8 ms·

Saying "there's no legal way to go after them!" I find kind of upsetting when bankers can hire great lobbyists to ensure they set up the law favorably for thems

Saying "there's no legal way to go after them!" I find kind of upsetting when bankers can hire great lobbyists to ensure they set up the law favorably for themselves. Definitely agree we should have paid off mortgages instead though.

bradleyjg 9y ago
> Definitely agree we should have paid off mortgages instead though. So if Donald Trump has a mortgage on a penthouse apartment worth $25 million the government should have paid that off, but some family making $15,000/year that can't get a mortgage in the first place should get nothing? Pay off all the mortgages is a terrible idea.
- paulus_magnus2 9y ago
  Thanks to zero interst rates for 10y his apartment is now worth $50 so effectively we paid of his mortgage.
- mrec 9y ago
  Agreed. The more sensible forms of debt jubilee I've seen proposed would give money to everyone equally, but with the proviso that if you have debt you have to use the money to pay that off first.
- isoskeles 9y ago
  It's a terrible idea mainly in that it is unfair to everyone who didn't drink the kool-aid and buy a house because the value was supposed to always go up. Not just because wealthy people might profit. If there's ever another bailout, they should heavily regulate the people who gain something from it. Not as a punitive measure, but more like a statement of good faith. "If you bought these homes, surely that meant you intended to live in them. So as a condition of the bailout you can't sell them for more than X or rent them for more than Y." It seems drastic, but I can't see many other ways to approach fairness in that situation. But I don't think we've learned because people are still arguing over whether we should have just thrown the bankers in prison, like the system wouldn't just replace them with more bankers.
  - bradleyjg 9y ago
    > It's a terrible idea mainly in that it is unfair to everyone who didn't drink the kool-aid and buy a house because the value was supposed to always go up. Not just because wealthy people might profit. It's a terrible idea for a lot of different reasons. Above all because it isn't a good idea. It doesn't come out of any kind of problem solving or optimization logic, just "wouldn't be awesome if I didn't have a mortgage anymore". > But I don't think we've learned because people are still arguing over whether we should have just thrown the bankers in prison, like the system wouldn't just replace them with more bankers. People are influenced by fear as well as greed. Of course the system would just come up with more bank executives. We'd want it to. But those bank executives would have something more to fear than just an earlier retirement than they had hoped for. Their greed would push them in one direction and their fear in the other. Hopefully the two would balance out to something closer to the social optimum. At the very least we should expect it to be closer than when there's nothing to fear at all.
    - richardknop 9y ago
      Yes it’s a terrible and immoral idea. It basically means giving people with mortgages free houses. What about people who are renting? I wonder how they would feel if other people except them were given free houses from the government. It also means rewarding fiscal irresponsibility as people who took 90-100% mortgages on big houses and could barely afford repayments are going to be rewarded while fiscally responsible people who were renting and maybe saving for a deposit down the line get nothing.
      - disgruntledphd2 9y ago
        They get more house supply, at a much cheaper price. What tended to happen (at least in places without non-recourse loans) is that all of the people in houses pay way too much towards their mortgage, have to make sacrifices in other areas of their spending, and loads of retail/service employees get fired.
        richardknop 9y ago
- marricks 9y ago
  Obviously target houses below 400k or what have you. If you can target tax breaks to wealthy and companies, you can target benefits to other groups.
  - bradleyjg 9y ago
    I just don't understand what the point or justification purpose of this massive give away is supposed to be in the first place. Why are people with about twice the median income (=can qualify for a mortgage on $400,000 home) getting a multi-hundred thousand dollar check from uncle sam? If we are going to do wealth distribution why not start at the bottom and work our way up, instead starting in the middle and working our way up to the upper middle?
    - marricks 9y ago
      Why was our solution to bail out the ones that caused the crisis and allow them to just get richer thereafter? Sure, universal income and taxing the richest more, re-enacting glass-steagall is better I'm just saying in that situation it would have been more moral to just forgive mortgages than what we ended up doing.
- deleted 9y ago
  [deleted]
rayiner 9y ago
Do you have an example of a law you think should’ve been used to put people in prison that we didn’t pass because of lobbying? What the bankers are accused of doing is classic civil fraud: lying about the quality of assets they sold to investors. These sorts of transactions between sophisticated parties has always been the subject of civil rather than criminal enforcement. (Criminal fraud tends to come into play only where the misrepresentations are more clear cut and egregious, and the victims are ordinary consumers rather than sophisticated counterparties.)
- marricks 9y ago
  I meant more the idea that we have a financial system that allowed this to happen. Since the repeal of the Glass–Steagall act there's been greater and greater instability and more opportunities for banks to reap large sums of money. Eating away at these protections allows for more exploitation basically. In terms of protections from prison, basically controlling the firms that are meant to police them seems sufficient. No real accountability from the financial crisis seems to show that...
  - chiaro 9y ago
    None of the troubled firms were horizontally integrated in the way the gs would have prevented.
  - gaius 9y ago
    Since the repeal of the Glass–Steagall act Don't forget Bill Clinton's Community Reinvestment Act too. This lies squarely in his lap.
- existencebox 9y ago
  Not OP, but to chime in with a concrete example. Glass-Steagall stands out, not in that they'd necessarily have gone to prison, but specific regulation likely could have softened the blow. I realize this is debated, but I wanted to counter the undercurrent of your post that the finance industry isn't working to undermine protective regulation for their own benefit, leaving us in a situation with very little pragmatic recourse for damages.
659087 9y ago
By pay off mortgages, do you mean essentially giving free houses to people (e.g. rewarding them for making incredibly poor choices and financing homes they can't afford)? Or do you mean pay them off temporarily and have those people pay the government back? If it's the former, what kind of message would that send to those of us who were responsible enough to avoid getting in over our heads?
- viraptor 9y ago
  It depends how you see the situation. Do you think it's closer to people acting irresponsibly, or closer to people getting scammed on a massive scale by institutions they trusted to provide good risk estimation? I'd go with 80% scam loans, where the scammers should lose the money and the scammed should get some kind of help. (Possibly not a full free repayment though - maybe maintaining the fixed introductory rate?) Because what kind of message are you sending otherwise? And how would more people in debt help the society at the moment?
  - richardknop 9y ago
    So what about people who are renting? Will they get a 300k cheque from government since people with mortgages are getting paid off? Or will renters get totally screwed over?
    - viraptor 9y ago
      So what about whataboutism? They're not a part of the risky buyer / scammy lender scenario. There are loads of issues with the properties market, but this situation didn't apply to all of them. As long as the solution doesn't make the property prices raise even more, renters should not be affected. Also, I specifically mentioned that some of the blame is on the buyers, so instead of free houses, they could be given the opportunity to continue paying off at the original terms, or a similar form of help. Remember that if the buyers don't get the houses in the end, the banks do instead. And why would we want that to happen?
      - 9y ago
CamperBob2 9y ago
Definitely agree we should have paid off mortgages instead though. Wow, OK. Let's think this through a bit further. What effect on the housing market, to say nothing of civil society, would you expect if the government were to stop the music and pay off everyone's mortgages using everyone else's taxes?

bradleyjg 9y ago

> Definitely agree we should have paid off mortgages instead though. So if Donald Trump has a mortgage on a penthouse apartment worth $25 million the government should have paid that off, but some family making $15,000/year that can't get a mortgage in the first place should get nothing? Pay off all the mortgages is a terrible idea.

paulus_magnus2 9y ago
Thanks to zero interst rates for 10y his apartment is now worth $50 so effectively we paid of his mortgage.
mrec 9y ago
Agreed. The more sensible forms of debt jubilee I've seen proposed would give money to everyone equally, but with the proviso that if you have debt you have to use the money to pay that off first.
isoskeles 9y ago
It's a terrible idea mainly in that it is unfair to everyone who didn't drink the kool-aid and buy a house because the value was supposed to always go up. Not just because wealthy people might profit. If there's ever another bailout, they should heavily regulate the people who gain something from it. Not as a punitive measure, but more like a statement of good faith. "If you bought these homes, surely that meant you intended to live in them. So as a condition of the bailout you can't sell them for more than X or rent them for more than Y." It seems drastic, but I can't see many other ways to approach fairness in that situation. But I don't think we've learned because people are still arguing over whether we should have just thrown the bankers in prison, like the system wouldn't just replace them with more bankers.
- bradleyjg 9y ago
  > It's a terrible idea mainly in that it is unfair to everyone who didn't drink the kool-aid and buy a house because the value was supposed to always go up. Not just because wealthy people might profit. It's a terrible idea for a lot of different reasons. Above all because it isn't a good idea. It doesn't come out of any kind of problem solving or optimization logic, just "wouldn't be awesome if I didn't have a mortgage anymore". > But I don't think we've learned because people are still arguing over whether we should have just thrown the bankers in prison, like the system wouldn't just replace them with more bankers. People are influenced by fear as well as greed. Of course the system would just come up with more bank executives. We'd want it to. But those bank executives would have something more to fear than just an earlier retirement than they had hoped for. Their greed would push them in one direction and their fear in the other. Hopefully the two would balance out to something closer to the social optimum. At the very least we should expect it to be closer than when there's nothing to fear at all.
  - richardknop 9y ago
    Yes it’s a terrible and immoral idea. It basically means giving people with mortgages free houses. What about people who are renting? I wonder how they would feel if other people except them were given free houses from the government. It also means rewarding fiscal irresponsibility as people who took 90-100% mortgages on big houses and could barely afford repayments are going to be rewarded while fiscally responsible people who were renting and maybe saving for a deposit down the line get nothing.
    - disgruntledphd2 9y ago
      They get more house supply, at a much cheaper price. What tended to happen (at least in places without non-recourse loans) is that all of the people in houses pay way too much towards their mortgage, have to make sacrifices in other areas of their spending, and loads of retail/service employees get fired.
      - richardknop 9y ago
marricks 9y ago
Obviously target houses below 400k or what have you. If you can target tax breaks to wealthy and companies, you can target benefits to other groups.
- bradleyjg 9y ago
  I just don't understand what the point or justification purpose of this massive give away is supposed to be in the first place. Why are people with about twice the median income (=can qualify for a mortgage on $400,000 home) getting a multi-hundred thousand dollar check from uncle sam? If we are going to do wealth distribution why not start at the bottom and work our way up, instead starting in the middle and working our way up to the upper middle?
  - marricks 9y ago
    Why was our solution to bail out the ones that caused the crisis and allow them to just get richer thereafter? Sure, universal income and taxing the richest more, re-enacting glass-steagall is better I'm just saying in that situation it would have been more moral to just forgive mortgages than what we ended up doing.
deleted 9y ago
[deleted]

rayiner 9y ago

Do you have an example of a law you think should’ve been used to put people in prison that we didn’t pass because of lobbying? What the bankers are accused of doing is classic civil fraud: lying about the quality of assets they sold to investors. These sorts of transactions between sophisticated parties has always been the subject of civil rather than criminal enforcement. (Criminal fraud tends to come into play only where the misrepresentations are more clear cut and egregious, and the victims are ordinary consumers rather than sophisticated counterparties.)

marricks 9y ago
I meant more the idea that we have a financial system that allowed this to happen. Since the repeal of the Glass–Steagall act there's been greater and greater instability and more opportunities for banks to reap large sums of money. Eating away at these protections allows for more exploitation basically. In terms of protections from prison, basically controlling the firms that are meant to police them seems sufficient. No real accountability from the financial crisis seems to show that...
- chiaro 9y ago
  None of the troubled firms were horizontally integrated in the way the gs would have prevented.
- gaius 9y ago
  Since the repeal of the Glass–Steagall act Don't forget Bill Clinton's Community Reinvestment Act too. This lies squarely in his lap.
existencebox 9y ago
Not OP, but to chime in with a concrete example. Glass-Steagall stands out, not in that they'd necessarily have gone to prison, but specific regulation likely could have softened the blow. I realize this is debated, but I wanted to counter the undercurrent of your post that the finance industry isn't working to undermine protective regulation for their own benefit, leaving us in a situation with very little pragmatic recourse for damages.

659087 9y ago

By pay off mortgages, do you mean essentially giving free houses to people (e.g. rewarding them for making incredibly poor choices and financing homes they can't afford)? Or do you mean pay them off temporarily and have those people pay the government back? If it's the former, what kind of message would that send to those of us who were responsible enough to avoid getting in over our heads?

viraptor 9y ago
It depends how you see the situation. Do you think it's closer to people acting irresponsibly, or closer to people getting scammed on a massive scale by institutions they trusted to provide good risk estimation? I'd go with 80% scam loans, where the scammers should lose the money and the scammed should get some kind of help. (Possibly not a full free repayment though - maybe maintaining the fixed introductory rate?) Because what kind of message are you sending otherwise? And how would more people in debt help the society at the moment?
- richardknop 9y ago
  So what about people who are renting? Will they get a 300k cheque from government since people with mortgages are getting paid off? Or will renters get totally screwed over?
  - viraptor 9y ago
    So what about whataboutism? They're not a part of the risky buyer / scammy lender scenario. There are loads of issues with the properties market, but this situation didn't apply to all of them. As long as the solution doesn't make the property prices raise even more, renters should not be affected. Also, I specifically mentioned that some of the blame is on the buyers, so instead of free houses, they could be given the opportunity to continue paying off at the original terms, or a similar form of help. Remember that if the buyers don't get the houses in the end, the banks do instead. And why would we want that to happen?
    - 9y ago

CamperBob2 9y ago

Definitely agree we should have paid off mortgages instead though. Wow, OK. Let's think this through a bit further. What effect on the housing market, to say nothing of civil society, would you expect if the government were to stop the music and pay off everyone's mortgages using everyone else's taxes?