Our financial system is crumbling this week.

[sighyoung]

I've already said that I don't really understand completely how we got here, so if someone wants to slam this idea (which isn't mine), then feel free. Won't hurt my feelings.

What if that $700 billion was taken and used to pay off mortgages? You know, pay them off. Where people have no home debt. Where they would in turn put that money into the economy.

What would that do to the current crisis? I'm asking because I really don't know.

So when businesses need a line of credit, college students need to pay for college, etc. they should go to homeowners for a loan?

That 700 billion isn't going to pay for every loan needed or every home in foreclosure or about to be in foreclosure.

It is meant to ignite the lending industry, not supply it.

So after they do this plan, instead of something I suggested, then they need to provide more regulations, right?

++

[UK]

So, for the sake of saving two or three bad days or even weeks on Wall Street, congress should push through an abhorrent bailout plan without getting it corrected? I don't think they should do it at all, and you're asking for the poo version to be pushed through. You may know more about financial markets and the economy than I do, but I don't think I'm wrong for being happy the bailout didn't go through yesterday.

No, I'm focusing on the economy as a whole as well. And, my simple reasoning is this: If you are a good investment (ie, have good credit, a solid job, and can make your monthly payments - be it a small business or an individual home/car buyer), banks will invest in you. Maybe not WaMu or Goldman Sachs or whoever else because they've all shot themselves in the foot. But, and I don't know this I can only guess - so if I'm wrong please tell me - there would be a bank, somewhere maybe Europe or Asia, just chomping at the bit to be the banker that all they have to do is follow a standard that banks with great success followed for 100+ years (or however long) and make a killing. If there's no banks wanting to make money and not bankrupt, then I guess I am wrong. But, seriously, America has been a pretty good country with a pretty good finanacial system for a long time. If all the banks here fail, all one has to do is step up with the capital, charge a little bit more for theirmoney, give out only loans that would have been approved in the 80's, follow old practices and make a boatload of money.

So, if our banks fail, every other bank worldwide fails as well? I agree with more regulation. I just wish the people that pushed for no government invovlement weren't the ones now screaming the loudest about how they need a trillion dollars.

I just simply don't believe this. I refuse to believe that banks will stop investing in good investments.

Further decline is fine by me.

Where is the govt getting the 700 billion from? They can afford that, but can't help the little guy get money to finance his home? This, imo, would be a lot better investment than handing over a blank check to whomever.

No plan is going to be perfect, the plan is designed to be a compromise between parties. Giving them till next Sunday to try and rework it does little to nothing at all if their partisan provisions remain the same.

You can't be focusing on the economy if you think certain increased recession and a possible Great Depression is fine by you.

You're wrong in the fact that you don't think that more people will be looking to borrow than the banks will provide credit, I think you misunderstand how vital lending is to the economy and not how critical denying an additional 5% of the mortgages, small business loans, student loan, etc. is to the economy. In this economy, people are looking to borrow more than they have in many years b/c they're making the same but expenses have increased, unemployment is high, and people had been living beyond their means.

They're getting the 700 billion from the taxpayers, having that go directly to the gov't does nothing for the banks, you need the banking system to revive and get the economy looking forward.

i never said Great Depression. I think that's made up. Yes, a recession would be fine by me. And, admittedly, for personal gains. But, I don't htink it's the end of the world. We can't have a booming economy 100% of the time.

I fully understand how important lending is to the economy. 75% of my clients have their projects financed. And, of those 75%, probably half to a third didn't deserve the loans they got. And, they were the ones that I am having problems collecting from. However, there are other markets, such as the green energy boom and infrastructure that we've discussed that will keep everyone afloat to say the least.

Unemployment at 6% is not that high. 4% is almost fully employed as there is a constant flux in people switching jobs and what not. And, people need to stop spending more than they make. If that doesn't happen, all this is moot because we're doomed.

How are they getting the 700 billion from the taxpayers? Taxes aren't due for half a year and I haven't gotten a bill...... I agree you need a banking system to keep the economy moving forward.

The Great Depression is somewhat of hyperbole on my part as well as others, it's remote to even suspect it might get that worse. Without the bailout and other nec. steps I've mentioned, I believe this country will cont. to regress finanically. I want to see them to try and prevent further damage from occuring as we certainly haven't leveled off as far as unemployment levels and we have now just started to feel the credit crunch as far as being able to get small business loans, etc. which in due time will hurt the economy far more down the road than it is now.

This isn't about trying to keep afloat, this is about trying to prosper again.

[UK]

I've already said that I don't really understand completely how we got here, so if someone wants to slam this idea (which isn't mine), then feel free. Won't hurt my feelings.

What if that $700 billion was taken and used to pay off mortgages? You know, pay them off. Where people have no home debt. Where they would in turn put that money into the economy.

What would that do to the current crisis? I'm asking because I really don't know.

So when businesses need a line of credit, college students need to pay for college, etc. they should go to homeowners for a loan?

That 700 billion isn't going to pay for every loan needed or every home in foreclosure or about to be in foreclosure.

It is meant to ignite the lending industry, not supply it.

So after they do this plan, instead of something I suggested, then they need to provide more regulations, right?

Very much so & if they don't, it's a waste of time and money b/c we'll be right back where we started from.

[UK]

It's a horrible idea because you are rewarding many people who speculated foolishly on rising home values and got burnt. You also reward the lenders that made loans to people who had no business getting loans.

Doesn't the Paulson plan already do this? It calls for the government to overpay to buy bad loans thereby subsidizing the rich bankers who made these bad investments.

It's something that needs to be reworked, IMO. Instead of buying back bad loans, some of it should be bought back in vanilla bonds to protect taxpayers.

[BW23]

I've already said that I don't really understand completely how we got here, so if someone wants to slam this idea (which isn't mine), then feel free. Won't hurt my feelings.

What if that $700 billion was taken and used to pay off mortgages? You know, pay them off. Where people have no home debt. Where they would in turn put that money into the economy.

What would that do to the current crisis? I'm asking because I really don't know.

So when businesses need a line of credit, college students need to pay for college, etc. they should go to homeowners for a loan?

That 700 billion isn't going to pay for every loan needed or every home in foreclosure or about to be in foreclosure.

It is meant to ignite the lending industry, not supply it.

So after they do this plan, instead of something I suggested, then they need to provide more regulations, right?

++

Okay, well, I guess it depends then. Congress enacted new regulations on the student loan industry. It almost crushed the entire student loan industry, and it has severely hurt borrowers, IMO. Many lenders have cut back or stopped lending altogether. Almost all have stopped borrower benefits that would reduce interest rates on those paying the loans back. For example, lenders that used MOHELA, mostly those in Missouri, to service their loans, would sell those loans to MOHELA before a borrower entered repayment. MOHELA had a benefit for those in what they considered service industry (teachers, law enforcement, nurses, national guard, etc.) that could greatly reduce their interest rates. I know nursing students that were paying 0.25% interest monthly on their loans.

Those benefits are gone. They likely won't be coming back. And now the interest rates are around 7%. Big difference.

Now, what is happening with less student loan lenders is that there is one agency that is benefitting. Only one.

The United States Department of Education.

[Leroy]

The part that bothers me the most is that the people that are in positions in which they could have if not prevented, but at least see this thing coming. They just sat there and watched and then tried to ram a $700 billion bill down the taxpayers throat in less than a week, without explaining why or what it was going to accomplish exactly. For them to not expect some push back is beyond naive.

[Arthur Dent]

It's something that needs to be reworked, IMO. Instead of buying back bad loans, some of it should be bought back in vanilla bonds to protect taxpayers.

How would that help? If there is a fundamental problem, it is that banks have gone bust with liabilities greater than assets and therefor the ability to lend money will dry up. Unless the interest rates on those bonds are set so that they are effectively giving away free money, loans won't help. What banks need is capital. In return, taxpayers should demand that the capital from existing shareholders be drained before any tax money is given and that citizens are given a return for their investment during the recovery.

Also, we should require greater transparency in the unregulated mortgage assets and encourage a quick deflation of the housing bubble. This would help end the panic due to the uncertainty about the value of these assets.

[AWvsCBsteeeerike3]

The part that bothers me the most is that the people that are in positions in which they could have if not prevented, but at least see this thing coming. They just sat there and watched and then tried to ram a $700 bill down the taxpayers throat in less than a week, without explaining why or what it was going to accomplish exactly. For them to not expect some push back is beyond naive.

++

[UK]

It's something that needs to be reworked, IMO. Instead of buying back bad loans, some of it should be bought back in vanilla bonds to protect taxpayers.

How would that help? If there is a fundamental problem, it is that banks have gone bust with liabilities greater than assets and therefor the ability to lend money will dry up. Unless the interest rates on those bonds are set so that they are effectively giving away free money, loans won't help. What banks need is capital. In return, taxpayers should demand that the capital from existing shareholders be drained before any tax money is given and that citizens are given a return for their investment during the recovery.

Also, we should require greater transparency in the unregulated mortgage assets and encourage a quick deflation of the housing bubble. This would help end the panic due to the uncertainty about the value of these assets.

B/c the big money banks need to secure the loans and mortgages from the regional banks, they didn't have the need to do this b/c everything was based on short-term gains. Locking up something long-term as a vanilla bond will secure their assets & will help bring back the housing costs up over time.

[KyCardinalFan]

B/c the big money banks need to secure the loans and mortgages from the regional banks, they didn't have the need to do this b/c everything was based on short-term gains. Locking up something long-term as a vanilla bond will secure their assets & will help bring back the housing costs up over time.

Mmmm... Vanilla... shake... Aaahhh