Monday, September 22, 2008

McCain wants to cap bail-out CEOs

John McCain made a suggestion that the CEOs of companies getting bailed out the feds tax-payers shouldn't be paid more than the highest level government employee. You check out the article here.

I think it's a great idea, but of course the talking heads are already against it.

I especially like this remark:

One commentator worried -- with a straight face -- that if pay packages fell that low, some young people could become doctors instead of investment bankers! Oh no, not that!

I think we could do with a few less finance bankers and more doctors and teachers. It burns me that as a society we give these fat-cats their millions for manipulating other peoples' money, but teachers are getting second jobs to make ends meet. No wonder it seems like society is slipping down the drain.

Better, be careful though. I'm starting to sound like a Democrat.

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Anonymous flaire said...

Yes, he wants to cap them - at $600,000 a year! As an honest banker, who makes waaaaay below that - and is facing the same stuggles that teachers are - I find it all absurd. I actually liked Newt Gigrich's interview on NPR today (um, ew - I sould like a repubican!). He made sense. Let's get all the facts, work out the scenarios, and see where this "bailout" will leave the taxpayers and their decendents. Where is this money going exactly? Who has oversight? What do the mom & pop investors get and what do the players get? Then let's make a decision.

I truly feel for homeowners that were suckered into more house than they could afford by some big mega-lender. I see it every day. But I don't believe that Obama has a clue about the real in's and out's of the economy either. He was spouting off some stuff during the Fannie/Freddie crisis that was just plain inaccurate.

This is my idea - insure the individual investors the same as the FDIC insures deposit accounts - $100,000 for each account type set up. This will ensure that the mom & pops and the individual investors are taken care of. Compensate the employees of the companies 2 weeks severance pay plus accrued sick and vacation. Just like any other lay-off. Yes, I feel sorry for the secretaries and the accounting clerks. But not for the executive management.

We cut the "bailout" from 70 billion to 70 million. Still too much to comprehend - but it ensures that my great-great grandchildren will only be paying off the war and not this screwed-up "bailout" too.

12:00 AM  
Blogger KNH said...

No, not a Democrat, just someone thinking about things rationally. Doing that means that sometimes you'll like a Republican's idea, sometimes a Democrat's, even a Libertarian's.

6:58 AM  
Blogger Oz said...

700 billion dollars would be enough to give the 10 million most "in-trouble" households $70,000 each. Yikes!

I'm not a banker so I don't know a lot about complex finances, but it seems like if the issue is the housing crisis, this money could be used to buy and refinance loans at a reasonable rate, keeping people in their homes but not totally absolving them of debt (which means a lot of the money would come back as the new loans are paid).

3:51 PM  
Anonymous Anonymous said...

This libertarian-objectivist has to say, tough shit to 95% of those who are going to lose your house. "Tricked into buying more house than you can afford"!?!?! Flaire, please, you don't really believe that do you? Like someone ran them down, tackled them, and held a gun to their heads while they signed for zero equity mortgages? Greed made them do it, and ignorance. Now just like the greedy bastards, led by democrat advisers for Freddie and Fannie (many now working for Obama), we're expected to foot the bill. Poor people, they were led to make these mistakes.

Take it one step further, if your the CEO of a bailed out corp, you do your part and work pro-bono until the company is solvent again. If it works out, give them a bonus tied to performance, if not, sorry dude.


9:24 PM  
Anonymous fliare said...

I don't know if it's possible to explain all the details of the housing mess here. Yes, these houses need to be refinanced to help the homeowners.

Unfortunately, the original mortgages from some of these lenders - like Countrywide - were done at 100 to 120% of the house's value at the time, betting that the values would continue to climb. Now that values are down, these loans are 150-250%, or more, of the current value.

Regulators are breathing down bank's necks about collateral value and over-extension now. Which makes it hard to justify re-writing loans for the borrowers without putting the banks in a really bad light with the examiners. It's a catch 22.

And at 6%, a $200,000 loan (which is below the median sales price nation-wide) for 30 years is still $1000 per month. Combine that with huge jumps in energy, food and credit card debt - along with cutbacks at their work - and even that is a struggle for a lot of people now.

I truly feel that the only way to help these homeowners who need help now is to extend the term of these mortgages to 50 years for refinances only and cap them at 4% interest. And unfortunately, unless the government agencies (FHA and VA) will approve and agree to underwrite terms like those, it's just not going to happen. No bank - big or small - will take that kind of risk to have an uninsured loan on its books for those terms.

So instead of helping those people who really need it, it's so much easier to give the money to the corporations that bought the mortgages in the first place. Less time. Less red tape. And a big "look what we did for the economy."

It all just sucks. Where's Ross Perot when we really need him?

9:32 PM  
Anonymous flaire said...

No Mark, I don't believe that all of the homebuyers didn't know what they were getting into. But I do believe that a lot of the first-time homebuyers didn't. Mortgage companies and banks pre-qualify the buyer based on a lot of criteria and tell the buyers "you're pre-qualified for $350,000." Heck, they did it to me, but I knew the business and didn't take the bait.

So you go out, get a house that's a little bigger and has some nice upgrades in a better school district. Maybe in a couple of years you get a home-equity loan to do some landscaping. The house is still worth way more than you paid for it. Everything's good when there's still inflated real estate values.

But the bubble burst, as they all do eventually.

And I thought you'd be proud of me for siding with Newt :(

9:41 PM  
Blogger Oz said...

My mortgage broker tried to upsell me also. I went by what I knew I could readily afford per month and stuck with a fixed rate. In retrospect I should have shopped around more, but I wanted to get the deal done.

No, mortgage brokers don't use guns, but some of them used less-than-honest sales techniques. I think the companies are as culpable as the people that didn't do their homework. All I know is now either way I have to help foot the bill.

3:33 PM  
Anonymous Anonymous said...

There is a unique solution. It's called reading the paperwork. Just because your incompetent doesn't mean you don't have personal responsibility, a nasty word these days to liberals. How come you can break a law and even though you didn't know it was a law, you still go to jail. But if your stupid enough to sign a mortgage or take a credit card without reading the fine print, the government races in and makes you a 'victim'?

Objectivism - the only way to fly.
I don't hope Atlas Shrugs, I hope he does the friggin hammer throw.


5:36 PM  
Anonymous Anonymous said...

Oh, Flaire, I have two mortgages with Countrywide. How did I manage to borrow within my means? Hmmm...

Fault - 10% countrywide
90% incompetent/uneducated borrower.

Borrowing money should be a lot like voting. If you can't read and understand a legal contract, best that you stay on a cash basis.

5:39 PM  

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