[kg_veteran]

Fine, I'll fisk your non-response:

Originally Posted by Mavdog

the writer fails to understand that the government didn't write these loans, didn't approve the borrowers for the loans, and didn't dice and slice the loans up to sell.

Actually, it's clear that he DOES understand. He understands that the government pressured lenders to write the loans and to approve borrowers that they otherwise would not have. He understands that Fannie and Freddie Mae were expanded as quasi-government entities to buy up these bad loans. With Fannie and Freddie there buying them up, and government pressuring them to make the loans, you're faulting the lenders for writing the loans in the first place? That's nonsensical.

As for dicing and slicing the loans up to sell (i.e., mortgage-backed securities), I agree, that was greed on the part of the banks/institutions involved. And they should have been allowed to fail. That's what the market would have dictated (as the writer states). But by refusing to allow failure, the government created non-market conditions whereby the banks could make such risky moves without the ordinary fear of risk that would have existed under true market conditions.

In other words, without the government nullifying market forces, the whole scenario can't unfold.

it's not "affordable housing" that is causing the hemmoraging at the banks. the term "sub-prime" does not mean cheap housing, which is what affordable housing is defined as.

So what do you think is causing hemmorhaging at the banks?

the cra didn't cause poor loan underwriting and fraudulent mortgage lending. the cra does not mandate a lender give a loan to an person who is unable to repay the loan.

While most of this is technically true, I think you're blatantly ignoring the role Congress (in particular, the Democrats) played in this whole debacle.

there is mechanisms for the plan to create a market for these securities, government will not be "dictating" their worth. the sellers will dictate what they are worth by the sellers agreeing to sell at a certain negotiated price. that is the definition of a market.

This is nonsense, and you know it. Who is going to be able/willing to outbid the government? What has been proposed is the furthest thing from true market conditions.

lenders wrote more sub-prime loans because they made more money doing those type mortgages than conventional loans, and they were able to move the sub-prime mortgages out the door rather than suffer the defaults that the current holders are faced with.

Move the sub-prime mortgages out the door -- who bought them?

can the us treasury make a profit or break even on these securities? frankly nobody can say yet

You know, aside from the whole principle of the matter, this is one of the scarier truisms of this whole sham of a proposal. No one is even guaranteeing that it will WORK!

one thing is for certain, there will be a higher percent of defaults if the country goes thruough a severe business recession, a recession that will be much, much more severe if nothing is done to provide liquidity to our financial system.

If nothing is done -- yes. But this bailout isn't the only solution. And in fact, you've just admitted that it's not necessarily even going to help!