caveat Emptor rules. Not disagreeing as far as the crucial value to society of personal responsibility but “throw them to the wolves” can also be a destructive reaction in times of crisis (see Secretary of the Treasury prior to the Great Depression.)

I have no idea what should be done. But I think I can be certain that whatever Bush has proposed is just one more half-hearted attempt at appearing as though he cares about the “little people.” (see FEMA, Hurricane Katrina.)

]]> By: Anonymous http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue.html#comment-644 Anonymous Fri, 31 Aug 2007 14:38:00 +0000 http://www.nakedcapitalism.com/2007/08/bushs-mainly-cosmetic-homeowner-rescue-proposals/#comment-644 If they are going to meet w/ lenders, I can see it now<br/><br/>"500 FHA Managers set to go on a 365 day worldwide junket to meet with those companies who carry the Mortgage on American Homes"<br/><br/>and<br/><br/>"We need to control our desitny by bringing these Morgages Home, where they belong - the US taxpayer has an obligation to stand up for America and the Dream to be Free"<br/><br/><br/>I think we will get the spin and be fed the garbage we deserve. We are no longer a society based on honour or loyality. The objective is to blame someone else and avoid personal risk at all costs! If they are going to meet w/ lenders, I can see it now

“500 FHA Managers set to go on a 365 day worldwide junket to meet with those companies who carry the Mortgage on American Homes”

and

“We need to control our desitny by bringing these Morgages Home, where they belong – the US taxpayer has an obligation to stand up for America and the Dream to be Free”

I think we will get the spin and be fed the garbage we deserve. We are no longer a society based on honour or loyality. The objective is to blame someone else and avoid personal risk at all costs!

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