[Tfug] OT: Bailout Bill

[Calvin Dodge]

On Thu, Sep 25, 2008 at 10:36 AM, Paul Scott <waterhorse at ultrasw.com> wrote:
> Jim Secan wrote:
>> At 09:56 AM 09/25/2008 -0700, keith smith wrote:
>>
>>> Are we not in a pickle?  If we fund this bailout we all pay and the ones who
>>> caused the problem get away with it.  If no bailout what does that do to our
>>> economy?  Will it crash?  Will the world economy crash?
>>>
>>> It seems we are in a pickle.  You and I will more than likely pay $2000 each
>>> for the bailout, or so that is the figure I am hearing.
>>>
>>> Do we have a choice?  Do we want another Great Depression?
>>>
>>
>> We don't really know, and given the propensity for shading the truth (I'm
>> trying to be polite) by the current administration it's hard to tell.
>>
> I understand that part of this was caused during the Clinton
> administration when the distinction between investment banks and
> commercial was removed allowing all banks to invent in ridiculously
> leveraged ways.

It goes back much farther than that - it started when Congressional
leaders starting screaming "racism" when banks didn't give loans to
people of color who had poor credit history. It didn't matter that the
people who they DID give loans to had similar failure rates regardless
of color.

But the biggest push for this "give loans to people who aren't likely
to pay them back" plan did, indeed, happen during the Clinton years.
The people on my side of the fence were warning back then that this
was a bad idea (example: the National Review article on the subject
which appeared in 1993 -
http://findarticles.com/p/articles/mi_m1282/is_n25_v45/ai_14779796/print?tag=artBody;col1)

And when some people (John McCain, John Snow) tried at times during
the last 8 years to change the rules to prevent this credit disaster,
the people on the other side of the fence (Barney Frank in particular)
were saying "no, there's nothing wrong here, and no need to reform the
system".

So yes, to some extent this problem is due to "greedy Wall Street
executives", as well as greedy home buyers (trying to get a far more
expensive home than they could realistically afford). But those greedy
people couldn't have contributed to this mortgage meltdown if Congress
hadn't turned Fannie Mae and Freddie Mac into mortgage welfare
organizations.

Calvin