Epic - Rick Santelli blows up at Stimulus, White House responds

[911fever]

^ LOL

[Canmorite]

Originally posted by method
If you can prove to me that the majority of the people that took these loans are house-flippers, then I'll agree with you.

It was a very small % of borrowers that took out loans to flip, that was simply an example. But people with no proof of income, even lying about income, not understanding terms or simply believing that housing prices would continue to appreciate by a linear amount each year got the whole thing started.

Then, the people above sub-prime ran into trouble when they were underwater and owed more on their home then it was worth. They started to walk away. Then the next level up was affected, etc etc.

Originally posted by Toma
Fucking total idiot with a narrow understanding of the financial markets and economy.

Oh well....

This collapse was engineered, pure and simple and had NOTHING to do with home owners not being able to afford their homes.

Santanelli is not an idiot

So hundreds, even thousands of firms all somehow worked together to create bad loans, package them, sell them to Wall St. then have Wall St. sell them around the world? Little far-fetched to me.

If people can't afford their homes they foreclose, and set off a domino effect on other home values.

If you have examples otherwise I'd love to here them.

Originally posted by pinoyhero

I'm still missing the argument from some folks that actually counters what he's saying. He's against bailing out those individuals and banks who didn't act responsibly, namely because if we do there no lesson learned that will prevent repeat behavior.

My thoughts exactly. Don't bail people out, only bail out firms who are too big to fail. With what the US has done, it's going to look terrible if they DON'T bailout the homeowner.

[Rocky]

Interesting stuff. Certainly good to see someone getting passionate while still making valid points. I like that the media got attacked a little bit too, they have a little too much freedom these days and I think they've moved to more entertainment and fear-mongering than actual news reporting -_-

I like Rick's comments for the most part, not that I'm real informed on the issue, but I think he's making some good points.

[method]

Originally posted by Canmorite


It was a very small % of borrowers that took out loans to flip, that was simply an example. But people with no proof of income, even lying about income, not understanding terms or simply believing that housing prices would continue to appreciate by a linear amount each year got the whole thing started.

Then, the people above sub-prime ran into trouble when they were underwater and owed more on their home then it was worth. They started to walk away. Then the next level up was affected, etc etc.

Do you have numbers on these instances? I'm interested to see.

Why were all these people given these loans? It's not good enough to simply offer these things to people and then scream 'meritocracy' when it goes awry. The people in control did this purely to profit from it... if homeowners had done the same then I might be inclined to offer equal blame.

Kicking people out of their houses to satisfy ideology is only going to make the average person hate wall street even more.

[Canmorite]

Originally posted by method


Do you have numbers on these instances? I'm interested to see.

Why were all these people given these loans? It's not good enough to simply offer these things to people and then scream 'meritocracy' when it goes awry. The people in control did this purely to profit from it... if homeowners had done the same then I might be inclined to offer equal blame.

Kicking people out of their houses to satisfy ideology is only going to make the average person hate wall street even more.

I don't have them, but this guy is very good at the numbers and explaining the mortgage market. http://www.youtube.com/results?searc...+mortgage&aq=f

Why were they given loans? Because the loan officers were raking in HEFTY fees or administering these loans. Then, the people on Wall St. who packaged these loans and sold them received big fees, same with rating agencies who rated them AAA.

Homeowners weren't all in it just to profit, but I'm sure quite a few saw home prices appreciating at a ridiculous rate and wanted a piece of that pie (See: Calgary). Being blindsided by greed and not understanding how ARMs work, or real estate prices didn't help.

A lot of this falls on the shoulders of the lenders not explaining all the terms, or people not caring and simply wanting the loan. I'm not trying to solely blame the homeowner, but you can't plead ignorance when shit hits the fan.

Everyone HATES Wall St. right now. Just wait till the next bull market comes along, and everyone will love it.

[Antonito]

This is some crazy shit going on. Bailing out the homeowners is a risky proposition. Stopping the hemoraging of value from homes would definitely help the American economy, but would the steps proposed actually accomplish that goal?

It's the same problem as with bailing out the banks. The reasoning is sound: if banks fail, they take down everything and everybody that relies on them for financing. But there's been a lot of money spent, and banks are still getting hammered.

On the other hand, even just slowing down the bankruptcies is helping things. Markets are as much about momentum and emotion as anything else. Having some breathing room to find alternate arrangements can mean life or death for a lot of businesses.

Well, if there was an easy answer, we wouldn't be in this mess.


As for placing blame, anybody that thinks the homeowners are equally to blame as the banks is a fucking fool. What's the point of going to school if you're apparently no more knowledgeable about your job than your customers?

[Canmorite]

Originally posted by Antonito
This is some crazy shit going on. Bailing out the homeowners is a risky proposition. Stopping the hemoraging of value from homes would definitely help the American economy, but would the steps proposed actually accomplish that goal?

I'm not sure it would. There is 13 months of housing inventory in the states, if we left home prices fall I'm certain more buyers and deal hunters would step in and let market forces sort out the price.

If you stop the bleeding, and allow homeowners to maintain payments on their mortgages, those payments go to the CMO holders-The investors. You are bailing out both this way, and potentially fixing the entire toxic asset problem. We still need a way to value these assets though.

Originally posted by Antonito
It's the same problem as with bailing out the banks. The reasoning is sound: if banks fail, they take down everything and everybody that relies on them for financing. But there's been a lot of money spent, and banks are still getting hammered.

If the big banks fail, I think things would be much worse before they got better. It could be a forest fire scenario though, with death comes new growth stronger then before. Coming out of this I think we are going to see legislation against banks becoming involved in systemic risk (Tough to regulate) or taking on too much risk (What's too much?). Hopefully the SEC gets a revamp, because those guys are fucking asleep!

Originally posted by Antonito

Well, if there was an easy answer, we wouldn't be in this mess.

As for placing blame, anybody that thinks the homeowners are equally to blame as the banks is a fucking fool. What's the point of going to school if you're apparently no more knowledgeable about your job than your customers?

I think this will be a problem that is going to be dealt with for years to come, along with all the debt being created to pay for this problem. Double whammy, both put on the taxpayers.

Equal blame isn't what I'm looking for, but you can't write off the homeowner as having no fault in this at all. Either way, this crisis has created a lot of volatility, and with that comes opportunity.

[Xtrema]

I like what Santelli was saying. But the whole scene was staged before hand. It's not a random mob scene.

While Jon Stewart is left leaning, he's actually pro common-sense. He will go after both side if something stinks.

Lack of regulation led to this. Greed led to this. I still think house affordability should be set by government and not individuals. What we have in Canada isn't bad but could be stricter.

For the last 30 years, we went from cash base to credit base. The credit funded economic growth gravy trains has derailed. It's time to go back to cash.

[Legless_Marine2]

Originally posted by method
Who has the command heights of the economy? You're going to place equal blame on people that have no idea about finance, and the enormous banks that doled out their predatory loans?

People are often financially stupid - that's no excuse to hand them loans that had the potential to make the mortgage crisis explode.

Almost all of us are financially stupid, and can only mitigate the myriad ways we are taken advantage of by increasing our financial intelligence.

It's unrealistic to expect the banks to act in any way other than their own best interest - This can only be accomplished by regulation.

Ironically, such regulatory protections were rolled back by Bush in 2002 as part of an initiative make housing more financially accessible, in order to increase minority home ownership.

[Canmorite]

Originally posted by Legless_Marine2
Ironically, such regulatory protections were rolled back by Bush in 2002 as part of an initiative make housing more financially accessible, in order to increase minority home ownership.

I believe Freddie Mac and Fannie Mae were Democratic iniatives.

[Antonito]

Originally posted by Legless_Marine2

It's unrealistic to expect the banks to act in any way other than their own best interest - This can only be accomplished by regulation.

Their own best interests is a relative term too, as evidenced by this current debacle.

Short term gain is a better way to put it

Originally posted by Legless_Marine2

Ironically, such regulatory protections were rolled back by Bush in 2002 as part of an initiative make housing more financially accessible, in order to increase minority home ownership.

Lol Bush and Republicans doing anything to help minorities (or white people that aren't rich)

Canmorite is right, that legislation was done in the Clinton era. Bushs' deregulation was simply because of the whole "the unbridled free market is supreme and infallible" ideology that is held by shortsighted retards.

As far as the minority initiative, here is a good article about the topic.

http://www.mcclatchydc.com/251/story/53802.html

tl;dr Lots of the loans made were not by banks "forced" by the Community Reinvestmant Act into making the shitty loans they did, but the act did force banks to find loopholes, which they then proceeded to go buck fucking wild with.

[CUG]

I don't get the blow-out about "bullying" the media, I agree a little bit with Rick.