Avinash_Tyagi said:
TheRealMafoo said:
Avinash_Tyagi said:
Again you're blaming government for the stupidity of the bank during the last few years banks were giving loans to people with no income and no collateral, no jobs whatsoever, this was their own stupdity in action. You don't give someone a 300K loan when they have no income or collateral or anythign to cover the loan, its just common sense.
I mean when I bought my car, I needed 5 grand in a loan, and the credit union I went to made sure I was making enough money, had collaterl and a cosigner before I got the loan, and it was only five grand. That's how a bank should act when loaning out money.
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The Bank that gave that loan is not the bank that's in trouble. They most likely sold that loan the next week to Fannie Mae or Freddie Mac and made a profit.
Fannie and Freddie should have never offered to buy the loan in the first place. if the government had not made it posable for the bank to sell the loan, they never would have given it.
The banks that are in trouble, are then ones that purchased a massive block of loans that these government run companies bought, packaged, gave a high ratings to, and said were the safest posable place to invest.
That's the problem.
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Ah, but the point remains, its because here were banks that were foolish enough to give out loans to people who didn't have the ability to pay them back that there is any problem, if the banks had done their job there would have been no issue whatsoever, even if other organizations like fannie took them and packaged them and resold them, as long as the people they had loaned the money to were trustworthy or had collateral, it would have made no difference, because the loans would have been paid back regardless of who bought it.
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Sigh... you're missing the point.
If Government had stayed out of it, the bolded part is exactly how it would have happened. It's how it has happened all along. That percentage of the population is about 60%. Government wanted more then 60% of the people to buy homes. They wanted people who did not meet this criteria given the opportunities of home ownership.
This is what the Community Development Act of 1992 was for. A way for government to force lenders to loan out money to those who they would otherwise never loan money too.
Force might not be the right word. They "force" them the same way they "force" states to make the alcohol level .08%, with money.
If a state does not comply, they don't give them funding for roads, and if a bank does not give out a certain percentage of sub prime loans, they tax the bank more on all there loans.
What your asking the banks to do, is the same as if the government got rid of income tax, no one paid it, and then you blamed all the people for the government not having any money. In your world, people should have paid the same income tax, even if the government made it very attractive not to.
The banks should have defied the government, and for the good of the people, not lend money to the group of people the government wanted them to lend money to.
What dream world are you living in?
