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If you're bailing out the banks for writing off non-performing loans, then by definition students get their loans written off.

by ethbro 8y ago

richardknop 8y ago
So students who took huge loans get scot free but a single mother who took a loan to support her two children will be left with her debt. I see no problem with that. Moral hazard and all that. Let’s just forgive all debt, what could go wrong.
- ethbro 8y ago
  In the context of this question, my response was about a hypothetical recapitalization of banks if the student loan bubble became untenable.
  - richardknop 8y ago
    My point about moral hazard stays the same and unaddressed.
    - ethbro 8y ago
      In this hypothetical, as with the recent financial crisis, you're weighing moral hazard against frozen credit markets and failing banks. Sometimes, one must pick the lesser of two evils.
elliekelly 8y ago
That's not how TARP worked though. The lending arms of the major car companies as well as the mortgage arms of the major national banks were bailed out by the Federal Government effectively purchasing the "troubled assets" to remove them from the companies' books (so they wouldn't go bankrupt). The companies were bailed out but the government didn't just forgive all of that debt. People still had to pay their mortgages even if they were underwater. People still had their cars repossessed. People still had their credit ruined.
- ethbro 8y ago
  You're describing parts of TARP. In sum total it: - Purchased preferred stock or warrants in banks, insurance companies, and auto companies, recapitalizing them, then subsequently selling that stock - Directly purchased troubled assets to remove them from bank's books and reduce uncertainty - Made a variety of loans around the financial system to encourage financial institutions to continue operations - Directly bailed out homeowners by modifying and adjusting mortgage balances and terms via HASP, HAMP, & HARP (to the tune of 32 B$USD) Afaik, the majority of those actions recouped their investment or suffered slight losses, with the exception of the last... which was designed to pay out to homeowners. The accounting off all TARP programs can be found in the CBO's annual report to Congress: https://www.cbo.gov/system/files?file=115th-congress-2017-2018/reports/53617-tarp-march2018.pdf https://www.cbo.gov/system/files?file=115th-congress-2017-20... You can't wring blood from a stone. So if the federal government does something about underperforming student debt, it's going to have to address the root cause of students being unable to service their debt.

If you're bailing out the banks for writing off non-performing loans, then by definition students get their loans written off.

by ethbro 8y ago

If you're bailing out the banks for writing off non-performing loans, then by definition students get their loans written off.

richardknop 8y ago

So students who took huge loans get scot free but a single mother who took a loan to support her two children will be left with her debt. I see no problem with that. Moral hazard and all that. Let’s just forgive all debt, what could go wrong.

ethbro 8y ago
In the context of this question, my response was about a hypothetical recapitalization of banks if the student loan bubble became untenable.
- richardknop 8y ago
  My point about moral hazard stays the same and unaddressed.
  - ethbro 8y ago
    In this hypothetical, as with the recent financial crisis, you're weighing moral hazard against frozen credit markets and failing banks. Sometimes, one must pick the lesser of two evils.

elliekelly 8y ago

That's not how TARP worked though. The lending arms of the major car companies as well as the mortgage arms of the major national banks were bailed out by the Federal Government effectively purchasing the "troubled assets" to remove them from the companies' books (so they wouldn't go bankrupt). The companies were bailed out but the government didn't just forgive all of that debt. People still had to pay their mortgages even if they were underwater. People still had their cars repossessed. People still had their credit ruined.

ethbro 8y ago
You're describing parts of TARP. In sum total it: - Purchased preferred stock or warrants in banks, insurance companies, and auto companies, recapitalizing them, then subsequently selling that stock - Directly purchased troubled assets to remove them from bank's books and reduce uncertainty - Made a variety of loans around the financial system to encourage financial institutions to continue operations - Directly bailed out homeowners by modifying and adjusting mortgage balances and terms via HASP, HAMP, & HARP (to the tune of 32 B$USD) Afaik, the majority of those actions recouped their investment or suffered slight losses, with the exception of the last... which was designed to pay out to homeowners. The accounting off all TARP programs can be found in the CBO's annual report to Congress: https://www.cbo.gov/system/files?file=115th-congress-2017-2018/reports/53617-tarp-march2018.pdf https://www.cbo.gov/system/files?file=115th-congress-2017-20... You can't wring blood from a stone. So if the federal government does something about underperforming student debt, it's going to have to address the root cause of students being unable to service their debt.