Who Do You Think They Are Helping?
by James Glaser
June 25, 2008
Congress passed a bail-out plan for the banks yesterday, and you just know it is going to pay those Congressmen a lot of dividends this election season. The banks are going to get rid of 400,000 extremely risky loans, and the U.S. Government is going to take them off their hands.
Here is how it was written up in the media: The mortgage aid plan would let the Federal Housing Administration back $300 billion in new, cheaper home loans for an estimated 400,000 distressed borrowers who otherwise would be considered too financially risky to qualify for government, fixed-rate loans.
These 400,000 people couldn't get a government loan without special legislation, so you know the banks would have been writing off most of these loans. When the banks first made these loans, you know they took a good profit off of every one of them at closing. Now they are looking at having to foreclose on these people, because they shouldn't have made the loan in the first place.
I think it is great that these people are not going to lose their house right now, but we can pretty well figure that the government is going to end up eating many of these new loans, and the tax payer is going to be holding the bag. If these people couldn't qualify for a real loan, how do you think they are going to make payments on these new loans?
The bankers are walking away from $300 billion in losses, and you know someplace down the road there is going to be a big payoff for those who got this bill passed. All you have to remember is all the Senators and Congressman who got the "sweetheart" loans in the last few years. Now they are all claiming innocence, but some are giving tens of thousands of dollars to charity as a Mia Culpa for their wrong doing.
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