Comments on: The sub-prime bailout

By: AZFlyer

AZFlyer — Tue, 18 Dec 2007 18:54:51 +0000

If trying to steer a customer to a more expensive product were a crime, car salesmen would all be in jail.

I find disturbing the idea that those who made poor investment decisions “deserve” renegotiated terms. I have made my share of bad investments and took my painful lumps as a life lesson. A free market economy doesn’t work if there is no downside to risk.

In my local market (AZ), it is estimated that about 70% of the subprime loans facing forclosure belong to real estate speculators that were flipping houses when the real estate market tanked. I have a hard time feeling sorry for these speculators.

By: Matthew

Matthew — Tue, 18 Dec 2007 12:27:56 +0000

I agree with Tom. Asserting that you chose to go into a negotiation without becoming informed is not an indictment of the other party, nor is it a justification for rewriting contracts and spending public money.

By: Tom

Tom — Mon, 17 Dec 2007 11:11:38 +0000

Hikaru, of course lenders are going to try to get people into higher interest rate loans–just like a car dealer wants you to pay the highest possible price when you buy a car. That is how things work in a free market, and if a consumer doesn’t want to overpay he needs to do his homework.

By: Hikaru Katayamma

Hikaru Katayamma — Mon, 17 Dec 2007 00:48:11 +0000

I’ve heard numerous stories coming from friends who bought houses over the last decade, all but one mentioned that the lender really pushed sub-prime mortgage at them even though they qualified for a better one. Turned out that when they asked another lender about it, the sub prime lender would have made more on the back end.

Don’t attribute this to people doing the right thing. Much of it was flat out greed.