Here's what is wrong with America:

[Stoop Dawg]

Mr. Bush and leaders of both parties on Capitol Hill have moved in recent weeks to react to the economic slowdown, first by passing a stimulus bill that will send checks of up to $1,200 to many couples this spring. They are now negotiating over proposals to overhaul financial regulations, blunt the effects of a likely wave of home foreclosures and otherwise respond to the real estate slump and related crisis on Wall Street.

The poll found that Americans blame government officials for the crisis more than banks or home buyers and other borrowers. Forty percent of respondents said regulators were mostly to blame, while 28 percent named lenders and 14 percent named borrowers.

http://biz.yahoo.com/nytimes/080404/1194761875466.html

Am I reading that correctly? Only 14 percent of Americans think that borrowers are responsible for making sound financial decisions? Forty percent think it is the governments job to regulate who can buy a house and for what price?


In assessing possible responses to the mortgage crisis, Americans displayed a populist streak, favoring help for individuals but not for financial institutions. A clear majority said they did not want the government to lend a hand to banks, even if the measures would help limit the depth of a recession.

<snip>

Respondents were considerably more open to government help for home owners at risk of foreclosure. Fifty-three percent said they believed the government should help those whose interest rates were rising, while 41 percent said they opposed such a move.

I agree that America is "on the wrong track", but it's these populist morons who scare me far more than terrorists in the middle east or an economic recession. These idiots get to vote. :mad:

[fadada1]

whatever happened to paying your bills on time and not "biting off more than you can chew"????

[Scott D]

whatever happened to paying your bills on time and not "biting off more than you can chew"????

it got lost in the silence about "How unexpected medical costs drive a family into bankrupcy faster than any other reason."

[Blue]

The middle class uninsured seem to pay an assload every doctor visit. The uninsured fools on welfare practically get their free healthcare. Or so it seems.

[sooner_born_1960]

Stoop Dawg. See what happens when you start a health care thread?

[Stoop Dawg]

it got lost in the silence about "How unexpected medical costs drive a family into bankrupcy faster than any other reason."

Alright, threadjacker, what percentage of people without health insurance can afford it and just choose not to buy it?

And by "afford" I mean "choose to forgo the 50" plasma TV and the brand new F150".

[Stoop Dawg]

Stoop Dawg. See what happens when you start a health care thread?

Some people will go to almost any length to avoid personal responsibility. Unfortunately for them, I'll go to almost any length to shove it down their whiny throats.

If you bought a house you can't afford on an interest-only ARM, YOU DESERVE TO LOSE EVERYTHING YOU OWN AND FILE BANKRUPTCY. It was a stupid thing to do. It's not the lender's fault for giving you the loan (although they will certainly take a nice loss for their lack of foresight) and it's CERTAINLY not the governments fault for not interfering in a free market transaction. It's YOUR fault. And, I dare say, you are probably a moron, so bailing you out isn't going to solve anything. It's really best if you just float on down to the bottom of the food chain.

[sooner_born_1960]

I find it amazing that 53% of the people think these borrowers should be bailed out. Don't they realize that bailout is coming from their pockets?

[Collier11]

Some people will go to almost any length to avoid personal responsibility. Unfortunately for them, I'll go to almost any length to shove it down their whiny throats.



Alot of Kids aren't even taught personal responsibility anymore, let alone accepting it

[shaun4411]

America-

Be Working class/poor-
Dont work, make bad decisions, be poor, get free sh*t, dont pay taxes, get a fat check from IRS.

Be middle class/white collar-
Work hard,make smart decisions, pay for poor people's free sh*t, Pay for your own sh*t, pay taxes, Get a small check from IRS.

Be rich-
Work hard, make smart decisions, pay for poor people's free sh*t, Pay for your own sh*t, Pay taxes on that sh*t, Give away/donate money, Write a check to the IRS.

[Condescending Sooner]

Alright, threadjacker, what percentage of people without health insurance can afford it and just choose not to buy it?

And by "afford" I mean "choose to forgo the 50" plasma TV and the brand new F150".

I have brought this up in conversation many times, but the woe is me crowd swears that never happens.

[yermom]

people are idiots, banks should know better. they make money by taking advantage of idiots, why on earth do they deserve a bailout?

if the lenders get help, the borrowers should too. forgive some debt on that overpriced house, or at least drop the fees and lower the interest rate. but yeah, there is a reason you don't buy stock on the margin anymore, i guess they are learning the same with houses now. some loans should be illegal IMO

the short answer is that it's bad for business if the banks go to ****, so the Feds are trying to avoid that. they don't care about black people. um, i mean regular people.

[yermom]

America-

Be Working class/poor-
Dont work, make bad decisions, be poor, get free sh*t, dont pay taxes, get a fat check from IRS.

Be middle class/white collar-
Work hard,make smart decisions, pay for poor people's free sh*t, Pay for your own sh*t, pay taxes, Get a small check from IRS.

Be rich-
Work hard, make smart decisions, pay for poor people's free sh*t, Pay for your own sh*t, Pay taxes on that sh*t, Give away/donate money, Write a check to the IRS.

i think it's already been covered... if you are writing a check to the IRS at the end of the year, it's your own fault, and doesn't have anything to do with how much taxes you pay

[shaun4411]

i dont believe in govt regulation of the housing market. (with reference to deciding who can be eligible to borrow for certain things). that is a contract between the borrower and the lender. if the lender is being stupid and letting someone borrow who has a propensity to default on that loan, then they need some new loan officers. on the same token, a family with a household income of $40k has no business buying a $300k house. we have apartments for you until youre ready. croikey people. people getting $1M+ loans to buy a house and defaulting on their loan. well mr banker, what did you think would happen when you give billy a million dollar loan that requires a morgage equal to two weeks pay? combined with the higher cost energy and taxes and other assorted goods/services in california, no wonder arizona and nevada is realizing such a boom.

[TUSooner]

Lenders must share some blame. They knew some of their deals were too risky (i.e., in some cases "risky" means "grasping and greedy"), and now they're whining just as much as the stupid borrowers.

[yermom]

at the point at which the banks get in over their heads and it requires the government to come in to bail them out or bad **** happens to the country is when they should start regulating things

people buying a $300k house on $40k a year through an interest only loan basically banking on being able to sell the house for $600k in 5 years only works for so long

[Scott D]

Alright, threadjacker, what percentage of people without health insurance can afford it and just choose not to buy it?

And by "afford" I mean "choose to forgo the 50" plasma TV and the brand new F150".

It's not only people without health insurance. It's people with health insurance that get denials for unforeseen emergencies. What about the person with health insurance who discovers after they are diagnosed with cancer, that oh...maybe 20% of their treatment is covered by their insurance policy?

Are there people who go the route you bring up? absolutely. Are there as many if not more people who just end up under a mountain of medical bills that their insurance for whatever reason slapped a denied on it? more than likely.

Saying everyone is just financially irresponsible because they end up in financial trouble is just as much of a cop out as saying that the government or the banks are solely responsible for the situation.

[85Sooner]

It's not only people without health insurance. It's people with health insurance that get denials for unforeseen emergencies. What about the person with health insurance who discovers after they are diagnosed with cancer, that oh...maybe 20% of their treatment is covered by their insurance policy?

Are there people who go the route you bring up? absolutely. Are there as many if not more people who just end up under a mountain of medical bills that their insurance for whatever reason slapped a denied on it? more than likely.

Saying everyone is just financially irresponsible because they end up in financial trouble is just as much of a cop out as saying that the government or the banks are solely responsible for the situation.

Funny how the increases in what your talking about coincides with the changes in the ARM's that were given.

From where I sit we see people come in all the time to design this or that for the new house their getting but by the time they get the house they have cashed in everything they have just to get into the home and end up buying a lost leader. I had brokers who came in during the past five years and they were just shaking their heads at what people were doing to get into 300K homes etc..... The party is ove and it is time to dealn with the consequences just like in Okla around the end of the oil boom. A bunch of my friends families moved out to ski island etc...... so high on the hog. Then the oil boom ended and they claimed bankruptcy. Even had a friend whos car (corvette) was repo'ed in front of the Pi Phi house.

[Scott D]

Funny how the increases in what your talking about coincides with the changes in the ARM's that were given.

From where I sit we see people come in all the time to design this or that for the new house their getting but by the time they get the house they have cashed in everything they have just to get into the home and end up buying a lost leader. I had brokers who came in during the past five years and they were just shaking their heads at what people were doing to get into 300K homes etc..... The party is ove and it is time to dealn with the consequences just like in Okla around the end of the oil boom. A bunch of my friends families moved out to ski island etc...... so high on the hog. Then the oil boom ended and they claimed bankruptcy. Even had a friend whos car (corvette) was repo'ed in front of the Pi Phi house.

The problem has been brewing for a long time, even before the ARM race. It's just at the point in the past few years that has boiled to a head. Ironically, a radio station up here played a speech from Dr. King today in where he laid into Americans for a "drum major mentality in their need to continue to keep up with the Jones'"

[Okla-homey]

Lenders must share some blame. They knew some of their deals were too risky (i.e., in some cases "risky" means "grasping and greedy"), and now they're whining just as much as the stupid borrowers.

I agree. And I'll drop my schweiz pfennig into the pot.

#1 IMHO, the people who need to be slathered in Karo syrup and staked out on an ant bed are the ones who made these loans to shaky homebuyers knowing full well they planned to flog this next to worthless paper on the broader market, thus getting away clean and making a tidy profit.

#2 If the First Bank of Wherever wants to take a risk on some guy seeking a mortgage, they should be free to do that. I am all about our Constitutional right to make a contract generally unencumbered by the gubmint.

#3 However, I support some sort of regulation to preclude that bank from passing that paper off as something other than the extremely high-risk secured paper it is. If someone wants to buy that paper strictly on spec the guy will make good, or in the alternative, because they are satisified with their right to foreclose on the property, fine. Short of that, negatory good buddy. It was this piece in the stream of commerce that got hugely jacked-up IMHO. There are pension funds that are now insolvent because their administrators bought bushels of this paper while being assured by everyone upstream it was all good.

In short, some dadgum regulation of this paper, a-la the SEC regs. that apply to sale of securities that require a whole bunch of disclosures by the seller so the investor has at least a chinamans chance of ferreting out whether or not he's buying shares in a pile of crapola or a going concern.

[olevetonahill]

What the Homester said
If they Cant sell that toilet Paper they wont be wrighting it !

[OUbones]

Some people will go to almost any length to avoid personal responsibility. Unfortunately for them, I'll go to almost any length to shove it down their whiny throats.

If you bought a house you can't afford on an interest-only ARM, YOU DESERVE TO LOSE EVERYTHING YOU OWN AND FILE BANKRUPTCY. It was a stupid thing to do. It's not the lender's fault for giving you the loan (although they will certainly take a nice loss for their lack of foresight) and it's CERTAINLY not the governments fault for not interfering in a free market transaction. It's YOUR fault. And, I dare say, you are probably a moron, so bailing you out isn't going to solve anything. It's really best if you just float on down to the bottom of the food chain.


I totally agree with you but, you do have to consider the in impact that would occur due to America's dependence on credit. Without credit the US capitalist system would collapse, which would screw everyone. It sucks for the ones who play by the rules. I'm about to be 29 and don't have ZERO credit card debt. That's not to brag but it's just to point out I understand credit and respect it. Yesterday I saw on the nightly news, I think it was ABC, about a family who fought off foreclose. The points of the story was to tell people to not give up and try to work something out with their bank instead of just accepting for closer. Then they put up the couple’s mortgage info. A married couple whose total income was $30,000 was able to secure a mortgage of $375,000 with nothing down. I mean come on, trusting the banks to do the right thing and tell the couple to **** off didn’t work. So maybe there need to be a little more oversight to the loan process. Letting the market govern itself didn’t work in this instance, you can see the disruption this is causing now. Hell we’re just talking about the mortgage situation and not the credit card situation which is far worse right now. Sorry I’m already ranting about stuff that’s out of my knowledge base, damn happy hour IPAs at the library.

[olevetonahill]

At 10% Interest Ya can afford 2.5 times yer annual income
Just sayin
So My point is save yer ****in money , Live as cheap as you can then Pay cash .

[MojoRisen]

I carry zero debt- this really PO's me because I would like to buy a house in the next year or so and this will likely impact people like me who have built credit with cards they don't need only to have credit so they can buy a house.

Lot's of people got rich quick out here in DC, and if you took on a loan you could not afford to begin with and took the ARM - thinking you were going to be able to sell or refinance - just remember it ain't so easy to get rich fast...

If the Government bails out the people, and believe me I don't enjoy other peoples misery, but - I will be extremely upset and will start to think we are socialist or commies.

The market will correct itself and perhaps people like me who want to buy a house and actually earn in the 1% of America - but can't save a dime would like to get a house that is afforable.

[Ike]

I agree. And I'll drop my schweiz pfennig into the pot.

#1 IMHO, the people who need to be slathered in Karo syrup and staked out on an ant bed are the ones who made these loans to shaky homebuyers knowing full well they planned to flog this next to worthless paper on the broader market, thus getting away clean and making a tidy profit.

#2 If the First Bank of Wherever wants to take a risk on some guy seeking a mortgage, they should be free to do that. I am all about our Constitutional right to make a contract generally unencumbered by the gubmint.

#3 However, I support some sort of regulation to preclude that bank from passing that paper off as something other than the extremely high-risk secured paper it is. If someone wants to buy that paper strictly on spec the guy will make good, or in the alternative, because they are satisified with their right to foreclose on the property, fine. Short of that, negatory good buddy. It was this piece in the stream of commerce that got hugely jacked-up IMHO. There are pension funds that are now insolvent because their administrators bought bushels of this paper while being assured by everyone upstream it was all good.

In short, some dadgum regulation of this paper, a-la the SEC regs. that apply to sale of securities that require a whole bunch of disclosures by the seller so the investor has at least a chinamans chance of ferreting out whether or not he's buying shares in a pile of crapola or a going concern.


BIN.

GO.


The way I see it, can you really blame the swath of america exhibiting this populist sentiment these days? The general feeling amongst a lot of americans is that regular people got the shaft, and the bankers waltzed away with a ton of cash....and now they see the fed financing the bailout of one of the largest banks when the other shoe dropped. What are the executives of these banks getting when they fail? Multimillion dollar contract buyouts and strongly worded letters from congressmen? I really can't blame the part of america that feels this way.

And regular people didn't just get the shaft by making poor decisions. The artificial inflation of home prices (brought about by the banks deciding to lend to high-risk borrowers, who are generally unwise enough to take it, so that they could dump the paper {fraudulently? I don't know} and turn a tidy profit) hurt people who made sound decisions as well, Like Joe Schmo who bought a house 2 years ago and now owes more on the mortgage than the house is worth.

[MojoRisen]

If it is a 30 year mortgage the market will return- if you counted on being able to take a loan on the rising housing market - not so good.

If you can make your payment- you can afford your house

[yermom]

well,that's the problem. if the interest rate and the payment goes up later when you actually have to start paying principle on the loan when you could barely afford the initial payments, you are screwed

part of the issue is also, that's the only way some people could buy a house at all in places like California due to the crazy inflated prices

of course, prices wouldn't be so inflated if Joe Schmo couldn't get a house that way

[Scott D]

If it is a 30 year mortgage the market will return- if you counted on being able to take a loan on the rising housing market - not so good.

If you can make your payment- you can afford your house

The market is returning at this point. It was however overinflated for the past decade.

[bluedogok]

Too many bought into the theory that housing always increases in value and never decreases. This is the same exact thing that happened in 1982 when the oil bust and the Penn Square bank collapse happened. When the FDIC "let" PSB "fail" they didn't think that a "small shopping center bank" was much of a risk to fail, little did they know that all of those bogus energy loans were sold off to the "big boys" and it took a few down with them. This is the same song, second verse. Those lenders should not have written many of the loans that they did and borrowers should not have been enticed by those "exotic" loans, both are responsible for the sub-prime disaster.

Here are a couple of interesting articles about the subject.

MoneyAndMarkets.com - Closer to a Financial Meltdown (http://www.moneyandmarkets.com/issues.aspx?Closer-to-a-Financial-Meltdown-1558)


MotleyFool.com - A Nation of Enrons (http://www.fool.com/investing/small-cap/2008/03/20/a-nation-of-enrons.aspx?)
Seth Jayson
March 20, 2008

An understatement: We are living through a time of considerable market and economic turmoil. Since we stand to see trillions of dollars' worth of assets vaporize in the ensuing mess, we ought to take a look at history to see how we got into it, and how investors can get out.

Half a decade ago, the entire nation was shocked when award-winning "innovator" Enron turned out to be little more than a cash-shredding pyramid scheme. The crucial failing for investors was Enron's use of opaque, "mark-to-market" accounting. The problem comes when the market is batty (or doesn't exist), so you instead mark your assets to a model, especially one that's wrong, either because you made an error or because you based it on exceedingly generous assumptions.

In the end, we learned that Enron's accounting was pretty much mark-to-fairy-tale, with the company booking enormous gains from assumed future profits on schemes (like bandwidth trading) that sounded great, but had little chance of producing anything besides headlines.

Andy Fastow, meet Fred and Ethel
You might think we'd learned our lessons about fantasy accounting after Enron, but you would be wrong. Things actually got worse. The infection moved to the comfy-sounding "homeownership" market. Against a star-spangled, feel-good backdrop touting the "American Dream," our recent mark-to-model mania tripped up a lot more than one big company. In fact, it swept through the entire banking world. (Bear Stearns (NYSE: BSC) is not the first to choke on lousy, poorly modeled mortgage-backed securities "income," and I'll eat a Miami condo if it's the last.)

But more dangerous yet was the way this mania also infected millions of aspiring real-estate moguls. The most widespread mark-to-model fantasies were actually committed not by some easy-to-blame Wall Street suit, but by Fred and Ethel down the street.

It was flawed models (and the habit of booking earnings on these models) that enabled financial companies to concoct the elaborate securities that funded the bubble. And yes, the bank CEOs who paid themselves handsome bonuses ahead of the hurricane deserve a public flogging. But they weren't the only ones making out like bandits. While Wall Street was booking fantasy profits on bad assumptions about real estate, Fred and Ethel down the street were operating under their own mark-to-model dreams.

Really ...
In their model, house prices always go up. In their model, you can pay any price for a home, so long as you can make the monthlies with a teaser-rate ARM, never mind the upcoming adjustment to 9%. In their model, you avoid that via a refinance down the line with an equity cash-out to boot. In their model, it's OK to buy on a less-than-forthcoming, Alt-A "liar's loan," because there's no real punishment for lying on a mortgage application -- particularly if everyone's doing it. With this model, it makes sense to buy three other homes, in order to flip them later. And it makes sense to extract HELOC cash from the home, based on fantasies about continually increasing "equity."

This is not so different from what Enron was doing. Fred and Ethel were marking up the value of their assets (the home) to a model (their belief that real estate prices always go up) and then spending the "income" immediately, on iPods, Hummers, $250 jeans, and fancy vacations. This happened all over the country, and millions of people behaved the same way. In fact, the American Fantasy of owning a home (for no money down) that would provide leveraged, 10% annual returns for a decade, is precisely what enabled those Wall Street suits to do what they did. It takes two to tango, folks. And this was the biggest dance party in economic history.

Last year's model got ugly
Alas, this dream's "income" wasn't actually matched by real cash flows, just bank loans -- precisely the problem at Enron. The "income" was all hot air. And now that the "income" from home appreciation has turned negative, it must be supported by cash mortgage payments. But many people can't pay those bills, the mortgages are defaulting in huge numbers, and now, we are all paying a price, even those of us who didn't throw our money into a flimsy, overpriced McMansion.

Stocks have been creamed. The losses at those companies most directly victimized by their own housing-bubble ineptitude -- Bear Stearns, Citigroup (NYSE: C), and Wachovia (NYSE: WB) -- are easy to understand. But, of course, the losses have extended much further than that. Even mighty Apple (Nasdaq: AAPL) has dropped like a rock, as investors wonder how many iPods can be sold in Foreclosureville, U.S.A. And if they can't afford their beloved iPods, what will they buy? That's the thinking that has crushed everything from trendy togs-sellers like Zumiez (Nasdaq: ZUMZ) to carmakers like GM (NYSE: GM). Consumers are spending less, and we appear to be headed directly into a recession.

So ugly it's cute?
By now, it ought to be clear that I have been, and remain, one of the most vocal econo-bears you will find on these pages. I am certain that systemic failure has steered us into a terrifying run at the ditch, to be followed by a painful, protracted rough patch. It was all spawned by greed gone amok on Wall Street and Main Street. Yet I believe history will prove this to be one of the best times to have invested in stocks, especially attractive-priced small caps. Here's why:

* The market is in panic mode, and when markets panic, no one's thinking.
* Small caps have been crushed more than the rest of the market, as investors seek "safe" large caps.
* Over time, value-priced small caps produce some of the most amazing returns in the market. Really.
* There are loads of small caps out there poised for years, if not decades, of fantastic growth, but the market is pricing them as if they are dead and buried.

The not-so dead and buried
Take oven-maker extraordinaire Middleby, down 20% so far this year, despite amazing returns on equity and capital, and its leading position in a megatrend -- the global move toward dining out. Or consider the abovementioned Zumiez, which has a growing brand, a solid balance sheet, and huge growth potential, yet is priced for a decade of subpar growth. Yes, the uncertainty ahead means a rough ride, and some of the small caps out there won't survive, which is why, at Motley Fool Hidden Gems, we advise opportunistic buying of cash-strong companies, long-term holds, and, above all, a steady temperament.

At Gems, we're on the dig, 24-7, for solid small caps with the capital to survive the downturn, and the superior businesses destined for major growth once things turn -- and they always do. In the next issue, we'll be reviewing the recommendations and finding the best bargains for new money.

If you'd like to take advantage of the market's panic and lay the groundwork for some great future gains, a free trial is just a click away.

Seth Jayson, a top-10 CAPS player, is also co-advisor at Motley Fool Hidden Gems. At the time of publication he was short Apple puts, but had no positions in any other company mentioned here. View his stock holdings and Fool profile here. Middleby and Zumiez are Hidden Gems recommendations. Apple is a Stock Advisor pick. Fool rules are here.

[Stoop Dawg]

In short, some dadgum regulation of this paper, a-la the SEC regs. that apply to sale of securities that require a whole bunch of disclosures by the seller so the investor has at least a chinamans chance of ferreting out whether or not he's buying shares in a pile of crapola or a going concern.

Shouldn't the "investor" require some disclosure? Why is that up to the SEC? If said "investor" is out buying **** without knowing what it is, said "investor" may actually be more acurately described as "moron".

Edit: Excepting, of course, cases of outright fraud. Which I have to imagine is already illegal, no?

[jkjsooner]

http://biz.yahoo.com/nytimes/080404/1194761875466.html

Am I reading that correctly? Only 14 percent of Americans think that borrowers are responsible for making sound financial decisions? Forty percent think it is the governments job to regulate who can buy a house and for what price?

I agree that America is "on the wrong track", but it's these populist morons who scare me far more than terrorists in the middle east or an economic recession. These idiots get to vote. :mad:

You are reading that incorrectly. Those 14 percent believe borrowers are mostly to blame. That doesn't mean the others don't think the borrowers deserve their share of blame. But I agree with you that borrowers share most of the blame.

But I also believe the regulators share much blame too. If the consequences were just between the lender and borrower then I would agree but that is not the case. We're all going to pay for this mess.

- If you live in a bubble area and are not a homeowner you're paying the price by being forced to rent lest you want to pay 2 or 3 times what the house is really worth. It might be the stupid people who are losing their houses but those same stupid people pushed affordability to all time lows in many markets.

- Responsible people who have worked in the housing industry (realtors, builders, good lenders) for decades are paying a price. I'm not talking about the thousands who jumped on the bandwaggon the last few years. Given, most should have made a lot of money during the boom and they should have saved much of that for a rainy day (that they should have seen coming)...

- The economy is in shambles and we could all pay the price for that. I personally don't want to live through the next Great Depression and I doubt you do either. Not many economists are predicting that but more and more daily come out saying that it is a legitimate threat.

If government can reduce the severity of boom and bust cycles I think they have an obligation to do so.

What do you think of insider trading laws? I mean, don't they get in the way of the free market?

[Stoop Dawg]

The way I see it, can you really blame the swath of america exhibiting this populist sentiment these days? The general feeling amongst a lot of americans is that regular people got the shaft, and the bankers waltzed away with a ton of cash....and now they see the fed financing the bailout of one of the largest banks when the other shoe dropped. What are the executives of these banks getting when they fail? Multimillion dollar contract buyouts and strongly worded letters from congressmen? I really can't blame the part of america that feels this way.

Sorry, Ike. You're wrong.

I *can*, and *do* blame people for feeling that way. Why does one man's success mean you got "the shaft"? Some bad guy got away from a poor financial decision without losing money? And that means *you* got screwed? That's bull****. Take responsibility for your own life, finances, and decision. Forget about what the other guy got. This feeling of entitlement (that guy drives a new truck so I should too!) is killing our country.


And regular people didn't just get the shaft by making poor decisions. The artificial inflation of home prices (brought about by the banks deciding to lend to high-risk borrowers, who are generally unwise enough to take it, so that they could dump the paper {fraudulently? I don't know} and turn a tidy profit) hurt people who made sound decisions as well, Like Joe Schmo who bought a house 2 years ago and now owes more on the mortgage than the house is worth.

Mojo Risin nailed this one. If you can afford the payments then you can afford the house. The housing market *will* return, but maybe not for a few years. Hold on to it and make your money later. The "housing crisis" does not stem from people owing more on their house than it is worth, it stems from people not being able to make the payments on their house. Are there "legitimate" foreclosures going on? Sure, there always are. People lose jobs, get divorced, etc. all the time. But this "crisis" has been caused by a litany of morons who over-bought on horrible terms. I have no pity for those people. None. In fact, I despise them for being a drag on our economy.

Blame the government? No, I blame those morons.

[jkjsooner]

if the lender is being stupid and letting someone borrow who has a propensity to default on that loan, then they need some new loan officers.

The problem is the lenders weren't stupid. Most immediately sold off the loans to larger banks who sold them to Wall Street who packaged them into securities. The loan originators had no incentive to really qualify the lender. Their incentive was to do as many transactions as possible.

The banks did have default clauses in the contracts and that is what ultimately did in many originators but only after the CEO's raked in huge bonuses for years.

[jkjsooner]

Like Joe Schmo who bought a house 2 years ago and now owes more on the mortgage than the house is worth.

Well, anyone who bought a house 2 years ago in DC, Boston, NY, Florida, Las Vegas, or California was just plain stupid IMO. It didn't take much to notice that that $600k house was $200k just a few years ago. Once seeing that warning flags should have been raised.

[SoonerBOI]

What’s wrong with America is that in our country, capitalism has gone too far. Remember the aim of capitalism is profit maximizing. Profit – material benefit is the priority in this system. One shouldn’t be surprised that in such country the weakest and poorest being left behind first, later the average people, then the less wealthier… More and more Americans will be complaining about their lives. One day, we’ll all find that the good old America has gone.

Our lives are in our hands.

[royalfan5]

It is interesting to note that Dutch financial giant ING, who holds it's own mortgages has had less than 20 loans go into foreclosure, as opposed to the folks who did mass securtization.

[tommieharris91]

What’s wrong with America is that in our country, capitalism has gone too far. Remember the aim of capitalism is profit maximizing. Profit – material benefit is the priority in this system. One shouldn’t be surprised that in such country the weakest and poorest being left behind first, later the average people, then the less wealthier… More and more Americans will be complaining about their lives. One day, we’ll all find that the good old America has gone.

Our lives are in our hands.

Maybe that is true with oil comanies and oil prices (which, IMO, will become the next hinderance on growth), but I don't this is the housing market's problem. It does have a little bit to do with the lenders, but mostly, its the borrower's fault. They are the ones that should have known not to buy a mortgage that is 10x their annual income. Really, you can thank these people for creating this mess with the weak dollar, the negative growth, the super-low interest rate offered by the Fed, higher gas prices, etc.

[Frozen Sooner]

The problem is the lenders weren't stupid. Most immediately sold off the loans to larger banks who sold them to Wall Street who packaged them into securities. The loan originators had no incentive to really qualify the lender. Their incentive was to do as many transactions as possible.

The banks did have default clauses in the contracts and that is what ultimately did in many originators but only after the CEO's raked in huge bonuses for years.

Good analysis. The originators were acting in a rational manner.

I've made this point before, but anyone want to guess what the cost of a major bank going down the tubes would be in both direct costs (in deposit insurance, etc) and indirect costs?

[Stoop Dawg]

What’s wrong with America is that in our country, capitalism has gone too far. Remember the aim of capitalism is profit maximizing. Profit – material benefit is the priority in this system. One shouldn’t be surprised that in such country the weakest and poorest being left behind first, later the average people, then the less wealthier… More and more Americans will be complaining about their lives. One day, we’ll all find that the good old America has gone.

Our lives are in our hands.

Yeah, maybe we should switch to socialism. That has worked out so well for so many other countries.

It's no coincidence that the largest economy on the planet is free market capitalism. Capitalism is the preferred economic system ... for people who actually work for a living.

[Stoop Dawg]

I've made this point before, but anyone want to guess what the cost of a major bank going down the tubes would be in both direct costs (in deposit insurance, etc) and indirect costs?

What is the direct and indirect cost of letting a major bank continue making poor decisions knowing they will be "bailed out" by tax payers? What are the direct and indirect costs of fixing rates on ARMs so that idiot borrowers who made bad decisions don't get hurt by those decisions?

[Frozen Sooner]

The United States no longer has the largest economy in the world as of a couple of months ago. Many of the participants in the largest economy in the world have an economic system that people on this board refer to as socialist.

Just as a fact-check. Unless the US economy has retaken the lead over the Euro Zone (which is considered one economy) recently.

[Frozen Sooner]

What is the direct and indirect cost of letting a major bank continue making poor decisions knowing they will be "bailed out" by tax payers? What are the direct and indirect costs of fixing rates on ARMs so that idiot borrowers who made bad decisions don't get hurt by those decisions?

That's the thing: the Fed has determined that the costs of the bailout would be less than the costs of one or more major banks failing.

[Stoop Dawg]

That's the thing: the Fed has determined that the costs of the bailout would be less than the costs of one or more major banks failing.

Or, did the Fed determine that allowing one or more major banks to fail might have more immediate consequences - consequences that might affect their job/credibility?

I'm not claiming to know the answer to that question, I'm just asking the question.

[Frozen Sooner]

You know, I don't think that the Fed Board of Governors can be fired. I could be wrong on that. They're appointed for a set term of years and their term can be renewed or not, I know that. I'd have to look up whether they could be actually fired.

Seriously, though, should Citicorp or Bank of America or any of the five big ones go "boom!"-and not just have a buyout or whatever but a real collapse-the direct costs would be in the hundeds of billions of dollars with indirect costs in the trillion neighborhood.

[Stoop Dawg]

The United States no longer has the largest economy in the world as of a couple of months ago. Many of the participants in the largest economy in the world have an economic system that people on this board refer to as socialist.

Just as a fact-check. Unless the US economy has retaken the lead over the Euro Zone (which is considered one economy) recently.

Considered one economy by who? I'm not sure that it's fair to take a mish-mash of different economic policies, combine them into one "economy", then compare them to the US. At least not for the purposes of the point I was trying to make.

Also, I'd like to point out that the French do not "work" for a living, which further validates my point. ;)

[Frozen Sooner]

Heh. They're considered one economy because they have a unified currency and open trade borders. Otherwise you shouldn't be able to consider the United States one economy-each state has different tax structures, etc.

[jkjsooner]

Yeah, maybe we should switch to socialism. That has worked out so well for so many other countries.


I guess somewhere in the middle is not an option?

I'll ask the question again for you no regulation guys, do you like insider trading laws?

Don't you believe that some regulation inspires confidence in the markets and actually encourages investment?

[yermom]

i could care less if it encourages investment...

if the banks need bailing out or the economy is going to suffer, then they have lost their "need" for not being regulated IMO

these executives are rich off all of this and long gone before it matters that they made decisions that would eventually screw their company with their short-sightedness

[SoonerAtKU]

Mike has really answered this one in previous threads and I think it bears repeating. The reason that you can lay some serious blame at the federal level is precisely because of the buyout/insurance policies the government has towards these banks. Since the money is federally backed/insured, the government has oversight into these practices. This should have been caught and curtailed YEARS ago, when this dangerous trend was noticed. The problem? Nobody wants to be the guy who shut down a boom housing market. Can you imagine the backlash initially had federal regulators put a cap on housing loans or housing values? Cries of Communism would have been deafening. Instead, the free market's just invisibly handed itself an emergency.

The regulations are there for a reason, and in this case it was to stop lenders/borrowers from playing hot potato with billions of dollars in bad debt. Nobody said anything, so nobody did anything, so here we are.

[r5TPsooner]

I'm still wondering when the federal government is going to help the honest folks in New Orleans who are still living in RV's?

I don't know much about economics or politics but one thing I do know is that it's almost impossible for middle class folks to get ahead in this country. This year's IRS taxes told me that!

[tommieharris91]

I don't know much about economics or politics but one thing I do know is that it's almost impossible for middle class folks to get ahead in this country. This year's IRS taxes told me that!

Don't worry, you'll get some of your money back. ;)

[jkjsooner]

Nobody wants to be the guy who shut down a boom housing market. Can you imagine the backlash initially had federal regulators put a cap on housing loans or housing values.

That is so true. And when the inevitable collapse happened they would have been blamed for it as well. Maybe it's just as well that nobody stepped in.

Of course many incorrectly blamed the interest rate hikes rather than realizing the inevitability of a correction.

[jkjsooner]

On a slightly different topic, I get irritated by all the talk about how we have to protect the real estate market.

I agree that we can't let the economy collapse but why all this talk about high real estate prices being good and lower prices being bad? In any other commodity we would consider higher prices as a threat. But, of course, housing isn't in the official inflation numbers - only rent.

Doesn't anyone realize that sky high housing prices (even if sustainable) are a threat to the health of the economy? Spending too much of our wealth on housing simply takes away from more productive areas (business investment, etc).

Does anyone realize that our children will one day need to buy a house as well? Propping up the market in the name of all things good is just another attempt of the baby boomers to exploit generation Y.

[Frozen Sooner]

Mike has really answered this one in previous threads and I think it bears repeating. The reason that you can lay some serious blame at the federal level is precisely because of the buyout/insurance policies the government has towards these banks. Since the money is federally backed/insured, the government has oversight into these practices. This should have been caught and curtailed YEARS ago, when this dangerous trend was noticed. The problem? Nobody wants to be the guy who shut down a boom housing market. Can you imagine the backlash initially had federal regulators put a cap on housing loans or housing values? Cries of Communism would have been deafening. Instead, the free market's just invisibly handed itself an emergency.

The regulations are there for a reason, and in this case it was to stop lenders/borrowers from playing hot potato with billions of dollars in bad debt. Nobody said anything, so nobody did anything, so here we are.

The biggest problem was that the banking sector that created this mess is outside of FDIC regulation. I posted an op-ed from Krugman a week or so ago that talks about this.

[Chuck Bao]

That is so true. And when the inevitable collapse happened they would have been blamed for it as well. Maybe it's just as well that nobody stepped in.

Of course many incorrectly blamed the interest rate hikes rather than realizing the inevitability of a correction.

Central banks elsewhere do. For instance, the Bank of Thailand sets a minimum downpayment requirement on mortgage loans and all commercial banks and finance companies have to comply. There is nothing burdensome about that regulation. It's just prudent and saving the banks and potential homebuyers from their own poor decisions.

Credit card debt is another area that needs greater regulatory control. Set the maximum credit card interest rate at 8-10% above prime. That'd force credit card issuers to be much more careful who they give cards to.

[Frozen Sooner]

Chuck:

Both the FDIC and NCUA set limits on loan-to-value ratios on bank and credit union in-house loans. They do not set such limits on loans that are sold on the secondary market to mortgage lenders who do not egage in commercial banking or that originate with lenders who do not engage in commercial banking. Of course, many of those lenders are subsidiaries of companies who have other subsidiaries that engage in commercial banking-like Wells Fargo, Countrywide, etc.

Credit card interest rates are capped by the FDIC and NCUA and also by individual state laws. NCUA caps credit card interest rates at 18%, FDIC caps it at (I think) 36%, and individual states have other caps. The more restrictive cap is always the one that applies.

[jkjsooner]

Central banks elsewhere do. For instance, the Bank of Thailand sets a minimum downpayment requirement on mortgage loans and all commercial banks and finance companies have to comply. There is nothing burdensome about that regulation. It's just prudent and saving the banks and potential homebuyers from their own poor decisions.


Just to clarify, I am pro-regulation. When I said it's just as well the regulators didn't step in I meant during the height of the boom. I really only meant to emphasize that the anti-regulation crowd would have blamed the regulation in that case and would have never admitted there was a problem to begin with. At least the way it turned out they can't make that argument.

[Chuck Bao]

Chuck:

Both the FDIC and NCUA set limits on loan-to-value ratios on bank and credit union in-house loans. They do not set such limits on loans that are sold on the secondary market to mortgage lenders who do not egage in commercial banking or that originate with lenders who do not engage in commercial banking. Of course, many of those lenders are subsidiaries of companies who have other subsidiaries that engage in commercial banking-like Wells Fargo, Countrywide, etc.

Credit card interest rates are capped by the FDIC and NCUA and also by individual state laws. NCUA caps credit card interest rates at 18%, FDIC caps it at (I think) 36%, and individual states have other caps. The more restrictive cap is always the one that applies.

That's the problem then. Bring ALL mortgage lenders under these regulations and toughen them up. I'm shocked at the number of people who bought houses with zero down. How did that happen? The property appraiser put a higher market value on the home than the purchaser just paid for it? Weird.

It is good to know that interest rates are capped on credit cards. But, 36% interest should never be allowed.

[jkjsooner]

That's the problem then. Bring ALL mortgage lenders under these regulations and toughen them up. I'm shocked at the number of people who bought houses with zero down. How did that happen? The property appraiser put a higher market value on the home than the purchaser just paid for it? Weird.

It is good to know that interest rates are capped on credit cards. But, 36% interest should never be allowed.

The problem is that the government's hands are tied now. If they enact strict lending regulations the real estate market will totally collapse. While I might prefer that than a Japan like decade of decline, that is not a realistic position for the politician who will be blamed for the collapse. How many people have 50k (10%) or 100k (20%) in cash for that downpayment on the $500k California starter home?

I'm afraid they're going to have to let the banks and Wall Street regulate this for now. Only after this has bottomed out and stabilized will it be politically acceptable to regulate this mess.

[StoopTroup]

Whatever happened to the loan sharking laws?

[Frozen Sooner]

Whatever happened to the loan sharking laws?

Usury laws vary from state to state (as I mentioned.) Sometimes they apply to open-end credit plans, sometimes they don't.

[Okla-homey]

Shouldn't the "investor" require some disclosure? Why is that up to the SEC? If said "investor" is out buying **** without knowing what it is, said "investor" may actually be more acurately described as "moron".



Agreed, but the investor lacks the ability to open the hood and crawl around the engine compartment. Thus, regulation that make sellers criminally liable for less than full disclosure of the risks inherent in purchase of this paper couldn't hurt and would at least put the put the buyer on notice he was buying something that could be worthless.

[Vaevictis]

Agreed, but the investor lacks the ability to open the hood and crawl around the engine compartment. Thus, regulation that make sellers criminally liable for less than full disclosure of the risks inherent in purchase of this paper couldn't hurt and would at least put the put the buyer on notice he was buying something that could be worthless.

We could stand to extend some of that to the credit rating agencies as well.

These securitized mortgages were highly overrated by Moody's, Standard and Poor's, etc.

Guess who pays to have them rated? Yeah, that's right -- the folks selling the instruments. Talk about a conflict of interest.

I think it would be nice if we kicked the rating agencies in the balls rather like we do with the audit firms. SEC Acts of 1933/1934 establish statutory liability if they certify any statement that turns out to be false.

There are ways to extend this concept to credit ratings.

Extending the circumstances under which we could pierce the corporate veil and go after employee/executive personal holdings would nip a lot of this crap in the bud, too.

I'm all for limited liability for silent partners (or shareholders), but the folks running the ship should be exposed to a greater degree than they already are.

[bluedogok]

It is interesting to note that Dutch financial giant ING, who holds it's own mortgages has had less than 20 loans go into foreclosure, as opposed to the folks who did mass securtization.
Not surprising at all, they looked at it as a long term investment and not just what they could package and profit take. I don't recall them offering those kinds of "exotic" loans that the resellers did.


It's no coincidence that the largest economy on the planet is free market capitalism. Capitalism is the preferred economic system ... for people who actually work for a living.
Not anymore: News.com.au - US economy loses its No 1 spot (http://www.news.com.au/business/story/0,23636,23378868-462,00.html)

We also have had true free market capitalism in almost a century...maybe even earlier.

[Stoop Dawg]

I don't know much about economics or politics but one thing I do know is that it's almost impossible for middle class folks to get ahead in this country. This year's IRS taxes told me that!

Sorry, bro, you just think you're middle class. If you have a job that pays above minimum wage you are actually "rich" and need to be taxed heavily in order to pay for benefits given to people who don't work at all.

"Affordable" health care and mortgage bail-outs for everyone! Hoooray!!

[shaun4411]

i have a full time job, and i can afford health insurance. therefore it is affordable to me. what is everyone complaining about?

[SoonerAtKU]

Usury laws vary from state to state (as I mentioned.) Sometimes they apply to open-end credit plans, sometimes they don't.

This is actually why the major credit card issuers are HQ'd out of Delaware. In exchange for the economic and tax benefit of having these huge companies incorporated there, they have agreed to not enact state laws severely limiting card interest rates. When working for Chase, we would get complaints from cardmembers that live in states which had interest rate limits. Delaware doesn't, so Chase doesn't. Loophole and chalk up another win for states rights, Sic 'Em.

[Okla-homey]

This is actually why the major credit card issuers are HQ'd out of Delaware. In exchange for the economic and tax benefit of having these huge companies incorporated there, they have agreed to not enact state laws severely limiting card interest rates. When working for Chase, we would get complaints from cardmembers that live in states which had interest rate limits. Delaware doesn't, so Chase doesn't. Loophole and chalk up another win for states rights, Sic 'Em.

I'm not real sure the above is accurate. See, foriegn corporations doing business in a jurisdiction other than their state of incorporation (Delaware or wherever) still have to comply with the laws of that jurisdiction.

Incorporation in Delaware is generally attractive because the Delaware corporate code is well drafted, well understood by legal practitioners and Delaware courts are exceptionally well qualified to adjudicate disputes arising from their code. Not because incorporation in Delaware gives an entity a free pass to blow off the laws in other states if they enter to do business with another states' citizens.

In a real sense, that is the victory for states rights. Put another way, each state has the right to declare caps on the interest which may be assessed credit consumers in their state.

[SoonerAtKU]

No, i certainly didn't mean that it gives them carte blanche to ignore laws, simply that they must conform to the laws of their state of incorporation. To put it another way, if you sign an agreement to use a card (Chase, etc.) you are agreeing to do business with them in their state, they are not doing business "in" your state. Note that this applies to the credit card division most primarily, as it is a different business relationship than a brick and mortar bank branch. Those I believe absolutely ARE beholden to the laws of the states in which they operate, as they ARE doing business inside that state. Hopefully that makes sense, I'm not a legal scholar by any means, this is just what i know from being in that business on the card company side of things.

[Okla-homey]

Let me try to explain it this way.

If an insurance company headquartered in Bloomington, IL or San Antonio, TX, regardless of where the company is incorporated, writes policies in Oklahoma, that company must comply with Title 36 of the Oklahoma Statutes. It doesn't matter if that insurance company has "brick and mortar" offices in Oklahoma or not. Moreover, that insurer is "doing business in" this state whether anyone from that company ever set foot in Oklahoma.

Commercial lending is no different.

Now, certain consumer contracts often contain clauses that disputes must be resolved according to the laws of a particular jurisdiction (that's called a "choice of law" clause) or in a particular location (that's a "choice of venue" clause). Sometimes they even include clauses that state disputes must be resolved by arbitration. For an example of this sort of stuff, check any credit card contract in your own personal records. I bet those clauses are in there.

That said, if the state where the consumer resides has statutes that are relevant to the dispute and ban a particular practice, those statutes trump the contract terms, including all clauses specifying jurisdiction and/or venue.

[SoonerAtKU]

And again, I'm certainly no lawyer, but my understanding is that the credit card transaction system operates differently than insurance, commercial banking, etc. Since the processing systems are housed in the state of incorporation, you are essentially renting use of their systems, and asking to do business in that state and not your own. It would be akin to owning property in another state. You pay that state's taxes, you're subject to that state's property laws. Here is the relevant court decision that I was able to find.

Marquette National Bank v. First of Omaha Service Corp. 439 U.S. 299 (1978). Under 12 U.S.C. 85 a national bank located in Delaware could charge interest at the rates allowed under Delaware law on credit card loans made to customers who resided in any other state, even though such rates would be usurious under the customer's state of residence's laws.

There was a similar case vs Citibank in '86 that determined the same thing applied to fees and not just interest rates.

[Frozen Sooner]

I'm not real sure the above is accurate. See, foriegn corporations doing business in a jurisdiction other than their state of incorporation (Delaware or wherever) still have to comply with the laws of that jurisdiction.

Incorporation in Delaware is generally attractive because the Delaware corporate code is well drafted, well understood by legal practitioners and Delaware courts are exceptionally well qualified to adjudicate disputes arising from their code. Not because incorporation in Delaware gives an entity a free pass to blow off the laws in other states if they enter to do business with another states' citizens.

In a real sense, that is the victory for states rights. Put another way, each state has the right to declare caps on the interest which may be assessed credit consumers in their state.

There is also the fact that Delaware has extremely strong laws regarding hostile takeovers.

[Okla-homey]

And again, I'm certainly no lawyer, but my understanding is that the credit card transaction system operates differently than insurance, commercial banking, etc. Since the processing systems are housed in the state of incorporation, you are essentially renting use of their systems, and asking to do business in that state and not your own. It would be akin to owning property in another state. You pay that state's taxes, you're subject to that state's property laws. Here is the relevant court decision that I was able to find.

Marquette National Bank v. First of Omaha Service Corp. 439 U.S. 299 (1978). Under 12 U.S.C. 85 a national bank located in Delaware could charge interest at the rates allowed under Delaware law on credit card loans made to customers who resided in any other state, even though such rates would be usurious under the customer's state of residence's laws.

There was a similar case vs Citibank in '86 that determined the same thing applied to fees and not just interest rates.

but only to a point.

Marquette is about the preemptory effect of federal banking laws that allowed national banks to export their interest rates into states where state interest caps would otherwise apply.

Furthermore, in Marquette, the Supreme Court twice cautioned that it was not addressing the question of whether the protections of federal banking laws would apply to non-bank parties* extending credit on their own. Id. at 307-08.

*e.g. credit card companies.

In short, I think commercial lenders who are not also national banks don't get to set interest rates above those allowed domestic lenders within that state.

[Frozen Sooner]

but only to a point.

Marquette is about the preemptory effect of federal banking laws that allowed national banks to export their interest rates into states where state interest caps would otherwise apply.

Furthermore, in Marquette, the Supreme Court twice cautioned that it was not addressing the question of whether the protections of federal banking laws would apply to non-bank parties* extending credit on their own. Id. at 307-08.

*e.g. credit card companies.

In short, I think commercial lenders who are not also national banks don't get to set interest rates above those allowed domestic lenders within that state.

Credit card issuers tend to be banks, and "national" banks (i.e. chartered under the FDIC) as well.

Capital One is a federally chartered bank.
Chase is a federally chartered bank.

[bluedogok]

i have a full time job, and i can afford health insurance. therefore it is affordable to me. what is everyone complaining about?
Is that insurance offered through your job? Because for many the company pays a chunk (sometimes very large) of the monthly premium. For many, their companies do not pay part of the premium or does not offer insurance. I had a former co-worker who couldn't get insurance through the company provided insurance (United Healthcare) because of pre-existing conditions for both he and his wife so they were without because of what the premiums would cost for an individual policy. If you don't have pre-existing conditions which raise red flags to the insurers, then it isn't too hard to find decent coverage for a decent price. It you don't fit in that window then it can be very difficult, I have known many who have had trouble getting insurance because of this.

My former co-worker and his wife had lived in Paris for many years before moving back to the States so he could start taking the ARE licensing exam to become a licensed architect. They got fed up with the "system" here, she and their son moved back to Spain (Madrid) where her family lived while he tried to finish the testing and tried to find insurance. After about six months of that he quit and moved to Madrid to be with his family. They much preferred the socialized medicine in their situation because hey could at least some some medical services without going broke. I didn't blame them for moving back, that is what they had intended to do anyway so they just did it before he was able to finish the testing which he can continue to take over there since it is a computerized test now.

I went without insurance for the first couple of years down here that I wasn't employed full time, to add me to my wifes policy was almost $500 a month, COBRA through my old job would have been about the same. My wife works for a small non-profit with many female and persons with disabilities employed there, so their claims are a bit higher than the average company of their size. I am on a maintenance med but it is only abut $10 a month for generic so that was not much of a concern, other than allergies I really don't have many medical issues so it was only a risk if I got ill or injured, so we took that risk. I can easily understand a family not being insured since those prices were for a single male, add a wife and kids and it goes up exponentially if you don't have a group plan with a company paying a significant portion of the premium.

[Stoop Dawg]

Is that insurance offered through your job? Because for many the company pays a chunk (sometimes very large) of the monthly premium. For many, their companies do not pay part of the premium or does not offer insurance. I had a former co-worker who couldn't get insurance through the company provided insurance (United Healthcare) because of pre-existing conditions for both he and his wife so they were without because of what the premiums would cost for an individual policy. If you don't have pre-existing conditions which raise red flags to the insurers, then it isn't too hard to find decent coverage for a decent price. It you don't fit in that window then it can be very difficult, I have known many who have had trouble getting insurance because of this.

I am under the impression that people are not generally turned down due to pre-existing conditions, just that treatment related to the pre-existing condition is not covered. This makes perfect sense. You wouldn't expect to go get auto insurance *after* you wreck your car and expect them to pay for it.

What your former co-worker needed was continuous coverage so that pre-existing conditions are covered. Or, at the very least, get some coverage that would cover things not related to the pre-existing condition.


My former co-worker and his wife had lived in Paris for many years before moving back to the States so he could start taking the ARE licensing exam to become a licensed architect. They got fed up with the "system" here, she and their son moved back to Spain (Madrid) where her family lived while he tried to finish the testing and tried to find insurance. After about six months of that he quit and moved to Madrid to be with his family. They much preferred the socialized medicine in their situation because hey could at least some some medical services without going broke. I didn't blame them for moving back, that is what they had intended to do anyway so they just did it before he was able to finish the testing which he can continue to take over there since it is a computerized test now.

I don't know how continuous coverage works when you move from country to country. I also can't bad-mouth socialized medicine from personal experience, but this second-hand story of your former co-worker is one of the few I've heard where someone actually likes socialized medicine better. However, I don't think it's coincidence that a couple with existing health conditions and low incomes wants socialized medicine.


I went without insurance for the first couple of years down here that I wasn't employed full time, to add me to my wifes policy was almost $500 a month, COBRA through my old job would have been about the same. My wife works for a small non-profit with many female and persons with disabilities employed there, so their claims are a bit higher than the average company of their size. I am on a maintenance med but it is only abut $10 a month for generic so that was not much of a concern, other than allergies I really don't have many medical issues so it was only a risk if I got ill or injured, so we took that risk. I can easily understand a family not being insured since those prices were for a single male, add a wife and kids and it goes up exponentially if you don't have a group plan with a company paying a significant portion of the premium.

Who the hell quoted you $500/month? I was able to get an individual policy for myself for a few months for $150/month from United Healthcare. If your rate was $500/month you must have some pretty significant health risks, which makes it even more important to have health insurance.

[bluedogok]

The $500 a month was 5 years ago for my COBRA or to add to my wifes policy, that was the standard premium rate for my former company of over 1,000 and my wifes non-profit of 7 full time employees without a company contribution. I rarely go to the doctor and the only "issue" that I have is a thyroid condition that I have had since I was 6 years old, that is the only thing that I take.

That was my former co-workers problem, the insurance company didn't want to "classify" their coverage in France as having coverage since they couldn't get an actual letter to put in a file. Part of the problem was that he changed jobs more than a few times in the US and let coverage lapse during those periods. He sat in the cube next to me so I got to hear most of his conversations with the insurance company. They always wanted to move back to Europe, so it was just a matter of time and her mother started having health problems, that was when they decided to move back, the insurance issue was just another thing that tipped the scale for them.

[Vaevictis]

Who the hell quoted you $500/month? I was able to get an individual policy for myself for a few months for $150/month from United Healthcare. If your rate was $500/month you must have some pretty significant health risks, which makes it even more important to have health insurance.

Was yours short term coverage? Short term coverage is cheap because it's non-renewable.

IIRC, OU health insurance coverage is something like $900/month total between OU and employee contribution.

EDIT: Just looked it up. $800-$900 for just employee and spouse. $1000+ for employee + family. Employee only is $330-$381.

[Stoop Dawg]

Was yours short term coverage? Short term coverage is cheap because it's non-renewable.

IIRC, OU health insurance coverage is something like $900/month total between OU and employee contribution.

EDIT: Just looked it up. $800-$900 for just employee and spouse. $1000+ for employee + family. Employee only is $330-$381.

Could have been short term. I only needed insurance for 3 months. I became self employed at the same time that my wife changed jobs and I couldn't get on her insurance for 3 months.

Is OU on the state plan? Regardless, I'm sure they get a good rate due the large number of people. On the other hand, I seem to recall their coverage being pretty good (my wife worked there for several years). I'd be surprised if a reasonably healthy middle aged man can't get basic health insurance for a few hundred dollars per month.

Instead of guessing, I went to Google and found this:

http://www.coverageforall.org/pdf/Research_0605_Cities-BuyInsurance_eHealthInsure.pdf

Apparently, there were individual plans in OKC for around $85/month in 2005 (see page 11).

[Sooner Born Sooner Bred]

I haven't read the whole thread, but this explains the mortgage crisis well:

http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true#0

[XFollower]

I despise the "victim" mentality that is passed through the media. It's the governments fault that this lady got a interest only loan on her home. Or it's the shady mortgage companies fault for selling her the interest only loan. For goodness sake, you were given a brain, use it. Information is available 24 hours a day to help you make a wise decision (ie google), but people want more than they can afford so they do stupid stuff. It's not the governments job to bail us out. Consequences of stupidy are very painful.

[Vaevictis]

Instead of guessing, I went to Google and found this:

http://www.coverageforall.org/pdf/Research_0605_Cities-BuyInsurance_eHealthInsure.pdf

Apparently, there were individual plans in OKC for around $85/month in 2005 (see page 11).

The problem with that PDF is that it doesn't tell you any of the most important details -- whether the insurance was renewable, what the out of pocket maximum was, and what the maximum payout was.

I can duplicate those figures pretty easily if I go non-renewable, $5k deductable, out of pocket maximum $10k, max insurer payout of $1m. In fact, I have, as that is my current health insurance setup.

I can't duplicate it with renewable insurance, which jumps immediately from about $100/month to about $385/month for roughly the same plan.

The problem is that non-renewable health insurance is utterly useless in the long term. If you have any long term problems, they'll drop you like a bad habit when the term expires and the condition will be pre-existing for any insurance you buy in the future.

[Stoop Dawg]

The problem with that PDF is that it doesn't tell you any of the most important details -- whether the insurance was renewable, what the out of pocket maximum was, and what the maximum payout was.

I can duplicate those figures pretty easily if I go non-renewable, $5k deductable, out of pocket maximum $10k, max insurer payout of $1m. In fact, I have, as that is my current health insurance setup.

I hear you, but you get what you pay for. From listening to Hillary Clinton one might infer that you need to sell your first-born child in order to obtain any type of non-employer sponsored health insurance. I read stories all the time about how some unfortunate soul who could not "afford" health insurance has medical bills in the tens of thousands of dollars. It may be crappy, cheap insurance, but it covers the rather large area between $5k and $1m. Worthwhile? I'd say so.


I can't duplicate it with renewable insurance, which jumps immediately from about $100/month to about $385/month for roughly the same plan.

The problem is that non-renewable health insurance is utterly useless in the long term. If you have any long term problems, they'll drop you like a bad habit when the term expires and the condition will be pre-existing for any insurance you buy in the future.

I'm not familiar with non-renewable health insurance, so I'll take your word for it. I'm not 100% sure what to do about "pre-existing" conditions. I can see where the "new" insurance company wouldn't want to pay for that crap (you don't want people waiting to sign up until they already need health care). I'm thinking there should be some obligation to the insurance company who was covering you when the condition began, but of course there are problems with that too. Are you saying that if you are on a "non-renewable" plan then that doesn't count as "continuous coverage"? That seems like a load of crap to me. (not a load of crap from you, a load of crap from the insurance industry)

[SouthFortySooner]

Consequences of stupidy are very painful.

Good point. But, only if one has a conscience which leans that direction.

[Vaevictis]

I'm not familiar with non-renewable health insurance, so I'll take your word for it.

Basically what it means is that the insurance company has no obligation to renew your contract. It may raise your rates or outright refuse coverage at its option.

Renewable means that they may not terminate your coverage, nor may they raise your rates without raising everyone else's rates (in your "class") by the same amount.

With respect to "continuous coverage", I don't know if it counts, but even if it does, that only matters if you're entering in a plan that has to honor "continuous coverage." My understanding (a little shaky, so take that in to account) is that only group plans have to honor continuous coverage.

So, if you're healthy and can land a job with group insurance, you're golden.

What happens if you're not healthy and you can't work, or you can't get a job that has group insurance?

... and when you go to the group insurance, it's going to be much more expensive because group insurance is renewable. (Note that you may not see the expense due to employer contributions, but it's there.)

[Chuck Bao]

During the Asian economic crisis 10 years ago, my employer at that time dropped health coverage for all employees. I was shocked to find out that I could not arrange for health coverage on my own. American insurance companies in Thailand did not want to bother with an American because an American would insist on going to the best hospital and getting the best health care possible.

I think my point is that if you think you're golden getting on a company group insurance plan, you may not be if economic times get tough.

Trust me, senior management and directors will have no qualms about dropping health coverage for employees.

Scratch that. This is probably one of the major factors leading to them outsourcing. So, you won't just lose your health care benefits, you lose your job.

[Animal Mother]

The problem is the lenders weren't stupid. Most immediately sold off the loans to larger banks who sold them to Wall Street who packaged them into securities. The loan originators had no incentive to really qualify the lender. Their incentive was to do as many transactions as possible.

The banks did have default clauses in the contracts and that is what ultimately did in many originators but only after the CEO's raked in huge bonuses for years.

I know for a fact you're right about the selling of loans and just wanting the numbers in the transaction category. Royal Bank of Canada sold ours after to Wells Fargo after the first payment.
Stoop Dawg. I hope that when you find yourself for the first time making an imperfect, petulant decision that people are more willing to take the avenue of helping instead of “go to hell”.Your attitude in regards to others borders on being Fascist.

[Animal Mother]

I despise the "victim" mentality that is passed through the media. It's the governments fault that this lady got a interest only loan on her home. Or it's the shady mortgage companies fault for selling her the interest only loan. For goodness sake, you were given a brain, use it. Information is available 24 hours a day to help you make a wise decision (ie google), but people want more than they can afford so they do stupid stuff. It's not the governments job to bail us out. Consequences of stupidy are very painful.


So are the consequences of pomposity.

[Stoop Dawg]

Stoop Dawg. I hope that when you find yourself for the first time making an imperfect, petulant decision that people are more willing to take the avenue of helping instead of “go to hell”.Your attitude in regards to others borders on being Fascist.

I make bad decisions all the time. I just don't blame other people for them.

[MojoRisen]

If my tax dollars are used to bail out folks who already got jacked up loans and bought cars and spent like wild people and rode the high life, figuring we were all the dumb ones. If they get bailed out - it is like double dipping and others get to pay the bill... No Way

Bailing out a bank that employee's so many people does make more sense to me in the long run for the economy for all peeps, not just the ones who thought they were getting over on the world and calling their Grand parents ignorant - and trying to get rich fast.

I will rebel