Remember also that the relaxed underwriting directives to fannie Mae and freddie Mac came from Congress during a Democratic administration.
Oops- I keep forgetting that blame can only be laid on the administration that happens to be in power when the house of cards crashes down. How silly of me.
Jensenman wrote: Oops- I keep forgetting that blame can only be laid on the administration that happens to be in power when the house of cards crashes down. How silly of me.
Both parties are to blame. How some of you people see everything so berkeleying black and white I'll never understand. That's right, I said "you people".
Hi 914Driver,
I’m sure you know this but it’s worth mentioning just the same…the earlier you retire, the greater the safety margin you need to have.
To retire at 56 with any level of assurance that you won’t outlive your money, you need to think in terms of a perpetual income. This means having a large enough estate such that the returns on your portfolio are reinvested so that it grows at least as fast as inflation and you live on whatever surplus is left over.
A diversified and reasonably yet not overly conservative asset allocation would look something like this:
Growth Stock (20% @ 12% = 2.40%) Value Stock (20% @ 8% = 1.60%) Bonds (25% @ 5% = 1.25%) Real estate (25% @ 7% = 1.75%) Cash (10% @ 0% = 0.00%)
Do the math and you’ll find that this portfolio generates a 7% ROI. Real inflation runs around 3.7% so that leaves 3.3% for you to live on. Now, multiply how much money you want per year by 30 and that value represents what you need to retire with a perpetual income. For example: 70K X 30 = 2.10M. Note...do not include the value of your home as part of your portfolio.
Of course, there’ll be bad years where your portfolio decreases in value but there should be an equal number of good years where you portfolio grows beyond your expectations. Ultimately, a perpetual income should result in it’s being worth just as much (after inflation) when you die (say thirty years from now) as it was the day you retired so if times turn out to be really tough, it just means the people in your will won’t be so fortunate but it’s very unlikely that you’ll ever run out of money.
16vCorey wrote:Jensenman wrote: Oops- I keep forgetting that blame can only be laid on the administration that happens to be in power when the house of cards crashes down. How silly of me.Both parties are to blame. How some of you people see everything so berkeleying black and white I'll never understand. That's right, I said "you people".
Per: we need that 'stick poke' emoticon. 
Hell yeah it's both parties at fault. But the real fault lies with We The People for letting these jerkwads get away with it.
There's an old saying: when you point a finger, notice there's three pointed back at YOU.
Please, no shoving, there is more than enough blame for everyone.
Well NOW I'm pulling out! 
WaMu is all over the news saying they're going to sell just they're savings deposits, but not any of the mortgages, HELOC's, or credit cards (mostly leftover from Providian).
Well Berkely you too jerks! I'm pulling MY savings out tomorrow, screw you for thinking it's something you can just sell and give to some other bank that doesn't have a single branch within a THOUSAND MILES of my house!
I'm switching back to Credit Union tomorrow morning at 8AM. I'm tired of big companies screwing with me. 
I have it on good authority that a bank in the "Plain States" will be "shut down" by the FDIC this weekend. Due to laws the person could tell me no more but we will all know in a few days.
The "Plain States", or the "Plains States"??
Plain state might be where I live, considerin' the cookin'.
You are correct, The Plains States. As I understand, they are very flat states and that may or may not make them plain.
Just thought I'd throw this link in here:
http://www.mytelus.com/ncp_news/article.en.do?pn=world&articleID=3003261
The bailout didn't pass today.
What I still do not understand is why a bailout is needed? How does a bank going under affect people (layman's terms please)? How can somebody, who has money in a bank, suddenly not "have" money even if they do actually have it. Wouldn't that constitute fraud or theft?
I also don't understand how companies collapsing causes an economic recession (to a certain point). How can a insert business here who goes bankrupt be helping an economy right until the company implodes?
Edit- Also, I've never really understood how an economy is built on credit. I mean, I understand how it works and if you stay within your means when borrowing that it should work out but whatever happened to fiscal prudence? Does a company really need to add THIS MANY figures to its bottom line? Isn't it good enough that a company turns a decent profit (instead of a massively ginormous credit fueled profit)?
P71 wrote: WaMu...I'm pulling MY savings out tomorrow...morning at 8AM.
WaMu - out!
Good luck with the pull-out.
Hey I have so little money it shouldn't be a problem! Oh, wait, uh, damn!
16vCorey wrote:Jensenman wrote: Oops- I keep forgetting that blame can only be laid on the administration that happens to be in power when the house of cards crashes down. How silly of me.Both parties are to blame. How some of you people see everything so berkeleying black and white I'll never understand. That's right, I said "you people".
if both parties are to blame, then no one is to blame, as it removes accountability.
The fact is that this mess was warned about by Bush in '03 (and made the front page of the NY Times), and McCain sponsored a bill to regulate Fannie Mae and Freddie Mac, as well a clean up som eof the lending practices rampant at the time (and created by Dems as a way of promoting low income housing for minorities). Dems blocked it in committee saying that the republicans were racist for even thinking about making it harder for poorer people to get homes. barney frank and a few other key Dems managed to convince enough other Republicans that there was nothing wrong with Fannie or Freddie, and that anyone voting FOR this bill was racist.
Sorry, but it's not EQUAL blame by any measure of the word.
her's what the Dems did in '99:
Fannie Mae Eases Credit To Aid Mortgage Lending By STEVEN A. HOLMES Published: September 30, 1999 In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders. The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring. Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits. In addition, banks, thrift institutions and mortgage companies have been pressing Fannie Mae to help them make more loans to so-called subprime borrowers. These borrowers whose incomes, credit ratings and savings are not good enough to qualify for conventional loans, can only get loans from finance companies that charge much higher interest rates -- anywhere from three to four percentage points higher than conventional loans. ''Fannie Mae has expanded home ownership for millions of families in the 1990's by reducing down payment requirements,'' said Franklin D. Raines, Fannie Mae's chairman and chief executive officer. ''Yet there remain too many borrowers whose credit is just a notch below what our underwriting has required who have been relegated to paying significantly higher mortgage rates in the so-called subprime market.'' Demographic information on these borrowers is sketchy. But at least one study indicates that 18 percent of the loans in the subprime market went to black borrowers, compared to 5 per cent of loans in the conventional loan market. In moving, even tentatively, into this new area of lending, Fannie Mae is taking on significantly more risk, which may not pose any difficulties during flush economic times. But the government-subsidized corporation may run into trouble in an economic downturn, prompting a government rescue similar to that of the savings and loan industry in the 1980's. ''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.'' Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped. Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings. Fannie Mae officials stress that the new mortgages will be extended to all potential borrowers who can qualify for a mortgage. But they add that the move is intended in part to increase the number of minority and low income home owners who tend to have worse credit ratings than non-Hispanic whites. Home ownership has, in fact, exploded among minorities during the economic boom of the 1990's. The number of mortgages extended to Hispanic applicants jumped by 87.2 per cent from 1993 to 1998, according to Harvard University's Joint Center for Housing Studies. During that same period the number of African Americans who got mortgages to buy a home increased by 71.9 per cent and the number of Asian Americans by 46.3 per cent
And here's what the NY times reported in 2003.
By STEPHEN LABATON The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago. Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry. The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios. The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates. ''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan. ... Significant details must still be worked out before Congress can approve a bill. Among the groups denouncing the proposal today were the National Association of Home Builders and Congressional Democrats who fear that tighter regulation of the companies could sharply reduce their commitment to financing low-income and affordable housing. ''These two entities -- Fannie Mae and Freddie Mac -- are not facing any kind of financial crisis,'' said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ''The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.'' Representative Melvin L. Watt, Democrat of North Carolina, agreed. ''I don't see much other than a shell game going on here, moving something from one agency to another and in the process weakening the bargaining power of poorer families and their ability to get affordable housing,'' Mr. Watt said.
Bush and McCain -tried- to stop this clusterf**k. They saw it coming, and they warned everyone about it, and they put a decent plan together to stop it from happening, and the Democrats said NOPE, nothing to see here, the Republicans are just racists trying to make sure black people can't afford homes.
How did Freddie and Fannie stop that regulation from happening? Easy, they flooded Congress with lobbyist dollars. And who were the three biggest recipients over the last 10 years? First, Chris Dodd. Then Obama - yes, he ranked #2 in a ten year ranking despite only being there 3 years - and then John Kerry.
Barack Obama has slammed the banking industry for its predatory use of sub-prime mortgages, which are pushing millions of American homeowners toward foreclosure. But his campaign's Finance Chair, Penny Pritzker, owned a failed Chicago thrift that helped pioneer sub-prime financial instruments and faced accusations of abuse. Superior Bank of Chicago went belly up in 2001 with over $1 billion in insured and uninsured deposits. This collapse came amid harsh criticism of how Superior's owners promoted sub-prime home mortgages. As part of a settlement, the owners paid $100 million and agreed to pay another $335 million over 15 years at no interest... But this seven-year-old bank failure has relevance in another way today, since the chair of Superior’s board for five years was Penny Pritzker, a member of one of America’s richest families and the current Finance Chair for the presidential campaign of Barack Obama, the same candidate who has lashed out against predatory lending. Though Superior Bank collapsed years before the current sub-prime turmoil that is rocking the world’s financial markets – and pushing those millions of homeowners toward foreclosure – some banking experts say the Pritzkers and Superior hold a special place in the history of the sub-prime fiasco. “The [sub-prime] financial engineering that created the Wall Street meltdown was developed by the Pritzkers and Ernst and Young, working with Merrill Lynch to sell bonds securitized by sub-prime mortgages,” Timothy J. Anderson, a whistleblower on financial and bank fraud, told me in an interview. “The sub-prime mortgages,” Anderson said, “were provided to Merrill Lynch, by a nation-wide Pritzker origination system, using Superior as the cash cow, with many millions in FDIC insured deposits. Superior’s owners were to sub-prime lending, what Michael Milken was to junk bonds.” In other words, if you traced today’s sub-prime crisis back to its origins, you would come upon the role of the Pritzkers and Superior Bank of Chicago.
So. Democrats were at the core of the cause. Democrats defended it in Congress. Democrats agitated against any oversight of Freddie or Fannie. Republicans alerted everyone to the problems, and Republicans tried to stop it, but they were unable to bludgeon through the massive wall of federal bureaucracy and millions in lobbyist money that was primarily shipped around by Democrats. The current Democrat candidate has one of the chief architects of the whole damn thing as his Finance Chair.
And the Democratic response? "The Republicans failed! It doesn't matter why they failed, it doesn't matter what they -tried- to do! They suck, and bear equal blame!"
Now, now Chris V: as I said, only the party in power when the house of cards crumbles can be blamed.
Well the Dems do have a majority, right?
But since Bush is in the White House that means in the eyes of John Q the repubs are running the show. Meaning it's time to dump it all on him. After all, that's his job- take it in the shorts for all the stuff that goes wrong.
I swear I cannot fathom why anyone would really want that job.
It was the companies who decided to take the gamble and allow people who did not have good credit to finance their mortgage. It doesn't matter who made the whole mess possible, the companies who made it a reality are still the ones to blame. I don't blame this one on a political party, I blame it on risky business practices, and I am not in favor of bailing out the companies who shot themselves in the foot.
EastCoastMojo wrote: It was the companies who decided to take the gamble and allow people who did not have good credit to finance their mortgage. It doesn't matter who made the whole mess possible, the companies who made it a reality are still the ones to blame. I don't blame this one on a political party, I blame it on risky business practices, and I am not in favor of bailing out the companies who shot themselves in the foot.
ah, but it does matter who made the whole mess possible. those who don't learn the lessons of history are berkeleying retards, or something like that.
obama made a E36 M3-ton of money off of the sub-prime deal, contributed a great deal to the creation of the current state of affairs, and now blames the current president for said state of affairs.
we'd better learn something from that.
Sure. It is also true that "An intelligent man learns from his mistakes, a wise man learns from the mistakes of others". I am not at all implying that there is not something to be learned from this mess, and it may be that a bailout is going to be the patch that hurts this country the least. However, in my experience, any time someone tries to make you make a fast decision about something, especially something involving money, they are trying to con you. This whole thing reeks no matter which way the political wind blows, and I don't think a bailout is going to fix anything. I think it will set a dangerous precident.
EastCoastMojo wrote: It was the companies who decided to take the gamble and allow people who did not have good credit to finance their mortgage. It doesn't matter who made the whole mess possible, the companies who made it a reality are still the ones to blame.
I respectfully disagree…when the Clinton administration passed laws to not only permit but encourage sub-prime lending, it forced lenders to go along…if they didn’t, their profits over the short term would have been far poorer than their competitors resulting in the tanking of their stock prices and demands from stock holders to replace leadership.
As much as I hate the idea of rewarding CEO’s for this mess, I honestly have to say that I’d do the same thing if I were in their position. What else could I do…If I stood my ground and said “this is crazy”…I’d be labeled a raciest, lambasted for not growing profits as quickly as others, & run out of office on the grounds of being incompetent.
Wake up folks…the 700 billion is nothing more than the next entitlement program for the poor.
I’m sure you’re fine with this because you know there are no lazy / stupid people, just bad luck just like there are no hard working / smart people, just good luck and the purely lucky people need to help out the purely unlucky people right???
EastCoastMojo wrote: It was the companies who decided to take the gamble and allow people who did not have good credit to finance their mortgage. It doesn't matter who made the whole mess possible, the companies who made it a reality are still the ones to blame. I don't blame this one on a political party, I blame it on risky business practices, and I am not in favor of bailing out the companies who shot themselves in the foot.
The point was that the business practices that were risky were caused by government regulation and intentional lack of oversight, as well as banks/mortage companies being required to make a certain percentage of loans to low income or unqualified buyers. So when the Dems made it possible to write loans to low income buyers, then required them to MAKE those types of loans, then made sure than anyone who said it was a bad idea was labeled a racist, then yes, it was one political party causing the problem. And it was all about money: look who made the most money off of all of this...
So the republicans knew this was going to happen 10 years ago and they didn't do anything about it? 
Just kidding. Like I said, I don't blame either political party. I just think that it will take time to come up with the best patch for it and the current scenario seems to be "Do this! Do it NOW or else!" sort of mentality and that smells fishy to me.
EastCoastMojo wrote: It was the companies who decided to take the gamble and allow people who did not have good credit to finance their mortgage. It doesn't matter who made the whole mess possible, the companies who made it a reality are still the ones to blame. I don't blame this one on a political party, I blame it on risky business practices, and I am not in favor of bailing out the companies who shot themselves in the foot.
You are exactly correct. But, there's a bit more to it.
Congress, during the Clinton administration, enacted legislation which directed Fannie and Freddie to loosen underwriting standards. No sense going over all that ground again. But here's what happened: Mac and Mae back up the vast majority of mortgages in this country, meaning the companies which needed them to back up their mortgage paper had to follow the same guidelines. For many of them, it was sink or swim; if they cut loose the Mac/Mae lifeline they were bound to go out of business. So they complied with the new guidelines and in response the housing market accelerated (driving the rise in home prices and thus equity) until those bad loans started coming back to bite. All it took was a crappy economy in seven states to start the thing crumbling. Now no one wants to risk buying up the subprime mortgages and can you blame them?
As has been said before in this thread, there's plenty of blame to go around. One piece of fallout from this is that those who do not meet strict underwriting guidelines won't be able to get mortgages, meaning we are right back where we started before that famous piece of legislation got WJC's signature. BTW, the original bill was the Glass-Steagall Act, repealed by the Gramm-Leach-Bliley Act.
http://voices.washingtonpost.com/postpartisan/2008/09/obamas_faulty_logic.html
"Obama's Faulty Logic"
"Bill Clinton beat Papa Bush in 1992 by blaming him for economic woes, even though the downturn of that year was over by the time of the election. Now Barack Obama is hoping to blame that hyphenated adversary, Bush-McCain, even though the facts don't fit his narrative.
Obama is trying to draw a link between the Wall Street blow-ups and a lack of regulation. But the blow-ups have included Fannie Mae and Freddie Mac, two of the most highly regulated financial institutions in the country. They have included three out of five of the top investment banks, institutions that were also regulated. By contrast, there have been relatively few blow-ups at hedge funds, which are not regulated directly. This pattern of failure is not consistent with Obama's claim that deregulation caused the trouble.
Embarrassingly for Obama, the principal piece of financial deregulation over the past decade was the reform of Glass-Steagall, the law that separated investment banks from deposit-taking ones. This reform was sponsored by McCain's friend, former Republican Senator Phil Gramm, but ending the division between the two types of bank was a policy that the Clinton team also supported, which does not fit the Obama narrative. And during the current crisis, the Glass-Steagall reform has proved to be a boon. It has cleared the way for relatively healthy deposit-taking banks, such as JP Morgan and Bank of America, to rescue desperate investment banks, such as Bear Stearns and Merrill Lynch. Without that piece of deregulation, we would all be in more trouble.
The regulation-versus-deregulation rhetoric is appealingly simple, and both parties abuse it. Republicans like to say they will get the economy going by cutting red tape. Democrats like to say that they will make the economy more stable by demanding rational oversight. Neither claim is worth much.
The Republicans fail to acknowledge that the easy economic gains from deregulation were exhausted more than two decades ago, when clearly destructive restrictions on competition in trucking, airlines and so on were scrapped by Carter and Reagan. The Democrats fail to acknowledge that there is a limit to what government oversight can do. Modern financial institutions are so complex that government inspectors are hard pressed to understand their trading strategies. That is why an outfit such as Citigroup, a deposit-taking institution theoretically overseen by multiple government bodies including the Fed, could park billions of dollars of toxic mortgage securities in off-balance-sheet vehicles, with nary a protest from regulators.
Yes, Wall Street's woes reflect greed and reckless borrowing. And yes, some regulatory reform is necessary. But you can't blame the mess on either political party -- at least not if you want to remain honest."
What is the notion that "" most Americans don't understand what needs to be done to save us from a critical Kablewy meltdown "" Life for most has been in a critiocal meltdown for months easily for most middle class . The price of JUNK cars has plumeted as with all metals . Fred Sanford Banking is manditory now . I wonder how many 20 K micro loans could be offered to Americans to start up businesses out of 700 B .
ALSO these churchs that are going political tax those ASAP!
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