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September 8, 2008

Fannie/Freddie takeover: What it means for you

Posted: 11:32 AM ET

Business Correspondent Jennifer Westhoven

This weekend, the US Treasury pledged to spend up to $200 billion to shore up Fannie Mae, and Freddie Mac. They’re basically booting out the CEOs and taking over. These mortgage giants got themselves in HOT water by taking on risky loans, but they’ve become “too big to fail” in the eyes of many. They’re such huge players in the mortgage market (because they are affiliated with the government) that if they went under, it could rock the economy.

ALT TEXT

Treasury Secretary Henry Paulson speaks at a news conference Sunday.

So the main benefit of a bailout? We avoid a “financial tsunami” (we hope). That’s Treasury Secretary Henry Paulson’s main goal: get confidence up so we don’t suffer a terrible financial shock (there were fears on the trading floors on Friday of such a thing).

What WILL you see? Analysts say the bailout will likely mean lower mortgage rates all around … which could be a crutch for the housing market (haven’t heard any economists saying this will mean the market jumps up out of its chair and yells “I’m healed!” though).

Just in time – a new survey says 9% of US mortgage holders are in foreclosure or behind on their payments. Also good news, the New York Times says “some delinquent borrowers may have a better shot at modifying their loans and ending up with lower fixed payments.” That would be a great help. Let’s just hope it doesn’t cost anywhere NEAR $200 billion.

PS: The federal budget for cancer research is about $6 billion. Wish we could put the money there!

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Stephen Coney   September 8th, 2008 1:43 pm ET

Wasn't bailing out losers in the S&L fiasco suppose to stop some sort of "financial tidal wave" as well"? I live in part of NYS the is a gruesome carcass to this day after the fallout that was our last recession. Ever since the Reagan years the economy has been a constant game of the Three Card Monte with the Market, the Fed, and the Treasury taking turns on who are playing the rubes. Let us not forget that the dollar was taken off the gold standard during the Nixon years. So for how long and how many billion can economy live as an illusion?


roland   September 9th, 2008 9:09 am ET

I dont see why white women in America are trying to compare themselves to Palin. Remember, SHE is a Politician AND an actress. All of America will not be judged as "lightly" as Palin has been. When her glamour wears off, and more people die in Iraq, gas prices go to $6.00/gal., Milk $6.00/gal.YOUR kid gets pregnant at 16, you lose your job and you cant afford to go to the dr., Palin wont be your hero anymore.REMEMBER: The Republicans got us in the financial state we are in today! How many people do you know who have lost theyre homes? Dont let superstardom, clever speeches, and fancy magazine covers influence your decision about government! Sound familiar? When the smoke clears, McCain and Palin are still Republicans. Republicans just do not deserve another 4 years in office, period. I wish there was a law against any Political Party running for President after ruining the economy!


L. Coleman   September 10th, 2008 2:04 am ET

These mortgage companies choose the fate that they are now suffering.……they choose to issue out loans to high-risk consumers and in some cases these companies did not disclose all the information these people needed to make a sound decision regarding whether or not it was a good idea at the time financially for them to accept these loans that these mortgage companies claimed they qualified for, which in fact these consumers were really NOT qualified for the loans offered to them simply because they were a high-risk and these companies knew it before hand.

I think that it is unfair for the government to bail out these companies because of their stupidity and adoption of a “false” risk assessment analysis/criteria to justify giving loans to high-risk consumers. I think however the government should restructure/reorganize Fannie and Freddie while bailing out the consumers instead especially the ones who can prove that they were actually duped into thinking they were able to afford whatever loans they ended up accepting.

Since the government has basically seized Fannie Mae and Freddie Mac, why don’t they take over Sallie Mae as well. There are plenty of student loan consumers who have been hit with circumstances that have rendered them incapable of repaying their loans at the payments being demanded of them by Sallie Mae not to mention they are just as shady as these two mortgage companies, when you do pay them they don’t credit your account and they continue to harass and threaten you for what is now an “incorrect” amount. No one is talking about Sallie Mae’s corrupt practices and the troubles facing consumers of this loan giant, not even the Presidential candidates…….If you are going to run to the rescue of Fannie, Freddie and their consumers, aid those having to deal with Sallie as well–same problems different lender, effect on the economy however has yet to be analyzed.


matthew   September 10th, 2008 8:17 am ET

Maybe we should start a national trend by making all executives accountable for all horrific failures, considering the public tax dollars have got to mop up their mess.


randy   September 10th, 2008 8:19 am ET

THE CEO SHOULD GO TO JAIL !!! WHY SHOULD WE GIVE THEM 24 MILLION FOR DESTROYING THE 2 COMPANIES. WHAT HAPPENED TO BEING RESPONSIBLE FOR YOUR ACTIONS!! THEY NEW EXACTALLY WHAT THEY WERE DOING. ITS ALL ABOUT GREED!!!!!!!


Joanna Henderson   September 10th, 2008 8:19 am ET

With Fannie Mae and Freddie Mac going bankrupt, the government is looking to sink billions of dollars into these companies so they can, in turn, raise interest rates on loans from American families. We are the ones paying for their downfall. If the government really wants to help the situation, when the companies go down, declare all loans paid. Then the government won't have to give the companies any money and the American people will get a big financial break we desperately need.


Earl   September 10th, 2008 8:24 am ET

The Tax payers are paying for the bail them out . We should not have to pay for bonuses too. Have we gotten t the point where we reward failure. How can I tell my child grow up be a CEO and bankrupt the company you might even get a big bonus. Now that is realy something to shot for


Bob   September 10th, 2008 8:56 am ET

I have read that Fannie Mae and Freddie Mac are the guarantors of almost half of the nations almost $12 trillion in outstanding mortgage debt.

With foreclosures possibly nearing a rate of 10%, that would leave them liable for nearly $600 billion, all things being equal.

But are things equal? Has there been a shuffle going on which places Fannie Mae and Freddie Mac in control of the riskiest of the mortgages? If so, this bailout could well surpass $1 trillion.

These two corporations were allowed by law to be underfunded and were not required to report their financial difficulties to the taxpaying public. Just how bad is their situation?

My guess is $200 billion is a bandaid where major surgery is required.


Chet   September 10th, 2008 9:18 am ET

"Aren't these CEO Exit Packages/Bonuses written into their contracts?" WHAT? It never ceases to amaze me how much compassion these incompetent CEOs get! As one American worker (of tens of thousands) who has recently lost my "earned" pension due to a corporate bankruptcy, no mention was made that "it" was a contractual benefit of mine. How many ex-CEOs have found themselves struggling in their retirement years because they didn't get a bonus they were due? Now count the endless number of American workers left without their "promised" pensions and see if their "golden" years are anything like they had imagined.


Mary   September 10th, 2008 9:34 am ET

Freddie Mac and Fannie Mae CEOs should not be paid severance millions at the expense of American taxpayers. They are in better financial conditions than most Americans who have lost their jobs and homes. Let them bite the bullet and leave quitely with no more money. I assure you they have plenty stashed away to last them a lifetime of lavish living.

It is outrageous that they receive a $15 Million dollar severance package and the government is having to bailout these corporations. Someone do something quick!


Michael   September 10th, 2008 9:47 am ET

Going as far back as the Chrysler motors bailout I fear we have set a fooolish precedence with the government bailouts of private industry. First I question the legality of the bailout program on constitutional grounds. I would like for someone to quote chapter and verse of the constitution that authorizes such bailouts. Second. Bailouts create a lazy business mindset in that CEOs think we can do what we want. If we get in trouble the govt. will bail us out. Third is responsibility. Industry doesnt have it. Which brings us to the govt. oversight committees that are supposed to monitor the banking industry. Why are these people not hauled into court. Govt has got to learn that the people are NOT a neverending source of money.


Susan LaPorte   September 10th, 2008 10:54 am ET

CEO's should not get any bonus for failing to do their jobs. Wasn't watching over Fannie Mae and Freddie Mac suppose to be their jobs? Anyone else would lose his job and his pension and health care if they had anything to to with this fiasco. Let them sell all their exclusive properties and toys and live like the rest of America. They haven't earned anything. Have you ever dealt with a government agency? Try the impossible task of changing your address with Sallie Mae. You will quickly see how incompetent they all are.


Earl   September 10th, 2008 10:56 am ET

Bailouts for companies! giving their CEO's Millions. Does this not fall on to the Ragan era? I mean they blamed Unions for years of taking money from people but now they get to give it to CEO's instead of people.

When did it become more important to Help a CEO more then the workers?
Millions of bailout dollars for them and the companies they took to the ground!
Take out Unions and enter the CEO BAILOUT!!!
WHAT A GREAT PLACE TO LIVE!!!!

When will this country or Goverment see CEO's are the old retirement packages that were once for workers.


Jody   September 10th, 2008 11:00 am ET

I always hear these companies say that they have to pay CEO's big money to get the best people for the job. So if the company takes a fall, why do CEO's severance packages. Its their poor leadership that allowed the company to fail. CEO's should take a major hit in the wallet.


Matt McCoy   September 10th, 2008 11:03 am ET

Leadership must be held accountable for its direction and destination. Fannie and Freddie's respective CEOs need to shoulder the costs of the decisions they've made, back out with the money we know that they have and forget about cutting a severance check with the money they know that we don't. Americans worried about putting food on the table for their families need it more.


Jason   September 10th, 2008 11:20 am ET

I don't think anyone should by a house,because you can't trust anyone these days.I think everyone should rent,only by necessities and cause all the merchants,who have been charging us way too much for their merchandise,to go under.The power is in the peoples hand,and they don't even know it.


Jim   September 10th, 2008 12:54 pm ET

What about PRISON Time and Fines for the people responsible???


Steve   September 10th, 2008 1:02 pm ET

I agree with Jim... Prison Time and Fines are a must… I also want to know what about the rest of us that were responsible tax payers and did not (a) live above our means (b) read our mortgage paperwork???? I guess we get screwed… AGAIN! Paying for everyone else to get rich or be lazy and stupid. Can You Say Discrimination...


Joe Gartner   September 10th, 2008 2:34 pm ET

Why would anyone even consider a bailout package for these CEO's? Their failure to properly operate and report problems to the public should carry some sort of punishment. Send a message to the corporate world that CEO's are not above the law and culpability. They should be fired with no benefits and face an investigation for possible legal action for negligent behavior. It will be very disappointing if they walk away with a good-by and 24 million dollars (or whatever they severance would)! They will be laughing all the way to the bank. As in any bad situation, I hope that someone is held responsable for this disaster.


Thomas Dies   September 11th, 2008 7:00 am ET

It is time a full investigation is done on the heads of Fannie/Fredy funds, the people that are invovled in the decisions to loan money to people who clearley did not have creit or the means to pay these morgages should be fired and if fraud took place they need to go to jail. And no cnn liberals Sarah Palin cannot be blamed for this.


GARedNeck   September 11th, 2008 7:28 am ET

Why do Republicans hate government when there is money to be made through greedy schemes? Yet when the greedy schemes start losing money the same Republicans cry for government bail-out.
It's a shame that legitimate homeowners will suffer because of lack of government oversight, and these CEOs, along with rich speculators will profit from their greed.
Anyone who says that government is the problem should have to lose everything they've accrued when they screw up.


Robert Farnell   September 11th, 2008 7:33 am ET

I only WISH that the incompetent CEOs of those firms will be "booted out." It is much more likely that they will both be able to pad their personal savings accounts with more millions from severance packages. All at taxpayer expense. They should be getting jail time, but I'll bet they get "golden parachutes."


ted   September 14th, 2008 3:22 am ET

Out Raged White Male : After all we've learned about Shara Palin How Can Anyone Vote For Her. Her And Her Husband Joining The ALASKA INDEPENDENCE PARTY, The Group That Wants Alaska to be Its Own Nation And No Longer Be Apart Of The United States. Her Failure As A Parent Not Taking Care Of Her Sixteen Year Old Daughter To The Degree She Gets Pregnant. Her Saying She'll Be A Advocate For Special Needs Parents When Before She Had A Special Needs Child She Cut Funding F or Special Needs From 8,000,000 To A Meir 3,000,000. Allowing her sisters husband to drive his police car while drinking and drunk, abusing her sister ,tazing his son but not reporting it until there going through a divorce what care rector. then there's her reputation a her school of being called Shara barracuda because of her oral skills and the soft-core porn flick. yea this is the perfect woman for the republican party. final straw seeing her on Charley Gibson she looked so out of her league only a fool would chance her having to Dael with Putin or Iran.


Bill Alvarez   September 15th, 2008 7:44 am ET

We can only blame are self’s for this problem. Either the search for the fast buck/ easy dollar, leads us to the present situation we are all going thought. When housing prices where sky rocketing everyone wanted to make a fast and easy dollar not caring or turning a blind eye to what might happen/ what will happen. So now because of creed, and yes creed because you know as Americans we all need to have a 50" flat screen TV, a 3500sqft house for a family of 2, a $100K car, and all the toys an adult can buy to make use feel better about are self’s/ look better to everyone else. But what it comes down to is that the US government is not a corporation and the only way it makes money is by taxes. So when the government bails out a company we are paying for it and it going to stay that way until we take response ability for other people’s actions and deal the problem some other way. This is one of many underlying issues as a country we are going to have to deal with.


Ron   September 15th, 2008 8:25 am ET

The truth is that the reason the FED didn't bail out Lehman is because the GOV'T. IS BROKE! The gov't. doesn't have the money to bail out everyone so they're in a position to pick and choose who's going to fail and who's going to stay afloat a little longer. Everywhere you look around you, people, businesses are going broke. It will only get worse. This is only the beginning.


Kate Smith   September 16th, 2008 7:20 pm ET

Honestly, neither the failing financial firms nor the homeowners should be bailed out. Both sides knew they were gambling. The financial firms KNEW a large percentage of the applicants applying for the subprime mortgages did not have the financial history to support the size of the mortgages they were provided. The firms just thought that although some of the loans would foreclose, that they would make enough money off of the few responsible loan holders they had to still end up ahead. And the homeowners who gambled to get the house that was too expensive for them or that they didn't save long and hard enough for. . . Since when is the government responsible for bailing out anyone (firms or individuals) that gamble and lost? I'm sorry but all of these foreclosures were not caused by loss of jobs and a bad economy. Alot of it is the result of bad choices and the only way to discourage such bad choices in the future is to have penalties. CEOs should be accountable, investors with stocks in those companies should be held accountable and homeowners who gambled with their mortgage should be held accountable – not the tax payers.


Harold   September 17th, 2008 8:39 am ET

Seeing Suzy Orman whine about the lack of this and that about the nations financial systems is really a joke. I am stupid and I realized five years ago creating a financial bubble by pouring cheap money into housing to make your mediocre economy look good would fail in the long run. D-oh!!!!!

This is always happening, look up the narrow gauge boom of the 1870's, cheap money for get rich schemes.

She never said anything when times were "good" but sure is whining now. Aren't they all now, they had that Kramer guy from "Mad Money" whining on "Morning Joe". Better off listening to Kramer from Seinfeld.


David   September 17th, 2008 8:51 am ET

These federal bail outs just makes me loose faith in our government. If I had a business and made irresponsible decisions to cause that business to go under why can't the government give me capital to keep me afloat? We just go bankrupt.


Roy   September 17th, 2008 8:55 am ET

A couple of things frustrate me when it comes to the bailout. 1) The government is not setting a good example when to comes to managing money. How can the goverment bailout anyone when they continue to go deeper in debt? What happened to "pay as we go"? 2) I don't own a house nor do I have credit card debt. I do not believe it is right to make these type of people to pay for someone who is trying to Keep up with the Jones'.


Harold Briggs   September 17th, 2008 10:30 am ET

The American people deserve better than crooked politicians(Carol Ronen and Governor Rod of Illinois) and incompetent CEO's( AIG, Lehman,etc.). People who work hard every day are being taken advantage of by goverrnment and big business. Our country was born of revolution and I can see an uprising of the hard working people of this country coming. We are sick and tired of working hard and watching business and government throwihg money away.


Andy   September 17th, 2008 10:37 am ET

Rather than focus on the aftermath, why not zoom in on what really happened. Some observations:
1. Since bad lending decisions are a "root cause," how were people so easily able to fool credit agencies and lenders about their horrible credit histories and inability to pay?
2. Shouldn't the people who committed the fraudulent acts (walking away from their mortgages) be prosecuted for criminal fraud?
3. By the time the CEO and senior management find out about these horrible decisions, the avalanche of damage has already occurred so why reward bad performance with bailouts?
4. Maybe all of these financial institutions "banked on" the federal government bailing them out when they continued to encourage the imprudent lending?
5. Did election-year politics (Freddie, Fannie, & now AIG?!?!) play a significant role in bailouts? And why start the bailouts now? These bailouts could have occurred 6-12 months ago and not have had such far-reaching consequences.
6. Shouldn't more financial lending regulatory oversight have been provided much sooner in the game? Oh, that's right, Congress can't get past the partisan gridlock in order to act until there is a new president.
7. If laws are not enforceable, don't we need legislators who will make law this is enforceable and then see that their laws are enforced?


Cindy Warren   September 17th, 2008 12:45 pm ET

Not sure where to enter my question, because I couldn't find the World Today site. But here goes - a comment was made regarding the "Federal" Reserve being a part of the US government. Is that accurate? I was under the assumption that the Federal Reserve was a group of mega billionaire companies, rather than the US government. Is that true?


aaron fown   September 18th, 2008 6:18 am ET

Well I just wondered if the feds would help bail me out as well. I work for Wendy's making 7 dollars an hour, and can't afford to move my daughter and girlfriend back to Ohio with me. I'm sure that it won't cost 85 billion dollars Oh thats right they don't care about me they just want my money to help their private interests. That's ok tell them we are going to move to CANADA!!!


Tasha   September 18th, 2008 6:33 am ET

I am a single mother with 2 children working 2 jobs to keep up with the growing gas prices and the increase in everyday living. I am curious to know if the government is going to issue out 85 billion dollars to help me and other Americans in the same situation that I am. I am still confused on how you get a 10-20 million dollar bonus every year and WE the tax payer who dont even make 10 percent of that a year have to bail you out!


kim   September 18th, 2008 6:53 am ET

Whatever happened to operating within ones means. That would be called a BUDGET. The feds didn't come into our homes and look at our income and decide to help us out. I dont know of anyone getting a substantial cost of living raise to compensate for the sky rocketing cost of fuel, utilities and groceries. I am a former small business owner. My business operated off a BUDGET. If the money wasn't there, I didn't spend it. When the economy started slowing down I watched my profit margin go down. Within 9 months I made the decision to close my business so I would not be in debt. Had I not done so, I doubt that the fed would have come charging in on a white horse to save me. We need to get back to the basics, if we dont have it dont spend it.


Mimi   September 18th, 2008 7:32 am ET

It's positively obscene that these big companies expect taxpayers to bail them out of their financial woes. It's even more obscene that Dem and Reps are like little children pointing fingers at each other. Dems have had control of congress for 2 years they haven't done any better than the Reps. Gas companies, insurance companies, large banks etc have Habitually raped the American public with over blown salaries and miss management and speculation. This "crisis" was created by them. Of all the things that govt regulates why arent they reigning in these large companies. If I dont stay on my budget and pay my bills then my house would be taken and I would loose what little assets I have carefully saved.

As to the ballplayer, his blatant disrespect for a country that is foolish enough to pay 10 million a year Shame on all


Mark Putt   September 18th, 2008 7:32 am ET

The next President has the tough job of accessing the economy. I hope the President just gives it to us straight. We could spend years pointing fingers at people and probably will. However for now, in the worse financial crises since the thirties, every American should offer the Government their support. The chain is only as strong as it's weakest link my friends. We should all lock arms as a Country and pull ourselves out of this mess. Start by helping your neighbor and let it grow from there. Help turn your neighborhood into a community. And never lose faith in God, He'll always be there.


Car Cauch   September 18th, 2008 7:56 am ET

This is in responce to the government bailing out the financal institutes. I am not supprised at all. We are talking about a segment of society that when growing up always had mom and dad to bail them out no matter what they did. Why should this be any different. I wonder what happened to you are responsible for your own mistakes and should deal with them by your self. What we need to do since this is a election year is do a recall election on all of the members in congress that are not up for relection at this time also. The people of this country need people in office that will take care of them and tell big business that they are on their own.


Laniard   September 18th, 2008 8:00 am ET

These companies are just two among many who have their hands out as the country's economy starts to tank. They all make a case that the economy can't survive without them. Bears & Stearns did it, Freddy, Fannie, AIG and now the auto industry. They are trying to get a piece of the taxpayer pie before it is all gone. They know they have become SO big that the government has no choice but to bail them out. Where are the repercussion? And don't be fooled by the semantics – a "loan" (as opposed to a "bailout") to the auto industry will undoubtedly be "government backed", which means the tax payers are on the line if the auto industry can't afford to pay it back after they have paid their ridiculous executive salaries and bonuses. Wake up people and SCREAM at your representatives. Squeeky wheel gets the grease.


Kenny   September 18th, 2008 10:02 am ET

I think with all the companies folding and the government bailing them out is essential to the United States but the people in charge of such companies need to be held accountable for allowing this to happen on a large scale. This is as bad as Enron was. They should have to pay instead of being given a pension or bonuses.


J. Repetto   September 18th, 2008 10:09 am ET

Well apparently if you make millions of dollars you can say or do what you want. But being an athlete on a National level he has to keep in mind that he has kids looking up to him and needs to set the example. Sure you have freedom of speech, but you also have National Pride..if you don't like the National Anthem then maybe he should remember all the sacrifices that have and are being made daily just so he can "disrespect" our National Anthem. God Bless America


JOE   September 18th, 2008 12:11 pm ET

How come gas is so much when it keeps the oil prices keep falling


James Carrow   September 18th, 2008 2:48 pm ET

Dear Robin and Jennifer:
Thank you so much for covering this story. You know, we all wonder what the actual meaning of the words "Wall Street" is these days. Once upon a time, it used to be a place where companies could sell stock to raise new capital for their businesses. That was a long time ago, of course. No one does that any more; they raise capital abroad or on smaller trading floors, if they have to. Well, after that, the Street, as such, meaning the NYSE and the major brokerages, sort of morphed into a business that rich people could use to avoid working for a living. I used to know many of these people myself; the point was, for all these prep school and Ivy League graduates, was that after Dad sent you through school, drinking and driving away, you could avoid all that work and simply take go on a long, 65-year vacation, by calling up your private banker or broker once a month, to check on your stock portfolio. Much easier than that business about learning a trade, working for someone else, and actually trying to make money, of course. This was the "Street" that the Carter, Reagan, Bush, Clinton, and Bush II administrations spent so much money subsidizing, and the alley where people like Mr. Paulson used to work, of course.
The little problem, there, Robin and Jennifer, is that this kind of street only works while stock and bond prices are going up; it doesn't work when they go down. So, for 30 years now we have been spending trillions of dollars of public money subsidizing a stock market that only goes up, here.
Now, what has been happening these last few years is that both the dollar and the stock market have started heading down, rather than up. This means, basically, that most stock portfolios, even those based on mutual funds, have been losing money. So, what these rich people have done is to start dumping money into hedge funds, funds that promise high positive returns. They do this by borrowing money from large invesment houses and banks (like Lehman Brothers, Goldman Sachs, Merrill Lynch, and Morgan Stanley) and then investing it in high-yield securities, like default derivatives or oil futures.
Well, there, Robin and Jennifer, what happens when they can't repay the money to the investment houses? Because default rates are going up, due to high energy costs, and oil or gas prices are going down?
What happens is that the investment houses head over to court to declare bankruptcy, that is what happens, in a nutshell. Like Lehman Brothers, which just defaulted on almost 700 billion dollars in obligations. Or, they ask a major bank, with large consumer cash deposits or credit card assets, to buy them out,as in the case of Merrill, Bear Stearns, and Morgan Stanley.
That saves everyone but AIG, which insures stuff like this, and Fannie Mae and Freddie Mac, who are taking a direct hit from the credit crunch, here.
Anyway, my general feeling to the current "Street", meaning all those idiotic hedge fund managers, investment bankers, and brokers, is, you know, "goodbye and good riddance, too." These people are a huge drag on the American economy, and a tax burden we just do not need in this country.
Hope that helps you out a bit, here.Thanks for all the cool news. James Carrow, jhc@florida.usa.com


Gary Ledford   September 19th, 2008 7:52 am ET

You Can Fix It!

Re: Sub-Prime Mortgage Crisis

Here is a simple plan.

1. Have Congress put a moratorium on sub-prime foreclosures.

2. That will keep families in their homes.

3. First Trust Deed [TD] holders will be forced to re-finance at 5.5% for 30 years any borrower who is current with first trust TD mortgages.

4. Second TD holders will have all principal and interest stayed for a period of 15 years, and those TD holders will amortize to -0- at the end of 15 years.

5. If a homeowner wants to sell their home, they will owe the amount on the first TD and the unamortized amount on the second TD. They will only make a profit if the sale price is above the total amount owed.

6. With this plan you keep families in their homes, making payments on what would reflect the current FMV and at a preferred interest rate.

7. The greedy second TD holders will just have to hope that the market changes and that families will sell their homes at a profit so that they can recover some of their capital.

8. Putting families out in the street only exasperates the problem, and continues to spiral down the FMV’s.

9. In order to stabilize you must keep them in their homes making payments.

With Best Regards

Gary A. Ledford
gleddream@aol.com


jay monson   September 19th, 2008 8:49 am ET

The bail-out means that we the people are gonna get screwed again and the financial giants are still getting paid. Im an hourly employee and I cant stand it anymore.


Damie   September 19th, 2008 8:51 am ET

How is it that we have billions of dollars in the federal reserve to bail out these big companies, when our national debt is so massive?


Grace Lee   September 19th, 2008 10:08 am ET

Hey, I think they solved the issue with Americans having health insurance. Heck we just bought AIG~ Insurance For All


Paul   September 19th, 2008 2:36 pm ET

Dont know much about high finance,but one thing always holde true,if your outgo exceeds your income, its not long before your assetts on the street


J Collier   September 19th, 2008 4:39 pm ET

I'm a Vietnam Veteran on Social Security Disability, I worked form the time I was 12 to 1996 classed at 125% BELOW poverty(by SS) would rather be still working but NO ONE including our govt will hire me. Make $1050.00 per month.

THESE WALL STREET WHORES who take home 5 million or more in saleries per year PLUS other high dollar spifs should TRY and live on what I get.

BAIL them and those OVERSEAS investors out at the cost to US taxpayers–HELL NO. HOW many have gotten RICH/RICHER??

Heres what the GOVERNMENT needs to do–

303 million people here, 290 million BORN in the United States,
YOU duduct THOSE with a NET WORTH of a $1,000,000.00-

AND SEND a real stimilus check TAX FREE of $1,000.000.00 TO
EVERYONE else.
BAIL US OUT!!!

JC
Vietnam Marine


Donald K. Laytart II   September 20th, 2008 10:06 pm ET

When they started giving loan's for 125%- I knew that this was trouble. Now me being an average American with no special training in the real-estate market, knew this, it makes me wonder if this was not allowed for the reason of taking control of businesses. Look at it, they are slowly taking total control of the whole American market! They (Government) are picking only the businesses they feel is important to them!!! REAL TROUBLE IS COMMING! Say goodbye to the American way of life!


Ivy   September 20th, 2008 10:44 pm ET

Hey Folks,

I am in the loss mitigation business working with homeowners facing, foreclosure or who are falling behind in their loans. I am also a business woman. So I have a question. Our government is going to bail out mortgage companies by purchasing their mortgage investments correct? We all know that due to the economy most of these mortgage investments are no longer paying. So will the government then have to start or complete foreclosure proceedings on homeowners who are in default? So will we soon have a department of real estate or will the Department of Professional Regulation who regulates the real estate industry then oversee all the REO properties that will be owned by the government (and paid for by the homeowner – slippery) or instead of selling the homes on the market at the mortgage companies are forced to do will the government then be able make them all into subsidized housing? and if so do you think the former owner will have any kind of 'leg up' on applicants for the public housing??????? And whose brilliant plan is this anyway? Let's buy into a business that is forcing the greatest bankruptcy in the history of american business! Wow.

This just all seems like a circle that will never end and the only one footing the bill in the long run are the people who can't afford the mortgages to begin with! There has to be a smarter way.


Bren   September 22nd, 2008 10:38 am ET

Many of the republican "talking heads" keep blaming people who took out mortgages they couldn't afford or didn't have the credit history to warrant the responsibility. With 600,000 jobs lost, thanks to the republicans, a lot of foreclosures were and are being caused because of job losses and not bad judgment on the part of the borrowers. In most cases, if someone loses their job, they are being forced to take jobs that pay less....and this is happening in every sector of our society. Put the blame where it belongs....on the heads of the greedy CEOs and republicans who deregulated!


Bob Ruffatto   September 23rd, 2008 6:58 am ET

Yes there may have been some shady lending practices and some CEO’s make too much, but the heart of this problem are politicians promoting home ownership and speculators and borrowers taking on too much debt.

As our representatives work out solutions to save homeowners and speculators from foreclosure, we should remember that every troubled borrower saved will paid for by those of us who sensibly manage our financial affairs.

By the way, if “living beyond our means” is at the heart of this financial train wreck, think about how our taxes are spent and the deficit we’ve accumulated for the nation. Today’s problem pales in comparison.


Greg Hampton   September 23rd, 2008 7:16 am ET

About bailouts & C.E.O. Bonuses

I am a crewmember for American Airlines & we the employees have been working under a 20% paycut since 9-11,while our company
loses money & our executives take obsene bonuses.I relate big business to pro sports, if a highly paid athlete performs at his top level he gets a bonus, if not he receives no bonus..You do well & excede expectations you get rewarded.These CEO's & top level executives should be fired for performing poorly & losing money for their companies & stock holders, not rewarded with bonuses.

My biggest concern is what are we teaching our young men & women
in business colleges today. Rape, pilage, steal & lie from their company, run it in the ground & walk away with a golden parachute.
I might be old fashioned but hard work, honesty & performing well
should have a place in big business in our country, If this were the case maybe we would not be in this dilema now.

Greg Hampton


Barbara Lippard   September 23rd, 2008 9:06 am ET

Bailouts! Are you kidding me?! I don't recall getting a bonus check from Wall Street or Bear Stearns or any other company when they were making money hand over fist. The CEO's and executuve management were the recipients of obscene salaries and bonuses. So now that those companies are in trouble, they want me to bail them out? The first people the government should get money from are those CEO's and executive management personnel. If they were able to reap the benefits in good times they should have to suffer the consequences of their actions when things are not so good. If they have to cough up a good prtion of that money and have to live on about 40K a year, that should make a good dent in that $700 Billion bailout the average taxpayer is being asked to fund. It is like the airlines cutiing pay of pilots, flight attendants and everybody else. After those unions agree to the package, the CEO's and executive management give themselves a raise! And then when they are in trouble, they ask for a bailout! Again, are you kidding me? Stupidity and greed should not be rewarded.


Penny "The Boat Lady"   September 23rd, 2008 9:39 am ET

The basic principles of business in America have been violated!

Entrepreneurs take the challenge of starting a business with no promise of the outcome. He or she is ultimately responsible for the success of that business.

An Entrepreneur does not expect to make a nickel until all of his or her employees have been paid adequately and all
debt is paid. When and if there are profits, the Entrepreneur will begin to reap the benefits of owning a business.

Ultimately the Entrepreneur's goal is to generate enough revenue so that the business owner can enjoy investing in other opportunities such as publicly ran institutions and the stock market. Unfortunately these companies operate on different principles. Most CEO's of public institutions are paid enormous salaries while their work force is paid barely enough to keep the companies thriving. This business philosophy is like balancing a brick on top of straws...
The entire structures will surely collapse.

If our Government continues to bail out public and financial Institutions they must fix the basic fundamentals of the business structure in order to build trust again in the tax paying American Citizens. There has to be accountability of the leadership and CEO's who represent these Institutions. These leaders like the Entrepreneurs who have invested in their industry should not reap the benefits of the job until all workers and debt has been paid adequately!

There should be a cap on the annual salary for all publicly ran positions. The work force and public should benefit from the fruits of their labor before the CEO’s are compensated their maximum salary. If there is evidence that these Leaders have not produced as expected, then they should be financially responsible. There has to be accountability for these high paid positions!

I personally feel a cap for any CEO in America in today's economy should never exceed one million dollars regardless how successful the company is. Shame on those CEO's who are drawing in millions of dollars while their companies are reporting low revenues and their work force has been paid inadequately, in addition to heavy layoffs. Those same CEO's are not accountable for the outcome of their performance. They look forward to the day they are relieved of their duties so that they can then collect a hefty settlement package...adding insult to injury!

The Title "CEO" is beginning to become another way of saying "A high paid CRIMINAL"! It would be interesting to see a list of the top paying CEO's, their salary and how their companies are producing. I would also like to see what the work force is paid and how may layoffs they have had under their watch.

If the Leaders of Public Institutions continue to not have to be accountable for their performance and the Government continues to bail out their companies, the Nation will eventually begin living in a Socialist economy.
The basic principles of the American dream will be history!

Regards, Penny "The boat lady"


Dennis   September 23rd, 2008 1:06 pm ET

My daughter's home is being foreclosed. She asked me for help to make up 3 months worth of payments, about $2400. When she called her bank BB&T to find out where I should send the payment she was told the amount due was over $4200 with all the late fees and extra interest. Now BB&T will have to try and sell her home at auction. They could have been made whole if they would have voided the extra fees. Now its going to cost them over $70,000 in losses. Do I support the bank bailout? Not no but HELL NO!


Perry Murphy   September 24th, 2008 8:54 am ET

700 billion bailout,I keep hearing that everyone will suffer if the Gov. does not bail these failing businesses out.I am disgusted at the very idea that bailing them out will help anyone ,It will cost tax payers plenty,Innocent people being effected that dont deserve it???? cant get a loan, effect my way of life??? do you people hear yourselves?
I didnt cause this mess and it's going to cost me plenty wether the gov bails them out or not,I'd rather take my chances,NOT bail them out and let this house of cards crumble,i dont want them bailed out,I dont want my tax money spent on these morons,I say "Hell No"


Ernest Fitzgerald   September 25th, 2008 7:29 am ET

I am concerned that the administration is pushing this bill for quick passage and that the Congress is in a hurry to adjourn so as to get to their home districts to campaign. I am afraid that such an important piece of legislation will be passed in haste and that we the taxpayers will get to suffer the results for a long time. There are many other solutions to this crisis and they will not even be considered.


Ruth Stiles   September 25th, 2008 7:56 am ET

I think that the American people -that my family – who are make mortgage and credit card payments on time, pay their taxes, and who are, in general, financially responsible, should not be forced to pay for the greed of some people, the lack of professional thoroughness of lending institutions, and poor budgeting by so many people who EXPECT the government to bail them out. It is ridiculous at how far the moral of people in this country have fallen. How people – who know they can't afford something – do it anyways! I don't want to be responsible for fixing their mistakes...but what is the right and best answer?


Susan   September 25th, 2008 8:17 am ET

1. Renegotiate mortgage contracts to a fixed rate that homeowners can manage for those in trouble for pete sakes! Tack on a couple of extra years to the life of their loan.
2. Any CEO of a corporation that folded, went bankrupt, etc, BUT, who walked away with several million dollars should be thrown in prison or be made to return some money to the stockholders.
3. Tax INCENTIVES to companies that keep their business in the USA and who hire ONLY American citizens!!!!!! TAX companies that buy ONLY from foreign countries ( like Walmart – who won't even sell the American flag in their stores!!!! ).
4. Keep jobs HERE in the USA, hire US citizens, keep God in our lives and on our money, name English as this country's language.... Learn it or leave!!!!

The American public is able – more than ever – to see through alot of the B.S. that's on TV. The media is SO slanted toward the liberals, which is why this country is slowing going down the tubes. Everyone wants 'it' their way. The democrats accommodate. So many people ( both sides) seem to be on the take! There needs to be rules, perimeters, limitations, boundaries that EVERYONE abides by....no matter how wealthy they are or what color they are!! But, in this country, money and liberals have done much of the talking!!
Now, look at the results!

Doesn't anyone in our government REALLY care about this country? Greed and more greed.

Form a committee of 'regular folks' – one or two from each state. Let them serve a 12 or 18 month 'term'. Let them be the true 'voice' of John and Jane Q. Public....not the crooked Representatives and Senators who are SUPPOSED to represent the 'voice' of America.....but rarely do. Let none of them make more than $75,000 a year. Let them be mixed representations of families, seniors, college age. Confer with them on issues of this country and get a TRUE perspective of what the 'common' men and women' are going through!!!

Do they REALLY want to listen to the people? Or is it STILL more B.S.?


Darcie   September 25th, 2008 9:06 am ET

I am really disgusted with the way the Federal Government is handling this possible bailout. Sometimes I feel like we are living in a communist country! They are just going to take our money and do as they please with it! Where is the justice? I agree with the earlier post from a CNN watcher: Give us on Main St. 1 million or $750,000, we can then use it to pay our mortgages, taxes, and increase the economy. Then we can put in jail those who are abusing the system!


Deborah   September 25th, 2008 9:38 am ET

I found our glorious leader a joke last night. He is trying to sell the package to the American people with "GLOOM and DOOM". I would not be surprised to see a run on the banks from citizens today. I think many Americans feel we have got to do something in a timely fashion. The major problem facing the American middle class approval I have found is the rush tatic. This situation did not happen in a week or week-end and it is ludricious to think all parties involved with so much at stake should be expected to solve it that fast. I watched the hearings and found many great ideas, questions and solutions were out there. Why we should buy this package set by the Bush Administration so quickly is not the answer. I only ask with so much at stake, all parties in government take the time necessary to get it right. If the government wants confidence back with the American public, please give us a reason to believe you. Take the time to consider all options and put together the best package possible to get the deal done. If by Monday a deal is not done will we see a huge downward swing in the market, financials, etc., possibly. We've seen it the last few weeks. We've also seen swings upward when the Government Bailout was made public. We will not be bankrupt Monday morning with no bill signed, As far as the suffering, the middle class is up to it. It hasn't been a walk in the park the last few years. We all would like the necessary time put forth on this critical issue, let the suffering linger awhile longer and get the issues resolved right as I don't think we have a second chance. The Bush Administration needs to know we as American citizens understand alittle more than "My Pet Goat".


James Moravec   September 25th, 2008 10:29 am ET

I am appalled and outraged about the decision by the Board of Governors of the Federal Reserve Board and Congress to provide bail-out money for the greedy and mismanaged corporate entities such as Fannie Mae, Freddy Mac and AIG.

I resent this decision to transfer the errors, poor monetary policies, and bad decisions of these large corporations to the average tax payer. Over the years, I have had to budget my family finances tightly and do without may things just to make ends meet. Now, our leaders go ahead and pledge our hard earned money to these corporations who pay their CEO's and senior executives multi-million dollar salaries and still run their corporations into debt and bankruptcy.

The people responsible for this mess should resign because they have lost all credibility with the American public.


Rick   September 26th, 2008 11:39 am ET

"TRICKLE UP ECONOMICS"

I think we are looking to solve this problem backwards. Which, is usually the way our government and business tend to do things. Instead of bailing out the corporations and companies, why don't we bail out the consumers. Try some "trickle UP" economics. We take the proposed 700 billion, and instead of giving it to the CEO's and companies that obviously don't know what to do with it (I mean, they already lost it once!) and we divide it up amongst the Americans who are in debt. We throw in some qualifiers, obviously: you have to be an American citizen, anyone who has been honorably discharged from a branch of the armed services, no convicted felons, no bankruptcies in the past (?) 7 years, must currently be paying on a home, etc.. we let the consumers pay off their homes and we now have a nation of American homeowners who have now freed up a SUBSTANTIAL portion of their income to spend and boost the economy. That is how you save our economy, with the working class doing what we do best. WORKING to improve our quality of life and now working to pay for the stupid mistakes of people that dont need our help.


Linda   September 29th, 2008 7:35 pm ET

Paulson's connection to Goldman Sachs is to close.

700 Billion was a 'pull it from thin air' number – but 700 Million in personal holdings by Paulson is not setting well with me.

Having an individual, who is not only the Secretary of the US Treasury, but a past CEO of Goldman Sachs (current major stockholder) – who called upon crone Goldman Sachs Director, Ken Wilson (Bush's personal request to Wilson solidified) to lay out the bailout plan that was known about far prior to July – and who does it benefit?

Protecting the holdings of the likes of Paulson, Wilson and Bush.

Greed.


Paul Kelley   September 30th, 2008 3:43 am ET

I am a capitalist. I only care about what is good for the economy and markets... b/c the single factor that separates 1st world countries and the 3rd world is not running water... electricity... or a stable democratic govt.... it is a Functional Stock Market.

We are now in a globally interconnected economy, and that is why not only the American govt., but 7+ other countries have moved to fund the "bail out" of the American equities (stock) markets. The truth is that when our stock market crashes... WE, and the world, will be in worse shape than generations before during the Great Depression. When our markets fail... so will savings and loan, your Parent's (and possibly your own) 401K, IRA, ROTH, and pension plans, Big business and Small business alike. Just think about the hard work that you have placed in your retirement accounts that could be GONE in a matter of weeks if something is not done to give some relief to the entities that allow your savings and investments to grow while you sleep at night. The impact could be the end of America.... b/c China and OPEC could afford to buy the U.S.A. for $1/share.

Also, the cause of this predicament is not completely on the shoulders of our incompetent congressional authorities and Wall Street. Cannot those that hold their hands out also share the burden of blame as well??? Those people that signed the loans.... knowing good and well that they could not afford that mortage... even before their ARM adjusted... should also be punished.

The fall of the markets is result of this foreclosure debacle is a direct result of how those mortages were dispersed within other investments. Consequently placing little sticks of dynamite in the highest grade investment vehicles... which is completely unheard of...and YES, a bit more regulation could have circumvented all this.

So those of you that feel like you're "sticking it to Wall St"..... just ponder on the idea of waiting in line for food... just like we in Atlanta have to wait in line for gas... imagine the Wall St. tycoons standing in line with you... and millions of other UNEMPLOYED Americans who worked for employers that relied on business loans to operate their companies... contemplate seeing everything going out of business around you.... Wall Street to Waffle House.... I dont think you'll make it!!!!
Sticking it to Wall St... is the same as Sticking it to Main St.
WE are all in this mess.... and WE have to get out of it..... Together!


Cheryl   September 30th, 2008 10:17 am ET

Oh, please!!!. Bush's statement this morning was full of nothing. American's already know we are in trouble and that he's disappointed in his bail-out plan not passing–he didn't offer anything as a solution. Americans should be responsible in using their credit cards and running up debt they cannot afford to pay back. The big companies who thought they were above all consequences have found out that their time is up. Why should we bail THEM out?

Americans need to go back to being Americans and help each other. Don't shop in stores that give jobs to the foreigners instead of to the Americans. Don't buy anything that says "made in China". They are laughing at us because we accept all of their poison and junk and our government knows it.

Any person who says they are American would not disgrace our flag or national anthem–if they do, they should be sent to a country where there is no freedom and see what happens to them.

I will not shop at Wal-Mart because they support things I am against.

Americans, make a stand now. Let us go back to the principles that our country was founded on and not allow the leaches that are in power to rule us. Let's not let the government dictate what is "good" for us by allowing all sorts of investment opportunities that help the big guys in the long run while they use up what we have saved for.


Sheri   October 1st, 2008 7:30 am ET

Over the years businesses have come and gone. If they can't make a profit or balance their budgets they go. I don't think the government should be bailing out all of these big businesses. I know it could mean a big recession and be painful to America. Maybe this is needed to recycle our economy. Living expenses are going through the roof, utilities, the cost of food, housing (both buying and renting), insurance, healthcare.
Maybe not passing this bailout thing could be a good thing in the long run.


Dave   October 1st, 2008 7:36 am ET

Maby what this country needs is a financial failure. We're suppose to have all kinds of rules and regulations that is suppose to prevent this from happening. The CEO's knew this was coming. The government knew this was coming. Yet they all did nothing. I'm not for a recession or depression but this could be what the country needs in order to wake up. There is no punishment for CEO's that let their companies go down the tubes and yet they reap in huge compensations for their bad decisions. Let the crises take its course. Make the CEO's pay.


P.E. Dawley   October 1st, 2008 12:23 pm ET

It saddens me to realize that our government will once, again, invest in a system that knows no other way other than to scheme, distort, and convolute the truth. Instead of investing in its' people, yes, us on "Main Street", they insist on re-investing in a corrupt system. Yes, CORRUPT!!!! Wall Street has used and abused the privelege that was bestowed on them by the people. Yes, that is US again. Wall Street dicided it didn't NEED the "little people" any more, they were going to USE them instead.Their greed and indifference to the common man is shameful and dishonorable. These people should be prosecuted for deliberately deceiving the people. They have been reporting "no problem" with the economy even as the gas, oil and eletrical rates have hiked to the zenith. How did "We are not in a recession" go to "Economical Crisis"? They have seen to it that their friends and influential people in their lives have reaped every reward possible and they want WHO TO BAIL them OUT? They still travel in their private, chauffered vehicles from their private fenced in properties. I'm with Rick. Give the money to the people to clear THEIR debt first, so they can once again invest in the American Dream. Maybe this will give the people the true confidence they need.

I'm sorry that corporate America has to get slapped in the head, but it's their turn. We have been sweeping the streets for years. I'm sorry you feel you have to pay millions of dollars for intelligence, because this is part of the problem. America has to start over and that means from the bottom up. There are just as many intelligent peole out there that would give you all they've got for a whole lot less money, but will you give them a shot. Heck no! We aren't happy until we pay through the nose for it!!! As long as you continue to dictate these policies on the levels that they are at, the longer it will take for minimum wage to increase. Picture some financial wizard earning minimum wage!! Hark, I laugh.

Start from the BOTTOM up. This whole current proposal is wrong. It coddles the wealthy once again and uses us as their excuse. Stop the madness. I know I will do my best to do just that at election time.


JACK DAHL   October 2nd, 2008 7:36 am ET

THE BANKS AND MORTGAGE COMPANIES CAN PULL THEMSELVES OUT OF THIS MESS IF THEY WORK WITH THEIR CUSTOMERS, INSTEAD OF JUST FORECLOUSER'S. IF THEY LOWER THE INTEREST RATES AND/OR LOWER THE PAYMENT AMOUNTS AND EXTEND THE NUMBER OF PAYMENTS, THEY WOULD BE GENERATING SOME INCOME TO SEE THEM THROUHT THIS AND ALSO STOP A LOT OF THE FOURCLOSUERS. THE LENDING INSTITUTIONS GOT THEM SELVES INTO THIS BECAUSE OF THEIR GREED, LET THEM PAY THEIR WAY OUT OF IT. LEAVE THE TAX PAYER OUT OF THEIR MESS, ANF IT ISN'T A PLACE FOR THE GOVERNMENT TO STEP IN. OUR GOVERNMENT IS FOR RUNNING THE COUNTRY, NOT THE BANKS. THANKS


Lorna Wollaston   October 2nd, 2008 8:29 am ET

$700 BILLION with a B. wow! If that's what we need, OK. But I have been trying to get a lousy $15 THOUSAND WITH A T for nearly 6 months now from alleged government grants and there is nothing for a moneyless SSD widow living in the boondocks of the Adirondacks of NY. Thank you.


Patty   October 2nd, 2008 8:30 am ET

This bailout for the guys with the bucks makes me so angry! I was a single parent with no financial support from the government. I worked full time and part-time jobs when my child was with his father. I paid my mortgage, car payment, utilities and had no money for vacations, the stock market or even a nice meal out! I think the money makers (those making $50K+) should not be given any breaks. Take a taste of what we common folk (yet responsible) wage earners have to nibble.

P.S. I would appreciate an email from Jennifer on this matter. I love listening to your segments while I am scurrying around in the morning getting ready for work. BTW: My child is on his own and being a responsible adult (with his spending and investments).


Bobby   October 2nd, 2008 8:43 am ET

NEW AUTO SALES DOWN 30 %.....The news says because people are having to put down larger down payments to get a loan, BUT maybe it is because 600,000 lost their jobs this year, and people worried of losing their jobs,,or maybe it is because people do not desire large poor mileage vehicles in auto inventory..


mikki perkins   October 7th, 2008 11:55 am ET

New York Times says “some delinquent borrowers may have a better shot at modifying their loans and ending up with lower fixed payments.” When will this come into effect. There is no information on what banks that will be doing the modifying. Homeowner that are in trouble need HELP NOW AS TO WALLSTREET.



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