Failed Wall Street Bailout and the Housing Crisis
House Bailout vote on Sept 29,2008
How's it going? I'm watching the bailout bill vote on the house floor and it's not passing.....the voting time is up and now apparently there is a lot of tension going down trying to sway members to change their votes but the numbers are not budging. The Dow Jones at one point dropped almost 700 points. I don't know how long it will be before they call the voting off today if nothing changes....I also heard that if the stock market drops 1200 points then everything ceases and what that means, I don’t know.....I’ll keep you posted. The vote is 207 YEA and 226 Nay......a simple majority is all that is needed to pass....... it’s not going to happen.
Economy/Housing Crisis Connection
I had a feeling a day like this would come ever since the mortgage crisis began. I am not going to get into the controversy on whether people bit off more than they could chew in buying a home because not one of us knows personal circumstances that may have caused the housing crisis today. What I do feel is that the financial institutions that held the notes on mortgages were not and are not willing to work with people who for one reason or another fell behind on their payments. I feel in my heart that many financial institutions set you up for failure. When many sub-prime mortgages went from a low fixed-rate payment to a variable interest rate, payments went up to the maximum rate as stated in the original loan. The economy was already in trouble, therefore folks couldn’t handle a jump of sometimes 400 to 600 dollars more a month to meet the mortgage. I know people who tried to negotiate a loan modification and were put off and eventually denied one by their banks. I heard members of Congress working on the bailout plan talk about mortgage forbearance. If a bank did grant you a forbearance, all that does is increase your monthly payment for as long as it takes you to catch up on your past due payments before foreclosure. How in the world can that help you if you can’t make the payment that you already have?
In a nutshell financial institutions were not willing to modify loans to help people stay in their homes. Didn’t they realize a long time ago what would happen? At least they would be getting payments as opposed to getting none because they basically kicked folks out on the streets and many neighborhoods are starting to look like wastelands. The further consequences of the housing mess are the depreciation of home values. I don’t see how many Americans can take pride in their home and neighborhoods when houses are so upside-down in value.
There were no provisions in the bailout plan that failed today for distressed homeowners. Was this one of the reasons why the plan failed? All I can say is “why reward banks and “Wall Street” for gross mistakes and greed and turn the other cheek to “Main Street” America when something could have been done in the housing market over three years ago. I knew something was going to happen and I’m not an economist. Someone’s been asleep at the wheel and now the U.S. Economy is falling over the cliff. We’ll all have to pay the price.