Is the $700 billion bailout another Bush administration sham?

Just as I was drifting off to sleep last night I thought to myself:

  • What if this $700 billion bailout demand is Bush’s parting gift to Wall Street merely for their irrational exuberance? 
  • Is this bailout the equivalent of the Bush giving Wall Street a pardon for all the sins of the last 8 years?
  • What if this is like the WMD (weapons of mass destruction) in Iraq that didn’t exist and there really is no crisis?

I’m cynical about just about anything the Bush administration portrays as an exigent circumstance. 

I proposed a series of questions yesterday in a post and, while I’ve searched and searched for answers to those questions, I can’t find them anywhere:  Fortune, Wall Street Journal, etc.  Those questions can be found at:

https://democratdave.wordpress.com/2008/09/23/why-so-little-detail-on-700-billion-bailout/

Last night on the news, I see the FBI is investigating fraud at some of the major institutions at the center of this “crisis.”  Duh!  Anyone who knows anything about mortgages in the past 4 years knows that the system was stuffed with loans that would have spelled disaster for the lien holders UNLESS the value of homes continued to rise year over year.  Why? 

The loans needed to be refinanced under the same “below market interest rate” terms as the existing loans for the owner to keep their home.  The “Option ARMS” often required no down payment, had 1% interest rates for the first 3 years (below market interest rate loans) which meant the house payment would have just about doubled at the beginning of the fourth year. 

People struggling to make that current payment would likely be forced into default at the end of year 3 if they couldn’t refinance under the same terms.  Why? How many people could absorb a change in monthly payment terms from let’s say $1700 a month to $3500 a month?  Not many.

The loan underwriting process–instead of confirming that the borrower met the terms and conditions of the loan–became a “look the other way” to fund the loan.  In other words, there was a lot of fraud.  Everyone in the industry knew this was the case!  Fannie Mae and Freddie Mac were the recipients for this toxic waste.

It’s okay to be cynical.  I don’t trust the Bush administration or anything it advances at this point.

I want the questions I asked yesterday in my post answered.  It’s up to Congress to get those questions answered before any bailout legislation is approved.

Democrat Dave

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3 Responses to Is the $700 billion bailout another Bush administration sham?

  1. Julia says:

    It’s very strange that a proposal that could end up costing us billions of dollars is so vague that it contains only 3 pages of documents.

    Very disappointing.

    Like

  2. culturepress says:

    This is definitely a Bush administration sham. And the figure $700 bil was just pulled out of nowhere. No ~real~ economists aided in the determination of that figure. I think they just liked the way it sounded.

    The audacity to call upon the American taxpayers for this bailout fund is just unbelievable, especially when we’ve got people in the south who urgently need federal aid in the aftermath of Hurricane Ike.

    Breaking news! McCain wants to postpone this Friday’s debate. Cut n’ run, McCain. Cut…and…run.

    Like

  3. Kurt says:

    Look, the main reason we need to get something close to the Dodd Plan done is that our entire economy is based on credit. Whatever company you work for doesn’t have hard cash to pay for goods and services, let alone your paycheck. No store, factory, school, wherever you earn a living, has hard cash in a bank vault somewhere that they can use to make it through the day.
    Now, multiply all the individual stores, factories and schools across our entire country. Add in every other market internal to global, that even one of those stores factories or schools might deal with.
    Everything would stop.
    And once everything stops, nobody knows what would happen after that.
    Notice I didn’t mention anything at all about mortgages or homes – everything in the free market effects everything else.

    Like

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