and when it blew up
and everyone found out had badly franks has been SCREWING
both FANNY and FREDDIE (after all he is a homo)
And then for FUN franks IS RAPING the ENTIRE US ECONOMY

YOu liberals then not only re-elected the dumb bastard
you then blamed BUSH for trying to STOP these liberal MORONS from destroying our entire country..

And now your so surprised when
OVEr 60% of the country doesnt BELIEVE the Democratic controlled congress..

And your all surprised WHY?

MORONS..

Why are they not referred to as such? This is not government money, it is our money, and it will need to be repaid by us.

And a larger question – why does no-one question the legitimacy of ‘government debt’ in the first place? Is it ethical in any sense? You wouldn’t let me run up your over-draft: why should you let the government?

I am seeing a blinking red light out of the corner of my eye – it’s indicating we’re out of personal responsibility.

Shouldn’t we try to reward the people who at least tried to play by the rules?

Cindy Munford on January 16, 2009 at 8:58 PM

You have FDIC insurance wherever your accounts are, though picking a company that didn’t have to take Fed money might be a good way to establish a commercial relationship–for autos or banks. If they were smart enough to avoid screwing up their business, maybe they are smart enough to provide you better service.

dedalus on January 16, 2009 at 8:51 PM

Does it make sense to work with banks that don’t participate? We deal strictly with credit unions but I heard on the news that the fourth largest bank in N.Y. (sorry don’t remember the name) has decided not to take any of the bail out. If I lived there I would move my accounts (not big deal) to that bank. I have always been partial to Fords so buying them isn’t a big deal but I would love to buy some of their stock. Shouldn’t we try to reward the people who at least tried to play by the rules?

If you act and fail, at least you tried

Not exactly. Making things much much worse is failing. They are setting a course for disaster.

if you don’t act and fail, you’re negligent.

Not exactly. Things would be would be better, faster if they just let the markets self-correct.

What’s a career politician worried about reelection to do?

Tell the American people the truth, for once, and end this fraud now.

The world of software engineering has more accountability because it still follows free market principals, which the banking industry no longer does. You perform, or they go out and find someone who does.

Problem is that the Banking industry seems to have become an insular “Old boys club” of guys who revolve between the Fed Bank, Government, and Major Companies… and even when they fail BADLY, soon end up with an even better job…

Please explain to me how the guy who was in charge of overseeing all these companies for the last few years, the head of the Fed in New York, is getting a promotion?

I mean, were not the vast majority of institutions now taking MY money, under his oversite?

I just plain cannot figure out how all these folks are being given a pass, when it is apparent that this was an EPIC FAIL of the system they created, and administered.

Romeo13 on January 16, 2009 at 8:13 PM

Valid point about Geithner, though it might be hard to find somebody with relevant experience who wasn’t tainted by an association with the mess.

Banking followed free market principles in some ways too greatly. If the SEC hadn’t relaxed leverage ratios a few years ago, this wouldn’t have happened. If the credit agencies weren’t appeasing the banks that paid them by rubber stamping investment grade ratings on junk, this wouldn’t have happened.

Unfortunately, there wasn’t good policing of the market and there wasn’t sufficient transparency for investors–even institutional investors.

Yes the banks should be allowed to fail, but the government needs to make sure that a bank going down doesn’t disrupt the wider market. Kinda like a neighbor’s house being on fire. It needs to be put out before it spreads regardless of how the fire was started.

dedalus on January 16, 2009 at 7:33 PM

The world of software engineering has more accountability because it still follows free market principals, which the banking industry no longer does. You perform, or they go out and find someone who does.

Problem is that the Banking industry seems to have become an insular “Old boys club” of guys who revolve between the Fed Bank, Government, and Major Companies… and even when they fail BADLY, soon end up with an even better job…

Please explain to me how the guy who was in charge of overseeing all these companies for the last few years, the head of the Fed in New York, is getting a promotion?

I mean, were not the vast majority of institutions now taking MY money, under his oversite?

I just plain cannot figure out how all these folks are being given a pass, when it is apparent that this was an EPIC FAIL of the system they created, and administered.

Romeo13 on January 16, 2009 at 6:36 PM

Certainly the world of software engineering has more accountability than does the world of government agencies. Yet, while it is clear to walk through a failed build and find lines of code that caused compile or link errors it is harder in a big project where code functions but doesn’t provide good usability. Maybe the program is slow or not intuitive enough. Perhaps it crashes when other programs are running. At that point the failure might be harder to isolate. Maybe it is a programmer error, or poorly written spec, or ambiguous requirements. Maybe that database guys didn’t anticipate the load that the middle tier would create. Often you get a conference room full of managers blaming each other.

Clearly the bank CEO’s are at fault. As you point out their net worth is higher than it deserves to be. There is talk of penalizing them (along with Hank Paulson) for the money they earned while jeopardizing the system. I hope they have to pay up, but I’m not holding my breath.

On the government side, the SEC is not capable of policing the street and needs to be restructured.

burt on January 16, 2009 at 6:56 PM

Calvin Coolidge FTW!

dedalus on January 16, 2009 at 6:21 PM

and yet they want to PROMOTE the guy who was in charge of the Fed Bank in New York… to be in charge of Treasury.

I expect Bankers to be crooks, and to game the system if they can, but I also expect those who work for the government to be looking over their shoulder… which apparently did not happen. Not a single Government person has taken the fall for this… or even any blame.

I’m in software development… if a program fails because I don’t know what I’m doing… which my clients EXPECT as I am hired for my expertise… then I’m fired, not given a promotion.

We hired these guys (FED, Treasury) to look out for the countrys interests… and they failed miserably. So now we just allow them to spend money with no apparent plan?

And on a side note… it would be interesting to see what the net worth of Jimmy Cayne (Bear Stearns), Stan O’Neal (Merrill), Chuck Prince (Citi), Dick Fuld (Lehman), these gentlemen is… I’m sure its enough to where they will never have to work again unless they wish to.

We are trusting the very people who allowed the system meltdown with Trillions of dollars that THEY say they need to fix this…. why am I a bit scepitcal of the outcome… and want a bit more oversite of their actions?

Romeo13 on January 16, 2009 at 5:10 PM

Many of the CEO’s who created the mess have been fired or their company’s equity crushed–Jimmy Cayne (Bear Stearns), Stan O’Neal (Merrill), Chuck Prince (Citi), Dick Fuld (Lehman).

The actions by the Fed have helped to narrow short-term credit spreads, which is essential to ongoing economic activity.

Did Paulson lie to congress? Maybe, but it is as likely that they were making things up as they went along.

The government needs banks to make loans to businesses. It is difficult to create one from scratch. It is possible to seize a bank and operate it, but so far the government has tried to avoid doing so–though that may change with a possible nationalization of Citi.

Johan Klaus on January 16, 2009 at 6:04 PM

LOL… yep…

One of the highest foreclosure rates in the Nation is Merced Country California… where I grew up and my Mom still lives…

It also happens to have a very high illegal population… and is in fact, right in the middle of a three way Ethnic Gang War…

Gee… what a coincidence!

beatcanvas on January 16, 2009 at 5:36 PM

I don’t know the answer either because if the rumor is true, then everyone is going to get their own little thousand dollar check to shut them up and I am sorry to say that it will probably be enough. Just like all the things the new president is going to do exactly like W but it will be accept because it is not W. I swear I live in an alternate universe.

Cindy Munford on January 16, 2009 at 5:25 PM

You’re welcome, and for what it’s worth, I enjoy your comments and honesty here on HA. That’s a perfect anecdote, your story of the home in Florida. Likewise in California, etc.

Perhaps what we need is a group of citizens who run as independents and promise to do what’s necessary to clean up this mess and pull government out of the markets completely. Because it won’t come from either party. And it won’t make these people popular for re-election in the hard correction afterwards. But they would simply do it as one-term patriots determined to right the massive wrong of government intervention in the free markets. Until government is extracted, the problem only compounds. How do we do that? That’s my answer.

I will campaign actively against my Congressman who is a Democrat AND campaign actively against my Senator for the 2010 elections because they BOTH voted for this socialist BS. I’ll vote “Mickey Mouse” if I have to, but I am finished with voting for politicians who are hell bent on turning the US into a socialist country.

beatcanvas on January 16, 2009 at 5:12 PM

Thanks for the info. Everyone lives by their own personal knowledge, it is human nature. In 1997 it was a buyers market and we had a house to sell in Virginia Beach, old and in need of updating. We couldn’t sell at 80K. At the height of the madness a house of a neighbor here in Florida sold his house (purchase price $165K) for around $415K. And it has been downhill from there. I am lucky and I won’t complain but it is so annoying to watch.

When the financial institutions saw the rise of foreclosures start, why didn’t they start working on fixing it then instead of allowing the housing market to diminish to the point where people are upside down in their homes?

Because home values historically hadn’t diminished, but grown. Few saw that deflation one coming in as strong a terms as it did. Many thought that housing was in a bubble, but the scale of it surprised people. In hindsight, if you look at how housing values outran inflation in the late 90′s and in this decade, the scale of it was foreseeable.

If the number of $80K for legal fees in a foreclosure are true, that is a lot of juggling that could have been done before we get to our present situation. Is it just that institutions such as Fannie/Freddie had to cheat to make their books look good until they couldn’t hide any longer?

Yes. The mortgage industry is about volume, the lower the bar to the secondary market (F/F), the greater the volume. The core problem is this: there is no real alternative today to government entities to purchase bundled home loans in volume. Which is why when F/F dried up, everyone turned to FHA again – more government.

I fail to understand why industries don’t do more to help themselves.

This will sound like it’s trying to be cute, but it’s not – these industries are helping themselves. They’re helping themselves to our money, which comes cheaply from politicians that they buy off.

Now it really doesn’t make any difference because you can be a full fledged total failure right out there in front of God and everybody and the government will come in and fix.

You just described not only industries, but almost all politicians as well. Does it matter that they fail so flagrantly in front of everyone? If you look at where Chris Dodd’s mortgage documents are (still in hiding) the answer is a resounding “no!”

Is there really an economist out there that says when your are broke and in debt the answer is to spend more money?

Cindy Munford on January 16, 2009 at 4:52 PM

Depends on how much you pay him or her. And how much they believe in redistributionist practices.

The market deteriorated more rapidly that Treasury anticipated.

dedalus on January 16, 2009 at 4:00 PM

Excuse me, but they “changed” the plan within hours of Congress passing the bill to give them the money.

I for one don’t believe that they ever had any serious intention of buying bad assets with it, as they told both Congress, and the American People (ie, they flat out lied to us).

So, the root cause of the meltdown… the proverbial straw that broke the camel’s back… has yet to be addressed, nor is there even a PLAN to fix it… they are just pumping my money into a bunch of bankers pockets.

Investors KNOW that nothing is actualy being fixed, and so are taking their money out of the market… killing stock prices… which causes a further meltdown of balance sheets.

Remember the talk of Sarbains/Oxley and how mark to market could be changed? That that rule was part of the problem? As far as I know there has been NO changes to those rules…

Tell me, would you hire the Captain of the Exon Valdez to Captain YOUR ship after his little… problem?

We are trusting the very people who allowed the system meltdown with Trillions of dollars that THEY say they need to fix this…. why am I a bit scepitcal of the outcome… and want a bit more oversite of their actions?

If you haven’t read the first book of the Left Behind series by Tim LaHaye and Jerry Jenkins, you should. Even if you don’t believe in the rapture and Christian tribulation, it’s scarily accurate to current events.