The Glade 4.0

Aizle:

The problem with predatory lending is that its the Federal Government underwriting and pushing those products to market. The people who do their due diligence don't get into the problems that Xequecal is describing. Yet, government agencies and even our President are still requesting that credit be loosened up and extended to the poorest segments of our society.

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Indeed. Strike-through is enabled for a reason.


Edit:

Also, whoever said this is a classic example of Liberalism v. Conservativism had a pretty funny statement in the context of the following biased quotes and re-quotes and "fixed it for ya's."

Holy, forest for the trees already....

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“The duty of a patriot is to protect his country from its government.” - Thomas Paine

Some of that type of lending may be predatory, some may not. However, that is not the only type of predatory lending that happens or would be affected by this legislation.

I must have been an oddity then, didn’t even really talk to the real estate guy.

Lawyers are a must, and it’s always good when you want a place to simply hand over to them your lawyer’s card and get them to deal with it. Less Bs that way.

I agree that pressure should never be an excuse for being stupid… I also learnt I’m a conservative… interesting…

It is very possible to be socially liberal and financially conservative.

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Darksiege
Traveller, Calé, Whisperer
Lead me not into temptation; for I know a shortcut

Oh for the love of ****, this. I do not know how to stress enough that I agree with this 100%.

If you cannot be bothered to do your homework and get all of the pertinent info regarding all of the terms and conditions.. you deserve to be **** by a big company. Adn if you cannot take responsibility for your own actions you just deserve to be **** on by life in general.

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Darksiege
Traveller, Calé, Whisperer
Lead me not into temptation; for I know a shortcut

That's just idiotic. Read what you just wrote. Also, when I say bank, I don't mean just "commercial banks" such as BoA's banking division which handles deposits, but also large banking institutions that structured supposedly risk traunched bonds based on CMO's using subprimes as part of their asset bed.

Additionally, this doesn't even begin to touch on policies that incentivize home ownership and holding large amounts of debt (the Fed).

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

Just an fyi for those that are worried about being "pressured" into signing a contract before you've had time to go through it. By law in the US you have a grace period of three days after signing a contract to cancel without penalty.

Learned a fair bit about how contracts work when I was working customer support for a company I won't name that had some pretty shady summer sales stuff going on. Thankfully, that company no longer exists.

You still have to link something F&F did to the mortgage collapse. Again, they are paying all their obligations. How did anything that F&F did force the big investment banks to buy up subprime loans? F&F did increase home prices and therefore made the bubble worse than it would have been, but even inflated home prices don't force any form of bank to make, guarantee, or buy mortgage loans.

Xequecal:

What caused the "recession"?

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I've posted it before but I think this explains it pretty well. It leaves out how Fannie and Freddie's actions contributed to the rising housing prices, but that still didn't force banks to make subprime loans.

Xequecal:

I remember that little Flash video now ... it's still wrong. What caused the recession?

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"Force" isn't the problem. Cash for Clunkers didn't "force" people to take on debt they don't need to have during an economy in major recession.

Did you return the consumer stimulus W. issued for the sake of preserving the dollar's integrity? Were you "forced" to take it? Did you take it?

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

The recession was caused because investment banks were borrowing money like crazy to buy all the mortgages they could get their hands on. When the mortgage lenders saw they could immediately sell any mortgage they made, including selling off the risk, they started issuing subprime mortgages to risky individuals. The investment banks bought these anyway, packaged them into CDOs and sold them off to investors. Both the banks and the investors figured that in case of default, they could just resell the home for a profit since house prices were going up. Of course, lots of subprime defaults made house prices start going down, which means the investors lose money on the CDOs they've bought. When they start losing money they stop buying them, and the investment banks can no longer sell them to anyone. The investment banks borrowed a lot of money to buy those mortgages to package into CDOs that they now can't pay back, so they go bankrupt.

The government encouraged this with F&Fs actions causing more demand and making house prices go up, but they did not force mortgage lenders to issue risky loans or force the investment banks to borrow money to buy them. The government also didn't force Moody's and other such institutions to give high ratings to subprime mortgage-backed CDOs.

I'm seeing the biggest double standard ever here. You say that when a private bank uses confusing contracts, high-pressure sales tactics, and various predatory lending techniques to push a loan, it's the consumer's fault if he doesn't do the research and decides to purchase it anyway. Not the bank's, but the consumer's. But when the government uses various tactics to try and coerce the consumer into taking on unwise debt, it's now somehow government's fault if the consumer decides to accept.

They didn't force those loan issuances (though other regulation occasionally does), nor force the purchase of said subprime mortgages, however they *did* create an environment where this was artificially profitable and appeared safer than it was, by creating the artificial demand and artificial price increases.

This is what all the anti-regulation people are constantly saying. Regulation tampers with markets and prevents the best interest of the market from being followed.

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"Aaaah! Emotions are weird!" - Amdee
"... Mirrorshades prevent the forces of normalcy from realizing that one is crazed and possibly dangerous. They are the symbol of the sun-staring visionary, the biker, the rocker, the policeman, and similar outlaws." - Bruce Sterling, preface to Mirrorshades

Even if I accept that, using your own logic, they still didn't cause the recession! Anyone could have done the research and easily figured out that the house price increases were artificial due to F&F's meddling, and not jumped on that time bomb. The double standard here is incredible. You expect that the average consumer do the research when it comes to a mortgage, something he likely does not understand well, so he doesn't get ****. Yet for some reason the banks are not held to that same standard, despite this being their area of expertise. When they don't do their homework and get ****, no, it's not their fault for not researching enough, it's the government's fault for creating those adverse conditions! It's ridiculous.

Furthermore, as far as "deregulation" goes, if the investment banks were unable to see the obvious incoming disaster caused by F&F inflating, what makes you think that in a deregulated market they'll magically be able to avoid getting screwed by large private entities that probably have much more sinister motives and are much better at hiding them?

Xequecal:

Nope. Care to try again?

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The government isn't using "confusing tactics". It de facto controls interest rates through The Fed. It's not "confusing tactics", it's exerting **** market forces that should be controlled by the market. A bank cannot create punitive measurse for not following regulation, but the government can. It can use these powers to influence the market and allow firms to be subsidized (in effect) by others. It can mint money (control interest rates) and use regulation.

You see a double standard because you severely need to upgrade your glasses' prescription.

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

I was responding to your mention of Cash for Clunkers. Cash for Clunkers doesn't force anyone to take on debt to buy a car. It doesn't fine you or put you in prison if you don't take advantage. It's simply an incentive for people to take on debt they don't need. By the same token, things like ARMs and the confusing mortgage contracts are also incentives for consumers to take on debt they don't need. But why is it that when the consumer takes advantage of CfC, it's the government's fault for giving him that needless debt, but when the same consumer signs an ARM, it's now his own fault for taking on that needless debt?

Where does the funding from CfC come from?

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"It's real, grew up in trife life, the times of white lines
The hype vice, murderous nighttimes and knife fights invite crimes" - Nasir Jones

F&F endeavored to underwrite more and more subprime loans at the behest of Congress with the knowledge that they were protected from loss by that same Gov't. They then sold those loans to financial institutions who perceived them as safe because they were sold by an entity backed by the Gov't. Those institutions securitized those loans and sold them; these securities were purchased by investors because mortgages have historically been at low risk of default due to sane lending practices (which had been undermined by the Gov't - through HUD pushing an agenda that getting low income people into homes is a public good).

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"Dress cops up as soldiers, give them military equipment, train them in military tactics, tell them they’re fighting a ‘war,’ and the consequences are predictable." —Radley Balko

Yes. I would posit that it's possible to mix those concepts even further, in fact. People are too hung up on labels. The world is not binary; there are more choices than the extremes.

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Well Ali Baba had them forty thieves, Scheherezade had a thousand tales
But master you in luck 'cause up your sleeves you got a brand of magic never fails...
...Mister Aladdin, sir, What will your pleasure be?
Let me take your order, Jot it down -You ain't never had a friend like me
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You don't think the bolded part isn't a major catastrophic mistake on the behalf of those financial institutions? Buying loans without checking them out first, and figuring out how much risk there really is? Everyone here is demonizing the average consumer for signing a mortgage without actually doing research or reading the terms, assuming that the bank is honest and going to give them a fair deal. But somehow, this kind of fatal assumption on a massive scale is perfectly OK when a bank does it? Seriously?

Fannie and Freddie sold both conforming and non-conforming loans. The conforming loans were guaranteed, noone in the secondary mortgage market lost money on these as F&F have continued to pay these obligations. The non-conforming loans were not guaranteed, everyone knew they were not, and F&F went out of their way to emphasize that they were not. Yet the secondary market bought them anyway, and somehow it's F&Fs fault when they went bad?

That's irrelevant. You are basically arguing that when the government does something shady, all negative outcomes that result are the government's fault. But when a private company does something shady, all negative outcomes are the fault of the people that did business with that company, for not knowing better.