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WASHINGTON, Sept 22 (Reuters) - The Bush administration has accepted changes to its $700 billion Wall Street bailout plan that would give the government a stake in institutions unloading assets under the plan, the chairman of the House of Representatives Financial Services Committee said on Monday.

The administration also has agreed that the plan should include more efforts to prevent home foreclosures and that an oversight board should be created to monitor the bailout, said Massachusetts Democratic Rep. Barney Frank.

"We got a lot of advice from people in the financial community that (Treasury) should also be able to take some equity and we agreed, and the secretary's agreed with that," Frank told reporters at a briefing.

"We also made it clear that if he takes that equity, it has to be with warrants," he said.

On reducing foreclosures, Frank said, "The foreclosure piece is agreed on. There was Republican congressional opposition but the administration accepted it.

"They've accepted our views on oversight ... There is some contention now over compensation and corporate governance." (Reporting by Kevin Drawbaugh and Donna Smith; Editing by Tim Dobbyn)

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phi1618 said:

I agree that excessive use of credit is a problem, and the total level of debt should fall.

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How can lowering the level of debt result in anything other than severe depression? What you need is more debt!

Smackshadow said:

I have a great idea about where we should spend that 700 billion.  There are maybe 10 million homes at risk for foreclosure. 700 billion divided by 10 million is 70,000.  What would be a better use of that money is to just pay off $70,000 on every at risk home mortgage.  Lets say the average mortgage is $300,000
a thirty year loan at 7.1% has a monthly payment of $2016

If we pay off $70,000 dollars the loan balance becomes $230,000
at 7.1% interest for the same 30 year loan the monthly payment would become $1545

Or a decrease of $471 a month. 

Using these numbers we can figure out what the effective interest rate would become the original $300,000.  Without getting into the math it becomes 4.64% which is what most ARM's started out at.

In other words people would once again be able to pay for their loans and thus keep their homes, we would solve the liquidity problem of the banks, the bad debt would become good debt which theoretically could be sold once again.  And everything would work out.

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That's a great idea.  My alternative idea is to start handing out free down payments to first time home buyers.  We could give out tens of millions of 10-20k down payments, and guess who they'd be going to for loans?  Seems perfect, no?

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Ferris said:

That's a great idea.  My alternative idea is to start handing out free down payments to first time home buyers.  We could give out tens of millions of 10-20k down payments, and guess who they'd be going to for loans?  Seems perfect, no?

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Ferris said:

  My  idea is to start handing out free down payments to first time home buyers.  We could give out tens of millions of 10-20k down payments, and guess who they'd be going to for loans?  Seems perfect, no?

Well, we'd have to give some of that money to the loan companies, because they need liquidity.  I don't know what the right percentage would be for that though.

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Hank, FTW said:

So is the Fed printing off a whole bunch of money to fix this problem?

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$10,000 dollars for a loaf of bread by this time next year!

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This was a fifteen year campaign by the Democrats, ACORN, and Fannie and Freddie's executives to loosen up mortgage requirements to the point where there simply where no requirements at all.

Net result? Trillions of federally guaranteed dollars flow into the housing market that shouldn't have been there -- suddenly buying a house becomes the easiest possible purchase you can make. All you need is a signature and a smile.

If the federal government were guaranteeing a trillion new dollars for no-money down car purchases with no credit checks or proof of employment or income, what do you think would happen to the price of cars?

They'd triple. For a while.

Housing market turns into dangerously overinflated bubble. Which is what always happens when a trillion fresh, cheap, easy dollars flow into a sector and begin chasing the same limited pool of goods.

Millions of credit-poor homebuyers -- with erratic and unverified incomes -- now have mortgages with payements well out of their range. But at least the homes are still worth their selling price... so if they default on a $350,000 house, no sweat, the bank now owns the $350,000 house, which can be sold for $350,000 to someone else.

But finally the bubble bursts -- and now all those credit-poor, erratic income homeowners now have mortgages for $350,000 on houses actually worth $150,000.

So what do they do? They walk away or stop paying. Which makes perfect economic sense.

Leaving Fannie and Freddie guaranteeing a trillion in bad mortgages. Which means you're guaranteeing them.

The bank made a $350,000 payment to the home-seller -- but now has only a $150,000 home to show for it. Uh-oh.

You the taxpayer just went on the hook for that $200,000 loss.

Wall Street's contribution? They stupidly bought up derivatives based on these junk mortgages, thus putting themselves, and the entire financial system, at dire risk.

But they didn't create the risk. The stupidly bought into the risk, but they didn't create it.

It was Barney Frank, Chris Dodd, ACORN, Franklin Raines, Penny Pritzker, Jim Johnson, and of course Barack Hussein Obama who actually built the bomb.


And I Repeat... Even now, the lisping marble-mouthed shufferin'-shucatash socialist moron Barney Frank is still fighting to federally guarantee the zero-money-down "seller financed" down payment mortgages that got us into this mess.

Because he's fucking stupid. As are most Democrats. They have no idea how money is made or how services and goods are exchanged. All they know is they want to distribute those services and goods more "fairly."

He doesn't agree with the basic idea that People who don't have enough money to afford a house shouldn't have one. He honestly believes that idea is "unfair."

Everyone should have a house. People who can't afford them most of all.

And if you tell him doing so will cost the government another 1-2 trillion in ten years, and will put the economy in crisis again, he'd say, "Fine." It's a fair trade as far as he's concerned.

Because who's paying that 1-2 trillion? People who have money. If provoking a crisis is the only manner to get the wealth distribution he craves, that's fine by him.

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Ferris said:

The incentive is, they better, if they ever want to buy anything on credit ever again.  Maybe we can have the gov'ment pay 10p and the buyers pay 10p.  Maybe the buyers can put down 20p and the government will pick up the first years payments, or a percentage of payments for several years.

My point is there are ways around every problem.

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