Making sure I can get debt forgiveness.

[grackal]

I agree with this bit.



I think this is way too harsh. And anyway, whether it's 2 weeks or 15 years before they can get another mortgage, the result is still the same for the taxpayer...they are left with the debt of the original mortgage.

Firefly, given the present situation:
1. The taxpayer owns the banks.
2. The banks own the mortgages.
3. Some of those mortgages are never going to be paid back.

Ergo - yes, the taxpayer is going to be left holding the tab no matter what kind of scheme is concocted.

In the case of bankruptcy, the tab will be: the outstanding debt of the original mortgage, minus whatever the bank manages to sell the property for.

I do not see how it is harsh. If someone has proven that they are incapable of paying back a mortgage, then they must be prevented from making the same mistake twice.

This is also crucial for ensuring that chancers do not think they can strategically dump their negative equity on the taxpayer, slum it for 3 years and then buy back an equivalent house for half the price.

Would my last point be why you think its "harsh"?

 

[Firefly]

I do not see how it is harsh. If someone has proven that they are incapable of paying back a mortgage, then they must be prevented from making the same mistake twice.

If someone is bailed out by either Debt Forgiveness or enters Bankruptcy, then the next lender will have access to this information. This will make it a lot more difficult to get a mortgage in any case without imposing a jail-like sentence of 15 years (which basically confines the debtor to a life of renting).

This is also crucial for ensuring that chancers do not think they can strategically dump their negative equity on the taxpayer, slum it for 3 years and then buy back an equivalent house for half the price.

I agree as per post #40

 

[grackal]

If someone is bailed out by either Debt Forgiveness or enters Bankruptcy, then the next lender will have access to this information. This will make it a lot more difficult to get a mortgage in any case without imposing a jail-like sentence of 15 years (which basically confines the debtor to a life of renting).

Well I wont argue over details, but yes it confines them to a long period of renting. Hardly a jail sentence, many people have rented for long periods without getting shanked at the dinner table.

 

[Firefly]

Well I wont argue over details, but yes it confines them to a long period of renting. Hardly a jail sentence, many people have rented for long periods without getting shanked at the dinner table.

Why not let the next lender, armed with the information that the person has previosly defaulted on a mortgage, decide on whether the applicant should get a mortgage or not?

 

[monagt]

Are we now beating a dead horse?

 

[shnaek]

Why not let the next lender, armed with the information that the person has previosly defaulted on a mortgage, decide on whether the applicant should get a mortgage or not?

Because, when the lender messes up again, the taxpayer will be on the hook again, and the cycle continues. We have seen how banks reckless lending has been rewarded. We tend to reward strange things here in Ireland. And we tend to punish acting responsibly.

 

[Sunny]

People should be discharged from bankruptcy after a 2-3 year period. The banktuptcy should be kept on a persons credit report for longer than that (say 6 years) and you should be legally obliged to tell the lender after this period that you were once bankrupt if you wish to borrow over a certain amount e.g. 50k. Then it becomes the lenders decision.

 

[shnaek]

Then it becomes the lenders decision.

But we are on the hook for the lenders decision. All lenders decisions are one way bets. If they win, they make a profit. If they lose, they walk away and hand the losses to the taxpayer. The bailout (worldwide) has ensured that there is no consequences, not now, not in the past, nor in the future, for bad lending.

 

[Sunny]

But we are on the hook for the lenders decision. All lenders decisions are one way bets. If they win, they make a profit. If they lose, they walk away and hand the losses to the taxpayer. The bailout (worldwide) has ensured that there is no consequences, not now, not in the past, nor in the future, for bad lending.

There won't be another crisis like this in Ireland. Things like this tend to repeated in large economies because they are harder to stop but Ireland will be like the Nordic countries and learn the lesson. This will be scarred on our national psyche like the famine. We might as well tell banks never to lend money again if we are not willing to move on. The Country messed up. We are not unique. It's time to stop the guilt and remorse and move on.

 

[Duke of Marmalade]

But we are on the hook for the lenders decision. All lenders decisions are one way bets. If they win, they make a profit. If they lose, they walk away and hand the losses to the taxpayer. The bailout (worldwide) has ensured that there is no consequences, not now, not in the past, nor in the future, for bad lending.

Ask anybody who bought "safe" AIB shares at €20 for their pension and now find they are worth 4c. I don't think they would agree that they had a one way bet.

 

[monagt]

Ask anybody who bought "safe" AIB shares at €20 for their pension and now find they are worth 4c. I don't think they would agree that they had a one way bet.

+1 and don't forget BOI, Anglo, Irish Life n Permo.

 

[Chris]

The fact that the Banks are owned by the State isn't the fault of the struggling mortgage holder. The same mortgage holders are (were once) also taxpayers. Also, not all banks are owned by the State. There is going to be a cost to the State in all of this one way or another. We can either spend the next 5 years coming up with mad schemes to try and put off the inevitable or we can bite the bullet, realise that some people cannot afford their mortgages and deal with it. And the only way to deal this is through insolvency legislation. I am not saying this should be a get out of jail debt free card but bankruptcy shouldn't be a life sentance for people either.

I don't like paying for wealthy pensioners to have medical cards. I don't like paying for child benefit. I don't like paying for numerous things that our tax dollars get spent on. Adding more capital into banks to deal with genuine hardship cases if needs be is just one other thing on the long list.

I fully agree with what you are saying, there are a lot of people that cannot service their debt and will have to default through some sort of a bankruptcy/insolvency process. But I also agree with Firefly, that it is the taxpayer who will be burdened further and therefore there would have to some extremely stringent consequences involved.

but it would mean that people would need much larger % deposits and the banks would be extremely picky about who they lend to – not a bad thing, but home ownership would become a lot less common than it is now.[/FONT][/COLOR]

I agree this would be an extremely good thing. But I don't think that it would mean that less people would own their homes. It would mean that people fresh out of college don't buy property and that the average age of a first time buyer goes up a lot, but ultimately people will still be able to buy their homes. They would have to either save more per month or for a longer period of time, both are perfectly good solutions and purely depend on personal priorities.

Why not let the next lender, armed with the information that the person has previosly defaulted on a mortgage, decide on whether the applicant should get a mortgage or not?

Because, when the lender messes up again, the taxpayer will be on the hook again, and the cycle continues. We have seen how banks reckless lending has been rewarded. We tend to reward strange things here in Ireland. And we tend to punish acting responsibly.

I agree with both of you, but I think that the underlying problem goes back to putting tax payers on the line for bank losses. Ultimately I think that many individuals will have to default which will put the bill on the taxpayer. But I don not believe that this crisis will end without the state, i.e. the taxpayer, defaulting on some of the debts racked up. The taxpayer will be out of pocket, there is no way of avoiding that. The question is how do you deal with personal bankruptcy to make it very unpalatable but at the same time an efficient process.

Ask anybody who bought "safe" AIB shares at €20 for their pension and now find they are worth 4c. I don't think they would agree that they had a one way bet.

People who bought bank shares invested in a business, not in the debt. Bond holders invested in the debt and walked away with all their money after a few weeks of worry.

 

[monagt]

The way to solve a local or global banking crisis is through the medium of “co-responsibility”, where the debtor and the creditor equally share the blame and the cost. One party borrowed too much in the good times and the other lent too much. That’s about the height of it.

[broken link removed]

Like him or hate him, he was prescient on the current shambles.

 

[Duke of Marmalade]

People who bought bank shares invested in a business, not in the debt. Bond holders invested in the debt and walked away with all their money after a few weeks of worry.

I really do not know what you are talking about. Neither senior bondholders nor depositors have lost any money, we know that. shnaek said banks can lend money as a one way bet, that means the business i.e. the shareholders and clearly this has not been the case. Bondholders make no decisions at all about what banks do with their money, that is a decision for its shareholders as represented by the Board and clearly they were not making these decisions as a one way bet, they lost everything.

 

[shnaek]

Shareholders were not the people making the decisions on who to loan to, day to day. Shareholders had a responsibility to keep a check on their investments, the didn't, and they lost big.
But the banks are still there, the same sorry cabal. This is not the first time AIB has been 'rescued' by the taxpayer. Can you be convinced that it will be the last? Are we not more like Britain and America than Scandanavia? After all, acting responsibly is taken for granted in Scandanavian countries. I can never see us going that route.
AIB, BOI, ANGLO, Irish Nationwide - they should all be banks that we used to know. That they are still going, and hoovering up money, is a disgrace that we will live with for a long time to come. And every time we see the names of one of those banks lording over us, we know that they are laughing at us.

 

[Duke of Marmalade]

But the banks are still there, the same sorry cabal.

Do you mean that Bankcentre is still there, that the branch network is still there, that the bank infrastructure is still there? Yes of course it is, the idea that we would just throw all that away and keep any sort of functioning economy is ludicrous. The State owns 99.8% of AIB and most of the senior management/directors who were implicated in AIB's demise are long gone.

You made a cheap throw away comment that banks make one way bets and I have shown that up for the fallacy that it is. End of.

 

[monagt]

The Banks and BS's should have been flattened.

BOI and AIB taken into state ownership and quickly sold off for a €1 to what ever foreign bank would come in and take over the accounts and infrastructure.

The rest closed immediately.

Same as any business.

 

[hastalavista]

Lots of mistaken views here on shareholders and their rights/powers/etc

Under company law, shareholders have the right to vote at general meetings.

They have no legal right to speak.

The only info they are entitled to get are annual and quarterly financial information as required by company law or the various jurisdictions where they operate: eg report to SEC in US

The quality of this information is poor at best

 

[micmclo]

I back debt forgiveness
However, I expect to get a room rent free.
I'm sure a single home owner in a nice three bed can get me a spare room

Only fair, I'm paying towards their lovely house after all