Is it right for the Feds to Bail Out the Wealthy with Tax Dollars?

Question

The stock market recently plunged. There was a great deal of "pain" on Wall Street, as the wealthier percentage of our citizens and Corporate traders went into a panic. Not once, but several times, the Feds poured money out to rescue the market. However, there was no bail-out for the homeowners losing their homes, the mortgage foreclosures that caused the stockmarket plunge. Is it right for the Feds to bail out wealthier investors, while ignoring the plight of citizens unable to pay their mortgage costs, using their tax money to do it?

Answer 1

May I remind you that the "wealthy" are the ones who hire and pay the rest of us. If they take a sudden financial hit, their response will be to lay off employees. When employees get laid off, the "wealthy" take another hit and the cycle repeats.

Everything in the economy is connected, its much much more complex than almost any of us can grasp, and you're gonna scream bloody murder if unemployment starts to rise...

So there's really no answer that will please you other than "rich=bad" and "government=evil".

Answer 2

It is, and it isn't.

On one hand, it isn't right because it goes against free market capitalism, and rewards stupidity. Yes, the lenders that got themselves into this were stupid, and there are a lot of people with six figure salaries that really need to be fired for that stupidity, but it isn't going to happen.

On the other hand, the existence of the Federal Reserve contributed greatly to the mess as well, by providing a system that these idiots that took these bad loans could count on to save them from their folly.

Finally, for the Fed to do nothing would be to change the rules far too suddenly, and would probably spook us into a much more serious economic situation, one that might be worse than you can even imagine.

Are you ready for worse than you can imagine? I doubt many people are.

Why should I feel sorry for citizens that voluntarily took out variable interest loans? Either they were bad risks and should have been renters anyway, and will be again, or they were speculating, which brings us back to W.C. Fields' old saying, "You can't cheat an honest man."

I closed about a hundred loans last year, about half with variable rates. The Truth In Lending statement shows them what the maximum payment could be, and I point it out to them. I don't know if other attorneys do this, but I do, and it's right there for them to see. It's their own fault if they ignore this information and get burned by it.

Answer 3

You are making a lot of assumptions that aren't correct.

First of all, it's not just "the wealthy" who have money in the stock market. Pension funds, much of which is for the working class people, own HUGE amounts of the stocks in the stock market.

The feds have decreased the discount rate, not bought into the market to prop it up.

If the economy stays stable, that means more of the ordinary (not "wealthy") people will have jobs - and be ABLE to pay their mortgages and keep their homes.

Much of the foreclosure problem was caused by people being given mortgages who never should have been, so inevitably things went sour a few years out for them. What kind of "help" are you suggesting? That the government just buy everyone a home who wants one? And then listen to complaints that somebody else got a nicer one?

Answer 4

My opinion is that although you are on the edge of being right the issue of the recent bail out of the stock market was for reasons of the declining housing market as it affected the rich and famous and the entire economy as a whole, in fact you should see another rate decrease by the Feds in the month of September.
As to what the government is doing for folks like you and me relating to the housing foreclosure crisis, the government realizes finally that if they don't do something they are going to make less taxes as these people are forced into economic disaster with an economic ripple throughout and therefore it is in their best interest to keep these people in the economic cycle so as to continue the tax flow to the government.
Here are some links of what the government is doing

Fannie Mae Loss Mitigation policies on Foreclosures
https://www.efanniemae.com/is/hcounselors/lossmitigation.jsp
Site #2
http://www.fanniemae.com/housingcommdev/resourceshomeed/lossmitigation.jhtml?p=Affordable%20Housing%20&%20Community%20Development
Government article and information on Foreclosures
http://www.occ.treas.gov/cdd/spring06b/cd/gsesusetech.htm
HUD: Servicing and Loss Mitigation on Foreclosures
http://www.hud.gov/offices/hsg/sfh/nsc/faqnsctc.cfm
Site #2
http://www.hud.gov/offices/hsg/sfh/nsc/nschome.cfm
HUD: Approved House Counseling Agencies includes foreclosure issues, by state
http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm
HUD: Article on Foreclosure Issues
http://www.huduser.org/Periodicals/ushmc/fall95/fall95.html
National Home Recovery Program for foreclosures http://www.nhrp.com/
Steps that can be taken to prevent foreclosures: http://www.consumerlaw.org/initiatives/seniors_initiative/advforcl.shtml
Remember that using money is faith based other wise it is nothing more than a piece of paper with dead presidents on it.

Answer 5

In the US we have socialism for the rich, and free-market discipline for the rest of us. There's always plenty of money to bail out the rich, to pull Chrysler out of bankruptcy, save the Savings & Loans, to subsidize Boeing and Lockheed-Martin, Grumman, and all the rest, but when the people lose their pensions due to corporate crime, or are the victims of a natural disaster, or become homeless because their health insurance denied their claim, or any of the other calamities that predatory capitalism causes (for a full critique, read Adam Smith's "Wealth of Nations"). As the grandfather of modern economics said, "Capitalism is a disaster for poor people." Smith also went on to cite what he called the vile maxim of Capitalists: "All for ourselves and nothing for anyone else."
It is important to keep in mind that when the "Feds" bail out these huge corporations, they are doing it with money borrowed at interest from a private bank called the Federal Reserve (which is not Federal, nor does it have reserves), which the bankers and their frontmen (read the Federal government) are going to make sure gets repaid, which means that not only have you and I paid retail for what we have already paid to have developed, but we have to pay again for the future privilege of paying retail after we bail them out.
This country operates on the principle of Profits over People, and seeing how quickly the politicians jump to bail-out their campaign contributors, and how years later, little if anything has been done for those in New Orleans who lost everything, or the victims of Enron and WorldComm corporate crime, it should come as no surprise that, their lofty words not withstanding, if we aren't wealthy, they don't care about us.

Answer 6

No but it is so because the poor have no time to fight for their rights in the world or do not have the knowledge accessible to them thru lawyers as the rich. This society has built laws around persons merits per say as their net worth needs to be protected This needs to be changed but no one will stand up for their rights in this country. All men created equal with certain rights has been changed to rich person count and poor people need to get out of the way. Check out the homeless they weren't always homeless. Persons look the other way because its easier than to make waves or challenge authority or to take the time to use the government for the good of the people. Some forget how or could care less because they forgot about WE THE PEOPLE and as long as they get what they need and it ain't them, They just seem to let the government go crazy with senators that are corrupt dealing in prostitution and corrupt contractors but if that was us we would be prosecuted. The government does not fear our opinions and just does what it pleases. This is why most persons are boycotting housing purchases. What has gone up must come down. Large egos included.iWe need to find a person whom is knowledgeable about the needs of the people instead of the needs of the rich and the corrupt. The rich get richer because they are allowed to break the laws and when caught just use their monies to protect themselves. Look at the corruption in the White House from Clinton not being impeached when he was caught with his cigar.This is the American peoples fault so blame yourselves for not educating and text your representative in congress if you even know who that person is because you don't utilize the government system.

Answer 7

The feds bailed out everyone. The economy crashing would mean you are out of a job, no one would benefit. No one got rich at the bail out.

As far as bailing out the people who caused the problem in the first place, there is no way to do it w/o destroying the economy. You have to remember, the money that these spent is real money, not just some number. The vast majority of Americans buy homes they can afford and make their payments w/o fail. Everyone " in trouble" got there of their own free will buying homes they could not afford. Even if they are given my tax dollars to fix their immediate foreclosure problem they still over bought and can not afford their homes, they will be in foreclosure again.

If the Feds stay out the real estate market will correct itself on its own. It will return to a normal market, not the weird on of the last few years.

I will be seriously PO'ed if my tax money is spent supporting my neighbors who bought in my neighborhood when they could not afford it. There is no reason in the world they should have some sort of special housing privileges.

Answer 8

1. It's not tax money they're using. The Fed's money is their own.

2. They're not bailing out investors at the expense of the consumer. They're preventing a wave of banks collapsing and wiping out the world economy.

3. If those banks did fail, the FDIC would then have to pay to insure the deposits. THAT's when taxpayer money comes in.

So really, they're helping you too.

I understand and accept the liquidity injections. That's fine, that's just them loaning their own money to banks.

I got more than a little upset that they cut the discount rate though. That's a complete handout to the banks that allowed and caused this to happen in the first place.

Answer 9

I don't want to beat a dead horse about the corporations, so lets visit the homeowners that you think should be bailed out.

1. they signed the documents.
2. They were given documents 3 days after they applied, the day before closing and the day of closing to see if this was a transaction they were comortable with. In some circumstances, they were given 3 days after signing to back out.
3. They were not forced to buy or refinance.

Why should they be bailed out for not paying their obligations?

If you loaned money out to your friend and they didn't pay you back, don't you think it would be nice if someone would help you out before bailing out your deadbeat friend?

Answer 10

Yo Sport --
This little thing has been going on for quite some time --
it is simply "out in the open" now -- because the "elite" don't really worry anymore about the "masses" having much "give-a-damn" OR SAY in what they do !!
This is yet another way that the "powers-that-be" have of shoring up their buddies and keeping themselves in control of the overall !! And, it is a major reason that the market -- overall -- is an absolute LIE of the actual factual of the value of ANYTHING anymore -- it is so subsidized and pumped up and manipulated -- there are no REAL indicators to be found anymore !!

And, after all ---- who ARE these little "nobodies" that are loosing their homes, anyway ?? The BANKERS are not going to be out all that much --- they've received years of payments and interest and then get the house back -- sometimes over and over again -- and in a lot of cases -- if they are the note holder to begin with -- they haven't actually put out any REAL capital on the property to begin with --- all of the deal simply being a "paperwork thing" --- and --- really now -- aren't THEY the ones that the government is truly working for to begin with ???

I simply LOVE your first poster's Neocon propaganda line about ---These people are our MASTERS -- if THEY hurt --- it's going to hurt US all !! ----- truck load of crap !! It was American ingenuity and business prowse that made these rats fat to begin with --- and if they were out of the way -- we would do MUCH better -- almost to the person !!
And, it shows the willingness at this point of a great number OF Americans --- to go in every day to the "chaingang" and strap themselves in to the Masters' Plan for them !!!

Answer 11

are you wealthy? nicely in case you have been, might you do your very own laundry, cooking, procuring, cleansing, backyard, ... no! you will possibly hire human beings to do this as quickly as you're making an investment or working your profitable business enterprise or out on your yacht... that's additionally cared for and maintained via employed workers! in case you don't get tax breaks then you certainly might discover different potential to do consisting of your earned money that should income and grant for you and yours rather of funneling it to a crooked government who makes use of it for his or her very own evil time table... think of it via earlier you generalize all wealthy human beings as getting breaks they ... on your opinion shouldn't get... i do no longer profess to nicely known all the crooked schemes and bail outs and twisted companies strikes yet the place do jobs come from? ... people who've monies to start and preserve them... those employers often pay advantages, well being and dental, retirements... so think of it via...