Three years ago my wife and I bought a house in Salem when our income was 105k. Within four months we had both lost our jobs. A year later our mounting credit card debt forced us to refinance and Wells Fargo, who holds our mortgage, took us for an interest-only, variable rate mortgage. My wife is still unemployed and we have struggled every month to make the payment and so far we have never missed that payment.
In October Wells Fargo received $25 billion in bail-out funds, and then last week we received a letter informing us that our rate was going to increase to the tune of $300. They say that we can qualify for a fixed rate but our income needs to be around $1000 more a month than we now make.
We made our choices and we have to live with them, but what drives me crazy is knowing that, on top of losing the home that we have poured everything into, we will now be working and paying taxes for the rest of our lives to cover the no-strings-attached $25 billion that was given to the people who are pushing us off the deck without a second thought.
No repeatable words can express how I feel about the insanity of our government's "solution" to the nightmare they helped to create.
Bailing out the giant companies, who are "too big to fail," appears to sustain a corporate oligarchy, rather than encouraging growth from the ground up. What if the government instead dedicated billions to a microloan program for small businesses, enabling government to collect a small interest rate and compete with giant banks directly.
My background is in ecology and this is like watching simplified agriculture and forestry systems fail because they lack any sort of diversity or stability. We have a few HUGE businesses in key areas that "can't afford to fail." Why?
What we need is many, many small banks and companies so that no single failure brings down the whole system. And I don't see that happening yet.
With the government we have, I don't see how we can expect to have them do anything but pour money in at the top to prop up the very system that is the problem. They should be bleeding money out of these huge companies and putting money into small banks and businesses, and local communities.
"What we need is many, many small banks and companies so that no single failure brings down the whole system. And I don't see that happening yet.
With the government we have, I don't see how we can expect to have them do anything but pour money in at the top to prop up the very system that is the problem. They should be bleeding money out of these huge companies and putting money into small banks and businesses, and local communities."
why doesn't the goverment force the heads of theese companys to put their own money in to support them. this is what any small buisness owner would have to do
It is too bad that the politicians in Washington of both parties did not take the simple and easy action of giving a stimulus check as $10 or $20,000 per legal adult citizen. Such a move would have had the immediate result of lowering consumer debit, increasing even if temporarily savings rates and in a consumer based economy provided an inrush of business that would have trickled UP to the big institutions. It would also not have cost $700-Billion.
It is stunning that the powers that have been elected do not understand that if you are going to have a consumer based economy you must have consumption. The current plan simply does not address this in any way other then to protect the institutions that generated the problem by enabling the consumer to dig out the foundations they are sitting on. Any business that fails, should fail, GM for example has mismanaged itself into its current position over two decades.
That a consumption economy is not and never has been sustainable is yet another problem that MUST be resolved, perhaps the 2012 administration will address it as a matter of national security. Without a, predominate manufacturing base this once great nation will be only a legend and example of shortsighted politics.
In a Rolling Stone's article Naomi Klein points out that the UK's prime minister, Gordon Brown, also constructed a bailout plan but there are marked differences that we should pay attention to, as he extracted meaningful guarantees for taxpayers:
1. voting rights at the banks,
2. seats on their boards,
3. 12 percent in annual dividend payments to the government,
4. a suspension of dividend payments to shareholders,
5. restrictions on executive bonuses, and
6. a legal requirement that the banks lend money to homeowners and small businesses.
"In sharp contrast, this is what U.S. taxpayers received: no controlling interest, no voting rights, no seats on the bank boards and just five percent in dividend payouts to the government, while shareholders continue to collect billions in dividends every quarter. What's more, golden parachutes and bonuses already promised by the banks will still be paid out to executives ? all before taxpayers are paid back."
Would love to get reaction from the NPR investigative journalists you have on your panel.
Question for your guests:
Addressing the "Too big to fail" concept. Why give money to banks that will use the money to buy smaller banks, thereby creating larger institutions, reducing competition, and ultimately bringing about more banks that will be "Too big to fail" in the future.
Also, why give money to the banks the core of the problem is the american family is unable to pay morgage. The money could go to helping the american family pay their bills. If the banks receive money, they could afford to foreclose more homes with out losing any money.
I support the sentiments of previous posters that "too big to fail" is a non-sequitur. It simply means "too big." Our anti-trust laws seem to have failed us, if they have allowed automotive manufacturers to grow so large they can extort ransom from our treasury under the threat of mass unemployment. How is "pay the ransom if you want to see your daughter alive" any different from "give us $25 billion or we'll put millions of people out of work"? If GM has been too blind to read the handwriting on the wall regarding peak oil, and has continued to produce heavy, expensive gas-guzzlers, then perhaps they deserve to fail, or at least to be severely down-sized.
Why not provide the *citizens* a safety net of enhanced unemployment insurance coverage and a re-training allowance for the workers (NOT the high-paid executives), along with consideration for mortgages held by the affected workers. Then, let the corporation succeed or fail on its own merits, and stand firm against demands to have the public shoulder losses while executives reap bonuses.
The idea that profits should be privatized, while losses become a public liability is ridiculous.
I'm listening to Micheal right now and he is dead on. Two years ago it became evident to me that I don't want to borrow any money. You have to be insane to want to go into debt at this time. Isn't it there-by obvious that propping up the lending institutions is a moot point. Interest based economies only exist through speculation. The solution must come from goods based economies.
I note that there is no problem with the member owned Credit Unions, just with the "for profit" commercial banks.
That's a pretty big elephant in the room.
And the Credit Union members will be paying taxes to bail out the "for profit" commercial banks for generations into the future.
That is very very wrong!
There is an old saying. "Where there is a buyer, there is a seller." But I think the corollary is even more true. "If there are no buyers, there are no sellers." Bailing out any company/institution will do nothing but increase the federal debt unless we do something to support the buyers of those goods and services.
I would like to know what the capital reserves of banks are made of. My question is has there been or can there be a contraction in the value of the reserves themselves?
What is the possibility that the Bush administration will commit the whole 700 billion, leaving the incoming Obama administration with few options and no money left to go forward with a different set of ideas?
Barbara in Corvallis
That is a traditional Conservative Republican strategy to prevent any progressive ideas from being tried by an incoming administration, leaving the government drowning in debt and Reagan and GHW Bush did it also.
Remember that the Conservative Republican Grover Norquist said he wanted to make the government so small that he could drown it in a bathtub? He got his wish, only they did it by growing the debt so large that our "government of the people, by the people, and for the people" is drowning in debt.
Republicans spend the money on the credit card and then blame Democrats for being responsible and raising taxes to pay off the Republican debt.
I would like to hear you talk about the structure of our economy. My sense is that what we have does not work. I would be interested to hear anyone talk about how we might restructure our economy so that things become more equitable. I don't imagine that if we keep working in the way we have we'll get a different result. What other models are out there that we might move towards besides the US version of capitalism? Thanks, Albert Kaufman, Portland, Oregon
Limiting CEO pay would be a start. They could be limited to seven times what their lowest paid full time employee makes. The more the employee makes, the more they make. In 1982 the average CEO made 42 times the average employee, In 2007 CEO's made 344 times what a average wage. Check out our lovely wage disparity: earnermade.http://www.faireconomy.org/files/executive_excess_2008.pdf
No matter how we go about it, the excessively rich are not going to willingly give up anything. The past shows that only physically removing them from their thrones brings about any change.
Does anyone realize that we are currently serfs, controlled by student loans, house mortgages, medical costs, energy, and credit debt? Our cost of living or procuring education and housing is more than our pay alotted to us by our lords and ladies can support. And don't think they don't know it.
There is a reason why your chances of reaching the top 5% is almost nonexistant, the game is rigged (i.e. bankruptcy laws, insurance cherry picking, corporate tax loop-holes). The American dream is dead.
Where is the outrage of the American people with this bailout boondoggle??
I can assure you that those that sit fat and happy at the top of these banking institutions are not going to become renters at any time in the near future. (This includes your guests.)
They will continue to do what they do quite well. Simply put, they will, along with the current and future administrations, create the smokescreens to steal from all of us and our children.
I suggest everyone pull their money from all banks. Join your local credit unions. It's easy to do. There is a huge difference between banks and credit unions.
For-profit banks remind me of our disgusting for-profit health care system in the U.S.
If you want a reason to grab a pitchfork, a torch and storm Wall Street, read Chairman Waxman's letter to the lenders first to receive Billions of the bailout! http://oversight.house.gov/story.asp?id=2265
The caller Carolyn? The woman with a brother 'abusing the system' by converting his mortgage to 6%? Sounds like a refinance to me. Many lenders are presenting solutions as part of the $700 B package. In reality they are simple refinances designed to stimulate a homeowner's desire to get their share of the bailout.
According to Inman News 27% of California homes have negative equity, not 50% as quoted by Mr. Blackwell.
Most of the solutions offered to homeowners have been preposterous and provide little or not benefit with some (Wachovia) resulting in a worse situation than the original details of the loan!
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