Reply #49: I may not read the same news as you [View All]

[sergeiAK]

But I don't see the banks making money on this right now. I see Citigroup taking $10B losses, Countrywide possibly going bankrupt, E-Trade Bank stock losing 80% of its value, and generally, the financial sector is anything but a picture of health right now.

What I do see, is people from both parties clamoring for a bailout. The Republicans want to bail out the banks (and in the process, some of the borrowers), and some Democrats want to bail out the borrowers (and in the process, the banks as well). If we do either of these, we are rewarding irresponsibility on both parts, and harming the nature of the free market system by saying to the banks "we won't let you fail, no matter how dumb/criminal you are". This encourages such practices, as we prevent the banks from seeing the true consequences of the dumb decisions they made. They made their bed, they can lie in it.

This entire "crisis" is made of irresponsibility. The government, for not enforcing the regulations and keeping them up to date, the lenders for making loans they knew wouldn't be paid off, and the borrowers for taking loans they knew they couldn't pay off. We should punish the first by voting them out of office, and the latter two by allowing the full consequences of their actions to hit them. If a bank made too many bad loans and can't collect, then bankruptcy it is. If someone borrowed too much on a "stated income" loan, then foreclosure it is. This is how the system is supposed to work.