John McCain on mortgage bailouts

[Thoth]

url=http://www.nytimes.com/2008/03/25/us/politics/25cnd-mccain.html?ref=business

<div class='quotetop'>QUOTE </div><div class='quotemain'>it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.</div>

<div class='quotetop'>QUOTE </div><div class='quotemain'>Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy</div>

<div class='quotetop'>QUOTE </div><div class='quotemain'>Of those 80 million homeowners, only 55 million have a mortgage at all, and 51 million homeowners are doing what is necessary — working a second job, skipping a vacation and managing their budgets to make their payments on time,” he said. “That leaves us with a puzzling situation: how could 4 million mortgages cause this much trouble for us all?”

Mr. McCain split the blame between the rising housing bubble and the use of confusing and complex financial arrangements, which he said were badly understood even by financial managers. He said initial losses, coupled with the lack of transparency, has caused a “crisis of confidence in the markets.”

Capital markets work best when there is both accountability and transparency,” he said. “In the case of our current crisis, both were lacking.</div>

 

[AEM]

<div class='quotetop'>QUOTE </div><div class='quotemain'>it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers.</div>

Here's what my problem is: While it certainly is not the duty of the government to bail out corporations, when the net effect of not bailing them out rises to the level of dealing a blow to the nation's economy, then the government has a duty to act. Not for the benefit of the corporations involved (who deserve what they get) but to minimize the impact overall.

 

[MikeDC]

Seems like a relatively sane response from McCain.

 

[Thoth]

<div class='quotetop'>QUOTE (AEM @ Mar 25 2008, 02:52 PM) <{POST_SNAPBACK}></div><div class='quotemain'>Here's what my problem is: While it certainly is not the duty of the government to bail out corporations, when the net effect of not bailing them out rises to the level of dealing a blow to the nation's economy, then the government has a duty to act. Not for the benefit of the corporations involved (who deserve what they get) but to minimize the impact overall.</div>

Agreed 100%. I still have a hard time believing they thought securities based on sub-prime loans was a good thing.

Bear Stearns, as I understand, played fast, loose, and was always on the edge. Their shareholders should have stepped up long ago but instead they wait to whine until JPM Chase plunders them big time. What goes around comes around.

 

[Real]

I don't follow the business world, so I'll stay out of this.

What I will say is in terms of his message to voters, McCain's response is essentially based on the Reagan-like philosophy of elimination of big brother government. Specifically, the type of message he has to get to conservatives to rally for their support, so I think for somebody who will be hit by the Dems for his supposed lack of knowledge about the economy, this was a good response.

 

[Dumpy]

his response (which is the same as my opinion, BTW), is overly simplistic and incomplete. The major issue is how to deal with fraudulent misrepresentation (or omissions of material facts) by mortgage brokers that led homeowners to borrow more money than they could afford? You've got unsophisticated homeowners who in many cases were misled by unscrupulous lenders about the total costs of the loan. In some cases, they lenders are out of business, so there is no financial recourse against them whatsoever. In other cases, the homeowner may have relied on an oral representation, which is essentially irrelevant. The question is whether the government should step in and help these people. While I personally have a hard time supporting a program that would provide relief to borrowers that ignored their own financial reality, I have no idea what to do about this situation. Hey, I personally just set up a spreadsheet and caculated to the penny what I could afford to pay per month in mortgage and insurance, given my income, expenses, expected down payment, expected property taxes and utility costs, and tax benefits of home ownership, and then calculated what I could afford to pay for a house. Everyone could--and SHOULD do this--but then again, I'm atypical. But this is beside the point.

It's a major problem, because if you allow 4 million families to lose their homes, home values will be destroyed--you'd be destroying the net worth of the other 50 million homeowners in the country, which in turn will prevent them from relocating, further harming the economy.

There's no easy answer on this one.

 

[CelticKing]

The companies shouldn't have lent the money to them in the first place, and that way those 4 million families would not have bought those homes, therefore they would have lost nothing.

Pretty much anyone can buy a house in the US. All you need is a job and the bank will approve you. (unless you're a criminal, etc)

Thats the real problem, and thats where the govt should act and stop the stealing that the banks do and have done for decades.

 

[Brand New]

Isn't McCain from Panama?

 

[speeds]

<div class='quotetop'>QUOTE (Bynumite @ Mar 25 2008, 10:08 PM) <{POST_SNAPBACK}></div><div class='quotemain'>Isn't McCain from Panama?</div>


http://www.nytimes.com/2008/02/28/us/politics/28mccain.html

 

[Denny Crane]

It's pretty clear the intent of the clause in the constitution is to prevent people who weren't born american citiizens from being eligible for the presidency. McCain was born an american citizen - it is a slam dunk, no matter what the scholars the NYT dug up in this hit piece say.

In fact, the people mentioned in the article (FDR Jr, et al) are/were clearly eligible as well.