Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Bernanke wants the banks to do what?!
Old 03-04-2008, 06:56 PM   #1
Recycles dryer sheets
amy5708's Avatar
 
Join Date: Feb 2008
Posts: 53
Bernanke wants the banks to do what?!

Um, now I wish I had a huge mortgage!

Did I hear the guy right when he asked banks to forgive part of the mortgage?

Just right it off? Yeah, I bet the banks will be jumping on board this one!
__________________

__________________
amy5708 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 03-05-2008, 07:56 AM   #2
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Meanwhile, all those people who were responsible, didn't borrow more they could afford and didn't fall prey to those exotic interest-only, little-down ARMs get to pay for their prudence. What a country.
__________________

__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 03-05-2008, 08:44 AM   #3
Full time employment: Posting here.
Retire Soon's Avatar
 
Join Date: Nov 2005
Posts: 655
Quotes from a related Los Angeles Times article:

"The ... decline in equity reduces both the ability and the financial incentive of stressed borrowers to remain in their homes."

"A troubling new phenomonon is is currently at work , in which people abandon their homes rather than make payments on a property that is worth less than they paid for
it".

"By the time the housing slump is over nearly 14 million homeowners, or 16%, will have zero or negative equity."

"The goverment is going to have to need to become bolder and put taxpayer money on the line to keep some of thes homeowners in their homes." (scary isn't it?)

"Increasing numbers of borrowers especially those who paid very little or nothing down or who refinanced out all their equity, and who live in areas of steep home price declines... are walking away from their homes."

Sign Up
__________________
Retire Soon is offline   Reply With Quote
Old 03-05-2008, 08:53 AM   #4
Thinks s/he gets paid by the post
Rustic23's Avatar
 
Join Date: Dec 2005
Location: Lake Livingston, Tx
Posts: 3,624
Seems there is a partial solution available for banks. As I see it, there are three types of situations out there.

1. People are need to sell do to a move.
2. People are need to refinance and home has no equity
3. People bought more home than they could afford and can't make payments

For 1 and 3, I am not sure there is a good solution. For 2, however, it would seem that the bank could refinance the total debt, with the value of the home at one interest rate, and the difference of the value and the debt at a higher rate, due to more risk. With lower interest rates on the majority of the note, their monthly payments may actually decrease. This may also work for some folks in situation 3. Banks would not have to lower the amount owed, folks that stay in their homes long term could refinance when the loan to values are normal again.
__________________
Rustic23 is offline   Reply With Quote
Old 03-05-2008, 12:03 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
re "The goverment is going to have to need to become bolder and put taxpayer money on the line to keep some of thes homeowners in their homes." (scary isn't it?)

none of my taxpayer money is available for that.

can i go out and have a reall fling with my credit card? will they also pay off everyone's credit cards each month while they're at it? where do i send the bill?

this stuff takes me real close to a proper rant. LOL
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 03-05-2008, 12:25 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by freebird5825 View Post
re "The goverment is going to have to need to become bolder and put taxpayer money on the line to keep some of thes homeowners in their homes." (scary isn't it?)

none of my taxpayer money is available for that.

can i go out and have a reall fling with my credit card? will they also pay off everyone's credit cards each month while they're at it? where do i send the bill?

this stuff takes me real close to a proper rant. LOL
I would like to be reimbursed for my paper stock losses since last November. Come on where is my guvmint bailout.
__________________
Notmuchlonger is offline   Reply With Quote
Old 03-05-2008, 12:47 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
Quote:
Originally Posted by Notmuchlonger View Post
I would like to be reimbursed for my paper stock losses since last November. Come on where is my guvmint bailout.
thank you for finishing the rant for me. LOL

ditto!!!
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 03-06-2008, 05:48 AM   #8
Recycles dryer sheets
 
Join Date: Nov 2007
Posts: 75
What I understand Bernake to be suggesting is that the banks buy these loans back from the investors and then enter into whatever restructuring makes sense to preserve the value of their assets. This, for the first time, would be a true market solution--quite the opposite of the taxpayer bailout that has been bandied about.
__________________
emilylynn is offline   Reply With Quote
Better now than later
Old 03-06-2008, 06:59 AM   #9
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,482
Better now than later

Keeping negative equity on the books for both borrowers and lenders is one of the reasons behind Japan's lost decade. He's not asking for a bailout, he's acknowledging that this is an anchor around our whole economy and it needs to be dealt with - the sooner, the better.

Bernenke's leadership skills are in question right now, but not his knowledge or understanding of our financial system weakness.

Michael
__________________
MichaelB is online now   Reply With Quote
Old 03-06-2008, 08:12 AM   #10
Moderator
ziggy29's Avatar
 
Join Date: Oct 2005
Location: Texas
Posts: 15,612
Quote:
Originally Posted by MichaelB View Post
Keeping negative equity on the books for both borrowers and lenders is one of the reasons behind Japan's lost decade. He's not asking for a bailout, he's acknowledging that this is an anchor around our whole economy and it needs to be dealt with - the sooner, the better.

Bernenke's leadership skills are in question right now, but not his knowledge or understanding of our financial system weakness.
This I actually agree with. But if he panics the market every time he speaks, maybe he should be quiet and work discreetly with affected investors, lenders and homeowners.

Ideally a negotiated easing of some of the terms of these mortgages to avoid foreclosures would help matters. If this is all the government does, I think it's worthwhile (even if I don't like it philosophically, it's practical).
__________________
"Hey, for every ten dollars, that's another hour that I have to be in the work place. That's an hour of my life. And my life is a very finite thing. I have only 'x' number of hours left before I'm dead. So how do I want to use these hours of my life? Do I want to use them just spending it on more crap and more stuff, or do I want to start getting a handle on it and using my life more intelligently?" -- Joe Dominguez (1938 - 1997)

RIP to Reemy, my avatar dog (2003 - 9/16/2017)
ziggy29 is offline   Reply With Quote
Old 03-06-2008, 11:40 AM   #11
Thinks s/he gets paid by the post
 
Join Date: Dec 2007
Posts: 4,764
Quote:
Originally Posted by freebird5825 View Post
thank you for finishing the rant for me. LOL

ditto!!!
My pleasure
__________________
Notmuchlonger is offline   Reply With Quote
Old 03-06-2008, 08:35 PM   #12
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
wait til you see Tax Rant II, coming soon to a theatre near you.

it will happen when i'm finally done with my taxes...i'll be sure to leave you a good opening line...LOL
__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 03-06-2008, 10:57 PM   #13
Recycles dryer sheets
 
Join Date: May 2007
Posts: 137
Banks are required to write down the value of a loan to it's current market value. A corporation is also required to write down the value of investments to current market value so what Bernenke is suggesting probably already been done by the investor or bank. A lender could structure a write down of a mortgage so that the borrower and the lender could share in equity increase in the future.

I am also guessing that Bernenke's comment that we will probably see small bank failures this year has a lot to do with bank regulators requiring banks to write down the value of loans. These banks would than have to get new equity. In todays financial environment that would be almost impossible which would lead to the larger number of bank failures.

I like Bernenke's suggestion it does not require a taxpayer bailout. I think one reason lenders don't like it is they are hoping for the taxpayer to step in. Remember what I said before the lenders have already written down the value of these loans. That is where a lot of the losses they are reporting is coming from. They have had to increase loan loss reserves to cover not only the real losses but the potential losses.
__________________
Freein05 is offline   Reply With Quote
Old 03-07-2008, 05:31 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Feb 2007
Posts: 5,072
I think the banks will wait for the government to do something. It is an election year.
__________________
chinaco is offline   Reply With Quote
Old 03-07-2008, 08:30 PM   #15
Thinks s/he gets paid by the post
 
Join Date: Jul 2004
Posts: 1,072
Just to add another twist (or hijack the thread!)- did anyone read the "Mark to Market" op-ed in the WSJ the other day? Seems the mark-downs are being done but some of the CEO's are mumbling about the 'artificiality' of it and expect mark-ups soon.

Back on thread - I steadfastly reject a taxpayer bailout of any kind for the current 'market woes.' The percentages of people who are actually in the dire straits being depicted are not as large as the amount of ink and political attention being directed to them.

Awaiting the tax rant.....
__________________
Deserat aka Bridget
“We sleep soundly in our beds because rough men stand ready in the night to visit violence on those who would do us harm.” - George Orwell/Winston Churchill
deserat is offline   Reply With Quote
Old 03-09-2008, 01:02 AM   #16
Thinks s/he gets paid by the post
Texarkandy's Avatar
 
Join Date: Feb 2008
Posts: 1,281
I think if I were a bank I would work to restructure loans as necessary so the occupants of the bank's house could continue to pay for as long as necessary to earn ownership of the house.

(& if that makes them vassals of the bank for life - so be it)
__________________
Retired 2009!
Texarkandy is offline   Reply With Quote
Old 03-09-2008, 02:10 PM   #17
Dryer sheet aficionado
 
Join Date: Jan 2008
Posts: 36
We need to do something to stop the falling Knife.Bernanke's proposal does nothing but give some people an equity position at the cost of the banks.In a matter of months they could be flat to upside down all over again.

I feel like the only thing that can get us out of this mess in the near term is lower interest rates,which helped ignite the housing boom in the first place.

I realize that it's easier said than done,but imagine what a 4.25% 30 yr fixed rate would do for this market??With the tighter lending standards,more people would qualify for loans,people would be put back to work and the economy receive on hell of a spike in the short term.

Just don't overdo it.
__________________

__________________
liveitup is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
In Private, Bernanke Tells Horror Stories MiningMajor FIRE and Money 6 02-07-2008 09:04 AM
What's Ben Bernanke doing? W2R Other topics 10 01-24-2008 05:01 PM
Greenspan/Bernanke tag team imperil ER... barbarus FIRE and Money 20 09-23-2007 12:07 PM
Bernanke warns budget could SERIOUSLY hurt economy camberiu FIRE and Money 21 01-19-2007 03:05 PM
Retiring with Bernanke-Are You Prepared? camberiu FIRE and Money 9 01-17-2006 09:09 PM

 

 
All times are GMT -6. The time now is 03:00 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.