AIG Bailout Has Saved America

#2
#2
ummm aig was bailed out under bush and yes it would have been a huge disaster because of the counterparty risk on their derivative trades. a lot more banks woudl have gone under if aig hadn't been saved.
 
#5
#5
capitalism never would have allowed unqualified buyers to buy homes in the first place.
 
#11
#11
droski said:
a) congress forced them

b) home prices went up pretty much straight for 15 years and default rates were low.
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This is overplayed. While it is true Congress had a stake in this, the amount of mortgages and subprime lending that went on was of the banks own doing. I think there was a lot of people punch drunk on making a quick buck trading these MBS and underwriters were more concerned with how much money they would make in the next 6 months than with if/how these mortgages would actually get paid.
 
#12
#12
while it's true that the banks (and primarily fannie and freddie) didn't have to expand their mortage portfolios if they didn't want to, it's also true that congress forced them to lend to inner city people and people with low credit as a stipulation of being allowed to expand their portfolios. so in my opinion both have equal blame. the banks shouldn't have expanded the porfolios if it ment drastically lowering their credit standards, but the gov't shouldn't have forced them to drastically lower their credit standards in order to keep the gravy train going.
 
#13
#13
Greed, and a false overbuilding of the market. The perception that we must own houses we cannot afford and the only way to afford them is with a lame variable option loan instead of staying within your means on a fixed loan and property you can afford, only to destroy the market, finances, and peoples lives five years down the road when the real payment comes to fruition and you suddenly realize your screwed.
 
#15
#15
Greed, no regulation and more greed. That sounds about right to me, GVF and BPV.
 
#16
#16
VolInMn said:
Greed, no regulation and more greed. That sounds about right to me, GVF and BPV.
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yep, it's pretty greedy to buy a house when you know you can't afford it but don't care because you know the American taxpayer is their to bail you out when you default.
 
#17
#17
VolInMn said:
Greed, no regulation and more greed. That sounds about right to me, GVF and BPV.
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No regulation is a bit strong. We are massively regulated. However, the credit default swaps became insurance without insurance company requirements and people's insane belief in limited home defaults let it happen. Stupidity from hordes of angles. Buffet warned of the impending crash, yet he had $7 billion of them on his books.
 
#18
#18
BigPapaVol said:
Buffet warned of the impending crash, yet he had $7 billion of them on his books.
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it's the ridiculous belief in reininsurance. this is why aig was a problem. that goes down and he brings down a lot of people with him. buffett himself probably would have had to void a quarters earnings.
 
#19
#19
droski said:
it's the ridiculous belief in reininsurance. this is why aig was a problem. that goes down and he brings down a lot of people with him. buffett himself probably would have had to void a quarters earnings.
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Buffet is a reinsurance guy because he own tons of the stuff. He believes he underwrites better than everyoe else and can price better.
 
#20
#20
MG1968 said:
yep, it's pretty greedy to buy a house when you know you can't afford it but don't care because you know the American taxpayer is their to bail you out when you default.
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Because I'm sure that's what people were thinking.

"Hey, we can't afford this house but let's buy it anyway because by the time we default there will be a system in place that we can use to screw the American taxpayer! To hell with our credit rating, who needs it!"

Lenders are greedy. People who knowingly took on more than they could handle are dumb.

Dumb ≠ Greedy
 
#22
#22
VolInMn said:
Because I'm sure that's what people were thinking.

"Hey, we can't afford this house but let's buy it anyway because by the time we default there will be a system in place that we can use to screw the American taxpayer! To hell with our credit rating, who needs it!"

Lenders are greedy. People who knowingly took on more than they could handle are dumb.

Dumb ≠ Greedy
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What were those people thinking IYO?
 
#23
#23
KB5252 said:
What were those people thinking IYO?
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I'm not sure that they were. That's the point.

There's a reason we have a credit scoring system and a reason why lenders have to approve loans. When your debt to income ratio is too high, the loan isn't approved. If we left it to the honor system, there would be no need for loan approvals.

When lenders start handing out loans to everyone who walks through the door to try and make a quick fortune on a hot housing market, that's pure greed.

I'm not saying everyone who's defaulted is innocent. I just don't seem them as being as much greedy as gullible.
 
#24
#24
You forget the fact that Barney Frank was telling everyone that owning a house is a right, and started putting pressure on the banks to take anyone and everyone regardless of their credentials.

While I don't believe the banks are completely innocent, the implication that they strove to put themselves into bankruptcy as fast as possible is perplexing.

The only reason AIG got a bailout is so Timmy Geithner could launder money to bailout foreign banks like Goldman Sachs and Deustche Bank.
 
#25
#25
VolInMn said:
I'm not sure that they were. That's the point.

There's a reason we have a credit scoring system and a reason why lenders have to approve loans. When your debt to income ratio is too high, the loan isn't approved. If we left it to the honor system, there would be no need for loan approvals.

When lenders start handing out loans to everyone who walks through the door to try and make a quick fortune on a hot housing market, that's pure greed.

I'm not saying everyone who's defaulted is innocent. I just don't seem them as being as much greedy as gullible.
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IIRC they were at the very least asked to do so in many cases if not mandated to do so in some cases. From there it snowballed.
 
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