Bailout or Buzz Off?
Bravo, to all of you for writing in (see below to read some of the emails), and may I just say that perhaps the politicians should be reading this, because if they think a government bailout would be popular, they’d better think again. We got about 57 emails to the realty check site in the hour after I did the bailout piece on TV, and I can’t find even one post that supports a bailout.
“No Bailouts. The idea is insane! People must be allowed to feel the consequences of their decisions. They are house gamblers just like Las Vegas gamblers. They lost, so be it,” says John in Wisconsin.
Now I realize that the CNBC viewer is a certain type, an investor-type that accepts risk, fancies reward, and weathers investment failure as part of the game. Some might argue that home owners are not the same breed as Wall Street investors, that they are just seeking the American Dream, a comfortable place to raise their kids and a piece of property to be proud of.
“I commend the government for making an effort to help borrowers. However this is not a government issue, it’s a predatory lending issue. Government should be taking damages from companies who knowingly took advantage of the ignorance of American families. Their actions were unconscionable,” writes Dana.
But here’s the rub: we’ve been doing plenty of stories about the beleaguered subprime borrower, network news shows are doing interviews with mothers-of-four who are about to lose their homes, community activists are yelling and screaming about the duped Americans who only wanted a piece of neighborhood serenity. But if we could look inside all those rising foreclosure stats, we would probably find that a good chunk of the borrowers in trouble are speculators, especially those who took out the Alt-A mortgages. Many of the subprime borrowers were looking to buy houses to quickly flip; in other words, they were investors, just like anybody sitting in front of a computer on E-trade, trying to make a quick buck. I’m not saying there aren’t plenty of well-meaning people who really did want to live in the homes, but I’ve spoken to a several so-called victims, who happen to mention that this is the fourth property they’ve bought in the last 2 years, or that they are worried because they have several properties going into foreclosure.
As a reporter, it’s not my place to say what the government should or should not do, but also as a reporter I’ve spoken with more borrowers than the average person out there, and the bulk of them say they just didn’t read the paperwork or they just expected the market to continue to rise, so they figured they’d take the risk and refinance later. Yes, predatory lending certainly exists, and yes, lenders were more willing to give money away than ever before. And yes again, the big Wall Street Banks had a hand in it. Congress should look at lending standards and go after those lenders who crossed the line. But it was a two-way street during the housing boom, just like during the dot.com boom. I covered the boom and I saw it all, from auctions where investors were gobbling up several properties at a time, to open houses with bidding wars on the front porch. I also remember saying over and over again that this kind of price appreciation was unsustainable. And by the way, I don’t remember the government bailing out the dot.coms.
Thanks for the responses, and keep 'em coming!
Taxpayers Should Not be Burdened
While it is unfortunate that some consumers may lose their homes in foreclosure, we the taxpayers should not be burdened with their mistakes and bad banking decisions. What kind of lesson is that?
Let the banks that profited from the massive lending fees and interest over the past 10 years work with THEIR customers thereby aiding themselves and their customers.... - David S.
My Blood is Boiling
My blood is boiling just listening to this talk of government bailouts. What needs to happen is widescale economic pain. Housing prices need to come down to reality, and some people are going to get hurt in the process. If we say it's ok for television shows boasting of "FLIP THIS HOUSE", then how can we criticize the other end of that spectrum. The housing market is nothing but a hot potatoe and someone needs to get caught with it eventually. Frankly I'm tired of the intervention! Let the market economy work properly so that those people who had the foresight to rent can finally buy a house. - Eddy G.
Brings back memories of the savings and loan failures! Inflated prices and someone willing to finance them is NOT the TAXPAYERS fault.
AND WE ARE WORIED ABOUT WAL-MART MESSING UP THE BANKING INDUSTRY. - Bill
Shakeouts are a Natural Process
It's par for the course when government tries to regulate market excess and buy votes by bailing out stupid business decisions. Show me a market bubble that did NOT get overleveraged in the end. Shakeouts are a natural process that should not be bailed out with our tax dollars. After all, homeownership is a privelege, not a birthright. - Mike K.
Good Sense Out the Window
I have been priced out of the market here in California for three years and have been waiting for the market to come down as it surely will.
It's pretty upsetting to think that I could have just thrown my good sense out the window and bought a house I couldn't afford and now the government would bail me out for being an idiot. - Kenn
Please send me my handout Check!
You should setup a fund for those that did not go beyond their means and are not part of the housing bubble mess that was created. Call it "Funds for Good Citizens". I think any US citizen who does not own a home should be entitled to $100,000 federal check for being a smart citizen. This will promote smart people owning homes instead of idiots. I will be leaving the country if this goes through, because I would rather be in a socialist country that benefits all smart and dumb and not in a country that rewards the stupid. - Douglas J.
Let me be perfectly clear, any elected official that supports public money to bailout greedy idiots for being totally stupid will not only LOSE MY VOTE, I will actively work to drive them OUT of OFFICE. - Mike
The Problem is Consumers
As a Real Estate Agent for the last Ten years I can say first hand that the problem is not the Lending. The problem is the Consumers who want what they want when they want it. The Government should not step in and create a safety net as that will only lead to bigger problems down the road. Markets take care of themselves!! I do think that Predatory Lenders should be Dealt with, especially those that take advantage of less educated consumers ... - Greg D
Questions? Comments? RealtyCheck@cnbc.com