Goodbye Lehman, Goodnight Merrill

[Welcome to Hell A]

http://biz.yahoo.com/ap/080915/financial_meltdown.html

It will be an interesting market tomorrow. I'm guessing bloodbath as some like to call it. Gold, anyone?

 

[flyfisher11]

Lehman is toast but Merrill is to be taken over by Bank of America come January.

 

[Drillbit]

Who is running these banks? These great minds all decided that loaning money to people who couldn't afford it was a great idea? Did they really think that real estate was going to go up 30 percent a year forever? I think all these dolts who were running these operations getting stuffed into the taxpayers lap should have all their personal possessions seized and sold at auction, hell maybe cut a few heads off and put them on stakes as a warning to the other swarthy rakes and rubes that there will be an accounting.

 

[brianhoberg]

Any word on what the outcome of Barclay's is going to be? I heard they were having tough times just like Fannie and Freddy.

 

[Welcome to Hell A]

Barclays must not be doing that bad, as they were a possible suitor for Lehman.

WaMu and Wachovia are both in danger of failing.

 

[apg]

Who is running these banks? These great minds all decided that loaning money to people who couldn't afford it was a great idea? Did they really think that real estate was going to go up 30 percent a year forever? I think all these dolts who were running these operations getting stuffed into the taxpayers lap should have all their personal possessions seized and sold at auction, hell maybe cut a few heads off and put them on stakes as a warning to the other swarthy rakes and rubes that there will be an accounting.

Now there's a party platform I could get behind....Off with their heads!

Pro'lly too late to consider running for office, eh?

Cheers

 

[Mike_Rupp]

There are 2 sides to every transaction. How about all of the deadbeats that are defaulting on their loans? Are we going to cut their heads off as well?

 

[apg]

Nah...just the loan officers who thought it was a good idea to provide a "liar loans" to someone with insufficient funds....

Or the brokers who bundled these crappy loans together, got some rating service (them, too....) to reclassify the portfolio from "junk" to "A"....

Accountability...now there's a concept!

 

[Mike_Rupp]

oh, so the person that sat across the desk from the loan officer was too dumb to evaluate the loan?

APG, you are a Marxist.

 

[p m]

oh, so the person that sat across the desk from the loan officer was too dumb to evaluate the loan?

I think many were dumb enough. Not to evaluate the loan, but rather the future of the economy - to the effect of how many times can a person refinance his/her house with 0% APR, interest-only?
Loan brokers have been pretty optimistic in that.

 

[Lake_Bueller]

It definately goes both ways in these situations. There are the lenders that are trying to get as much money as possible. Then there's the lendee that sees the "American Dream" of the big house with a yard.

We purchased our house 4 years ago. The lender gave us two options. Here's how he presented them to us (parapharsed, of course)...

"I have two options for you. The first is asking you how much your comfortable spending per month for the next X number of years. Before you answer that question, also think of the lifestyle you'd like to lead (interested in travel, etc). Also look where you're at with saving for the future and possible need for new vehicles. The other option is for me to tell you that you're approved for $XXX,XXX."

After discussing our current situation and trying to read into the crystal ball, we decided to purchase a house that was at about 60% of what they were able to get approved. Because of that, we were able to replace my wife's beater. A few years later, we were also able to get me a new daily driver also.

But it would have been very easy to fall prey to the guy that's telling you to hit the max and get the grand house.

 

[Leslie]

It definately goes both ways in these situations. There are the lenders that are trying to get as much money as possible. Then there's the lendee that sees the "American Dream" of the big house with a yard.

We purchased our house 4 years ago. The lender gave us two options. Here's how he presented them to us (parapharsed, of course)...

"I have two options for you. The first is asking you how much your comfortable spending per month for the next X number of years. Before you answer that question, also think of the lifestyle you'd like to lead (interested in travel, etc). Also look where you're at with saving for the future and possible need for new vehicles. The other option is for me to tell you that you're approved for $XXX,XXX."

After discussing our current situation and trying to read into the crystal ball, we decided to purchase a house that was at about 60% of what they were able to get approved. Because of that, we were able to replace my wife's beater. A few years later, we were also able to get me a new daily driver also.

But it would have been very easy to fall prey to the guy that's telling you to hit the max and get the grand house.

Ditto. Three years ago is when we were buying. We knew how much house we wanted, and not more. The loan officer was sittin' across from us, tellin' us we could go bigger, get a house that was twice as much.... we were jaw-dropped at the idea.... I mean, why? A decent house, enough room, why the heck get a McMansion just because we could have???

 

[az_max]

The banks were betting on the homeowner getting re-fi'ed once the ARM went up. At that point the bank makes it's money back with healthy interest and All Is Good. they didn't count in 80% of the people not being able to get refinancing or the economy taking a big ol dump. Guess they lost that bet. I just wish there was a way to hold the loan officers and bank officers personally responsible for the damage they've caused.

 

[Mike_Rupp]

I think many were dumb enough. Not to evaluate the loan, but rather the future of the economy - to the effect of how many times can a person refinance his/her house with 0% APR, interest-only?
Loan brokers have been pretty optimistic in that.

Peter, my wife and I bought our home in 2005, right in the heat of the sub-prime mess and just before the top of the real estate market. I can remember even my real estate agent saying that "nobody gets 30yr fixed loans anymore." We got a jumbo loan for 5.625%, which I thought was an extremely good deal considering historical averages.

The people that took out these sub-prime loans mostly knew what they were getting themselves into. They did it because of greed, not stupidity. Sure, there are morons out there, but by and large people should have known better.

It is right out of the communist manifesto to blame "the man" for this fiasco. In the same way that APG could never say a positive word about Bush, he could never bring himself to believe that the borrowers were also to blame.

"Capital is reckless of the health or length of life of the laborer, unless under compulsion from society. " Karl Marx

 

[Jason T.]

Most borrowers who got ARM's only saw the lowest interest rate and never bothered to really ask themselves if they could still afford it if it were 3 % points or more higher. Lots of people in this area took mortagages on homes they couldn't realistically afford. And yes, the lenders are to blame also. Unfortunately I'm now paying for my own mortgage as well as others through my taxes......:banghead:
Jason T.

 

[p m]

Mike, it's been my "general guideline" that the consequences of stupidity lie with the person committing the act. But, recently, I've been giving people more slack.

There's a lot of strawberry-pickers in California who, I'm sure, are not very familiar with both math and general concept of a home ownership. Even if they did, they've been under a considerable pressure from loan brokers.
The hardest-hit counties in California are the agricultural ones, for this very reason. That was also a self-fueling machine in early-2000s - with new home prices nearly doubling in three years, well ahead of inflation. Would you expect this crowd to check the historic trends in housing prices, to make sense (or not) from what they were bombarded with?

 

[az_max]

....There's a lot of strawberry-pickers in California who, I'm sure, are not very familiar with both math and general concept of a home ownership. Even if they did, they've been under a considerable pressure from loan brokers.

I read a while back that some loan officers were combining the income of the three families living in a house to come up with the required income for a mortgage. These poor workers only want The American Dream, and are being taken advantage of by the lenders. When they can no longer afford to pay, they move on. What's a BK on their credit matter if they're not here legally anyway?

My Ex's house in Huntington Beach was purchased by her grandfather for her for $350k. It was up near $1mil for a while. Probably back down to $750k now. Not bad for a 1200ft^2 ranch house on a tiny lot. She'll definitely make bank if she sells and moves to Oregon or Idaho like she wants.

 

[Mike_Rupp]

Peter, of course there were dumb people who made bad decisions. That is still only a small part of the whole problem though. For APG to deny that borrowers are to blame as well shows he is a hardened Marxist.

PM, if only the strawberry pickers are the ones to have issues with their mortgages, why are the upper end homes taking a drastic cut in value? I think you know the answer. Every income group has borrowers in it that became greedy and got caught when the market turned.

 

[MUSKYMAN]

Even if they did, they've been under a considerable pressure from loan brokers.

this is just so laughable:rofl:

you are about as informed about this as Obama is.

when you place blame on the broker you are doing the same as blamming the girl behind the cash register as McDonalds for causing heart disease.

the brokers never set the risk grade

the brokers never created the products

all the brokers have done is ask if you want points with your fries.

The ARM products were created on wall street and designed to capture a market, the banks that are going under because of the product deserve to go under.

last week I said Lehman was done...the reason I said that is because I watched them produce crappy product after crappy product at one point doing 100% loans for anybody with a 560 fico and unlimited 90 day lates....like that wasent going to catch up to them:rofl:

 

[p m]

PM, if only the strawberry pickers are the ones to have issues with their mortgages, why are the upper end homes taking a drastic cut in value? I think you know the answer. Every income group has borrowers in it that became greedy and got caught when the market turned.

Mike, I said "many were dumb enough," not all or most.
Some people were dumb enough, some - smart enough to count on an organized bailout that we are witnessing now. It would be interesting to see a breakdown in the fraction of defaults and fraction of lost mortgage amounts in family income - I haven't seen any numbers.

this is just so laughable
you are about as informed about this as Obama is.

Are you talking to me?

I am placing part of the blame on a loan broker who kept telling a family with barely beyond basic English skills that they could afford a $700k house on a $13k combined family income, something that happened in Hollister, California. And many like him. Hell, half of my junk mail in the last five years has been from loan brokers.
If you're one of them, you're in it too.

You can compare this with what liberals say about gun control - that people are more liable to abuse firearms when they have them at their disposal. The answer to that is education - when your kids know how to handle the hardware, and have a decent conscience about taking somebody's health of life, you can trust them and never turn back. But, now Feds are taking care of checking your conscience (by extrapolating your background), but I'm yet to see a salesman explaining how to use the weapon (not to say there aren't any, just I haven't come across one).

Same thing with the home loans. One can do bad and good with a large chunk of money, and there were checks in place for your sanity (again, by extrapolating your past credit history and income). The salesmen, the loan brokers, were bound by their employers to properly disclose all ups and downs to the customers. Then, all the hell broke loose - your sanity all of a sudden became of little value, and you'd be rushed through signing dozens of pages of paperwork, and off you went with a loan that you couldn't possibly pay off.