how to prevent the next wall street crisis...

[Callme_CO]

This is interesting. I found it on CNN so i don't know how much credibility it has.

http://www.cnn.com/2008/POLITICS/09/17/stiglitz.crisis/index.html

[Silverbird]

Since it's a commentary, I think of it as a good "thought piece", a blog if you will. Not to be taken alone as gospel, but as a piece of the puzzle.

[Callme_CO]

thanks for your thoughts silverbird i tend to agree. I'm typically the one who doesn't believe many media outlets but i see what your saying.

[CountryBoy]

Good points.

When I got a loan some 23 years ago, the loan could only be 28% of my total indebtness, my employeer was actually called, I had to provide the latest paycheck stub, and I had to have 10% down. I think just those moves alone would've prevented or greatly reduced the chance that the greedy, the stupid and outright liars woud drag us into another subprime mess.

We had these ARM's when I applied for my loan, but they were called balloon loans, but you still had to have above requireements met for a balloon payments. I believe the balloon moved based on treasury, but don't quote me on this.

Of course I was also taught by my parents, you don't buy what you can't afford.

CB

[Silverbird]

Balloons, you knew what was coming - you had to pay off the rest of the loan after 5 years. The consequences of NOT paying it off after 5 years was to become stuck with a penalty and an interest rate that would look like a credit card today(interest rates were higher in those days before baloons became illeagal), and no, getting rid of the house did not get rid of the loan.

Adjusted rate fun, well, you get a new interest rate. Whether from re-finance or..nasty surprise for some people who really didn't understand what this new rate was going to mean...