Mind Vomit by the ikss: no bailout for you

I am very happy that the $700 Billion Wall Street bail-out bill was defeated yesterday! Not only am I pleased, but I am curious and, dare I say, overjoyed about the manner in which it all played out. What Michael Moore has called “The Corporate Crime of the Century” was halted yesterday (at least for a few days) by a vote of 228 to 205. It was historic - a bill supported by the President and the leaders of both parties went down in defeat. That just doesn’t happen.

As of Monday night, everyone I listened to thought the dang bill would pass. Those of us railing against how unjust it all was, and writing and calling our elected officials to voice that concern, seemed to be in the minority. Whatever questions Congress had about the contents of the initial bill – the dollar amount itself, the lack of oversight and accountability, the lack of a cap on executive salaries – they were supposedly being worked out so that the bill could be passed and “save our economy.”

The whole time, I’m sitting here thinking, “it’s not like we screwed this economy up over night - why is it so freakin’ urgent that we pass this bill in the next five minutes, without thinking it through and considering other options???” Perhaps more importantly, I could not conceive of bailing out the very people who fucked us all over to begin with. I’m sorry, but when your normal, average Joe can’t pay his bills he gets his house foreclosed upon, his car repossessed and/or he has to file for bankruptcy. We’re all now supposed to financially bail out those banks which would foreclose on me in a second if I couldn’t pay my home loan?

Hardly seems fair, does it?

If passed, this bill would result in every single American paying over $3,000 out of his/her own pocket to bail out banks and financial firms - companies who bought and sold and bought again loans which were never strong and never should have been granted in the first place. It is the fact that these loans are so weakly supported that got these institutions in trouble in the first place.

Why did this happen?

Over the last decade or so, lending practices have been so deregulated that there was no oversight. Housing was booming. You could buy a house and sell it three years later at a huge profit. Everyone wanted a piece of that action. Since there was so little regulation and oversight in mortgage lending, some really shady people got in there and made a killing. New types of loans were created so that more people would qualify for a home loan. Mortgage brokers made deals with people they knew could not afford the loans they were working up for them or, if they could afford them now, they would not be able to afford them when their interest rate went up. But those Brokers didn’t care – they made their profit and they’ve now probably moved on in to some other form of criminal activity – like cooking up meth in their basement.

Financial institutions got rich on their mortgage loan portfolios, so really they didn’t care, either. It’s funny how little things like proof of income or flood zones don’t matter much when everyone is rolling in dough. When there is so little regulation and oversight, these banks can do pretty much whatever the heck they want to do and nobody will say jack about it, so long as its stockholders are making money.

So now…interest rates are higher. People can no longer afford that adjustable rate 2^nd mortgage on their home and are trying to sell. But nobody is buying, so they end up losing their house in foreclosure. The banks are stuck with dead properties on their hands, no longer worth the paper the mortgage is written on. As their net worth goes South, so does their stock value.

Now we’re supposed to bail them out, by essentially buying up all of these crappy loans that the banks never should have bought and/or granted to begin with. We, the American People, are supposed to go in to the lending business…and let me just say that as a Credit Professional for the last 18 years, I do not think that buying bad loans is a good investment. It’s a loser’s bet. At least, it is when the American Government is behind the whole thing. They say that once these loans are repaid, we are likewise supposed to get our money back.

Ha. Now that’s a loser’s bet right there.

A) We would never get back all of our money because if the loans were worth anything, the financial institutions wouldn’t be in the position they’re in to begin with. We would be lucky to get a small percentage back.

B) Who is going to oversee the process? How will the American People know if we are due money back or not and at what point?

C) Like I would even trust our government to give me back three cents on the dollar. Just ask the Native American nations how far we can trust the American Government to pay us what they owe us.

Isn’t it part of Capitalism that you take a risk? You put your money in a business or a service or whatever; you provide that business or service to the general public; you make decisions and purchases, ostensibly in an effort to improve your business and boost profits…but sometimes, you make the wrong decisions. You buy a horribly expensive piece of property or equipment which ends up devalued because of some unforeseen happening or you get sick and can no longer run the business. Whatever – you took your chance and for whatever reasons, you may succeed and make lots of money, or you may fail.

Same goes for those who invested in these firms. The stock market has no guaranteed investments. When you choose to play the market, you are gambling with your money, plain and simple. Sometimes, you will lose and if you bet big, you will lose big. I don’t understand why it is now the responsibility of the rest of us to bail you out of your gambling debt.

That’s life in a Capitalist environment. You win some, you lose some. I have never read any “bailout” caveat.

Perhaps more to the point, is anyone bailing us out? Cuz little of this is our fault, yet we are the ones paying for it - at the grocery store, at the gas pump, in shipping costs. We are the ones losing our homes to these short-sighted, greedy institutions and criminals.

Now, I will say that there is some personal responsibility at play here, as well. I think we are very spoiled in this country. I think we all want so much that we tend to live beyond our means. Material possessions have become far too important in our society. Perhaps being in the credit field for so long has soured me, but it is hard for me to have a whole lot of sympathy for someone who willingly signed up for an adjustable rate mortgage, as a means to get in to a home they otherwise could not afford. You had to know that those rates were not always going to stay in the basement. I know you may have been hoping that by the time they went up, you would be in a different financial position…but…sorry, but that is a tad naïve.

You buy the home you can afford to buy, while making sure you cover your ass. You should never sign any loan documents unless and until you know exactly what you are in for and what kind of risk you are taking.

I understand and have even inferred already here that there were a lot of predatory brokers and lenders out there who preyed upon peoples’ naïveté. That is horrible and very sad…but it still does not over-ride one’s responsibility for one’s own financial condition.

But back to the larger matter at hand – this bail-out and why I am glad it did not pass.

I am sure we all know that the stock market goes up and down. Just because it spent so many years going up in the nineties does not mean it was always going to continue doing so. Our recent dives may have been deep, but frankly they were inevitable. Aside from all of the de-regulation which has been going on over the last decade, the Bush Administration has also dug us in to a dangerously deep whole. You can’t just keep spending money you don’t have and expect your economic situation is going to keep getting better. It doesn’t take a genius to figure that out. That’s why I took all of my 401k money out of the stock market a year ago.

Did you know that over 200 Economists wrote to Congress to express their opinions that this bail-out may not help the economy at all but may in fact harm it even more?

Did you also know…

1. The bailout bill had no enforcement provisions for the so-called oversight group that was going to monitor Wall Street's spending of the $700 billion (and the original bill called specifically for no oversight at all – if you can believe that!).

2. It had no penalties, fines or imprisonment for any executive who might steal any of the people's money (if you can believe that!).

3. It did nothing to force banks and lenders to rewrite people's mortgages to avoid foreclosures. This bill would not have stopped ONE foreclosure.

4. It had no teeth anywhere in the entire piece of legislation, using words like "suggested" when referring to the government being paid back for the bailout. See? When the talking heads go on about “paying back the American people” eventually? That ain’t gonna happen.

A few things are interesting to me about the vote and its aftermath:

1) The Republican Revolt: 2/3 of Republicans voted against this bill. Is it because they saw it for what it is and want to protect their constituents or because Bush so badly wanted it to pass and they so badly want to distance themselves from anything Dubya-related as we near election day?

2) Most Democrats are Wimps: 60% of Democrats voted for the bill. I believe they did so not because they believed in it, but because they were scared. They believed the Chicken Littles who said the sky was going to fall on Wednesday if we did not vote this bill in to action on Tuesday. And if the economy tanked over night, the Dems would then be blamed. And, you know…an election is right around the corner. Only those Dems who swing to the left (such as my buddy Dennis Kucinich) voted against it. So yes – you read that correctly. On this issue, traditional, big-government-is-bad Republicans joined hands with Liberal Democrats. It’s heartening, really. Let’s all sing Kumbayah.

3) The Blame Game: The 1/3 of Republicans who voted for the bill still insisted on blaming Democrats (specifically House Speaker Nancy Pelosi for making a “partisan” speech against on the floor) for the bill not passing and are, in fact, warning us that the economy is now going to fail and it’s all their fault. I don’t know where they have been for the past 10 months or so, but the economy is already failing. Why is only this one bill at this one time that is going to be our Superman?

Yes, the market did fall by 777 points last night, as everyone panicked upon discovering that the bill did not pass. But the sky is still in place. We are all still alive. I have heard of no mass jumps from any tall buildings today. In fact, when I left for work this morning, the market was correcting itself and back up by 270 points or so – which is to be expected when it crashes simply out of panic.

And that’s the thing. We can’t panic, people. That’s how we get taken advantage of. That’s how we allowed the Bush Administration to get us all in to this mess to begin with. Post-9/11, everyone was scared of the bogeyman and allowed Bush to get us in to a quagmire in Iraq which is partially responsible for ruining our economy. That fear then allowed him to nip away at our personal freedoms; that fear allowed him to disregard the Geneva Convention and all human decency when it comes to prisoners of war. Now that we’re all waking up, let’s not let the same thing happen over fears of what is happening to our economy.

Something must be done, yes. But that something is not this bill. This bill was something the Bush Administration threw together in an effort to screw us all one last time out of several more billion dollars before he leaves town and crawls back in to a beer bottle on his ranch in Texas, to party with all his friends who were made rich during his eight years in office. He just figured we were all so scared that we’d fall for it – just like we have all of this other brilliant ideas.

I am overjoyed that we finally realized that it would be prudent to slow down and think about this for a while. And maybe we should actually have the smartest guys in the room be the ones to figure it out.