Well,no need to recap what is happening in the equity markets right now. Failure after failure of banks, investment companies, and even semi-government agencies have us running to Uncle Sam to bail us out again. But should we? These failures although damaging to many of us, are needed. These CEO’s need to be left holding the bag and be held accountable for their own misgivings. No, I do not mean jail in most instances, but really hurting those who ran these companies financially would be a good thing. Make them suffer the financial consequences and I bet you it would not happen again.
Instead, we have many companies lining up for what they believe is there “right” to a free government bailout all the while paying top CEOs millions in severance packages…
“After imposing wage cuts of up to 50 percent and other concessions on hourly workers, executives at bankrupt auto parts supplier Delphi, are seeking permission to hand themselves a multi-million dollar payout. Delphi is seeking court approval to pay 560 of its executives some $216 million in bonuses and incentives after the company comes out of bankruptcy.”
And another….both are Obama campaign consultants…
”Specifically, Dan Mudd, the CEO of Fannie Mae, is getting $9.3 million of severance for destroying his company. Richard Syron, the CEO of Freddie Mac, is getting $14.1 million--in part because of a clause he added to his employment contract two months ago, when it was clear the company was headed for disaster.” (From the Business Sheet, Blog Sept 7th)
Makes you sick doesn’t it? Well that is because they have never been forced to reap the so-called benefits of failing. They risk it all for the glory and walk away with top salaries when it fails. Both candidates stumble and feel their way around polling data to find out what to say. When what really needs to be said would be political suicide…..
”Ceo you who donate to our campaigns, take it on the chin, tough luck, you lost, now try again…..American people, when you take out a loan you cannot afford you lose….period”
Amusing, and is something that needs to be said, but NO ONE in today’s politics would say that. Ahh…I long for the days of Teddy Roosevelt, oh well.
Congress (who by the way was supposed to be watching this) has done nothing up until now except blame the other party, (who is in control is to blame has been a regular practice for some party but WAIT not when it applies to THEM!!!) What is going on? Where we all these people when the crisis was looming? Where was congress, oh yeah congress, where were all these smart people when this was a growing problem? They were watching and hoping SOMEONE else (insert, another party) could take the blame.
Yes as accusations fly from both sides of the aisles, we the people hold the bag and hold our breath. Really we should be holding our nose. Our markets, whether unregulated or over regulated were broken a long time ago.
Our market valuation system never accounted for adjustments but rewarded greed and over leveraging. Why not leverage? By leveraging you can make more money without using much of your own. This is a great investment theory and it works too, but NOT without limitations. You cannot leverage $50 for every $1 you invest without putting yourself at such risk you lose $100. In real estate clients would buy a piece of land start to build a home on it, take a loan out (because they would have 70% equity) then use that equity loan to start the next process of buying land starting to build and leveraging that project to start the next one. That is all well and good if you can sell the first to pay off the second and then sell the second to reap all the rewards. But that is just it, our wall street markets were not waiting to start the next project when the sold the previous leveraged asset and paid it off. They just kept on leveraging hoping that sooner or later it would all work itself out. And in Wall Street’s situation it will, by a trillion dollar payout to rescue them from overleveraging themselves when they knew what they were doing was risky.
What is the POINT of calling it risky of you eliminate failure? Bottom line, our markets need to fail, once and a while. We need these over leveraged companies and fat cat ceos to be held accountable and be open to monetary failure. The problem comes in when by doing this we harm a lot of people who DIDN’T do these things….who may you ask….the middle class. How can we let these people fail and yet still protect the average investor? That will be the great debate.
I think regulation is required, but this regulation MUST adapt to the ever changing and over complicated markets. Don’t allow these companies to leverage to such an extent, clearer books, and if a company goes into bankruptcy, disallow any ceo payouts from a year to the day filing for bankruptcy. Financial insolvency must start from the top down.
I am for capitalism with common sense and responsibility BUT also with the RISK of failure. After all with failure comes the realization of mistakes. Mistakes lead to fixing the mistakes or not repeating them. Think about it, isn’t failure the single most important element to success? With failure you learn and never do that again, and next time around you have the memory of that mistake to correct you in the future. Or is it the FEAR of failure that drives some people to never accept less than success.
I think this starts as children, our schools have created such an atmosphere of “don’t worry no one fails here”. “Trying something is as good as not trying something and way better than failing someone.” This creates thee atmosphere that someone will always be along to rescue them and make things right. NO, that does not always work.
I believe the government serves a purpose, that purpose is limited and should be used in extreme cases. Here in this market we do have an extreme case, but only because we allowed these investors to think that there was no possibility of failure, the government would always step in and save them, thus….NO REAL RISK. No, in life we need ups and downs, we need failures and we need success. Although, believe me that easier said than done in your own life isn’t it?
Basic economics tell us that with high prices come low demand and with low demand comes lower prices, this is the cycle we need. With investment comes risk with risk comes profit, not bailouts. So we need it, but what we DON'T need is the extreme swing this has brought on, we need educated buyers, who understand what they are doing. We need CEOs who are held financially liable for their mistakes, investors who not only understand their risk but prepare for it. And if they don't, they take the financial hit and the responsibility.
What makes our country great is at the end of the day we all will be able to breathe again and one day remember this day and smile that we NEVER made that mistake again. We failed but yet we move on, making things better and learning from feeling our mistakes first hand. So please businesses, learn to embrace failure, live with the fear of failing, it just might bring about the next best business model.
Hey just for fun check out the Socialists idea of a solution…I KNOW you see the faults in this one……hahaha have fun and breathe a sigh of relief that these extremist will never have more power than ordering a coffee from a local coffee shop. Ryan S. Carrigan
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“From the American Socialist Movement website------ American capitalism has become the global leader in the creation of personal wealth for the ruling elite entirely separated from the creation of real value in the process of production. The current economic breakdown, which threatens the world’s people with catastrophe, is the inevitable result. The alternative to the naked dictatorship of capital and the impoverishment of the working people is socialism. The Socialist Equality Party insists that if the resources of the American people must be mobilized to avert an economic catastrophe, then the American working people should assume control of the financial institutions and use them for the common good, not corporate profit and personal enrichment. We propose that the major banks and financial institutions be nationalized and turned into public utilities, operated under the democratic control of the working population. The vast financial resources that they control must be used to provide decent education, housing, health care, retirement benefits and good-paying jobs for all. This should be carried out without compensation to their former owners, while securing the deposits and savings of working people and small business owners. The billions of dollars in social wealth diverted into the private accounts of speculators and bankers must be recovered, to be used for the expansion of social programs that benefit the masses. There must be a public accounting of the fraud and corruption that have fueled the crisis, and those responsible must be held accountable, including by means of criminal prosecution. The books of the major banks, financial firms, insurance companies and hedge funds must be opened to public examination, to lay bare illegal and socially destructive activity. The Socialist Equality Party and its candidates for president and vice president, Jerome White and Bill Van Auken, advocate the creation of a workers’ government—a government of, by and for the working class—to carry out emergency measures to resolve the crisis in the interests of working people, including a halt to all foreclosures and repossession of homes, the creation of millions of public works jobs, a ban on wage-cutting and layoffs, and an enormous expansion in public services. We issue an urgent appeal to all those who oppose the bankrupting of society for the benefit of the financial elite, who wish to defend the interests of working people, and who see the need for a socialist alternative to the two parties of big business: Support the SEP election campaign and its candidates, Jerome White and Bill Van Auken. Join the Socialist Equality Party.
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WOW, now that is a misguided perception of reality….Good luck in 2008 guys.
We should re-name the U.S. The United States of Banking America. With Uncle Sam becoming the co-signer to corporate America we just cant learn from previous mistakes. In 1979 Congress passed the Chrysler Corporation Loan Act of 1979.$1.5 billion of taxpayers money was to loaned Lee Iacoca and Chrysler. A few years later the U.S. Treasury gained many an interest from this transaction. The U.S. is bailing companies because they gain more profits in the long run with interest. I emphasize the word Interest. The U.S has no interest in bailing out someone like myself because they gain nothing but taking my taxes every year. There has to be INTEREST. The government has every thing to gain if they take control of these loans and companies. As far as the CEO's are concerned they will always get severance packages because the company and employees allow it. The day i see an hourly worker get a bonus like that, will be the same day i see Hitler,John Denver, and the Devil, and Hell freezing over. Folks, we gotta understand even when the markets fail, everything remains the same only the mega-rich survive and the super poor go to the soup lines. Here's an idea but in the perfect world of course, instead of giving the Ceo a severance package for sitting on his ass and attending meetings. Distribute his funds among the hard workers who make the company run smoothly. A thing called a bonus. Did i mention in a perfect world? Greed, that's what it all comes down to. People like Karthik Rajaram, the former Pricewaterhouse accountant who took his money too seriously and killed himself and his family and in his suicide note stated the action was to be honorable. I worked for a company where the Ceo spent most of his months at a Sheraton in Oahu. I would ask for him through his secretary and she would say he's in Hawaii again. Must be nice. Robert F. Kennedy once said... Only those who dare to fail greatly can ever achieve greatly. I hope some people in the higher positions grasp this.
Posted by: Gerardo Bardo | October 07, 2008 at 01:23 PM
Although Ronald Regan was the greatest president this country has known, I thoroughly disagreed with his policies of deregulation. Vice President, George Bush Sr. was in charge of some deregulations, but it was not until his election in
1988 that deregulation on, and running in one direction.
By 1989, the nation faced a financial crisis caused by the collapse of hundreds of savings and loan associations, who had taken advantage of loosened regulations to invest aggressively in real estate and other ventures, many of which went sour. Their problem was the government's problem, too, since their deposits were guaranteed by the federal government.
Fearing the damage such a meltdown might cause to the economy at large, Congress and President George H.W. Bush in 1989 created the Resolution Trust Corporation to take over troubled thrifts, as the banks were known.
Resolution Trust Corporation closed or reorganized 747 institutions holding assets of nearly $400 billion. It did so by seizing the assets of troubled savings and loans and then reselling them to bargain-seeking investors. At the peak in early 1990 there were 350 failed savings and loan institutions under the agency's control.
By 1995, the S.& L. crisis abated and the agency was folded into the Federal Deposit Insurance Corporation, which Congress created during the Great Depression to regulate banks and protect the accounts of customers when they fail. The total cost to taxpayers was later estimated at $124 billion.
Fast Forward: The Clinton Years—the all branches of government combine through the efforts of Republicans and Democrats to reign in government spending. Those actions balanced the budget, and created a surplus.
Fast Forward: George Bush Jr., President. “Like Father like son.” The mantra: Spend, Spend, Spend, Cut Taxes and in the process treat the country as one huge credit card. Leave it to future generations to pay down the growing unimaginable debt. Deregulate, Spend,
Deregulate, and Spend. A drunken giddiness came over his government and the financial institutions tied to it.
With tacit approval of the administration, and under the mantra of prosperity, Wall Street and lending institutions ran amuck.
Now, at the end of his presidency, the wreckage: financial meltdown. CEOs bailing with suitcases full of money and golden parachutes.
Just as in 1990, Wall Street lobbyists knocked on the door of the president who directed them to the Secretary of the Treasury, himself a former wall street $$$CEO--, to ask for the largest government bailout, which they knew (Ha Ha) would be forthcoming. How could it not.
Invoke RTC, you have an out Mr. President. Everything will be all right. Let the taxpayers bail- out the crisis.They have no choice. Sell it to them in terms that the money will come back to them.
“Is it right that we have we have companies lining up for what they believe is there right to a free government bailout all the while paying top CEOs millions in severance packages?
Absolutely not!
Should financial institutions fail? Basic 101 economics—let them fail; others will survive and not repeat the mistakes. (
President Regan was not averse to letting the steel industry fail but for different reasons. The next President, whoever that is, should not allow financial institutions to ever again engage in lending practices that the ordinary man on the street would not transact, unless he is a fool. Simple common sense, no loans to anyone who can’t pay them back.
Main Street has been fleeced. The Administration has insisted till this date: "The economy is strong with Sound Fundamentals."--Paulson.
There should be jail time, not bail time, to those financiers who seek the “social security” of a bailout.
If ever the top executive of this country was guilty of gross negligence and malfeasance in office,its this one. The buck, if one can found, stops with him.
It is not Congresses job to enforce laws. Congress enacts, the President executes them. He and his administrators are the people's watchdogs not co-conspirators.
In my humble opinion, the Democrats and Republicans alike, are to blame for this crisis. One Congressman admitted to not knowing what was going on. Sorry Congressman, "Ignorance is not excuse in they eyes of the law," and Congressman, you are the law maker. Well, are'nt you?
Some Wall Street Pundit on the Power Lunch stated: the American people created this mess, they should pay for it.’ When questioned just how main street is responsible? He answered “the American way is to elect anyone who offers the promise of prosperity, anyway, anyhow. They had that for the last 4 years wih the tax breaks enacted.”
The moral climate in this country needs fixing. The moral question of bailing out Wall Street is wrong. This will encourage similar schemes in the future.
Unfortunately, it’s a damn if you do and damn if you don’t situation. The bail out had to happen. However, the economic woes are too substantial to be addressed by the bail out bandage.
The flood of subprime lending practices along with negative amortized loans tanked the economy causing banks to fail and credit has narrowed. Anther contributing factor is normal business cycle cycled down as it always does when the supply exceeds the demand. The credit crunch is crippling the demand. There will always be a degree of boom and bust in our economy due to supply and demand factors.
Newly qualified buyers will appear in time.
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Posted by: john | October 05, 2008 at 11:27 PM
I an very surprised that these CEO's are getting al these Millions in Severance Package. Fannie Mae is getting Severance package for destroying his company? and Freddie Mac added a clause knowing that his company was heading for a disater. Delphi wants court approval, 216 Millions in bonuses to pay his Executives? What about the Hourly employees that lost about 50% of their salary?
I believe that these CEO's should not be bailed out and should be accounted for their mistakes, otherwise this mistakes will happen over and over again.
I believe that CEO's who contribute to compaigns, the contribution should come out of their pockets.
I believe that our Markets should be allowed to fail and the Congress should reject the bailout proposal and use the money instead to capatalize new "Clean Banks" and to provide a fund for the refinancing of a mortage for those Homeowners who want to keep their home, and give some kind of help to those homeowners that Lost and are in the process of loosing their homes because of the (risky) bad loans that the banks gave them, knowing that they could not afford this loans.
Gema Nguyen
Posted by: Gema Nguyen | October 05, 2008 at 10:55 AM
Mortgage rates are stuck just above 6 percent, but at least they're not blowing up or shut down along with the rest of the credit world. We and our peers are operating normally.
Passage of the rescue bill has pushed up long-term Treasury rates, as markets anticipate large sales of new Treasury bonds to raise bailout cash. The stock market has stopped nauseating freefalls twice this week. These moves also reflect hopes for coordinated global central bank rate cuts over the weekend and a Euro-zone version of our rescue package.
New economic data are awful, with GDP obviously contracting in September. Auto sales fell below 1 million last month, 26 percent below last year. The always-reliable purchasing managers' "ISM" manufacturing index plunged from an expected 50 reading to 43.5 (50 is a breakeven economy, 44 is recession). New claims for unemployment insurance are running a sustained half-million each week, double the rate in a healthy economy. Today's crusher: Payrolls fell 159,000 in September, half-again worse than forecast.
Before political and financial follies, the highest possible honor goes to Sheila Bair, FDIC head, for grace under pressure. She has gotten us out of WaMu and Wachovia with no hit to the insurance fund: no fuss, no mess, on time. To those of you worried about your bank accounts and stashing greenbacks: cool it. I think our banks are fine, now.
This week we have been in the worst moments of the largest "run" in history, nothing remotely comparable, in part because of these damned elections. Civilians and experts alike have been terribly confused, trying to understand what is happening.
Posted by: michael rezk | October 03, 2008 at 09:52 PM
How did this $700 billion dollar deficit benefit the people at the bottom of the totem pole. I can tell you being a state employee, it was going to hit home “the pocket book”. The last couple of months have been an extreme mental hardship. State employees were laid off, three day notice, which included Retire Supplemental, 95 student assistants, part-time workers, positions were downsized, and funds were cut. Managers were covering their employee positions in the departments; example Landscaping. State employees didn’t know month to month if they were going to be paid minimum wage. Vendors did not want to do business with the State. The Governor was in Control: our Retirement, 401K, Social Security, Medical Benefits, Dentist, College School Loans, Union Dues, Taxes, and Bank Accounts. Where is this all going…..Gas, Jobs, homes, schools, teachers. The answer, as I have been told, makes more money! The answer can’t be done. There is more and more homeless children, families in the streets worried about the next meal, the next bottle, the next diaper…..all sun burnt and barefoot. The foreclosures, short sales, HUD homes, apartments, condos= Real Estate is on a role for some and for others tears for their loss. Only the children/parents know the pain of being hungry looking for plastic bottles in the containers on trash day and a place to sleep at night. What do the banks want more money for their incentives and severance pay, It doesn’t end here……
Posted by: Yvonne Lozano | October 03, 2008 at 09:45 PM
Markets fail around the world and what is the consensus in our country. We look at that country as a failed institution. What does that mean for us? I have grown up in a hispancic neighborhood where 1, you didn't keep up with what goes on in the rest of the world and two, you think the government has it all figured out. With my human eyes I witenssed the evil that took place when the riots and maylay incensed in Los Angeles in 1991. I lived right in the thick of things. My perception was that you must fight for all the inequities that you are handed. However, what you consider wrong I may consider right. So who is right? I have had to fight for what I think is right. I have had to pave my own way and never felt that anyone has given me a pass for anything!! The elite look out for their own. What does that mean? Does that mean that if you and I were life long friends I look out for you and you for me? That's a novel concept. The difference is that you took public office and made a public oath to represent the interest of every red-blooded american, not just your special interests. If our economy fails what does that mean for my family? What does that mean for the American Dream? I had a meeting with a prospect who wanted to buy a property. This person and her husband are undocumented. They are looking to buy a part of the American Dream. The Problem is that they have no credit and cannot get credit as again, they are undocumented. I made the picture very clear to her and said you cannot buy a property. She stated that she is not willing to work as hard as she has the past 8 years with no proof of life. She said she will be here maybe one year and then go back to Mexico. I have grown up only to find the country that I was so proud of has become a burden to the rest of the world. Should we bail out CEO's? Should we hand them golden parachutes and let them sail off into the sunset? NO!! Should we bail out the rest of the country? Is 700 billion going to do the trick? Why do I feel like I'm listnening to all the wrong people? Deception is all in the eye of the beholder. Right? I not going to pretend I know the anwser to our ecnomic problems. However, I am going to tell you what I think. Markets should fail, governments should not. This is not the creation of one man or the creation of wall street bureaucrats. This is a nation that feel asleep. This is people from all walks of life who thought that every thing will be taken care of. This is a party, in which one day the partier overdosed. We are all responsible in our own special way. whether we allowed it or did nothing about it. Who is to blame? I really don't care. I just want to say I'm an American and here we right our inequities and solve our own problems.
Posted by: Richard Ayala | October 03, 2008 at 09:32 PM
700 BILLION DOLLARS!!! According to the news last week, that money would pay for the war in Iraq, 6 years of Universal Health Care, and payoff EVERY student LOAN there is. Now what can that do for me??? I agree with most Americans in this country, why are we bailing out the banks when they are the ones who put themselves into this position in the first place. Honestly, if you choose to loan a person 5-6 hundred thousand dollars knowing that they cannot afford the payment, then who's fault is it that we are in this mess. Now are we just going to put the blame on the banks, of course NOT, we know when we cannot afford a payment. When the bank is offering a payment that we can afford right now, we know that later in the future that payment will be difficult to make, especially when we see the payment will rise.
How is this going to affect real estate, currently, there are many homes going into foreclosure, that is no secret, who's suffering the banks or the people? In this instance the people are suffering because they are losing the homes they have put their heart and should into. Some of these people have just given up and decided that they would just stop making payments until they lose the home, others have tried loan re modifications. What the bank is not doing, is allowing those people who want to keep their home, re modify their loans. This then pushes these people into selling the home. What happens at this point. The person is attempting to sell their home as a "short sale". The bank has to approve the offer, however, there is a problem, the turnaround time on short sales is like waiting for rain to fail during the summer. It feels as though it will never happen. Therefore, real estate agents refuse to show the homes that are considered short sales. Why should they put all their time into a home that will not ever have an accepted offer. This not only hurts us as real estate agents, but as we can see, it also hurts the economy. Here we have banks complaining that they have too many properties and assets, but yet they refuse to get rid of it by selling as a short sale or remodifying a loan.
Here is the bottom line, the banks are waiting for the 700 BILLION DOLLAR bail, they will receive incentive to retire, Why?? Why must they receive MORE money to retire?? Are they not already millionaires, do they not have enough money?? Why do they feel there is a need to have more?? I do not understand, but if I were a CEO I guess I would, RIGHT?? Next, who is going to pay for this bailout, are the banks, when they sell the properties they will have money to give back, OR again is it the lowest paying hard working people of this country. The middle class. Those of us who are already struggling, losing our homes, and so forth are paying to bailout these banks, they are going to use OUR tax dollars and RAISE our taxes, but what about the banks?? The people who got us into this mess anyway. If I had a say in this, which obviously we do NOT, i would say do something constructive with the money, if the government feels like giving and donating money, why NOT donate it to us students and pay for our loans. At least we know that when you raise our taxes it will be something that benefits us, PAYOFF of our student loans, and go figure the concept, are we not paying the government back because they raised our taxes. Why can't we receive the same free rides as the banks. BAIL US OUT, but DON'T expect US to REPAY you. WE leave that JOB to the MIDDLE CLASS.
Posted by: Maria Lozano | October 03, 2008 at 09:16 PM
I agree. I am truly disturbed with the whole idea of bailing out these companies and allowing them simply a pat on the hand and a fat check. This has become the unfortunate way of business these days and we as consumers and tax payers must bail out those who are supposed to be educated enough to make the financial decision to stay out of the "RED". Wow...not very impressive at all!
It is also very disturbing that our president and politicians would even consider bailing them out. Simply, when it come to the average person who works and he is just trying to make a good living for himself and family, if any money is owed, creditors and banks won't relent to allow any type of understanding or bail out process. Instead he looses everything and is expected to know better next time. If there is a next time.
In regards to the real estate industry, I believe that this is sending a bad message to buyers,seller and investors. It is going to be harder to hold a binding contract to each WORD. If "BIG" business can be bailed out of a binding contract then why can't a buyer,seller or investor w/benefits? So although, there is a binding contract with all of the Is dotted and the Ts crossed, if either party want to change their decision, why not? When Congress and Senate allowed BIG business to bail of their binding contracts with benefits.
It shouldn't matter if it is BIG business or the average person, when you make a decision and give your WORD, you should uphold what you have promised. If things do not pan out as expected, take the loses and move forward with wisdom and knowledge.
Posted by: Sonya Bellamy | October 03, 2008 at 08:55 PM
I was brought up believing once you signed a contract that was it, there was no turning back. Well, times they are a changing and reality does strike and away go our beliefs. Last year I was in a similar position as the buyers in the article and know what they are going through and know there are extenuating circumstances that need to be considered on both sides.
As a marketing ploy, developers set up an atmosphere of excitement and an attitude of “you better buy now or you will lose out.” This attitude was rampant in the industry. Everyone saw dollars signs and a comfortable retirement. The excitement just built on itself and we kept the blinders on.
As a student just learning about the real estate industry, this is my lay opinion. A buyer should be able to get out of a signed contract when the developer does not perform according to law or contract. However, the contract is a binding agreement and the buyer should not get away without consequence as they have a responsibility to adhere to the contract also.
The developer should sit down with each buyer who wants out of their contract individually and they need to explore what would be the best solution to both sides. With the economy as it is today, a few questions I can think of are: will the buyer still be able to qualify for this loan after the legal time period? Will the buyer need to come up with a higher down payment and can they afford it? What expenses will the developer have to take the unit back and resell it? Will this start a run on other buyers exiting the project? If the buyer cannot afford the property now, what happens to property values if the buyer is forced to go through with the sale and ends up in foreclosure? Yes, it may come to the point that the buyer needs to forfeit their earnest money. But it is what it is.
Since Wednesday, I have contemplated the effect of this situation on the industry. I think most people who buy a property want to follow through with their contract. I don’t know if there would be that many people who would be backing out of their contracts to make a difference in the industry. If a few buyers back out, I don’t think property values would depreciate so low that it affects the whole of the development. Although this depends on what area of the country we are dealing. Developers are panicking because so many of them are going into bankruptcy.
Now, my opinion on this may change as I delve into other real estate classes and encounter the industry as a professional, and that’s okay as I am looking forward to exploring this whole new world (at least for me).
Posted by: Linda Peeples | October 03, 2008 at 08:33 PM
Our current financial fiasco is just another example of an extreme following an extreme: people were making mass amounts of money working the angles from an out of whack housing financial system for way too long, and now many are "finally" feeling the pinch from the delusional nature of expecting a never ending parade of money and falling into a more poverty stricken lifestyle.
Those CEO severance packages really is just a strong form of degeneracy fluttering around these failed companies. I can't say I'm surprised such exit packages exist, since human beings are motivated primarily by self interest, but of course I'm going to say that it really does seem like a total slap in the face of what our economical system is supposed to be about. Incompetence is incompetence and these CEO's should have it hard just like everyone else under them at their failed companies. Still again, I can't say I'm surprised. The people with the "F-You Money", the type of money that gives a person the pride to tell anyone to bug off, are the people who have the power to enact such severance packages. These CEO's should be considered failures, and their companies should fall.
Posted by: Joshua Garica | October 03, 2008 at 07:56 PM
HECK YES!! OUR MARKETS SHOULD BE ALLOWED TO FAIL!! You cannot learn if you never fail. It is from failing that we learn and change our ways.
It is not a surprise the amount of trouble we are in and I only think that by allowing for this 700 billion dollar bailout we are only aiding the big CEO’s in their mistakes. CEO’s will be pardon of their mistakes and they will only continue to get richer while the working middle class continues to work harder and get poorer. What angers me most is knowing that with this bailout, our great (NOT) CEO’s will only get richer with their unnecessary and undeserved multi million dollar bonuses.
When will the government make a decision that is going to benefit the people who need it most? Not the already million and billionaires already reaping the benefits of our money. Now this bailout which is suppose to help the people and prevent the crash of the economy is only going to pay the causers of it and in turn the middle class people who need the money the most will continue to struggle by having to pay for the bailout.
Will no one stop and ask the middle class how they are doing, or what do they think about this bailout. The people hurting most are only going to continue to hurt. As we struggle to pay our rent and keep our houses, and even stay employed, the rich get richer and the poor get poorer.
The economy needs the money, there’s no debate about it. Without flowing money people will not buy and businesses can not run, however there needs to be another way. We need money back into the economy but lets not give it back to the people who contributed to the reason we are here now. CEO’s need to learn there mistakes or we will undoubtedly be in this same situation again in the future.
Posted by: Megan Miller | October 03, 2008 at 07:55 PM
To be real i am not surprised that the top CEO's have done this. It really like a slap to the face, you it know its coming. I had always thought of a boss or in this case CEO's taking control of everything which concerns with money. They have become greedy people with no moral value. I do believe our market is allowed to fail but not this far. the Government i think is no longer concern of the people but just being at the top. What happen to our being equal? It not there. CEO's getting richer while the lower people are getting heavy financial damage.
i Believe that CEO's think this is a game of monopoly. You can't start this over just like that. But CEO aren't the only people who are responsible for this mess we are but also the loan officer and people who knew they didn't have the money to buy a home. The buyer's knew that they could not buy that $500,000 dollar home knowing that they could only afford $300,000 (Slap yourself). Loan officer who accepted it... come on think a little. Luckily people are realizing there mistakes. Now we can start a new but it is going to take awhile.
Posted by: Jorge Menendez | October 03, 2008 at 06:21 PM
It is so shocking to know that CEO's of major corporations are going to be getting a severance pay when their company is going down. How in the world does that make sense? You fail, so here's a huge chunk of money? Don't mind all the people under that are losing their jobs because there will no longer be a company. But sure, it makes sense for them to get a lot of money back. Sure. That is ridiculous. CEO's should be held liable for their actions just like all the homeowners that have lost their homes to foreclosure. If they are going to be getting a bail out, then the homeowners should as well. All the banks should be willing to work with these homeowners in order to at least stop all the massive amount of foreclosed homes.
Markets should be allowed to fail. This is how we learn from ourselves. How we can better ourselves. The economy was really getting out of hand, especially in California and the inflation in the housing market. A home in the IE was going for half a million dollars, some even more. Our markets falling is a blessing in disguise. Of course, it is very unfortunate that there are good people out there that are hurting from all of this, but hopefully with the economy starting again, they will be able to get back on their feet. This should teach us all a lesson and allow for new rules and regulations in order to prevent the situation from getting like this again. At least, for it not to hit us so bad that the economy is in need of a 700 billion bail out.
Posted by: Elsa Ramirez | October 03, 2008 at 05:58 PM
The amount of government intervention in our private lives and private businesses has been spiraling out control for many years now. I never thought I would see the day when a conservative Republic president would be involved in designing, promoting and ultimately signing a bailout plan to benefit private industry to the tune of $700 billion dollars on the backs of the American tax payers. I'm just glad Ronald Reagan is not here to see this. I recall the days when "small, limited government" was the talk of Washington and politician were neither shy nor afraid to discuss that concept in public. Today, as we sit and ponder our economic future, not a single significant voice has been heard questioning the wisdom of this massive bailout plan. The fact that this bill is being discussed during a presidential election year further contributes to the lack of clarity of the long term economic effect being incurred by passage of the bill. Most of the rhetoric in Washington these days is political, nothing is substantive. In the midst of all the noise, hard working Americans are losing their homes, jobs, in fact their entire livelihood. I've always considered myself to be fiscally conservative and I believe that small government and a free enterprise is always better than higher taxes, higher government spending and government regulation. And I also believe that businesses and private individuals should be allowed to fail. However, no one likes to see others fail and certainly no one likes to fail. I'm certainly not happy seeing my friend and neighbor loose his job, his home, his health insurance. But knowing him the way I do, I'm also sure that he did not expect nor does he want the government to bail him out. The best government can do for us is level the playing field and give us all a chance to succeed. Aside from that, no one sector of society or business or industry should benefit from a massive government assistance plan that was caused by greed, ambition and excessivenes; not to the tune of $700 billion. I know that the Socialist solution to this crisis was posted in this article for fun and we're a long ways to socialism, but in reality isn't socialism partly defined as government ownership of all economic aspects of society, include financial system?
Posted by: Nick Dominguez | October 03, 2008 at 04:34 PM
It’s a surprise to know about the CEOs or the top executives will be in the first place to grab the millions for severance packages even though the company is operated in their failure, they may execute their special authority to well plan their compensation at their own interest to catch the final dollars and neglect their intention will expedite the company’s bankruptcy or add on the loss to the innocent people.
I hope our government may bailout those companies to minimize the further consequences, but in the condition of kick those “top executives” away by no payroll or any kind of compensation, ask them to go unemployment, why the treatment is different with our normal people, they should pay for more since they’ve earn enough when they were in the position.
Government agency, Banker or financial institution may need to revise the control of the loan processing, with the substantiate credit report, income validation or may be with the assistance deduct the mortgage from the payroll direct as taxes, assist for those suffering with temporary un-employment, I think it may be better for the house owner to continue to have their own house.
For the real estate market, although it may slow for another year, but it may be the good time for real buyer who need a home. If government may assist, the interest rate may be set lower to the one who buy the house for the primary residence, lower the property tax rate. The falling may not be bad, let’s looking forward to have a healthier market in near future.
Posted by: Sinnie Tse | October 03, 2008 at 04:18 PM
From Lyn Walker September 27, 2008
I have been thinking about the government bail out a lot lately and I can not understand it all, but this is what I think about it. If the government is going to bail out these companies by buying up there loans I am sure they will get them at a very low price, so why cant the banks just refinance the homes and give the people that are already in the homes a break like they will the government.? This should only be done for the people that are actually living in the homes not the ones that have over extended themselves in real estate like investors. I fill that if the banks would renegotiate the price of the home for what they are selling for now and then lower the interest rate also, a lot of the home buyers could afford there loans.
As far as the CEO of all these companies this just makes me sick. I do not think they should get a single thing, except jail time maybe. Would we get multi millions in bonuses and incentives if we ran our businesses into the ground, especially since they all new it was coming and all this was happening due to there inaptness to run the loans correctly, they all new what they were doing was going to end up like this, so why should they get anything.? Who do they think they are adding a clause to there employment contract two months before when they knew the company was headed for disaster, and who aloud this? Who gives the CEO the right to take away from the actual working people buy cutting there wages and/or laying them off of work?
Sorry, but it just makes me sick. You are right, if they bail them out they will never learn because there is no consequences for there misbehavior. Just like a child sometimes you have to let them do it to understand the consequences, just telling them no don’t do that or you will get hurt does not teach them.
Lyn Walker
Posted by: Lyn Walker | October 03, 2008 at 03:35 PM
This article is very true to the way that I feel. I think that we should be able to fail because if we don't have failure we will never be able to learn from our mistakes. In the cases of the major companies that are causing all of the problems these CEO's that caused there companies to fail will since they are getting a good severance package will just bring down other companies. This will happen because even though they went bankrupt they will get a get out of jail free card with the bail out from the government, which will teach them nothing. This means to the real estate industry that since these companies gave loans to anyone who was breathing at the time of signing it is now going to make it a lot harder for people now to get a loan to buy a house which will then cause the house prices to fall. This price reduction is good for the buyer but bad for the seller. With prices being lower than they were when they were bought the people who have the houses will not want to sell them. If no houses are being sold then no agents are making money so people stop being agent and then the quality of agents when the change happens for the better the good agents are gone.
Posted by: Jesse Beem | October 02, 2008 at 09:44 PM
The current financial market disaster is the symptom of the structural imbalances in the real estate industry. Greed is the leading cause of the turmoil in the financial markets. I do not think government should bail out troubled investors, CEOs, and homebuyers with bad loans. It does not make a significant difference to let investors, CEOs, or buyers with bad loans to walk away without taking responsibilities. The policy makers did not learn any lessons from Japan’s many years down turn of the real estate industry. The real estate industry will still go through a long period of recession even if the Congress and House of Representatives pass the bailout bill. Some of administrative officials who came from financial industry made mindless economic and monetary policies, which favors the opportunists instead of average taxpayers, how can they take the responsibility of supervision? There is no new spurt of economic growth in sight. Yet many investors stay put because they have been conditioned to believe that government will bail them out. Homebuyers with sub prime mortgages have been expecting the market conditions will become better within a short period of time, and also they are looking for the easy way out. The government is looking for an instant solution to relieve current situation. But the current situation is not when that can be solved with a simple solution. This after effects of disaster will be with us for a long time to come. We should be prepared for the worst, cash out your stocks, buy gold, store your physical goods and protect yourself from inflation.
Posted by: Anguang Zhou | October 02, 2008 at 09:18 PM
It is sad to say that our government politicians are more interested in making it into office and saying what people want to hear then doing what the public needs. To read this article and think about all the CEO's and opper level excutives who are getting rich while the lower level employees are getting screwed and losing jobs with nothing. Accountablity needs to be taken by the upper level management, if you make bad decisions within your company, then you should have to suffer the consiquences. If you make mistake while working for an employer it could cost you your job, why should it be any different for upper level management. They shouldn't be allowed to really on the government to bail them out. I agree that we learn from failure, and all these companies that have made bad choices and are filing bankruptcy shouldn't be allowed to hand out huge severance packages to CEO's for running the business into the ground. I agree our markets should be allowed to fail so that we can evaluate the choices and decisions that were made during this time and then learn from those mistakes so that we do not make the same choices later on in life.
In the real estate field, I feel that the buyers are suffering for the mistakes of agents, loan officers, and banks. And because of the situations that buyers have gotten themselves into because of bad guidance from there agents and loan officers, people can no longer afford the homes and now people are losing there houses. Why should people who were trying to own a home lose it because of bad information. I understand that there were many poeple who were looking to get rich quick and they got into to many loans to fast, and they are now losing there properties, but they are now suffering the consquences of there actions which is what should happen to people who try to get to greedy. I feel sorry for the people out there who got taken for a ride and signed these interest only loans and now the can't afford there homes, but they should have realized how much money they make and what they really could afford and then they should have gotten something in there price range. So now, poeple are suffering, but they are learning from there mistakes and the failure of this market will allow agents, loan officers, banks, buyers and sellers to see where they made bad choices and how to approach business in the future. Accountability is very important in the learning process, and even though the market is bad right now, and people are suffering, in the future, those same people won't ,ale those types of choices again.
Posted by: Brady Chapman | October 01, 2008 at 04:55 PM