McCain Tells It Like It Is

[red states rule]

Once in awhile a politican will tell the truth the voters. It may be what the voters do not want to hear, or have the liberal media brand him/her heartless and cruel

I disagree with John McCain on so many issues, but at least on this issue, he told the truth




McCain tells it like it is
THE WASHINGTON TIMES EDITORIAL
April 4, 2008

John McCain has delivered a speech detailing how the housing and credit-market crises erupted and what should — and should not — be done about them. "I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," Mr. McCain said last week in California, where some of the most "rampant speculation" in the housing market occurred earlier this decade and where the inevitable foreclosures have now become common. "Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy."

Worth noting is the fact that "big banks" have already absorbed nearly a quarter-trillion dollars in asset writedowns related to the collapse from the subprime-mortgage market. And hundreds of billions in additional asset writedowns are on the horizon. That seems to be lost amid the liberal furor over the Federal Reserve's emergency action to prevent the imminent bankruptcy of Bear Stearns from unleashing a systemic tidal wave that might have overwhelmed the financial markets.

"A sustained period of rising home prices made many home lenders complacent," Mr. McCain rightly noted. "[T]they stopped asking basic questions of their borrowers like: 'Can you afford this home? Can you put a reasonable amount of money down?' " On the other side of the transaction, Mr. McCain reminded us that "ome Americans bought homes they couldn't afford, betting that rising prices would make it easier to refinance later at more affordable rates."

The ongoing housing crisis is intensified by the fact that "o many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with." To prevent this huge problem from recurring, Mr. McCain proffered the obvious solution, which somehow has eluded Mrs. Clinton and Mr. Obama: "Policies should move toward ensuring that homeowners provide a responsible down payment of equity at the initial purchase of a home." While Hillary Clinton characterized Mr. McCain as sounding "remarkably like Herbert Hoover," we say John McCain sounds exactly like John McCain — a straight-talker.

for the complete article

http://www.washingtontimes.com/article/20080404/EDITORIAL/132790632/1013

[red states rule]

The Cocaine News Network shows its bias during an interview with Sen McCain


CNN’s Bash to McCain: Are You ‘Heartless’ When It Comes to the Economy?
By Matthew Balan | April 2, 2008 - 12:27 ET

CNN correspondent Dana Bash, during an interview of Senator John McCain which aired on Tuesday’s "The Situation Room," raised the issue of whether the Republican presidential candidate felt voters’ pain on the economy. "[I]n this time of uncertainty, when there are so many people hurting, are you concerned that there are voters out there who hear that who say, John McCain is heartless when it comes to this issue?" The thought that McCain might be "heartless" was reenforced by inclusion of the chyron, "McCain & Voters’ Pain: Against Big Economic Bailouts." [Audio available here.]

Following her "heartless" question on the economy, Bash followed up by asking a particularly blunt question about whether the current economy would hurt him if it continued into the time immediately before the election. "If the headlines that are on the front page of the newspapers today are the same headlines on the front pages in late October, early November, does John McCain lose?"

http://newsbusters.org/blogs/matthew-balan/2008/04/02/cnn-s-bash-mccain-are-you-heartless-when-it-comes-economy

[theHawk]

Liberals don't want to hear the truth. They want to hear that life will be made easier with a big brother government there to bail them out.

[mundame]

Our financial system is in a lot of trouble because of these liar loans based on house prices constantly going up, which didn't happen.

The question of interest as I see it is whether a "bailout" of questionable mortgages will fix things by preventing massive walkaways and foreclosures with their collapsing effects on house prices.

Or whether such a bailout would make things worse by encouraging paying, good mortgage holders to walk away from homes that they owe more money on than the current value of the home. Especially if they need to move because of employment issues in a falling job market, that could be a REAL temptation.

Then the bailout would have caused a worsening of the problem it is trying to solve.

[Joe Steel]

Our financial system is in a lot of trouble because of these liar loans based on house prices constantly going up, which didn't happen.

The question of interest as I see it is whether a "bailout" of questionable mortgages will fix things by preventing massive walkaways and foreclosures with their collapsing effects on house prices.

Or whether such a bailout would make things worse by encouraging paying, good mortgage holders to walk away from homes that they owe more money on than the current value of the home. Especially if they need to move because of employment issues in a falling job market, that could be a REAL temptation.

Then the bailout would have caused a worsening of the problem it is trying to solve.

What makes you think the terms of a bailout would be so attractive it encourage good mortgage holders to close their mortgages? What would such a bailout look like?

[Joe Steel]

"Don't just do something, stand there!


That appears to be John McCain's approach to the housing credit crisis. On Tuesday, he delivered what his campaign billed as a major address on the housing crisis. What made it notable was that it contained nothing notable.

McCain started off stating the obvious: there was a housing bubble: "speculators move into markets, and these players begin to suspend the normal rules of risk and assume that prices can only move up -- but never down....The normal market forces of people buying and selling their homes were overwhelmed by rampant speculation. Our system of market checks and balances did not correct this until the bubble burst." Lenders went wild and some Americans bought homes they could not afford. And, he added, "the housing bubble was made worse by a series of complex, interconnected financial bets that were not transparent or fully understood....Because managers did not fully understand the complex financial instruments and because there was insufficient transparency when they did try to learn, the initial losses spawned a crisis of confidence in the markets."

Anyone who watches a cable business show--even only during the commercial breaks on American Idol--knows this. The question is, what would a President McCain do about it. Short answer: not much.

"I will not play election year politics with the housing crisis," he declared, adding, "I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers." That's a fine sentiment. Tough love. Let the markets take care of things. But does he have any idea how to make the system work better? How to make sure that people victimized by predatory lenders have a shot at solvency? How to ensure that whole neighborhoods don't collapse?

http://www.motherjones.com/mojoblog/archives/2008/03/7755_mccain_on_the_h.html

He's useless.

[mundame]

What makes you think the terms of a bailout would be so attractive it encourage good mortgage holders to close their mortgages? What would such a bailout look like?

The Barney Frank one that was the subject of the lead Wall Street Journal editorial yesterday. The Journal didn't like it, especially the danger of moral hazard in encouraging "good" mortgage holders to abandon ship when their houses lose value.

************************************************** *
Mr. Frank's idea (http://online.wsj.com/article/SB120718217009085001.html)is that, for mortgages originated between the start of 2005 and mid-2007, a lender and borrower would be able to agree on a federal refinancing plan. Lenders would have to write down their loan to no more than 85% of the current appraised value of the property – which means the banks will use this opportunity to unload the biggest stinkers in their loan portfolios.

For the borrower, the deal is even sweeter: a low fixed monthly payment and a reduction in the principal to market value. The Federal Housing Administration would then guarantee the loan, up to a total of $300 billion in total Frank Refis. The deal is so sweet that even Mr. Frank is concerned that otherwise reliable borrowers may "purposely default" to be eligible for assistance. His solution is to require borrowers to "certify" that they really, truly aren't doing this simply to get on the taxpayer gravy train.

The pols also understand, but won't admit, that you can't bail out borrowers without bailing out lenders. And on both counts, we're not talking about the most deserving recipients in the history of welfare: Those receiving bailouts will be lenders who chased high returns despite the risks, and borrowers challenging historic rates of delinquency even before rate resets. Many will also be fraudsters, given that mortgage fraud has increased more than 1,200% since 2000.

A new study from the Boston Federal Reserve destroys the myth of the victimized subprime borrower. Boston Fed economists examined 1.5 million homeownerships over nearly 20 years and found that the overwhelming reason for subprime foreclosures is not unsustainable debt foisted on ignorant borrowers or even financial setbacks. People walk out on subprime mortgages when the value of their home declines.

Homeowners who've suffered a 20% decline in home prices are 14 times as likely to default as those who have enjoyed a 20% gain. "Subprime lending played a role but that role was in creating a class of homeowners who were particularly sensitive to declining house price appreciation, rather than, as is commonly believed, by placing people in inherently problematic mortgages," says the Boston Fed study. In other words, even if the government moves these borrowers into FHA-guaranteed mortgages with fixed rates, but home prices keep falling, lots of borrowers will stiff the taxpayers like they've been stiffing private lenders.

Traditionally, lenders making a commitment to finance your home have demanded that you make a commitment as well: a down payment. But during the credit boom, the shrinking market share of FHA-insured loans demonstrated how much the world was changing. FHA was intended to help moderate-income borrowers afford homes by requiring merely a 3% down payment. When subprime lenders started offering loans with zero down, FHA asked Congress to let their lenders do the same. Fortunately for taxpayers, Congress resisted. In the fourth quarter of 2007, FHA loans were one mortgage category that actually enjoyed a decline in foreclosures.
************************************************** ***

[Joe Steel]

The Barney Frank one that was the subject of the lead Wall Street Journal editorial yesterday. The Journal didn't like it, especially the danger of moral hazard in encouraging "good" mortgage holders to abandon ship when their houses lose value.

Frank's bill looks like a bad approach to the problem to me.

[Monkeybone]

meh, i think that if the Gov "bails out" these banks. then the payments should go to the Gov, not to the banks. give them a fixed percentage and payment.

[mundame]

meh, i think that if the Gov "bails out" these banks. then the payments should go to the Gov, not to the banks. give them a fixed percentage and payment.


This "bail out," Monkeybone, didn't go to the bank, Bear Stearns. It was ruined, and all their stockholders, and all their employees, who had their retirement money in (now almost worthless) Bear Stearns stock AND will be out of their jobs. It was a fast forced sale to J.P. Morgan guaranteed by trading $30 billion in badish Bear Stearns securities involving the bad mortgages for $30 billion of good Treasury Securities.

What they bailed out was Wall Street banks collectively, because if Bear Stearns had been allowed to go bankrupt at 10 AM that morning, all their loans --- and they had a LOT of overnight loans out in many banks for their regular operating expenses, like making payroll --- would have hung frozen for months, and that day bank after bank might have collapsed like a row of dominoes.

It was a very exciting day. We were glued to the financial channels. I sure hope it doesn't happen again. I feel so sorry for the Bear Stearns people --- they were comprehensively ruined. And for what? Just rumors, really. Suppose you worked there and had a thousand shares of stock? It had been worth $200 the previous year; that's $200,000. It was worth $60 that week -- that's at least $60,000.

It sold to J.P. Morgan for $2 a share: that would be $2000 if you owned a thousand shares. It's up to $10 now, but still ------- there goes their retirement. God forbid any more banks get "bailed out" like that.

[red states rule]

Why should the governemnt get involved anyway? The market will correct itself

Now Dems want to have the Federal government get involved with flipping homes

[mundame]

Why should the governemnt get involved anyway? The market will correct itself


Yep, the market will correct itself, though maybe after another Great Depression. Hey, it did last time, right? Took WWII and a whole lot of socialism introduced by FDR, but eventually it righted itself.

Like getting sick. The body will run a high fever and kill the germs, so no need for medicine. Or maybe the body will die when the fever gets too high, but whatever.



No real problem.

[red states rule]

Yep, the market will correct itself, though maybe after another Great Depression. Hey, it did last time, right? Took WWII and a whole lot of socialism introduced by FDR, but eventually it righted itself.

Like getting sick. The body will run a high fever and kill the germs, so no need for medicine. Or maybe the body will die when the fever gets too high, but whatever.



No real problem.

Great Depresion? LOL

FDR's handouts did nothing to end the Great Depression - it only made it worse

And it created the entitlement mentality we have to deal with today

[mundame]

FDR's handouts did nothing to end the Great Depression - it only made it worse

That's not obvious to me. The unemployment rate was 25% -- they were desperate to get money into peoples' hands for the multiplier effect. I'm no fan of socialism, but most of the old New Deal programs are gone now that they aren't needed.


And it created the entitlement mentality we have to deal with today

Some truth to that, I think.

[red states rule]

That's not obvious to me. The unemployment rate was 25% -- they were desperate to get money into peoples' hands for the multiplier effect. I'm no fan of socialism, but most of the old New Deal programs are gone now that they aren't needed.



Some truth to that, I think.

and the US still had high double digit unemployment on the mornng of 12/7/1941

The rrograms may be gone, but the give me mentailty lives on

and it has cost over $9 trillion and still counting

[mundame]

and the US still had high double digit unemployment on the mornng of 12/7/1941

The rrograms may be gone, but the give me mentailty lives on

and it has cost over $9 trillion and still counting


An older woman in the 1960s told me that people who believe as you do, RSR, used to call FDR "That man." They wouldn't say his name. http://wade.hu/smiley/kategoriak/%E1llatok/animal-smiley-016.gif

[red states rule]

An older woman in the 1960s told me that people who believe as you do, RSR, used to call FDR "That man." They wouldn't say his name. http://wade.hu/smiley/kategoriak/%E1llatok/animal-smiley-016.gif

FDR was a great war time President, but he introduced socialism to the US; and people have been demanding more handouts ever since

[bullypulpit]

Once in awhile a politican will tell the truth the voters. It may be what the voters do not want to hear, or have the liberal media brand him/her heartless and cruel

I disagree with John McCain on so many issues, but at least on this issue, he told the truth




McCain tells it like it is
THE WASHINGTON TIMES EDITORIAL
April 4, 2008

John McCain has delivered a speech detailing how the housing and credit-market crises erupted and what should — and should not — be done about them. "I have always been committed to the principle that it is not the duty of government to bail out and reward those who act irresponsibly, whether they are big banks or small borrowers," Mr. McCain said last week in California, where some of the most "rampant speculation" in the housing market occurred earlier this decade and where the inevitable foreclosures have now become common. "Government assistance to the banking system should be based solely on preventing systemic risk that would endanger the entire financial system and the economy."

Worth noting is the fact that "big banks" have already absorbed nearly a quarter-trillion dollars in asset writedowns related to the collapse from the subprime-mortgage market. And hundreds of billions in additional asset writedowns are on the horizon. That seems to be lost amid the liberal furor over the Federal Reserve's emergency action to prevent the imminent bankruptcy of Bear Stearns from unleashing a systemic tidal wave that might have overwhelmed the financial markets.

"A sustained period of rising home prices made many home lenders complacent," Mr. McCain rightly noted. "[T]they stopped asking basic questions of their borrowers like: 'Can you afford this home? Can you put a reasonable amount of money down?' " On the other side of the transaction, Mr. McCain reminded us that "ome Americans bought homes they couldn't afford, betting that rising prices would make it easier to refinance later at more affordable rates."

The ongoing housing crisis is intensified by the fact that "o many homeowners have found themselves owing more than their home is worth, because many never had much equity in the house to begin with." To prevent this huge problem from recurring, Mr. McCain proffered the obvious solution, which somehow has eluded Mrs. Clinton and Mr. Obama: "Policies should move toward ensuring that homeowners provide a responsible down payment of equity at the initial purchase of a home." While Hillary Clinton characterized Mr. McCain as sounding "remarkably like Herbert Hoover," we say John McCain sounds exactly like John McCain — a straight-talker.

for the complete article

http://www.washingtontimes.com/article/20080404/EDITORIAL/132790632/1013

There are already rules on the books when it comes to the LTV ratios for mortgages...verification of income and employment...creditworthiness and more. On the borrowers side, mortgage payments should take up no more than 25% of monthly income, borrowers MUST read and be sure they understand the terms and conditions of the mortgage...once they sign the documents, they cannot plead ignorance as they have signed statements that they fully understand and accept the terms of the mortgage.

Between the greed of the lenders and the sloth of the borrowers, there is plenty of blame to go around. But more weight lies on the shoulders of the lenders and their agents who failed to do due diligence in vetting borrowers. They consistently pushed borrowers into more homes than they could afford by offering favorable 'teaser' on ARM's which ballooned beyond their ability to pay; Charged prepayment penalties on sub-prime loans; Rewarded mortgage brokers who could get clients into higher cost loans that what they were actually qualified for; and the list goes on.

Builders also fed the process by establishing their own mortgage companies and pushing their mortgage brokers to move the inventory off their books. Once the homes were sold the builders, in turn, promptly sold the loans to whatever entity would but them. Once off the books, it was someone else's problem if the borrowers defaulted. They also contributed to the drop in home values by building new housing in markets which where already glutted.

Speculators also played their role, buying up blocks of houses from builders, artificially driving up the prices and then selling the home to individuals. Others bought homes serially, living in it for a few months until they could realize a profit from the sale as home values rose. They then repeated the process.

As I said, there's more than enough blame to go around.

[red states rule]

There are already rules on the books when it comes to the LTV ratios for mortgages...verification of income and employment...creditworthiness and more. On the borrowers side, mortgage payments should take up no more than 25% of monthly income, borrowers MUST read and be sure they understand the terms and conditions of the mortgage...once they sign the documents, they cannot plead ignorance as they have signed statements that they fully understand and accept the terms of the mortgage.

Between the greed of the lenders and the sloth of the borrowers, there is plenty of blame to go around. But more weight lies on the shoulders of the lenders and their agents who failed to do due diligence in vetting borrowers. They consistently pushed borrowers into more homes than they could afford by offering favorable 'teaser' on ARM's which ballooned beyond their ability to pay; Charged prepayment penalties on sub-prime loans; Rewarded mortgage brokers who could get clients into higher cost loans that what they were actually qualified for; and the list goes on.

Builders also fed the process by establishing their own mortgage companies and pushing their mortgage brokers to move the inventory off their books. Once the homes were sold the builders, in turn, promptly sold the loans to whatever entity would but them. Once off the books, it was someone else's problem if the borrowers defaulted. They also contributed to the drop in home values by building new housing in markets which where already glutted.

Speculators also played their role, buying up blocks of houses from builders, artificially driving up the prices and then selling the home to individuals. Others bought homes serially, living in it for a few months until they could realize a profit from the sale as home values rose. They then repeated the process.

As I said, there's more than enough blame to go around.

So the borrowers ar totally innocent. So what if they bought a house they can't afford. So what if they lied on their application? So what if they planned to flip them and not libe in them

What is next BP - some idiot droops the house payment in Las Vegas will you want a new Federal program to bail them out

Or someone who overspends on his/credit card. Another Federal program to bail them out?

Or the buy a car they can;t afford - another Federal program to bial them out?

[avatar4321]

i have no problem with McCain's position on this. in fact, its very close to my own. However, i take exception to the fact that simply because he is honest about say this, he is an honest politician (I know oxymoron). McCain lies just as much as everyone else. In fact, he admits he lies just like everyone else. It was the whole entire premise for CFR.

[red states rule]

So the borrowers ar totally innocent. So what if they bought a house they can't afford. So what if they lied on their application? So what if they planned to flip them and not libe in them

What is next BP - some idiot droops the house payment in Las Vegas will you want a new Federal program to bail them out

Or someone who overspends on his/credit card. Another Federal program to bail them out?

Or the buy a car they can;t afford - another Federal program to bial them out?

What's wrong BP - all we hear is crickets chirping

[red states rule]

i have no problem with McCain's position on this. in fact, its very close to my own. However, i take exception to the fact that simply because he is honest about say this, he is an honest politician (I know oxymoron). McCain lies just as much as everyone else. In fact, he admits he lies just like everyone else. It was the whole entire premise for CFR.

While I disagree with McCain on many issues - there are a few occasions I have to give him credit

This is one of them