Why "cash for clunkers" is wrong, wrong, wrong!

Years ago, in an effort to stimulate home ownership, Barney Frank, Bill Clinton and friends, started a housing program to encourage people who would not normally own homes to purchase them. They forced banks to give loans to people with little or no credit. They encouraged banks to give loans to people with no jobs, to people who weren't even american citizens!
These loans were propped up by institutions like Fanny Mae, and Freddie Mac.

Years later, after a record breaking amount of forclosures created massive debts with these mortgage institutions, this created (or at least initiated) the financial meltdown we are seeing now.

Now we have the same party that created the mortgage mess, giving incentives for people to go out and buy cars. Just like the home ownership issues in the 90's, it created an artificial "boom" in the housing market. But when it came time to pay the bills, it crashed.

Mark your calendars boys and girls. With this foolish cash scheme with the auto industry, we are going to see the same thing. Poeple, who normally would have just driven their older cars, are now going to be saddled with new car payments, new insurance payments, at a time where they are saving more due to job losses and a massive downturn in the economy.

It will create more job losses, associated with the auto sales, auto insurance.
It will create another opportunity for the government to step in and "save" us from the mess they created.
It will cause people to have less, and subsequently rely on government more.
It will create an environmental nightmare for all the "good" cars filling junk yards.

It is creating an artificial "need" for something. And when people start waking up (after 3 billion now?) and realizing that this is nothing more than a government ponzi scheme, the very same government will be there to help us out of this mess.

If you have no job combined with little to no savings and are spending $20,000 on a vehicle you are not a wise individual...I doubt you would get a loan in this economy even...

For some people who actually intend to purchase a vehicle this is a great incentive...

But you are right, there really is no need to waste this much money on this program other than try to artificially boost a dieing industry..

I was told you have to be able to qualify for the loan from the bank before your even allowed to apply for the govt. cash and then you have to be qualified by the govt. to get the cash by buying an energy efficient car and trading in a gas guzzler. Reason so you can't just take the cash and run in the end.

Now I live in a po dunk town so it may not be quite correct but this is what they told me and said because I want to buy a standard 4-wheel drive truck (which by the way is right now cheaper than the energy efficient vehicles) I wouldn't qualify anyway.

So with my trade in I'm looking at 11,000 for a brand new 4-wheel drive truck and chances are they can not give me a better deal even with the program.

Basically if you have bad credit you will not get approved through the bank and that will automatically disqualify you for the 4500 bucks.

Edit: I do agree though that it is a stupid program in the first place and solves nothing all it does is move the country as a whole further in debt while trying to keep the car industry afloat for a little longer and pad the appearance of a recovering economy but in the end just draws it out longer.

[edit on 1-8-2009 by Darthorious]

Originally posted by Krystian
If you have no job combined with little to no savings and are spending $20,000 on a vehicle you are not a wise individual...I doubt you would get a loan in this economy even...

For some people who actually intend to purchase a vehicle this is a great incentive...

But you are right, there really is no need to waste this much money on this program other than try to artificially boost a dieing industry..

Having no job, little to no savings didn't stop people from buying homes. People who were planning on buying a car still would have, without the need for tax payer money to "boost" their decision.
This is the government creating a program to show how their bailout of the auto industry "worked".

Originally posted by Darthorious
I was told you have to be able to qualify for the loan from the bank before your even allowed to apply for the govt. cash and then you have to be qualified by the govt. to get the cash by buying an energy efficient car and trading in a gas guzzler. Reason so you can't just take the cash and run in the end.

Now I live in a po dunk town so it may not be quite correct but this is what they told me and said because I want to buy a standard 4-wheel drive truck (which by the way is right now cheaper than the energy efficient vehicles) I wouldn't qualify anyway.

So with my trade in I'm looking at 11,000 for a brand new 4-wheel drive truck and chances are they can not give me a better deal even with the program.

Basically if you have bad credit you will not get approved through the bank and that will automatically disqualify you for the 4500 bucks.

Edit: I do agree though that it is a stupid program in the first place and solves nothing all it does is move the country as a whole further in debt while trying to keep the car industry afloat for a little longer and pad the appearance of a recovering economy but in the end just draws it out longer.

[edit on 1-8-2009 by Darthorious]

I wish that were the case. In some instances, it might be. But to create the incentive with tax payer dollars, for people to buy a smaller cheaper cars just so that they (government) can say that this is what people want, will eventually hurt the economy.

You were looking for a new truck regardless. If the industry allowed people to purchase, based on their need rather than government incentive, then I would allow that the economy is improving under it's own steam.
I have yet to see a program that improved under government intervention.

reply to post by mikerussellus


You have absolutely no idea what you are talking about. This Fannie Mae/Barney Frank/Democrats/Bill Clinton FORCING banks to lend to unqualified people to buy homes has been soundly debunked. It comes from the same proaganda mill that is now trying to tell older Americans that the new healthcare bill contains eugenics.

The mortgage mess was largely created by people outside the CRA structure, often referred to as 'private label' mortgage companies hawking sub-prime mortgages, falsifying financial statements and home appraisals in order to feed wall street and the mortgage derivative orgy they spawned. CRA mortrgages could NOT be sold down the line and had to be held by the local banks. As a result, duh, they have performed better than average.

During this period where you suppose Congressman Frank, Bill Clinton et al steam-rollered this situation through Washington you may be surprised to learn that it was a Republican controlled Congress at the time.

There was no forcing anyone to do anything. The HUD programs which I think you're talking about provided guarantees in order to ALLOW banks to require less downpayment so people who had SUFFICIENT INCOMES but who did not have downpayments saved would be able to buy homes. It was dishonest mortgage originators that perpetrated FRAUD in order to write mortgages that got these people in trouble. The consumers trusted their bankers and got screwed. The bankers, you may recall, were bailed-out. And for the love of God don't say 'by Obama'.

Go check your facts. This GOP propaganda BS is getting old. Oh, how do I know this? Because I've worked with these entities on a consulting basis since 1993. You, sir, are parroting GOP propaganda and are flat-out wrong.

reply to post by jtma508


I quote. . .
"In a move that could help increase home ownership rates among minorities and low-income consumers, the Fannie Mae Corporation is easing the credit requirements on loans that it will purchase from banks and other lenders.

The action, which will begin as a pilot program involving 24 banks in 15 markets -- including the New York metropolitan region -- will encourage those banks to extend home mortgages to individuals whose credit is generally not good enough to qualify for conventional loans. Fannie Mae officials say they hope to make it a nationwide program by next spring."
. . . .

and

. . . "Fannie Mae, the nation's biggest underwriter of home mortgages, has been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its phenomenal growth in profits."

. . . .

and

. . . .''From the perspective of many people, including me, this is another thrift industry growing up around us,'' said Peter Wallison a resident fellow at the American Enterprise Institute. ''If they fail, the government will have to step up and bail them out the way it stepped up and bailed out the thrift industry.''

Under Fannie Mae's pilot program, consumers who qualify can secure a mortgage with an interest rate one percentage point above that of a conventional, 30-year fixed rate mortgage of less than $240,000 -- a rate that currently averages about 7.76 per cent. If the borrower makes his or her monthly payments on time for two years, the one percentage point premium is dropped.

Fannie Mae, the nation's biggest underwriter of home mortgages, does not lend money directly to consumers. Instead, it purchases loans that banks make on what is called the secondary market. By expanding the type of loans that it will buy, Fannie Mae is hoping to spur banks to make more loans to people with less-than-stellar credit ratings."

From NY Times Sept, 30 1999.

full story here. . .
www.nytimes.com...

Like I said, Clinton, Frank, the whole damn lot of them!

Look, I'm not saying that the GOP was innocent. But this is a thread about more government meddling into the free market system, with predictable events. If you are going to be nothing but an apologist for the democrats, then start another bloody thread!

Dude, I can cut-and-paste with the best of them. Exactly what is your Ctl-c/Ctrl-v flurry proving? That there was an effort to extend homeownership to people with more moderate means. Unlike your oiriginal post there was no FORCING anyone and these people still had to qualify. That is, they had to be able to prove they could carry the mortgage. Fannie Mae had less than 10% of the sub-prime market and only waded in that far becasue they stockholders were pissed that they were missing out on the profit free-for-all in the private morgage industry. Again, the mortgages that precipitated this mess were outside the CRA structure. Fact.

I'm not an apologist for the Deocrats. I'm not a Democrat. But I know what I know and there are so many people like you out there placing blame on people just becasue you can cut-and-paste and parrot information you know nothing about.

The financial markets brought this mess on all of us by lobbying for changes in regulations that allowed them to run fast-and-loose in mortgage investments. The government facilitated that by a complete abdication of their fiduciary responsibility of oversight. Then they bailed the perpetrators out and started pointing fingers.

Just know your facts. Which is not the same as parroting.

reply to post by jtma508


I use facts to illustrate my point. Not rhetoric. If you want to prove your point try using facts also.

And just to illustrate. . .

U.S. Rep. Barney Frank said Monday that fewer prospective homebuyers will qualify for mortgages as a result of the financial meltdown, calling that trend a positive byproduct because "tens of millions" of people are not suited to own homes.



“We made a mistake as a society in promoting homeownership as a universal achievable goal,” he said.

In an article "By Jim O’Sullivan/State House News Service
Tue Oct 28, 2008, 10:59 AM EDT "

Sorry, if I use actual facts and what the person actually said to prove my point.

Again, back to the purpose of THIS thread, the same damn mistakes are being made with this cash for clunkers program.

I don't need to get hit in the head with a hammer a second time to determine if it will hurt again.

Dont forget our dwindling resources are being used to build these new cars! Are the old ones being recycled to build these new ones???
This is actually telling people its okay to continue the status quo.

We need alternate forms of transportation, not more cars guzzling
oil! Its just a way to continue the depletion of our planet, foul the air,
and of course #1, provide the oil companies and the auto industry with
continued profits! Oh, all with your money of course!
Dont hear much about any of that do we? Wonder why.

Ah, land of the greed, home of the 'fraid.
Good thread btw!

reply to post by mikerussellus


I don't mean to be rude but PLEASE inform yourself. You really have absolutely no idea of what the cash for clunkers program is about. It sounds like something Glen Beck or some other political commentator would say. PLEASE don't get your news from commentators; they are giving you opinions and putting political spin on items to help their ratings (equating to their salaries). I'd suggest you find out, quite easily, about the program from its US Gov source. Or even from a car dealer!

reply to post by dodadoom


Thanks.

From what I understand, the engine blocks on these old cars are treated so they can never be used again, sent to landfills, junk yards, shredded for recycling. The rest of the auto is parted off, and the rest thrown away.

I agree, for an administration that promotes "green" agendas, this is just another way to reward the status quo.

I am as conservative as Ghengis Khan. (registered independent) but I'd be the first in line for an electric car if it were affordable, and engineered properly.

reply to post by jupiter869


Please, tell me what I have said that is incorrect. I will apologise for any misinformation that I have put out. My opinion on the matter is my own, not that of any commentator though.

If THEY agree with me, well, then that just shows how smart they can be

reply to post by jtma508


During this period where you suppose Congressman Frank, Bill Clinton et al steam-rollered this situation through Washington you may be surprised to learn that it was a Republican controlled Congress at the time.

Repubs got Welfare Reform, Dems got the housing mortage program. Compromise here. Which program helped America???

Originally posted by jtma508

You have absolutely no idea what you are talking about. This Fannie Mae/Barney Frank/Democrats/Bill Clinton FORCING banks to lend to unqualified people to buy homes has been soundly debunked.

Democrats forcing banks to do things is nothing new, and it is still going on today.

www.breitbart.com...

WASHINGTON (AP) - A senior House Democrat threatened banks Wednesday that if they don't volunteer to save more homeowners from foreclosure, Congress will make them.
In a sternly worded statement, Rep. Barney Frank said Congress will revive legislation that would let bankruptcy judges write down a person's monthly mortgage payment if the number of loan modifications remain low.

Debunked? Think again.

This says it all



[edit on 1-8-2009 by Cloudsinthesky]

reply to post by xsail


None. This isn't a partisan debate. This is one about the morons in DC period.
This reminds me of the story about how some farmer got frogs to take care of a bug problem. Then got foxes to take care of the frog problem. Then got dogs to take care of the fox problem. Then got tigers to take care of the dog problem. Then got elephants to take care of the tiger problem.

But the elephants brought bugs with them.

reply to post by RRconservative


Thank you for providing more information.

And I haven't even touched the ACORN issues yet!

reply to post by Cloudsinthesky


More sleight of hand from this administration. Everyone, pay attention to the left hand.

Just ignore what the right hand is doing!!!

reply to post by jtma508


While I think that there is plenty of blame on both sides of the aisle, it was the reps. pushing for more regulations, but being shot down by the dems.



Barney Frank is a blathering idiot...watch it if you dare...

Back to the topic...

The "cash for clunkers" stimulus was a bad idea on so many levels, it clearly shows how incompetent this administration is.

Can anybody show one positive aspect of the "cash for clunker program"?