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Sympathy For The Borrower?

Rod David Jul 15, 2008 1:45 pm


		Our hearts should go out, not our money.

I have a rule: Never ask a technician for a fundamental opinion. The rule may not apply to all technicians universally, but it certainly applies to me. Speaking as a technician, I'll gladly extend this rule to economics. If you must ask me about personal finance, please limit your questions to topics such as whether the 64-ounce jar of Skippy peanut butter is a better deal at twice the price of a 36-ounce jar of Jif Chunky.

Speaking of which, this story seemed a little nutty to me:

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The FDIC took control of IndyMac (IMB) on Friday, and announced yesterday a halt to the former thrift's foreclosures. Instead, it will "pursue loan-modification strategies" - other than the modification strategy of foreclosure, I imagine.

This embodies FDIC Chairwoman Sheila Blair, who wants to see solvent banks act with similar mercy. Thumbs up to you, Madame Chairwoman!

Thumbs up from borrowers, that is. As for depositors, not so much. Hundreds of them lined up to withdraw funds at IndyMac branches Monday. Maybe it's just me, but that seems sort of ungrateful, given the fact that IndyMac is also reimbursing 50% of deposits above the $100,000 FDIC insurance. level

Is that what's left, or is it all being supplied by you and me?

To be sure, there are parts of society that deserve protection from free market forces, ranging from relatively incapacitated individuals to national security interests. Not requiring protection are upside-down homeowners, cash-strapped borrowers and under-insured depositors. My heart goes out to them, but why must my wallet follow?

Perhaps this is the silver lining to socializing, errr, nationalizing, ummm, saving -- yeah, saving, that's the ticket -- "saving" failing banks: The FDIC (you, me and my wallet again) will then improve conditions for consumers so that they'll stop dragging the economy down.

No doubt restoring the consumer's health is a big step on the path to recovery - or one path at least. But is it the right one? Despite their best efforts to rationalize this degree of intervention, there's no happy medium between laissez-faire and a yet heavier-handed government. Once you go down that path, you're on that path, no matter how briefly the present administration promises to remain on it.

Wouldn't USD buybacks have gotten a bigger bang for the buck, as it were? Maybe the government isn't viewing this as an either/or proposition, and Dollar intervention is coming next. I would have rather any intervention at all be focused entirely on restoring the Dollar's health, instead of shoring up capital for private institutions and individuals.

But nobody asked me - I'm just a technician, with a coupon for 20 cents off Skippy.


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Comments (5)

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Mr Bacan

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07-15-2008, 2:25 pm
I agree with you, that you are perturbed that you and I must all bail out these banks. But my must we do this? Because the financial system has been allowed to get so far out of tilt, that there is a real possibility for a spiraling collapse Read More

Mr Bacan

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07-15-2008, 2:30 pm
I also include Fannie and Freddie in "bailouts" Read More

David Fitzsimmons

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07-15-2008, 3:04 pm
The article suggests that certain individuals should be protected from market forces by society; included are "relatively incapacitated" people. We can all agree on that, I imagine. OK, but... stipulate a person, call him David, who is Read More

Davita Pray

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07-15-2008, 5:24 pm
"Here in Minyanville one stated goal is "financial literacy" - but what if David is simply not capable of achieving any such thing ? Hmmm.. perhaps the whole "nanny state" idea makes sense, for the Davids of the w Read More

Stephan Allen

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07-20-2008, 2:44 am
A loan modification is a great alternative to foreclosure. LoanMod.com (aka Mizna) helped me complete a loan mod with my current lender. Of all the companies I researched to help me avoid foreclosure, loanmod.com was the most credible and even has Read More


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