lhoover49

Bailouts: Misunderstanding the Moral Hazard

Why has a situation that has in the making for about 7 years all of a sudden a "crisis"? Wall Street is taking a lesson from Big Oil. When Katrina hit, the oil barons found they could push the price of oil up 3 fold, and Americans whined a little then just fell in step and accepted it as a necessary evil. A couple of big Wall Street firms finally reap the fallout of their greed, and expect the American taxpayers to bail them out with a quoted $700B, and we all know will eventually become well over a trillion dollars. Let the shareholders who have been letting them run rampant for years and years, and the private sector bail them out, NOT the taxpayer. We have had many recessions since the turn of the century, and somehow we have turned them around and the US has come back stronger than before. I think there is not enough known about the root cause of this situation, and all the possible avenues to lead Wall Street out of this situation have not been explored.

Has anyone considered instead of handing a huge amount of money over to a bunch of people who created this mess, instead doing something that would benefit the people who are in the crisis with these failed mortgages, helping the small Main St. banks who are struggling, and instead of removing the possiblity of home ownership from all but the rich, by providing programs that will offer "realistic" mortgages to people with limited incomes, and credit scores below 740. The current mortgage programs and rates set these people up to fail. Many failed because these mortgage underwriters knew they were telling these people they had to borrow much more than they could afford at rates they could not afford.

I think it would be a HUGE MISTAKE to rush to authorize a bailout on these terms for this amount of money and expect the taxpayers to blindly comply. I just wonder, does modern politics remember the Boston Tea Party?