[clue-talk] The stimulus bill

[Angelo Bertolli]

On Fri, Feb 6, 2009 at 7:14 PM, Jed S. Baer <cluemail at jbaer.cotse.net>wrote:

> On Fri, 6 Feb 2009 13:54:00 -0500
> Angelo Bertolli wrote:
>
> > The way it's supposed to work is the lender is supposed to use things
> > like credit score (which goes down the tubes if you pull something like
> > this), income, etc. to decide if they would like to lend that amount of
> > money or not.
>
> Which is how it would have mostly continued to work, if not for the
> intervention of the federal government (Carter Administration) to push
> lenders into making disadvantaged loans in the name of "affordable
> housing". That was actually a fairly small thing (on the scale of our
> Leviathan government), until it was greatly expanded under Clinton. This
> is one of the "fairness" credos of the left, that everyone should earn a
> "living wage", and then a "living wage" should include the American Dream
> of home ownership.



Subsidizing mortgages not withstanding, I think you'd at least agree that
the mortgage crisis we're in right now has way more to do with banks/loan
officers/whoever not doing their risk assessment "properly."  Unless you
mean that our attitudes about houses and the culture created by our laws
gave the banks the feeling that they could get away with it.

I think if anything the banks needed more intervention, not less.  (But the
right kind.)  Even Greenspan said he was shocked that these companies would
actually put themselves in this situation.  In a perfect market it wouldn't
happen.  Unfortunately, the market is run by imperfect people who are very
often greedy and looking at their own bottom line.  They figured they could
get the money, and leave someone else holding the bag.  I mean, if it were
you or me, we DEFINITELY wouldn't loan money to some of these people ;)

Also, ARMs shouldn't be subsidized through tax breaks, because the only
reason you should consider it a good deal is if you're planning on getting
out of it before it becomes a bad deal.  (Did that make sense?)  In other
words, ARMs used for a good reason are bought so they can be resold for a
profit before paying off the mortgage.  All others should stay away. And I
definitely don't think we should be subsidizing houses as investment plans.


Angelo
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