This is criminal! And some heads need to roll. And I hope they DO ROLL!
Bailing out the industry is just so typical though. What about the people who lost their homes? And we're not talking about these so-called "investors" who took "risks" to make
First came DEREGULATION. Most governments will set in place some guidelines/rules about some financial practices that have the ability to affect the majority of people. Why? Because despite the constant verbal diet of 'the free market' ie capitalism rules lunch - it doesn't work. If it did, then no country or people would ever need any government to force people into pay taxes for the roads they use, the schools their kids attend, the firemen and policemen they want to protect them - the list is endless. Once you remove the protective layer it's open season. The only reason to deregulate or remove the rules, is to make more money. A lot of people thought this would be their opportunity to own a home and bought into the idea that their wages would increase to meet the debt and some were totally mislead into believing that they could afford the home they were buying. Some were lied to and some many were manipulated. We can sit and blame the fools who just wanted a piece of the wonderful American dream but it's those honest hardworking but maybe less than knowledgeable people I feel for. They have nobody helping them now.
I feel absolutely no compassion for anyone who knowingly invested in the market with the intent of flipping their homes, so that they went out and remortgaged their primary residence, bought more real estate and now finds themselves in the position of losing one of them. Those people as investors had more opportunity and more knowledge to even get into the game. I have even far less sympathy for those at the very top who own multiple investments on paper and for whom the guy losing his home is nothing more than a number and doesn't really exist.
The difference is that the investor at the very top didn't lose his money because the banks that he dealt with on all of his holdings, received billions of dollars in fall out cash in order to make sure those guys didn't hurt too bad. The guy at the bottom end, the honest homeowner who believed he could own a home, will receive nothing but a bankruptcy discharge paper at the end of it all, no place to live, possibly lose his job if he worked in an industry supported by the housing market etc. Funny thing - Bush pretty well stated in one of his beautiful speeches that all those homeowners are idiots - they're uneducated. Well, maybe he was right. Of course, while he was making that speech, he also released 37 billion dollars into the banking system so the market wouldn't collapse - called propping up the guys at the top.
Oh and for anyone who keeps believing that nobody would lend money to someone who is going to default...educate yourself. Your house is collateral. If I own a house that I bought for 100,000 and a few years later I sell it to you at the inflated market value of say 300,000, I'm 200,000 up. If I personally hold your mortgage - guess what? You are paying me principle and interest monthly and if you default then not only have you lost all the cash you sunk into the house but I get to take the house back. I can then rent it out and I'm still looking good from a financial standpoint. It's not that you believe they will default, but it's knowing full well that if they do, then the house is still yours, you can rent it out or resell it and your losses are nil. It's even sweeter if the house was paid for. sammieswife.