Gangsters, Banksters, & Serious News People

As usual, the Reverend demonizes and engages in name-calling against those he disagrees with, without explaining much about the issues at hand. So, in the interests of fairness, I guess I'll play devil's advocate on the mortgage cramdown bill.

A mortgage is a contract. It's contract law. The Rev professes to be a stickler for the law when it comes to the enhanced interrogations issue, yet he has no problem with a judge stomping all over the law when it comes to mortgages. That's what the cramdown bill would do. It would allow a bankruptcy judge to change the principal amount on a mortgage loan contract for someone's primary residence. It would allow a bankruptcy judge to modify an existing contract, a contract that was entered into by the mortagee on a voluntary basis. This should at the least cause concern. What good is a contract when it can be violated ? Not much, and what would be the effect of the cramdown bill ? Opponents argue that it would incentivize irresponsible behavior and incentivize bankruptcy. The bankers also argue that if such a bill passes, they would have no way to plan their business, since a judge could change the terms at his whim. The bankers have a valid point. Imagine if this was true in any other business. Imagine if you bought a refrigerator from Sears for $500, and then some judge could come along and say you only had to pay $200 for it. What would that do to Sears ? Further, think what it would do to the price of refrigerators. Sears would have to jack up the refrigerator price to everyone to offset the losses associated with the judicial fiats. I always thought judges were supposed to enforce the law, not violate it.

I realize bankruptcy allows people to walk away from their debts, but with the cramdown bill, those people aren't walking away, they are staying in their houses. The cramdown bill would encourage people to continue living above their means, when we should be encouraging people to do exactly the opposite.

For a long time, people have been able to keep their homes following bankruptcy, but that has always been on the condition that they keep paying for their homes. The cramdown bill is a major break from all of past history, and a dangerous precedent to set. As for the existing provision to alter mortgages on second homes, yachts, etc., that should be stopped.

Your legal righteousness when it comes to monetary issues is interesting, as, say, compared to your legal unrighteousness when it comes to national and international laws and treaties pertaining to torture.

But setting that aside……..AIG, Citi, Goldman and all the rest had obligatory contracts requiring payments for specific financial "products." These "product" sellers could not honor those legal obligations….so, in a state of emergency, they had the feds honor them with our tax money. Okay, so far?

Now, the AIG, Citi, etc., companies have other customers who owe them money from financial "products" they sold called mortgages. A very tiny number of those "product" holders, facing financial emergencies of their own, can be kept from declaring full bankruptcy by allowing a judge to lower interest rates and perhaps even loan amounts based on today's values.

And so comes the hue and cry about honoring of contracts and the end of the world and all.

I'm going to say it like it is. The Congress isn't representing it's constituencies by helping a handful of big corporations to avoid legal contract blowups and bankruptcy, while at the same time denying to help Americans in the same fashion. We have a double standard in the U.S……and it's very obvious.

Despite King's comment, I can't even find a reasonable argument proving otherwise.

No, I'm not "okay so far" with all the bailouts of private industry. I was against them (as I recall, YOU were for them), except maybe for AIG, due to the systemic risk factor involved. That same systemic risk factor does not apply to individual homeowners, but you already know that. I'm also fairly certain I never said anything about the "end of the world" occurring with the mortgage cramdown bill. It's just a bad precedent that would promote more irresponsible behavior, and it's also a violation of contract law, a basic legal tenet of society.

If you don't accept contract law as a "reasonable argument," then I don't know what to tell you.

As I made clear…..the Bigs were bound by contract law, and could not fulfill those obligations, so they sought the government's help.

However, your argument is that if individuals can't fulfill their obligations under contract law, then the government has no right to help.

Double standard.

So then, anytime anyone can't pay their bills, the government (other taxpayers) should do it for them.

Yeah, brilliant idea. Bonnie and Clyde had a similar one.