The Bailout Double Dip Theory

I'm trying to get aa grip on the whole Bailout. Yes, even after it has been passed... Yes, even after it has been denounced by it's creators... Yes, even as they ask for more.

To try and get an idea on what could (or might not be happening) I'd like to present you with this and see if anyone here can hone in exactly how it works or if this is indeed the conspiracy I think is laid in the Bailout.

The bank gives William a loan for a house he is buying. The house's inflated rate is $230,000. William is a bit streched for credit, but they give it to him anyways...

Some time later, the realestate bubble pops and William's house is only worth $80,000. Forced to forclose, he turns it over to the bank who calls it toxic and get's the govenment to pay the total differance that William owes including intrest.

THEN, because it's contractual, the bank sells the house at an obvious loss of lets say $150,000. Now you and I both know that William is going to have to pay the differance for what he owed on the house and what they got for the house.

But wait a minute... Didn't the bank just double dip? Did they not just get (in this scinario) money from the governement to cover it and the still hit William up for the money too?

I present to ATSers world wide the Bailout Double Dip Theory

I am not sure how accurate this is... But does anyone know if this is what the banks can/will do? Because let's face it... If they can, it the Bailout only helps the bank double profits... It still screws the consumer.

I am open to critizism here, but I really don't see how this Bailout works (in practice or theory) so I'm trying to get a real world scinario.

Grazi on your input!

reply to post by Jkd Up


It makes sence!
And you are right if the banks take the bailouts they should write off all debt to William!
The question is, did the banks plan this?
Cause in hindsight i can think of two classic ads i would have run for the banks!
"Want a house? All delinquents welcome!"
Or "So you think you can afford a 200k house? Why go small when we will loan you 400k!"

Not only is the double dipping on the bailout what you mentioned above but there is far more.

The bailout is tax money going to the banks. Tax money is our money

The banks take that money and lend it to us to "keep the credit flowing"

We have to pay that money plus interest back to the banks because it is credit.

This is the true double-dipping going on. We give the banks money. Then the banks lend us that money and they make money on the interest.

Enraging isn't it? There is a good reason why the majority of Americans are against bailouts to financial institutions.




[edit on 3-12-2008 by wutone]

reply to post by Jkd Up


Lets start our own bank!
We can call it the ATS bank.
1. We apply for some of this magic bailout money.
2. We loan it to our selves!
3. We then sell these loans to AIG with interest.

Would we not have doubled our money (Tax payers money)?
And be collecting a monthly income?

reply to post by Daniel666


If you read some books on the way banks work and how they operate it is constantly joked that it is cheaper to open your own bank then to open a checking account.

There are actually ways to do this and charter a bank. That might not be a bad thing.

The ATS Cerdit Union... Hmmm.... Catchy!