Quote:
Originally Posted by Sly
I don't think they are going to change. The truth is, we the people, still want them. We want things we can't afford. In order to get the things that we can't afford, somebody needs to give us the money to do that. The only people that are going to give us the money so that we can buy things that we can't afford are people that know how to play a very tricky game and win every time.
What is going to happen to the congressman that places a vote that forces banks to stop giving out ANY sort of mortgage or car loan? That guy is going to get kicked out of office. Who will get put in office? The guy that makes those loans possible again.
Up and down. There have been dozens of stock market crashes over the last 200 years. We are a greedy, lazy people, eager to take the easy way out time and time again.
30 year mortgages, of any sort, are a very new thing. The US government pushed them into play after the Great Depression to get things rolling again. Ironic.
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They don't have to stop giving out any kind of mortgages. What they need to do is change the law that allows savings and loan banks to act as investment banks so they can sell investment products and services.
For decades it worked great. You want to buy a house a bank gives you a mortgage. If you fail to pay it and the bank takes the house back it is between you and that bank. It wasn't so long ago that the bank that gave you the mortgage held that mortgages forever. Since those banks were going to be on the hook for any "bad" mortgages they gave out they were a little more picky about who they gave loans to and how much they loaned.
With the deregulation it allowed banks to give mortgages then bundle them and sell them to other companies as an investment product. This allowed banks like B of A and Washington Mutual to go crazy giving mortgages to anyone who was breathing and then misrepresent them and sell them off to other companies. Eventually it caught up to them. Washington Mutual is out of business and B of A is being sued by the government, but the damage was done and many of the players in that little game of buy and sell the mortgage got bailed out.
But I do agree with you fully that in a general we are greedy people who always crave more than we have. If you offer someone credit to buy something they otherwise could not afford they will buy it. Look at the car industry. It wasn't too long ago that the average car financing was 2-3 years and most people owned average cars. Then they expanded the financing to 4,5 and even 6 years. This allowed someone who normally could only afford a $20K car to buy a $40K car and they did just that. Drive through any suburb in this country and the driveways and garages are filled with overpriced SUV's. This attitude by many people is likely not to change.