1. Why wouldn't the Feds stipulate that in order to receive a federal bailout, the mortgage companies must restructure the variable loans into long term fixed mortgages people can afford?
-my argument for this: Consolidating these loans would keep people in the homes (foreclosures cost the banks and the govt money), they help keep home values up, it would IMMEDIATELY give people DISPOSABLE INCOME! Think, currently low interest rates locked in, at lower monthly mortgage payments! This would revive the economy in the matter of weeks!!!
2. Repeal Bush's tax cuts once the economy stabilizes...
-Argument: This would help re-fill the funds needed to fix our roads, fund alternative energy, pay back the national debt, send our people to school and help pull people out of poverty. This would also help fund badly funded schools and law enforcement agencies.
What do you folks think? The Jackasses in Capitol Hill don't get it!! Tito.....
Let me break this down for you. I would love if the Fed could do something. The point is you dont understand mortgages. Mortgages are sold on the open market as mortgage backed securities. Wells Fargo packages them and sells them in 100M blocks (example). They dont own the paper. Wells fargo makes .25% to service the loan. They get that, the investor that bought the bond makes the rest. Point is wells fargo promissed the bond holder they would make 7%.
They Fed cant go into wells fargo and say lower all your rates by 1%. It doesnt work. They keep about 5% of their loans. The rest are sold. The bank has to pay 7% no matter what to the investor. The investors that buy mortgage back securities are Governments, China, France, GB and huge insurance companies.
Your question is flawed. For the fact you actually think its the banks money. Its not. They just collect the interest to pay to somebody else.
Bush can say all day that you should freeze the APR on rates. The banks are all like yeah but china doesnt agree with you. We just collect the payments for the bonds they bought. If we stop it at 5% we still have to pay 12%.
The Bond holders are in control, not the banks. The Bond holders will never change that rate. Its all politics and its hilarious, and sad. The banks and the Fed cant do a damn thing. They dont own the bonds.
If the banks lower the rates, somebody has to pay the difference. Its not as easy as you make it sound.
PS I agree with you the tax cuts have to be taken back.
*** UPDATE ****
Holy **** I cant believe im reading this. Nevada you actually think the Government can control mortgage rates? Good hell. They are sold on the open market. Saying the Government should do something about the mortgage rates is about as stupid as saying they should do something about the oil rates. Do you even know what you are F****** talking about? I hope you would never be my loan officer. The government cant control it, it they could... It would have already happend. Good hell.
The Government doesnt fund mortgages.. They Insure them on only VA or FHA. The US government cant go to wells fargo and say change your rate to 5%. WHY? because wells fargo doesnt own the bond. It might be owned by some company in france. I think what your suggestion makes a lot of sense; unfortunately, it is too much like right and we see that is not what our government is calling for.
It is an excellent idea though. No. If the government were to put even more regulation into the mortgage industry, we would just be asking for another catastrophe. Remember, it was the government that introduced the notion of "sub-prime" mortgages in the first place, though this has never been reported on television or in the news:
http://en.wikipedia.org/wiki/Subprime_mo...
The trouble here is that you do not understand the monetary system controlled by the Federal Reserve Bank (the Fed). When they "cut" interest rates, they flood the economy with money in order to target a key overnight lending rate that serves as the basis for most other rates. With this power, they can control the economy on the fringes, but they can only do one thing at once. By "stimulating" the economy, they destroy it in the long term with ever-increasing inflation. Inflation, which is simply a measure of the increase in the amount of dollars in circulation, is caused by the government printing money to finance its debts to foreigners and to the American people. We are printing billions and billions of dollars in order to fund our HUGE military and entitlement programs. We are also using this printed money to pay down foreign debts we have taken out to fund our spending.
Your solution to raise taxes to fund out of control government spending is simply looking at the problem from the wrong perspective. Why do we need so much spending from government? Why do we spend insanely large amounts of money every year on keeping our military in Germany, Japan, South Korea, etc.? Why do we really need to be in Iraq? Raising taxes will not stimulate the economy and the only way to fund our domestic promises is to stop spending our money overseas, even though I think the government should stop making so many domestic promises. The problem is that they are funding stupid programs and letting interest rates be compounded. There is so much that is wrong that it would take a major overall of government. |
