Citigroup

Hey Moz,

Yeah, this site does get some interesting converstations going :) And you’re sure right. People want stuff and the banks want to give them the means to pay for it and then a few go a little overboard. And it is a few. The numbers of foreclusures aren’t greatly higher than they’ve ever been, but put a few big headllines along with those numbers…

Keep in mind that our schools don’t teach people how to balance a checkbook, much less teach an understanding of credit and debt. Several weeks learning Islamic Culture is ok, but balance a checkbook and understand credit and debt? Bad, bad, bad.

And since our schools are Government run, I don’t think we can blame the corporations for that. Besides, it’s not in the Bank’s interest to have people go bankrupt. They wouild far rather have your reliable monthly payments than your house or Harley.

Personally I think schools should require an understanding of basic science, math through statistics, and economics (and a few other things.) As it is, some of these things are "technically" required, but in reality they aren’t since people will pass anyway. People can graduate with no understanding of these topics. I think that if they can’t demonstrate an understanding of these topics then they don’t graduate, no matter how much people cry about it. We’re not talking differential calculus here. This stuff isn’t rocket science.

Politicians get into office on the basic of personal networks, vision, drive, ambition, and the ability to sell themselves to enough voters. An understanding of banking, credit, and economics isn’t required. Heck, in some areas it’ll probably disqualify them, since they’d try to explain the stuff and lose big.

Take Obama, for example. He’s never heard of economics, much less studied it, and look at the numbers he’s pulling.

My point is that a good Government solution probably isn’t going to happen. It probably can’t happen. About all the Gov can do is try to make sure people follow some basic rules. Then it should get out of the way before it screws everything up. (Yeah, I lean a little libertarian. :) )

Thanks !  What a refreshing dialog. 

Here is the scenario that drives me crazy.  The person gets a 125 % loan. They buy a Harley with the equity. Value, economy or other factors create downturn. They lose the house and the Harley. 

Here is the one that makes sense.  Person takes a reasonable home equity loan, up to 80%(I happen to like the term) Invests in the home, value remains at a point that they can sell and pay the off mortgage.  That person can bail at any time and not need help from anybody.

The government cannot fix the fact that people can make bad decisions with  money they have in their pocket, where ever the money might come from.

Banks are right to give people options with equity.  The problem is we are taking away the stigma of bankruptcy and allowing the same people to make the mistake over and over.  "I can fix your credit score" !  "Bad Credit No Credit, it doesn’t Matter" They might as well say " I can get you buried in debt again !" These are the phrases the government should go after.

It’s not all the banks’ fault here. Not even close.

Kevin’s right on here.

Let’s remember that the same people screaming at the banks for their predatory loan (or foolish loan) practices are the same people who were screaming at the banks for NOT lending to these people who "forgot that you can’t spend 2/3 of your pay on your house."

Also, the banks arguably deserve kudos for coming up with products to let people buy into very expensive homes, such as the 2,000 sq ft (which includes garage(!)) in El Cerrito (East San Francisco Bay Area) which we sold for over $700k. Hardly a mansion.

At the time no one saw the crunch coming. (ok, some didn. Many of them the same crowd who always see doom around the next corner, generally to sell their "doom fix.") So while the banks probably deserve the criticism, so do the buyers, and so does Congress and all those who pushed for these creative loan products to provide funds to people with iffy credit to pay for very expensive homes. It worked very well for a while.

Heck, given Congress’ demonstrated lack of knowledge of banking and overwhelming deisre to regulate, I’d say they deserve at least as much of the blame as the Banks.

After all, the banks aren’t in business to lose money or go bankrupt, but Congress has no such concerns (and people want MORE government???) Bad decisions all around. Maybe we can stop the blame game and figure out how to keep it from happening again? Yeah, I know… silly idea.

Wow – another news story designed to encourage Americans to NOT take ownership for their own actions.  Banks are businesses – they made poor decisions – they should suffer the consequences.  Nobody forces you to signed on the dotted line for a home equity loan or for a variable APR.  If you can’t afford it – DON’T BUY IT.  Stupidity always has a price.

The ONLY reason that the government should step in and intervene at all is if the overall effect on the economy would be so profound as to affect the entire country – NOT because a bunch of people forgot that you can’t spend 2/3 of your pay on your house.

Interesting story about corporations search for profit quickly rolling over the ethical concerns of a minority of its employees…and reshaping our culture in the process. Interesting story earlier this week of same corporations now doing it in Turkey.