Loan Bail Outs

I listen to a lot of talk radio and read a lot on loan reform, loan bailouts, and all the other related issues.  There is a lot of opinion about how much the government should be involved and whose ox should be gored in all this.  There are those that feel that people who took the loans that they now cannot pay should take there lumps.  There are those that feel they were ripped off by evil banks and lenders.  There are those that feel the government has no business involved in this and the market should flow as it flows.  There are those that point out banks are simply investment vehicles for seniors who have bought bonds and securities through these lenders business and that these retirees will get hit hardest.

I don't have an answer for all of these.  I do have some thoughts that do not get mentioned I will throw out.  There are (were) a lot of bad apples making loans.  I am also a private investigator and have worked for Insurance Carriers investigating some of these issues.  I have seen it from the other side.  A lot of buyers took risk and knew what they were doing, but now that things have gone bad they point in other directions.  The Government encouraged lenders to loosen up and loan more money; this drove the market and helped feed even higher home prices and even riskier loans. 

Many people want more disclosures on loans.  There are so many disclosures regarding loans and home buying now that no one reads them.  I think things could be simplified, but then someone would find something missing and sue someone.  After reading all the disclosures it is amazing anyone would buy anything.

Those that are upset that they will loose money on there bond investments due to government interference ought to think again.  Do they want to loose a little now, or a whole lot latter if the crises are not stopped?  Yes there were many stupid loans taken and maybe those people deserve what they get.  But the same could be said of the bond buyers.  Maybe you should have looked at the long term market more carefully.  Do you want what you should get now?  Even if the government did not force the banks to start working to bail out some of the riskier loans the banks would need to do it for self preservation.  A bird in the hand is better than another bank owned home on the market.

I am generally a free market type guy and think the government ought to stay out, but the government helped create the problem.  There is no good solution. 

I do think this will end quicker than people think.  I think now is the time to buy.  I see the market starting to pick up.  See my other blog's on this.

I want to hear your thoughts on this.  I've said I do not have all the answers, just some random thoughts.  Let's hear yours.