Lehman, the Big 3... and who's next...

[Cruisingdad]

Anyone who has not been living in a hole realizes Lehman Bros is in SERIOUS trouble. I think they are number 3 or 4 in investment banking?? There are rumors floating that the government may take them over or orchestrate a buyout like Bear Sterans. Don't you know the big three autmoakers are watching carfeully too as they are probably the next to fail and would love someone to pick up their tab too.

Point of this is do you think it will happen? Do you agree we, the US tax payers, should eat all of these? THis includes the Fannie/Freddie purchase.

My personal opinion is that I realize why they did it. I am not sure that I support it. Like many, I put down my 20%. Like many, I was careful what I bought. Like many, when I saw the real estate market in Florida getting rediculous, I sold out and let the sharks and speculators have it. Now, all Americans get to pay for what is basically a bunch of other people's dumb investments.

I realize the argument could be made (and may very well be true) that if we had not bailed out Fannie, or BS, or likely Lehman... it could cause a total collapse domestically and globally. Still, in the end, it is the ordinary mom and pops paying for some one elses greed.

Am I wrong?? Thoughts??

- CD

[lynn1120]

it is not an easy system or situation to untangle-- and the issue is pervasive-- even if your home is paid for you have benefitted in that the easy credit and the federal govt push to increase home ownership over the past 15 years-- that is what has caused housing prices to rise as much as they have in the past 15 years-- they have risen waaaay more than inflation.

So if you have ever used your paid house as an asset to gain credit or access to credit or lower credit costs-- you too have benefitted.

For those who 5 or 15 or more years ago bought their first house, have benefited and will continue to have a benefit. Despite the news coverage there are more of these than the abusers-- and yet all of their security is now at risk too.


Those late to the party, those trying to get too many pieces of "cake" at the party, those living beyond their means and cash flow, are getting crushed. If this works the rest of us will only have a bruise. The reporting will be better if they would stop using large numbers--try looking at it as a % of GDP so that we can compare apples to apples-- it is hard to wrap your head around billions vs trillions.

In times of systemic crisis moral hazard is put aside untill the immediate crisis is stabilized. You do not cut off your nose to spite your face as my grandmother would say to me.

Do what you have to do now so that you can do what you want to do later

[painkiller]

It IS annoying being one of the people that lives below their means, keeps their small house, owns paid-for non-flashy cars and pays their bills on time* only to have to contribute to the salvation of the knuckleheads that bought that McMansion on an interest-only loan and leased that Mercedes so they can drive their kids to a Montessori school that costs more than my college education.
But I'm not bitter.

* Not claiming to be a saint here. I do that to afford a boat**. :-)
** Which I can afford because I didn't buy the biggest thing I could qualify for a loan for.

[fullkeel7]

Originally Posted by Cruisingdad

Now, all Americans get to pay for what is basically a bunch of other people's dumb investments.

Still, in the end, it is the ordinary mom and pops paying for some one elses greed.

Am I wrong?? Thoughts??

- CD

And it will more than likely just keep on keep'n on! Greed is rampant in the US and at almost all levels. Seems laws are to protect the greedy. It's too easy to rip the public off, put the proceeds into your wife's name, move to Florida and buy an off the wall expensive house so the powers that be can't touch the product of the ill- gotten gains. OJ move to Florida, not for the sunshine, to buy a house that the civil suits couldn't touch....another outstanding Floridian!

Oh well, at least OJ only killed two people, the banking bad loan fiasco of the late 80's(of which our grandkids will still be paying for), Enron, Tyco....an endless list of corporate rip-offs, collectively decimated thousands, if not millions of individuals financial well being. Lives absolutely in ruin. Then there's the government rip offs. Two women got caught ripping off the Pentagon shipping hardware to our Armed Services overseas. They shipped three, yes THREE bolts and charged the US over $595,000 in shipping costs. The pentagon later said it has been going on for years and that the checks and balances were just not in place. SOMEONE needed to go to JAIL. The two involved bought 3 mega million dollar homes in the Hamptons. I guess the media just didn't think the outcome news worthy, I never heard any more of it...just like the banking bad loans of yesterday year. The beat goes on!

Haliburton got caught over charging the government millions (what's NEW) for meals to thousands of soldiers that were not there. No one went to jail and they are still providing services to the military...Gee, wonder how they got that job??

The housing market...geez. Everyone wants big, better, best and NOW! My personal take is that both the Banks and the Real Estate concerns knew this while making all of those 'teaser rate loans'. It jacked up the prices of homes(oouh, the builders/real estate companies sure objected) and the banks IMHO, knew that most of the owners could not handle the payments after the teaser rates expired. The banks have the owner's down payment and closing costs and after foreclosing, can sell it again.(nothing new, just look at the used car industry). The builders got their inflate cost of the house, the real estate developers/agents got their commissions and everyone is happy. I think they really did not realize how MANY could not make the payments and how badly it would effect the market....too damn bad!

Now, most employers are all looking to under cut there employees, lowest wages possible, no insurance and I guess that's BUSINESS! So what did the buyers of these inflated priced homes think would happen. Oh, I bought a $300,000 dollar house @ 5.5% with a payment of just under a $1000.00 a month...gee, my payment will SURELY go DOWN after that teaser rate runs out in two years. ARE people really that naive? I do not think we all should pay for the ignorance of others. Saturday Night Live said it all in the Mothamatic skit.....AMERICA, you'll buy anything!!

Enough ranting, it all boils down to when we all demand that such 'white collar crimes' be punished with severe jail time, fines and the funds (although put in anothers name) are recouped, these types of crimes will only continue. As it now stands, the level of punishment is not equal to the offense committed. IMO, they're much worse than common criminals!

Could the reason we do not hold these criminals accountable for their actions be that as individuals, we cannot hold ourselves accountable for our own?

[cardiacpaul]

Could the reason we do not hold these criminals accountable for their actions be that as individuals, we cannot hold ourselves accountable for our own?

eggg-zactly.

For more decades than I'd like to admit, I was involved in the high tech industry.
With gov't regulations being what they are, preferences were made to MBE/WBE's or, in Texas, they were known as HUB's (Historically Underutilized Businesses).
Ok, so, a dealer bids on a gov't contract, doesn't win... why? a flying superskirt, or some other "minority" can bid a higher amount, and take the business. So much for "lowest cost".

Well, one dealer, had an "idea". He went to his local salon, got a haircut, and said to the two ladies running the shop... "have I got a deal for you"

he starts a HUB, puts the two chicklets "incharge", sets up separate telephone support lines, )that forward to his existing business)orders new invoices,(that are printed by his existing business) and is now one of the largest cisco distributors in the country.
The two chicklets, when asked by a gov't auditor, what a "network switch" does, couldn't answer the question. They're still the preferred vendor for the State. And the two chicklets get a "bonus" of 1% of total sales to the state. Thats not much you say, right? That vendor sold 38.7 MILLION to the State last year.

just another example of "good idea, bad plan".
Same thing goes for the house flippers and investors. They took advantage of the system, hell I would have too. And, I'd probably be cryig for a bailout too, if I could.
I don't think they should get it, but, what do I know.

[sailingdog]

Originally Posted by fullkeel7

And it will more than likely just keep on keep'n on! Greed is rampant in the US and at almost all levels. Seems laws are to protect the greedy. It's too easy to rip the public off, put the proceeds into your wife's name, move to Florida and buy an off the wall expensive house so the powers that be can't touch the product of the ill- gotten gains. OJ move to Florida, not for the sunshine, to buy a house that the civil suits couldn't touch....another outstanding Floridian!

Oh well, at least OJ only killed two people, the banking bad loan fiasco of the late 80's(of which our grandkids will still be paying for), Enron, Tyco....an endless list of corporate rip-offs, collectively decimated thousands, if not millions of individuals financial well being. Lives absolutely in ruin. Then there's the government rip offs. Two women got caught ripping off the Pentagon shipping hardware to our Armed Services overseas. They shipped three, yes THREE bolts and charged the US over $595,000 in shipping costs. The pentagon later said it has been going on for years and that the checks and balances were just not in place. SOMEONE needed to go to JAIL. The two involved bought 3 mega million dollar homes in the Hamptons. I guess the media just didn't think the outcome news worthy, I never heard any more of it...just like the banking bad loans of yesterday year. The beat goes on!

Haliburton got caught over charging the government millions (what's NEW) for meals to thousands of soldiers that were not there. No one went to jail and they are still providing services to the military...Gee, wonder how they got that job??

It isn't like Haliburton knows anyone in the current administration, except for most of the leadership...

The housing market...geez. Everyone wants big, better, best and NOW! My personal take is that both the Banks and the Real Estate concerns knew this while making all of those 'teaser rate loans'. It jacked up the prices of homes(oouh, the builders/real estate companies sure objected) and the banks IMHO, knew that most of the owners could not handle the payments after the teaser rates expired. The banks have the owner's down payment and closing costs and after foreclosing, can sell it again.(nothing new, just look at the used car industry). The builders got their inflate cost of the house, the real estate developers/agents got their commissions and everyone is happy. I think they really did not realize how MANY could not make the payments and how badly it would effect the market....too damn bad!

Now, most employers are all looking to under cut there employees, lowest wages possible, no insurance and I guess that's BUSINESS! So what did the buyers of these inflated priced homes think would happen. Oh, I bought a $300,000 dollar house @ 5.5% with a payment of just under a $1000.00 a month...gee, my payment will SURELY go DOWN after that teaser rate runs out in two years. ARE people really that naive? I do not think we all should pay for the ignorance of others. Saturday Night Live said it all in the Mothamatic skit.....AMERICA, you'll buy anything!!

Enough ranting, it all boils down to when we all demand that such 'white collar crimes' be punished with severe jail time, fines and the funds (although put in anothers name) are recouped, these types of crimes will only continue. As it now stands, the level of punishment is not equal to the offense committed. IMO, they're much worse than common criminals!

Could the reason we do not hold these criminals accountable for their actions be that as individuals, we cannot hold ourselves accountable for our own?

Unfortunately, white collar crime and fraud seems to be treated with at best a slap on the wrist. Corporations have very little to keep them accountable.

For instance, look at the current problems with "identity theft". Currently, the way the laws are setup now, it is not the problem of the financial institution when someone applies for credit in someone else's name—it is the problem of the person who's "identity" was stolen. Here's my take on it.

Let's call "identity theft" what it really is—FRAUD. If you're going to be lending someone a large chunk of change, doesn't it make sense to make sure the person you're lending the chunk of change to is actually who they say they are??? If they don't make sure that they are who they say they are, isn't it their own damn fault... so why should the person whose identity they stole be responsible for it.

In one North Carolina case, against a major credit card company, the company claimed the woman they were hounding for payment wasn't allowed to have a copy of the credit card application because they knew she didn't apply for the card, and since it wasn't her application, she couldn't have it. However, they were still trying to claim, since it was her identity used to open the account, that she was somehow responsible for the thousands of dollars of debt racked up.

There's a really simple way to cut down on 95% of identity theft IMHO. Simply require any credit application to have a notarized fingerprint and signature on it. That would at least make it so that you'd need to compromise a notary public, or go through the trouble of faking the embossing stamp and all. Then, if a claim for payment came up... and it wasn't you... you could demand the finance company show you the fingerprint... and if it ain't yours, you don't have to pay. Also, I'd think that most thieves aren't going to like the idea of having a fingerprint on the application tieing them to the fraudulent account.

Granted, this wouldn't stop all identity theft, but it would block 95% of identity theft which is committed by rather stupid people who have the opportunity to do so. This would also allow LEOs to focus on the real identity theft problems, and shift the burden of due diligence back onto the financial institutions, where it belongs.

There is a very good reason the financial institutions are against this—GREED. Doing this would eliminate much of the fraud, but it would also make applying for credit much more difficult. There are a lot of stupid people out there who apply for credit cards they can't afford because the applications are so easy to fill out. This would eliminate almost all of them from doing so because they're too lazy to jump through such hoops to get a credit card. Those are the same people who, if honest enough to apply as themselves, get hit with late fees and exceptionally high interest rates—huge profit centers for the banks issuing the cards.

[Robby Barlow]

Heck, now what was I on thinking this would be some hot new gossip regarding the VFB Stuttgart & German national team soccer goalkeeper 'Jens Lehmann'? What a dumb mistake to make, there are similarities though as both seem to have had better days, but seriously the German is spelled with double 'N' FCS.

[cardiacpaul]

anybody remember these names?

E.F.Hutton
Smith Barney
Shearson
Lehman
Ernst
Arthur Anderson

Waterhouse, Deloitte, Peat-Marwick.

fraud, bad bidness, mergers, buy-outs, money pits...
point being, these were all, at one time very respected and HUGE companies. All (most all) failed and were sucked up, closed down, now gone like the wind.
Did the gov't bail 'em out? nope.

[dakuehn]

We had an all-employee town hall with Secretary Paulson yesterday--a very unusual experience. Many Fannie employees and what is left of management feel Treasury over-reacting and should have restricted its action on Freddie Mac. Freddie was at the end of its rope as it failed/refused to raise additional capital earlier this year and maintains a more troubled albeit smaller book of business. I think Treasury did the right thing—even with our capital raise earlier in the year, we would be in trouble by early 2009 (unless something miraculous happens in Florida) and the agencies are considered joined at the hip. Deferred Tax Assets and other intangible don’t help much when it comes time to pay bills. Anyway, the debate is now framed for Congress. I don’t think you can serve two masters—HUD and Congress with their unreasonable affordable (read subprime) housing goals and Wall Street. My personal vote is that we change the name back to Federal National Mortgage Association and unwind Freddie Mac. In the meantime I will have to put my dreams of a deeded slip at Rock Creek/Texoma on hold and come up with a plan B for the kids’ college education. Oh yeah—Lehman owes us a lot of $$--maybe Treasury can help with that.

[Cruisingdad]

Told ya they would bail them out...

"As speculation grows about the possibility that the government may have to step in to help Lehman as it did with Bear Stearns back in March, the Treasury Department told CNN that it "is monitoring markets and remains in contact with market participants."