What percentage of this mess is home loans?

[SHRED]

I heard less than 100 billion dollars.

Anyone have a link to the actual numbers?

[ixion]

1. I've seen the figures 85 and 92 billion floating around

So it sounds like you're in the general vicinity, give or take a billion.

[harun]

2. This morning on NPR they talked about a huge problem right now and that

is banks are afraid to lend to each other because if one of them goes under they might not get their money back. So I think the gov. is trying to figure out ways to get banks to stop being so scared.

[madokie]

3. Or some politicians are trying to figure out a way to take what is left in the kitty

on their way out. The majority of our congress critters are crooks, plain and simple. IMO

[MindMatter]

5. So what?

The politicians keep talking as if this is a "credit crisis on Main Street". Where is the evidence of that? From what I can see, banks have enough money to lend to businesses that are well run and profitable. My business struggles to make ends meet every year, and this year is more of a struggle than most, but we pay our bills on time. Banks are all over us wanting us to borrow more money. When I talk to colleagues around the country, I hear similar stories.

I'd like to see even one example of a profitable, well-run company that has a track record of paying its bills on time that is having trouble getting the capital it needs. I just don't believe that.

Likewise, show me a single home loan applicant who has a good credit history and is asking for a sensible loan on a sensible property, yet is having trouble getting a mortgage. Again, I just don't believe that.

The "credit crisis" is real, but it is in the form of banks backing away from shaky loans. From where I sit, that is a good thing. Yes, it is a shock wave, but necessary if we are going to have a system with any integrity.

I could support this bailout if the politicians were honest and said, "Look, we let our banking system spiral out of control with banks falling all over one another to make riskier and riskier loans. We now see what a disaster that was and we have to go the other direction. If we just go 'cold turkey', this will be a huge shock to our system, causing a lot of economic pain to many Americans who have done nothing wrong. So instead of that, we have asked for this $700B funding to help control the shock as we move our banking system back to solid ground."

I believe that is generally what they have in mind, but I sure wish they would say it that plainly.

[lligrd]

9. Good Points. Can We Call Them Daily And Ask Them To Pay

up like they do us? Will this ruin their credit for 7 years? Where is the fairness?

[MindMatter]

11. :) Good point

As you know, the system is rigged. It is definitely a one-way street. When banks go under, we can lose the savings we had on deposit, but the loans never get lost.

[lligrd]

4. I Heard 200 Billion Would More Than Cover All Of it But That

unsecured credit was the next to fall. Add in hedge funds,derivatives and a bit to cover those in charge and there is your 7 billion.

[willing dwarf]

6. Newsweeks' Allen SLoan on NPR 's Marketplace this morning

observed that his personal finance was alright because although his stocks had taken a beating, he "hadn't taken out more of a second mortgage than he could afford to loose on the stock market." Which got me thinking -- if even 1% of the people in the country took out 2nd (or 3rd or 4th) mortgages against the market value of their home and put it in the stock market, now as the stock market implodes, and the housing market is utterly devalued, those people are going to be doubly screwn.

And thes there are some people who piggybacked house on house, and took out additional mortgages in those, so there's a whole house of cards that tumbled with the housing market devaluing already, but is now taking a second tumble with the stock market collapse.

It just keeps looking worse!

(sorry if this is obvious to everyone else, but the investment of home equity in the market is the part I missed till now!)

[rgbecker]

7. There was a great post on DU about this by Deutche Bank economist.

Can't fine it right away but she wrote the sub prime value was about 285 bln in late 2007. But remember that does not include any problems that have arisen because even aaa mortgages are now in jeopardy because of falling house prices.

That being said, this bailout is about confidence to advert a run on the banks and the dollar, which would essentially stop the economy in its tracks. Think about it: Look at all the talk about getting your money out of the bank just among those without any significant savings...then imagine those controlling considerable assets, and thousands of them. People are so uncertain that they are taking money out of circulation, buying treasuries with less than 1% return, just because they are afraid of the markets. If people don't have some confidence there will be no investment in solar energy, high mpg cars, or anything else and that is why it is essential for the US to send the message that America is still in business.

The blame game the right wing conservatives are leading is attractive to the moral compass in all of us, but this is not about finding crooks, but rather reassuring investors, workers, retirees and everyone else that there is no reason to head for the mountains with your survival weapons. Look to Obama's reaction. He is in the know and is being advised by the best minds in world.

[rug]

8. Good question. What's the other $600,000,0000,000 for?

[PSPS]

10. It's over $1 trillion

It's these alt-a "liar's loans." These began being recast this year and will continue to be through about 2012. These amount to between 1 and 3 trillion dollars. It is expected that at least half will end up in foreclosure because the people who took out the loans will never be able to make the payments. (They bought far more house than they could afford.)