Comments on: Treasury bailout: will it work? http://seekerblog.com/archives/20080921/treasury-bailout-will-it-work/ Seeking reliable, objective sources on economics, foreign-policy and energy-policy issues. Fri, 09 Jan 2009 00:26:03 +0000 http://wordpress.org/?v=2.3.2 By: Steve Darden http://seekerblog.com/archives/20080921/treasury-bailout-will-it-work/#comment-29674 Steve Darden Mon, 22 Sep 2008 23:33:11 +0000 http://seekerblog.com/archives/20080921/treasury-bailout-will-it-work/#comment-29674 Charles, Thanks for the link to your analysis -- excellent work. I recommend all our readers follow the link - and the supporting links that Charles provides. I wrote "root cause" above referring only to the current 2007-2008 negative feedback loop. Your historical points address the root-root causes. Steve Charles,

Thanks for the link to your analysis — excellent work. I recommend all our readers follow the link - and the supporting links that Charles provides.

I wrote “root cause” above referring only to the current 2007-2008 negative feedback loop. Your historical points address the root-root causes.

Steve

]]> By: Charles Hill http://seekerblog.com/archives/20080921/treasury-bailout-will-it-work/#comment-29668 Charles Hill Mon, 22 Sep 2008 19:24:49 +0000 http://seekerblog.com/archives/20080921/treasury-bailout-will-it-work/#comment-29668 Democrats in Congress and Bill Clinton relaxed lending stardards in the years ago so low income people with bad credit could buy houses with no downpayment, poor credit and no proof that there income was enough to afford the house. Just Google old newspaper articles or the Congressional Record. "A brief history of the Fannie Mae and Freddie Mac mess is in order. Back in the days when a Bank or Savings and Loan approved a home loan, they did so with lending standards that had historically led to only safe loans. They had to because they kept the loan and were responsible if it failed. These standards included 3 major parts. First, the mortgage payments could be no greater that a set percentage of your income, usually about 40 percent. Second, a down payment was required of about 10 percent or above so the new owner would immediately have some equity in the home. Third, A good credit rating was required to prove you had a history of paying your bills. Some adjustments could be made, for example people that had poor credit could get a loan with a larger down payment so if the loan failed, the bank could still resell the house and cover the loan." http://strategicthought-charles77.blogspot.com/2008/09/democrats-created-fannie-mae-and.html Democrats in Congress and Bill Clinton relaxed lending stardards in the years ago so low income people with bad credit could buy houses with no downpayment, poor credit and no proof that there income was enough to afford the house.
Just Google old newspaper articles or the Congressional Record.

“A brief history of the Fannie Mae and Freddie Mac mess is in order. Back in the days when a Bank or Savings and Loan approved a home loan, they did so with lending standards that had historically led to only safe loans. They had to because they kept the loan and were responsible if it failed. These standards included 3 major parts.

First, the mortgage payments could be no greater that a set percentage of your income, usually about 40 percent.

Second, a down payment was required of about 10 percent or above so the new owner would immediately have some equity in the home.

Third, A good credit rating was required to prove you had a history of paying your bills.

Some adjustments could be made, for example people that had poor credit could get a loan with a larger down payment so if the loan failed, the bank could still resell the house and cover the loan.”

http://strategicthought-charles77.blogspot.com/2008/09/democrats-created-fannie-mae-and.html

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