Friday, September 26, 2008

Fat Cats or Stupid Borrowers

So many people are against the $700 Billion ‘Bail Out’ because they do not want to help Wall Street 'Fat Cats' who they said caused this.

Is this outrage well placed?

This crisis is because of bad loans, deflated home values and under-valued mortgages. Fat Cats? Where is the outrage and blame of those who had no business taking loans they could not afford at rates that doubled after a short amount of time? Fat Cats? No. The bail out is because of folks who had a household income of $50k thought they were ‘entitled’ to a loan of $350k for a house bought on terms only an idiot would agree to. I suppose these people put flat screens on lay-away or LOVE stores like USA Discounters. Can’t afford it? No problem!

The same ideology that told you that everyone is entitled to a house regardless of their ability to pay for it, is now blaming the very industry they pushed and provided incentives to make these bad loans happen. Now obviously there are exceptions, some opportunistic and criminal mortgage scams, but I am talking about the majority of the loans.

So who loses in this? People like me who got a traditional 30-year fixed rate mortgage that I could afford based on the over prime good credit I earned and protected all of my life.

Who wins? People who were irresponsible with a sense of entitlement who this bail out with save.

So what have we learned? Buy whatever you want, comrades. Your government will save you.

So if you know anyone who has a mortgage for a house you know they could not afford, tell them 'thank you.' Thank you for the crisis.


Ohio Bassist said...

You can't borrow unless there's a willing lender! There's always going to be folks out there who want to borrow more than they can afford. It's the job of the lender to assess risk and know whether or not they should take a chance on someone. The issue is that financial institutions ignored protective policies they had in place for years against high risk lending/investments. I will never blame "fat cats" because that's liberal whining against those who have done well in business. However, you can't pin it on the borrowers, because they can't force lenders to give them money. I don't blame the junkie for being a user, I blame the dealer for providing the smack in the first place.

The Squeaky Wheel said...

I blame both but your point is valid.

But one has to use comon sense. if your household income is $50k, you can't really believe you can afford $350k.

The Peanut Team said...

There's plenty of blame to go all around. The buyers who said "I want it all and I want it now". (consumer demand)

The lenders who came up with loan programs to comply with the government's goals that all Americans should own a piece of the American Dream. (supply)

In this area, I place a lot of blame on the builders who told buyers they could afford a lot more house than the buyer ever thought possible. (greed) The buyers believed them because afterall, "a lender wouldn't approve them for something they couldn't afford, would they?"

Actual example, was a couple who were approved to buy up to a $114K home with a regular lender. A major builder told them they could afford a $220K home. That's why so many of the homes in trouble are in the newer subdivisions. Thankfully, those buyers stuck with the $114K home and they're OK.

Anonymous said...

Different decade, different scam. In the 80's the banks made loans to farmers who couldn't afford them. More recently, these fat cats offered predatory loans, handing them over to other lending institutions as fast as the could, like a game of financial "hot potato". I'm no Republican, but I have to agree with those Republicans who say that the market will have to work this out and the govt. should no more invest in these bad loans than private investors who won't touch them. Hold onto your butts my fellow Americans...