Occupy Wall Street

[scorch-]

I'm not sure morally unacceptable is the right description. Contract breaches occur all the time and you (should happen but might not always) pay your due when it happens. If there was not an intent to breach at the time of signing, I don't think it's morally unacceptable. If it was, I think we would punish breaches with jail/prison time.

Definitely not advisable or smart. Then again, neither is offering high-risk loans to individuals with shaky credit.

[mg_]

I'm sorry you think distinctions aren't important.


That explains a lot of this conversation.

[mg_]

I'm not sure morally unacceptable is the right description. Contract breaches occur all the time and you (should happen but might not always) pay your due when it happens. If there was not an intent to breach at the time of signing, I don't think it's morally unacceptable. If it was, I think we would punish breaches with jail/prison time.

Definitely not advisable or smart. Then again, neither is offering high-risk loans to individuals with shaky credit.

Foreclosure is often not the worst thing that can happen. It's why it's a security in the first place, sure, the bank would probably prefer you pay it.

However, there comes a point when foreclosure might be a more advisable position for the mortgagee.



Thatsright, I'm sorry you think distinctions aren't important, but that's your own problem. Illegality is a specific word. Contracts are between private parties, and, as Dan already pointed out, illegality is rarely a concern.

[BrentMusburger]

Foreclosure is often not the worst thing that can happen. It's why it's a security in the first place, sure, the bank would probably prefer you pay it.

Of course the banks don't want the houses back, because they know that houses aren't an ATM machine like they temporarily were during the boom times. It's a depreciating asset that has a ticking time bomb of maintenance costs (roofs, heating), lawn care, and property tax costs. Not to mention in a depressed market, the values tank and they have an inventory sitting around....becoming less and less desireable as it sits there.

However, there comes a point when foreclosure might be a more advisable position for the mortgagee.

Funny. Many taxpayers have went against their moral obligation (and something they promised in writing) because it no longer made business sense for them to pay on it.

Yet, when businesses make business decisions....like laying off staff or shifting production to what is a more "advisable position" for the company, they're monsters.

Shouldn't the homeowners "do the right thing" and eat the losses so they can meet their obligation and not be a deadbeat and fallback on the people who do make their payments?

[BrentMusburger]

I'm sorry you think distinctions aren't important.


That explains a lot of this conversation.

They've taught you well.

but that's your own problem

No, it's not my problem, because it's not something I beleive. That's something you threw into my mouth.


Never did I make the claim "all distinctions aren't important". I basically made one mistake with minor wording--and it got blown out of proportion. My point still stood that walking away from a mortgage is no less "wrong" (I'll take away the term illegal because it apparently causes a firestorm) than making mortgages to drive commissions or what have you.


I gaurentee you'd be singing a different tune if you lent me $20,000 and I just decided that I wasn't going to pay you any more for what ever reason. Afterall, you should have known I wasn't good for it and I didn't really understand the payments.

[mg_]

Never did I make the claim "all distinctions aren't important". I basically made one mistake with minor wording--and it got blown out of proportion. My point still stood that walking away from a mortgage is no less "wrong" (I'll take away the term illegal because it apparently causes a firestorm) than making mortgages to drive commissions or what have you.


I gaurentee you'd be singing a different tune if you lent me $20,000 and I just decided that I wasn't going to pay you any more for what ever reason. Afterall, you should have known I wasn't good for it and I didn't really understand the payments.

Actually, depending on the reason, I'd negotiate with you to get that back as much as possible. Hence, why smaller regional banks have been more than willing to work with their debtors, than, let's say Bank of America, Countrywide, Chase, etc.

People who are actually close to the debt often realize strictly foreclosing, blind to the facts, find it bad business.

Shocking.




Call me when you rejoin reality.

[scorch-]

I'm sorry you think distinctions aren't important.


That explains a lot of this conversation.

They've taught you well.

but that's your own problem

No, it's not my problem, because it's not something I beleive. That's something you threw into my mouth.


Never did I make the claim "all distinctions aren't important". I basically made one mistake with minor wording--and it got blown out of proportion. My point still stood that walking away from a mortgage is no less "wrong" (I'll take away the term illegal because it apparently causes a firestorm) than making mortgages to drive commissions or what have you.


I gaurentee you'd be singing a different tune if you lent me $20,000 and I just decided that I wasn't going to pay you any more for what ever reason. Afterall, you should have known I wasn't good for it and I didn't really understand the payments.

I guarantee that:
1) I wouldn't lend you 20,000$ unless it was a good investment.
2) The contract would stipulate exact terms on what should occur in cases of default, and a method of enforcement.

Funny how banks are businesses and have those in place.

The difference between negligence and poor judgment can be fuzzy sometimes, but negligence is where most people draw the line between morally acceptable but stupid and morally unacceptable. Also happens to be the point where civil liability starts turning into criminal offense in a lot of cases. Strange how that works.

[BrentMusburger]

Actually, depending on the reason, I'd negotiate with you to get that back as much as possible. Hence, why smaller regional banks have been more than willing to work with their debtors, than, let's say Bank of America, Countrywide, Chase, etc.

You'd help me only because, as a small lender, that $20,000 actually is materially significant to you and you don't have millions of other outstanding loans. The reality is, that if you were large enough of a lender, you would tell me to eat a dick, foreclose, and find someone else.

The big banks starting working with people, when it became material--just like the small banks did--but it became material to them much sooner.

They don't owe anyone anything.

But really--what were the big banks supposed to do? Open new offices, hire more employees, use more computers, paper, take on more overhead, and the whole 9 yards---shifting their resources of their business into a "lose even more money on the customers costing us money" division? Because, it's not like all this infrustruture is already sitting there in place ready to be shifted.....it's busy being used to do their core activities.

People who are actually close to the debt often realize strictly foreclosing, blind to the facts, find it bad business.

Shocking.

Or more likely they are less diversified. Being a small bank, they only work in their region. If the shit hits the fan in their region, it's not like a bunch of new customers are going to come riding in on a golden horse.

Make no mistake about it, they are only working with people because it creates less of a loss for them--and since they're smaller they are much more scared of losses. It's NOT because they're any "nicer".

They want to grow their market share by seeming nice compared to the big bad bank and play it off like they're the small friendly guy down the corner.

I guarantee that:
1) I wouldn't lend you 20,000$ unless it was a good investment.

Well, then you would have been exposed to the paradox of risk. You would have looked at my past to determine the risk of loaning to me, but the very idea of risk is that the future will be different from what we expect.

This article is about the dollar bubble, but it's the same idea to help you understand if you substitue the words in to apply to banks.

Of course they see it! (Bankers/Buyers) can see what is happening. They wonder about it and shake their heads. It even scares them a little, sending chills down their spine. But they keep (selling mortgages/buying) as though possessed. The greater their doubts, the more greedily they (make loans/cash out on equity). Indeed, that's exactly what is so crazy about these (banks/buyers) and their behavior: The client isn't just a client. (The buyer) creates the security he's purchasing by the very act of purchasing it. If (buyers) were to stop buying (mortgages) tomorrow, suspicion about the (housing values) would spread and insecurity would grow. Then the dream would end. The (values) would start to falter and all the wealth held in (housing properties) would lose its value. Of course, that's not something (banks/buyers) want to see happen.

The only way to fight a weak (housing market) is to strengthen it. Many people no longer care whether the market still justifies the faith people seem to have in it. The new game, which amounts to playing with fire, works exactly the other way around: The (buyers) deserves the faith they gets because otherwise (we lose) that faith. (loans) are bought so they don't have to be sold. The (market) is strong because that's the only thing that can prevent it from growing weak. Reality is ignored because only by ignoring it can the dream come true. Or, to put it still more clearly: Behaving irrationally has become rational behavior.

As long as the faithful outnumber the skeptics, everything works out fine for the (housing market). The trouble starts the day the scale begins to tip.

The process is complicated by the fact that (banks) aren't driven by blind faith alone. In part, it seems, hard facts also push them to extend their credit of trust a little longer. (Housing value growth)-- an impressive figure on paper -- is an important benchmark. When it is high, (banks) feel reassured in their faith in the power of the (buyers) to perform well.

And yet this benchmark is not as reliable as it seems. The faith (banks) have in the figure has actually helped create it. After all, the purchasing price of (more houses) feeds almost directly into state consumption. In this way, the expectations of (banks) -- including the expectation that the United States will continue to grow -- transform into certainties almost all by themselves.

In other words, the capital of trust creates the very growth rates it needs in order to justify itself.

These days, the (home loans) are making a lot of people uncomfortable. One morning many (banks/buyers) will wake up and look at the facts about the (housing market) without their rose-colored glasses --

Greed triumphed over fear for a few years -- but then fear came back.

Much the same fate is in store for the (homebuyers) and for (bank) loans. The (homebuyers) has sold more security than it has to offer. The expectations traded will turn out to be valueless because they can't be met. Just as the New Economy was unable to provide investors with either the growth or the profits that had been predicted for investors, (banks/buyers) will one day have to admit that the (values) backing the (housing market) they sold is weaker than they claimed.

Everything is fine. Until it isn't. Your loans look collectable, until they are not. You look like you'll be able to meet your payments, until you lose your job and cannot.

My belief is that the banks are EQUALLY responsible with the American public. Both sides were greedy and continued to act like there were no consequences.

A drug dealer on a street corner can offer every kind of crazy drug I don't understand imaginable, but if I don't bite and take a hit for a high, I'll be fine. They may be providing it, but I'm accepting it. The drug dealer has no control over me if I stay away from what he's peddling. He or she can only destroy my life if I let them in.

At the end of the day, you both suck. Dealer and Druggie alike.

[ward]

Who the **** resurrected this thread? DIE IN A FIRE

[Sym]

My belief is that the banks are EQUALLY responsible with the American public.

That is nonsense. Disregarding the fact that 'the American public' is not a corporation of people and is, rather, millions of individuals actly largely independently you STILL can't reasonably justify this stance because neither party is responsible for the same thing. When the full weight of the crisis had arrived investment banks like Lehman, Bear Sterns, Morgan Stanley and Merril Lynch were holding AT LEAST 30 to 1 leverage ratios. THIRTY TO ONE. At that level it's no wonder sub-prime foreclosures could have wiped out equity (and it did, with Lehman taking a 3% hit, wiping out its equity, and sending them into spirals of asset sales). A single man foreclosing on his home does not, under any ****, equate to a multinational corporation leveraging itself beyond its means via risky securities and opaque practices.

It's absurd to take those individual home owners and lump them all together as the 'public' to act as, what, a moral counter-balance?? Maybe we should examine what we're trying to counterbalance. We have one side that literally creates an entirely seperate opaque banking and credit system in order to bypass regulation to fund its habit, and the other side...well it took a loan to buy a house that had the possibility of having its rate jacked up. Do you see a difference here?

Your analogy about the drug user/drug dealer dynamic is utterly hollow. The act of taking out a mortgage on a home is not a 'drug'. Nor is it inherently addictive. Smart and capable homeowners take out mortgages every day. It's practically part of the American Dream. And a good portion used ARM's effectively. Starting out in an ARM and moving to a fixed rate as they began to see it move up. But because some of them didn't it caused a loss--statistically normal. But because the institutions higher than the actual foreclosure were leveraged into the oort cloud, and had gamed their assets to the point where they couldn't even be identified properly it helped cause the whole thing spin into a crisis.

So unless you're willing to say that every sub-prime foreclosure acted in coordination with one another you can't even begin to equate the actions taken collectively by the Financial Sector with those taken by your 'American Public', and thus you can't equate their blame. You seem to be a capable thinker, but you're showing a distinct lack of it in your adherence to blaming this or that cultural abstraction. "Greed" isn't a real thing, so blaming it is worthless. And I can tell you from first-hand experience that people who take out mortgages on their homes DO understand the consequences. So your ire is coming across as bordering on white-washing. It ends up as the equivalent of a 'kids these days' attitude and it's entirely out of place.