Re: Does anybody else find the timing odd

In article <diorite-C47110.09564401102008@xxxxxxxxxxxxxxx>, Diorite says...

In article <6khaajF7sg4gU1@xxxxxxxxxxxxxxxxxx>,
"songbird" <songbird@xxxxxxxxxxx> wrote:

Penelope Periwinkle wrote:
...
However, what I really would like is if someone could sort out the
threads of the mess we're in now. I know how we got here, just not
where we should go now. I've been trying to read and follow and
understand; but I honestly don't know enough about finance to know
what the best course of action is, or even what the viable
alternatives to the proposed plan are.

One thing I'd like to see would be a clause requiring any institution
applying for bailout to refinance every ARM, or ARM held in derivative
form, into a market rate thirty year mortgage. That would put a dent in
the foreclosure rate going forward.


what if they can't pay the mortgage on a 30-yr fixed based on their current
income?

What are the consequences for those folks? they got in over their heads and now
someone has to help them? I'm not saying the organizations that helped them get
in over their heads are not culpable, but for a large number of folks who did
not buy homes out of their reach, have been living below/within their means and
continue to meet their financial obligations (like me) where's the benefit?

I'd also like to see requirements that mortgages be triaged to see who
is fine, who can be bailed out, and who is beyond salvage. Then
resecuritize them, with accurate information on the quality of the
underlying loans.


what a lot folks seem to miss is that the 'collateral' for these loans still has
intrinsic value. The house still has value but the problem now is that in the
'free market' what someone is willing to pay for that same house.

There has been an assumption that house prices will continually rise. For many
areas, that is true but the rate of rise is typically modest. However, you get
into major boom/bust cycles based on local industry or desireability (lots of
folks would rather live in a warm climate than a cold) and that's where you get
huge swings. (might be time to look for that little house on an Hawaiian island
;D)

I sure as hell don't trust this administration, but I don't feel like
I have enough information to voice to my representatives how I think
we should proceed. Other than, of course, not passing a bill that
doesn't have considerable oversight and plenty of checks to balance
any Bush appointee.

yes for sure.

Amen

it's fiction based upon fear. people who should be lending
money based upon facts are instead not lending money because
of fear. so until someone holds their little hands and tells them
to grow a pair while we give them free money to risk they're
going to keep quivering in their hidey holes.

As in not doing the jobs they are chartered to do. The government could
make them - if the government actually wanted to.

i say bail out whoever needs bailing, but make sure that
there are clauses in there for recovering the money later
that comes out of profits and executive pay when it is
above industry average. since it is the responsibility of
the executives to supply oversight and wisdom that they
clearly screwed up they should be the ones who cough
it up.

Not industry average. 100X full time minimum wage in the state the
institution is incorporated in. And that should include all compensation
including deferred, options, warrants, health care, retirement, and
personal use of company property and services.

If they can't manage to live on $1+ million / year, why should they be
trusted to balance the companies books?


I go back and forth on executive pay/bonuses. I look at my own company and the
CEO is responsible for 80K+ employees and annual revenues of ~$40B. That is a
huge responsibility. I'm not going to begrudge his bonuses if the company does
well. I do know his bonuses are reduced/eliminated if the company doesn't do
well (I know he has a lot of stock options that are underwater.)However, if the
company were to tank, I would hate for him to get a golden parachute (along with
the rest of executive staff) and the rank and file getting hammered. this is
what happened in the case of Fannie Mae and Freddie Mac. The problem is that it
was a 'contractual' agreement and I doubt there was language in the contract
that would change the terms based on 'market conditions.'

Sara


--
--
Sara Running
Not speaking for my employer
History doesn't necessarily repeat, but it does rhyme

.

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