Originally Posted by srmom (Post 1794754)

There was a ton of pressure put on lenders to open up lending to people who in the old days wouldn't have qualified for a loan, both by the higherups at the lending houses and by the government, as is shown in the fannie mae congressional hearings that are on cspan and youtube.

Those crazy lending schemes were a bi product, and it wasn't just Florida retirees and California yuppies that caused it.

My niece worked for Countrywide in the DC area right out of college about 5 years ago. She told me some pretty crazy stories about their lending practices and what sufficed as credit history - they were doing no paperwork loans there too. She finally quit (before the crash) because she was so sick of the cut throat competitiveness of the lending agents. Bonuses were contingent on closing deals, it didn't matter if the deals were legitimate or not - or if the mortgage would ever be repaid.

Could have been part of the SNL skit.

Originally Posted by srmom (Post 1794761)

Of course, that's what they'd say isn't it?? ;)

The AIG exec partyline is - if these incredible business minds leave at this crucial time, the company will fail (although I'd say they've already failed, they're being propped up by the american taxpayer). All the work they've been doing to unwind the derivatives will unravel and will slow up the process. Investors will jump ship because their trust will be shattered (if they can fix the trust shattered issue then I bet they can walk on water too). etc. etc.

Originally Posted by KSig RC (Post 1794757)

That might be how the average person views it, but reasonable should be an entirely different standard.

Look, AIG is sunk cost at this point. The money's gone - and if you want to unseat your Congressman because s/he voted for it, go nuts, because that's the only say we have in it now. But let's not misrepresent the idea here - the thought wasn't "oh, $144 billion and things go away" . . . not in the slightest. The idea was "oh, $144 billion and maybe we'll help prevent or stave off a market collapse that will devalue the currency, cause massive bank failure and create a situation of incredible panic." Because that was one of the potential downsides of the AIG failure - and we need to look at it more like this:

(these are all completely made up)

-10% chance of market collapse given the Lehman/Bear Stears/AIG troika, with only AIG needing to be propped
-25% chance of deep depression
-65% chance the failure has no long-reaching consequences

The 10% chance costs the economy something like $2 trillion, the 25% chance something like $1 trillion, the 65% chance something like $144 billion. The math is very simple: the 'risk' of the $144 billion is worth even a moderate to small chance of collapse.



If the company doesn't have the money to pay me, I don't get the money, sure.

The company does have the money to pay them - and it's a tiny, tiny amount of the overall income process.

There's also a very good chance that there paying the bonuses IS in the best interest of ensuring the company doesn't fail, by the way - no one has addressed that yet.

Originally Posted by KSig RC (Post 1794763)

I mean, of course they'll say that - but is there a compelling interest on the part of the company to pay out bonuses to crappy employees that aren't on the board (or whoever gets to determine who gets what)? The company might be feeding us a line, but like Munch said, there are people available - you have to really feel like it's Good Ol' Boys here to think that they wouldn't jump to get the same (or better!) people at lower cost in this kind of market if it were actually a net positive.

I mean, there's gross incompetence, then there's just a lack of common sense, and I'm not willing to assign them both, because their failings appear to be built on greed rather than stupidity.

Originally Posted by srmom (Post 1794754)

Those crazy lending schemes were a by-product, and it wasn't just Florida retirees and California yuppies that caused it.

Originally Posted by KSUViolet06 (Post 1795040)

Originally Posted by UGAalum94 (Post 1794766)

This crosses over into a bit of paranoia, I admit, but isn't there some interest in simply keeping the people who know the crappy stuff you've been pulling in your company rather than cutting them loose to testify against you? (I don't just mean legal testimony, but keeping them from being free to lobby against your efforts.)

Originally Posted by Munchkin03 (Post 1795031)

Did I say that it was just inland California (believe me, not yuppie central) and southern Florida? No, but I do put the lion's share of the blame on conditions in those regions.

If you look at the twenty counties with the highest foreclosure rates or with the highest rates of defaulted subprime loans, usually 15 of them are in inland California or southern Florida. I've seen different lists with different results, but the only non-CA or south Florida counties tend to be in Michigan, sometimes Clark County Nevada or in the Phoenix metro area. I don't make this stuff up. Clearly subprime mortgages were everywhere--even here in NYC--but to not understand that these two areas were ground zero for the subprime crisis, and therefore the foreclosure mess, is myopic at best and ignorant at worst.

I blame the homebuyers--and these areas are clearly the easiest target--because no one puts a gun to your head and makes you buy a home. Like I said before, I got all sorts of credit card offers thrown at me during this whole time, but did I take advantage of them? No, I didn't. Neither did most people.

Originally Posted by AGDee (Post 1795046)

The people I know in Michigan who have foreclosed have done so due to unemployment, not due to subprime mortgages (and of course, my neighbor who was work reduced due to breast cancer treatments and lost her husband). With no job, you cannot make a house payment, no matter what the loan terms were. If they want to move out of state for a job, they end up having to let their house here go to foreclosure because they can't sell it for even half of what it was worth a few years ago. This seems to be a never ending cycle since, the more houses go into foreclosure, the less money you can get for your house.

Originally Posted by KSigkid (Post 1795126)

A lot of people went into these without thinking about 5, 10, 20 years down the road. They either wanted to turn a quick profit, or they wanted to get more house than they could afford. People didn't have a longterm view, and it's costing them now.

Originally Posted by KSigkid (Post 1795126)

I don't know about that; you have non-disclosures and everything else that could help protect your business practices, and whistleblower statutes in many areas to protect employees who report out on problems.

I'm not saying that those can't be reasons to retain employees who "know too much," but I don't think it's a significant number.

Originally Posted by KSigkid (Post 1795126)

But, I think Michigan is an exception rather than the rule. With the troubles in the auto industry, even people who spent within their budgets are facing foreclosure. I don't think you can use Michigan as a representative sample of the rest of the country.

I'm guessing there were still people in MI who over-extended themselves, but overall I think the state is an exception when examining the foreclosure problem.