Obama administration pushes banks to make home loans to people with weaker credit
The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.
President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.
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.In response, administration officials say they are working to get banks to lend to a wider range of borrowers by taking advantage of taxpayer-backed programs — including those offered by the Federal Housing Administration — that insure home loans against default.
Housing officials are urging the Justice Department to provide assurances to banks, which have become increasingly cautious, that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default.
Officials are also encouraging lenders to use more subjective judgment in determining whether to offer a loan and are seeking to make it easier for people who owe more than their properties are worth to refinance at today’s low interest rates, among other steps.
Obama pledged in his State of the Union address to do more to make sure more Americans can enjoy the benefits of the housing recovery, but critics say encouraging banks to lend as broadly as the administration hopes will sow the seeds of another housing disaster and endanger taxpayer dollars.
“If that were to come to pass, that would open the floodgates to highly excessive risk and would send us right back on the same path we were just trying to recover from,” said Ed Pinto, a resident fellow at the American Enterprise Institute and former top executive at mortgage giant Fannie Mae.
Administration officials say they are looking only to allay unnecessary hesitation among banks and encourage safe lending to borrowers who have the financial wherewithal to pay.
“There’s always a tension that you have to take seriously between providing clarity and rules of the road and not giving any opportunity to restart the kind of irresponsible lending that we saw in the mid-2000s,” said a senior administration official who was not authorized to speak on the record.
The administration’s efforts come in the midst of a housing market that has been surging for the past year but that has been delivering most of the benefits to established homeowners with high credit scores or to investors who have been behind a significant number of new purchases.
“If you were going to tell people in low-income and moderate-income communities and communities of color there was a housing recovery, they would look at you as if you had two heads,” said John Taylor, president of the National Community Reinvestment Coalition, a nonprofit housing organization. “It is very difficult for people of low and moderate incomes to refinance or buy homes.”
Y'know as a 20yr old, my biggest fear is not having credit at all, I need ot build it, but i have no money for it. So i can see where they are coming from.
But, I thought with weak credit you can still get a loan, just pay higher premiums and interest?
hotsauceman1 wrote: Y'know as a 20yr old, my biggest fear is not having credit at all, I need ot build it, but i have no money for it. So i can see where they are coming from.
But, I thought with weak credit you can still get a loan, just pay higher premiums and interest?
Getting student loans helps establish some level of credit (since it shows someone is willing to take a gamble on you). But that's not to say you should just go out and get as many student loans as you need... No need to saddle yourself with that debt.
Not always man... Honestly, best thing I did when I first joined the army was to get a cell phone plan. That one bill helped build my credit to where I got a pretty decent credit card, etc.
Yeah, occasionally you'll have to pay a higher down payment to get a loan, and/or get higher interest rates, but so long as people pay their bills on time, their credit should go up.
Depending on what type of loan you're after, weak credit may get you denied.. But not actually because of the credit. When my wife and I were buying our house, we were using one of our VA loans, and especially in home buying, debt to income ratio (your bills and "mandatory" expenses vs. how much you actively bring into the household) is the biggest determining factor in the whole process.
A credit report is much less meaningful for a home loan mortgage. As EF said, debt to income is the primary factor (or used to be, before the market started the subpar lending that led to 2007).
Glad to see it's not just the UK being this stupid...
Banks loose money due to lax credit policies
Govenment scream blue murder at them for being to lax
Banks restrict credit.
Govenment scream blue murder at them for being to restrictive.
Politicians (and the genral public for that matter) don't get how credit works.
There is an argument that some people are stuck at high interest rates and could be much safer if they could remortgage at lower rates, but again, thats forgetting the fact that higher interest rates are how you offset some risk.
On a side note, I'm sure this is not an "Obama administration" thing and any govenment would be doing the same.
hotsauceman1 wrote: Correct me if im wrong, but didnt banks mainly affect people that they approved loans for people who couldn't afford them??
I was thinking the same thing! I always thought the housing bubble popped because banks were letting people who couldn't afford the payments buy houses. They ended up giving loans to people with bad credit, and then through some financial wizardry making sure that someone else was holding the loan when the person who took it out stopped paying.
While I like the thought that the banks are being made to lend money again I'm not sure what I think of this in the long run if people start getting loans they cannot repay again.
hotsauceman1 wrote: I just remember my Proffessor telling me how banks would give loans to people for houses they just couldnt possibly afford.
Yeah, with things like monthly payments that were 110% of your wages but they would accept interest only payments. I can't see how that wasn't sustainable....
It wasn't just that people were getting loans they couldn't afford.
It was also the crash of the housing bubble. People were buying houses then turning them around for $50k+ (MUCH higher in California) in profits, then doing it again. Finally, the housing market crashed, house prices rebounded, housing speculators went bankrupt, and banks/creditors got left holding worthless loans (again, especially in CA).
There is plenty of blame to go around, banks and speculators included.
I not certain that forcing banks to extend loans to people with weaker credit wouldn't serve to start a similar cycle rolling again, and I'm not for it.
kronk wrote: It wasn't just that people were getting loans they couldn't afford.
It was also the crash of the housing bubble. People were buying houses then turning them around for $50k+ (MUCH higher in California) in profits, then doing it again. Finally, the housing market crashed, house prices rebounded, housing speculators went bankrupt, and banks/creditors got left holding worthless loans (again, especially in CA).
There is plenty of blame to go around, banks and speculators included.
I not certain that forcing banks to extend loans to people with weaker credit wouldn't serve to start a similar cycle rolling again, and I'm not for it.
Were they turning them around for 50k+ after fixing them up and "rehabbing" them as it were? Or were they just buying a house for like 50 grand, and then turning around and selling it to someone for 100 grand as is?
I know that my parents did that with our current house, but we're certainly not planning on selling it...
The reason this is bad, is it sets up the exact same pressures as what started this joy in the first place. Its like galactic level face palm. The moment you stray away from 10% down and max 2 to 2.5x cash flow the statistical rate of default goes geometrically higher.
I'm not really talking about flipping, where you fix up a house then sell it, but as Fraz says, that was also part of the issue to some degree. All depends on the area.
Speculation was the bigger issue. Like buying a house in a popular area and hoping to sell it for more, immediately. Unfortunately, both approaches were hit hard by the eventual crash.
You had people with no idea what they were doing trying to "get in on the action" without realizing that the wheel would eventually stop spinning and someone would be left with the bad deeds in their hands.
You also had "direct" speculation wherein people would buy houses to live, that were substantially beyond their means (willingly or willingly), with the view that they could sell it in a year at profit or just walk away from it.
Evidently (after the time I was in real estate) balloon loans changed to where you paid a lower rate initially then it jumped a year or three after. You could make the payment,. but once that other hit, you couldn't afford the payment.
Other speculators could only afford the payments for a few months to begin with. If they couldn't flip it in 6 months, they were SOL. The property went back.
There are up sides. My uncle put allot of money in to property and became a landlord despite knowing nothing about credit or being a landlord.
I, however, work in credit and at the time allot of my work involved chasing landlords so I had a good idea about my customers market. He told me repeatedly that "property always goes up" and "it's a brilliant way to make money". Both myself and my wife who is an accountant told him not to do it and that he was going to loose money, and that we felt that kind of venture was immoral as he was reliant on abuse of the housing market (houses go up in price due to the an artificial restriction on building so is not a free market). He told us that it was fine and his friend the estate agent (who he was buying from...) had told him it was a good investment. I laughed so hard when I found out how much he lost... Not very nice, but he chose to ignore the advice of two qualified people and tried to drag other family members in so I don't feel guilty.
Steve steveson wrote: There are up sides. My uncle put allot of money in to property and became a landlord despite knowing nothing about credit or being a landlord.
I, however, work in credit and at the time allot of my work involved chasing landlords so I had a good idea about my customers market. He told me repeatedly that "property always goes up" and "it's a brilliant way to make money". Both myself and my wife who is an accountant told him not to do it and that he was going to loose money, and that we felt that kind of venture was immoral as he was reliant on abuse of the housing market (houses go up in price due to the an artificial restriction on building so is not a free market). He told us that it was fine and his friend the estate agent (who he was buying from...) had told him it was a good investment. I laughed so hard when I found out how much he lost... Not very nice, but he chose to ignore the advice of two qualified people and tried to drag other family members in so I don't feel guilty.
Honestly, I think that there are smart ways to make good money in real estate... I mean, look at the Trump. But, I think that too many people pre-bubble bursting were like your uncle: ie, they didn't know enough/ or anything about the system and how everything really worked, and were then stuck with in essence, bad property.
hotsauceman1 wrote: Y'know as a 20yr old, my biggest fear is not having credit at all, I need ot build it, but i have no money for it. So i can see where they are coming from.
But, I thought with weak credit you can still get a loan, just pay higher premiums and interest?
Sometimes it can, sometimes it cannot.
As a 20 year-old, you're not supposed to have much (if any) of a credit history, because unless you're some wunderkid, you shouldn't be able to afford the sort of gak you need serious credit for in the first place. Cellphone plans, power bills, rent payment on the crappy one-bedroom apartment you're supposed to be living in...those will all build it.
hotsauceman1 wrote: Y'know as a 20yr old, my biggest fear is not having credit at all, I need ot build it, but i have no money for it. So i can see where they are coming from.
But, I thought with weak credit you can still get a loan, just pay higher premiums and interest?
Sometimes it can, sometimes it cannot.
As a 20 year-old, you're not supposed to have much (if any) of a credit history, because unless you're some wunderkid, you shouldn't be able to afford the sort of gak you need serious credit for in the first place. Cellphone plans, power bills, rent payment on the crappy one-bedroom apartment you're supposed to be living in...those will all build it.
Not exactly... Unless the US is radically different to the UK, and from what I understand it's not that different, apart from employers are able to look at your credit report (Which, for the record, I think is stupid).
Rent payments won't affect your credit rating (Unless you don't pay and they get judgment against you, but if you’re at that point your credit rating is the least of your worries). Two reasons for this, one rent is not credit, you pay it in advance and two, most landlords are far too small to be reporting to credit agencies if they did anyway. It is useful for referencing for future rental but that’s about it.
Phone and utility bills are good for taking the first steps as they can't refuse you very easily and the amount of risk is small to them because the values are small. However once you get past the first steps they tend to be weighted very low in company’s credit scoring engines for exactly those reasons.
The best way to build up a credit history is getting a credit card, use it to buy your weekly shop, and pay it off IN FULL EVERY SINGLE MONTH. If you are not adult enough to be trusted with a credit card then do not do this. If you think there is any chance friends will call you just before pay day when you have no money and you will decide to put it on the credit card do not get one. Do not use the credit card cheques they will send you. Do not use it to get cash out. If you can do this then you will quickly build a good credit history.
However, don't get card after card after card or keep upping the limit thinking this is good. You will quickly run in to what is called "over exposure". This is where you have too much money at risk. Basically the lender will look at your cards and say "they are paying it at the moment, and they are not using it, but if tomorrow they go on a crazy spending spree I will be screwed". Until you get older and settled I would go for no more than your monthly take home pay. Many people have more than this, but personally I think if you need more than this you should be looking at a loan as you are not going to be able to pay off the credit card on a sensible time scale.
Loans, yes, you will probably be able to get a loan of some sort if you have poor credit, but it may not be very large and it may have very high charges. There are loan companies in the UK specialising in loans to people with poor credit. They are normally less than £2k and have interest rates higher than credit cards, sometimes 100%+, up to 2000% for some short term pay day loans. At this end of the market they are little more than legal loan sharks.
TLR To build credit get a credit card with a small limit and don't be stupid with it.
Now, if anyone want's a lecture on credit scoring engines or the immorality of pay day loans and the rental market I'll be working on doing my month end recs.
Well its not like he can run again next year so if he creates a mess he won't have to clean it up. Claim the credit from the lower/middle income families for making banks lend to them again, if it all goes belly up hope that it happens when you're out of office. Nothing like passing on a poisoned chalice to your successor
Honestly, I think that there are smart ways to make good money in real estate... I mean, look at the Trump. But, I think that too many people pre-bubble bursting were like your uncle: ie, they didn't know enough/ or anything about the system and how everything really worked, and were then stuck with in essence, bad property.
Certainly, but comparing what Trump and his ilk do to house-flippers is apples and oranges. Trump's company also makes huge fething buildings! He's also in the acquisition and resale business, but that's on a whole different scale!
Calling it house flipping is like calling John Stewart a little sarcastic.
Honestly, I think that there are smart ways to make good money in real estate... I mean, look at the Trump. But, I think that too many people pre-bubble bursting were like your uncle: ie, they didn't know enough/ or anything about the system and how everything really worked, and were then stuck with in essence, bad property.
Certainly, but comparing what Trump and his ilk do to house-flippers is apples and oranges. Trump's company also makes huge fething buildings! He's also in the acquisition and resale business, but that's on a whole different scale!
Calling it house flipping is like calling John Stewart a little sarcastic.
Trump has also declared bankruptcy mutliple times and routinely had a net worth less than your average teacher. Hold Trump up to be nothing but the power of Bull gak.
hotsauceman1 wrote: I just remember my Proffessor telling me how banks would give loans to people for houses they just couldnt possibly afford.
Yeah, that's what happened, but a lot of peopel still want to blame poor people for getting loans they couldn't pay back.
The interesting thing about Credit Scores in the US is that there are four credit bureaus. All of them are private businesses with little or no oversight. Each one has a different, secret method for calculating your score. So, when people tell you to do this, or do that, we are all really just making a best guess about thing sthat have worked int he past. All the actual formulas are top secret.
hotsauceman1 wrote: I just remember my Proffessor telling me how banks would give loans to people for houses they just couldnt possibly afford.
Yeah, that's what happened, but a lot of peopel still want to blame poor people for getting loans they couldn't pay back.
The interesting thing about Credit Scores in the US is that there are four credit bureaus. All of them are private businesses with little or no oversight. Each one has a different, secret method for calculating your score. So, when people tell you to do this, or do that, we are all really just making a best guess about thing sthat have worked int he past. All the actual formulas are top secret.
Well, yes, but you don't get credit based on your credit score. That is just an indicator of how good or bad the agancy views your file. Companies you are borrowing from will do there own credit scoring. They will buy the raw data from the credit agancys (All sorts of data, not just payment history) and then do there own scoring. They will build a scoring engine dependand on their own needs. If they are a bank they will link in there own infomation, which can be given more or less weighting dependand on the credit policy of the company.
Scoring engines/cards can be very complex and expensive. We were looking at implimenting one a little while back. Something very simple that just worked on our payment history data, how long we have been trading with the customer and a few other points. It was an off the shelf job, no customisation. They wanted £10k a year... I told them where to shove that (We had no real use for it due to the nature of the business I am in. We work in trade and most people work on the basis of trade refrances).
This will then be used to do a Yes/No/Maybe sort. Depending on the size of company and the size of loan it may be passed to an underwritter. Small loans it may be that Yes & No do not but Maybe are for them to take a look at the data and make a choice. Large things like mortgages will normaly all be passed to underwritters to have a look at (Although they will often not look at No's unless the borrower requests it. It is always worth asking). They would have to have a good reason to go against the score card, but they can if the feel they should.
Credit scores should just be a way of giving Joe public an idea of what all the numbers mean, although some very small lenders may use them as an indicator. We use them for some large lending just as an indicator as to wether we need to do more research or not, but never as the basis of a rejection/acceptance.
The basic concept of how to influence your credit score is sound (Keep your borrowing low, but have some. Pay it off on time). Whilst credit managers don't know the details of how the agancys do there scoring, or how other companies lend we do know the theory of credit scoring and how we do our own. We also have an idea of how other credit managers work and what they personaly want to see. The basis is always pay on time and don't have too much borrowing.
Easy E wrote: Yeah, that's what happened, but a lot of peopel still want to blame poor people for getting loans they couldn't pay back.
Well, it's like crack. Yeah, the guy shouldn't have been selling it on the corner, but that doesn't absolve you of all responsibility of being dumb enough to start smoking it.
Easy E wrote: Yeah, that's what happened, but a lot of peopel still want to blame poor people for getting loans they couldn't pay back.
I blame them both. The people who couldn't do basic math to see that they couldn't afford it, and the banks who enabled them.
In the UK, in my last job before moving here, I worked with the Financial Services Authority and the Financials Ombudsman Service both. I was financially savvy, worked with contracts and insurance premiums, ensuring our business remained compliant with current law and protected against scrutiny, I was fairly good at it, keeping the business robust and receiving praise from both external regulators on fairness and clarity.
I had a loan with the bank, it had been running for years, since I took it out in my early 20s and was comfortably paying it off. I wanted a new computer and went to see the bank about another loan amount, just a few grand to give to my mate to build me a 'dream machine'.
****
'Not a problem sir, absolutely easy and what we'll do for absolutely making life easier for you is just amalgamate this loan with your existing payments, so it will all be one convenient payment and single amount.'
'Well that sounds great, so the 3 grand I'll owe for the 2 grand you're giving me today will just be added to my outstanding amount of 2 grand on my old loan and I'll have 5 grand owned to you?'
'Well, more or less.'
'Explain?'
'We'll add your current loan to the existing loan for one loan amount to pay off, mmmmkay?'
'Let me see this on paper please'
'Oh... erm, here's the contract we'd need you to sign, if you'd just...'
"what is this, you want me to actually take out 5 grand, 2 of which would pay off the interest I'm currently paying you, so that I end up owing you closer to 8 grand? You want me to pay off the interest gathered off the 'recalculated every day' loan you got me with before with more money I borrow from you that will, it's self, add additional daily recalculated interest, that's rather sly isn't it?'
'It's not sly, it's a way in which you can make things convenient for you by one simple payment'
'the money is removed from my account on a set date by direct debit, in what way is one payment more convenient to me than two?'
'erm...'
'how's about you just give me the second loan, separately, with a clear and separate contract, unrelated to the initial loan, or I'll write a letter of complaint to the FOS, with a copy of this contract and a statement to the effect that you used sales tactics that breached almost every one of the 6 expected outcomes of the treating customers fairly initiative?'
'certainly sir, I'll get right on that now'.
****
If I'd not caught it, I'd have been stiffed for several thousand pounds more in debt. I caught them out doing it, but I'd been trained to look this stuff over. The spin was good, she was even flirting with me (which made me suspicious, I have a face like a robber's dog...), making me coffee and lots of friendly talk and 'helpful' 'on your side' behaviors and explanation.
After that encounter, I was left in no doubt that someone not expecting to be fethed in the arse with a lawnmower would find themselves in a tricky situation and it was suddenly very clear to me just how so many are up to their necks in debt on both sides of the Atlantic.
People being sold mortgages they can't afford to deal with just have my sympathy, not any sense of blame, because the spin and the sale pitch is clever and desperately driven by commission. This should be better regulated and the punishments for businesses pushing the line too far should be far greater.
Why were you taking out a loan for a computer MGS? Was that a home business venture and needed it for that?
But yea, thats cheesy. Having said that, I've not heard of personal loans for computers outside of small business (maybe vendor financing). Interesting.
Frazzled wrote: Why were you taking out a loan for a computer MGS? Was that a home business venture and needed it for that?
But yea, thats cheesy. Having said that, I've not heard of personal loans for computers outside of small business (maybe vendor financing). Interesting.
Naw, my laptop was dying and I decided that I wanted a great computer for playing my MMO on. I gave the cash to a tech-savvy friend and said 'build me a monster' and indeed he did.
I think she listed the loan reason as 'home improvements'. /shrug
I had an excellent credit rating in the UK, no dependents, working for the NHS, Social Services and a financial business and making steady repayments on the previous loan.
Annoyingly, that excellent rating does not follow you 'over the pond', if I'd had a gak one, that would have tailed me to the ends of the earth, but I have to rebuild here it seems.
MeanGreenStompa wrote: Annoyingly, that excellent rating does not follow you 'over the pond', if I'd had a gak one, that would have tailed me to the ends of the earth, but I have to rebuild here it seems.
People being sold mortgages they can't afford to deal with just have my sympathy, not any sense of blame, because the spin and the sale pitch is clever and desperately driven by commission. This should be better regulated and the punishments for businesses pushing the line too far should be far greater.
Yeah, being a reformed salesperson myself, I have no doubt that I could dupe a lot of people into making really bad investments.
Since I wasn't a very good salesperson, I can only imagine how many people a great salesperson could screw over.
Frazzled wrote: Why were you taking out a loan for a computer MGS? Was that a home business venture and needed it for that?
But yea, thats cheesy. Having said that, I've not heard of personal loans for computers outside of small business (maybe vendor financing). Interesting.
Naw, my laptop was dying and I decided that I wanted a great computer for playing my MMO on. I gave the cash to a tech-savvy friend and said 'build me a monster' and indeed he did.
Well I hope you had a good Sauron voice when you said it. "Build me a computer worthy of MorrrrrDorrrr..."
Thanks. I never did consumer lending. Don't have a clue.
Yeah, being a reformed salesperson myself, I have no doubt that I could dupe a lot of people into making really bad investments.
Since I wasn't a very good salesperson, I can only imagine how many people a great salesperson could screw over.
There's a cost - usually social, often financial, occasionally physical - to making stupid decisions without knowing what the hell you're doing. It's the way it should be.
Soladrin wrote: I haven't taken a single loan in my entire life. True story.
Sol, you're also squatting in an old police station, married to your housemate, while a little Dutch lovin' on the side, and you work for a store that is... roughly the same as a dispensary here in the States... nothing about your life is normal, why would you need a loan?
Next you'll be telling us you lived in a van down by the river...
Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
For the poor it does because stuff like universal healthcare, socialized healthcare, higher minimum wage, better employee benefits, better welfare systems, etc will decrease financial strain and restrictions and increase the number of life chances for the poor (a lot these things benefit the
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
For the poor it does because stuff like universal healthcare, socialized healthcare, higher minimum wage, better employee benefits, better welfare systems, etc will decrease financial strain and restrictions and increase the number of life chances for the poor (a lot these things benefit the
middle and upper class as well).
Bah... none of those are necessarily socialism... but, that's not what we're discussing here.
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
For the poor it does because stuff like universal healthcare, socialized healthcare, higher minimum wage, better employee benefits, better welfare systems, etc will decrease financial strain and restrictions and increase the number of life chances for the poor (a lot these things benefit the
middle and upper class as well).
Bah... none of those are necessarily socialism... but, that's not what we're discussing here.
Yeah, you're probably right but they are social programs though.
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.
He was talking about a better, higher minimum wage, something I've heard described here in America as 'hurting the job creators', 'forcing work overseas' and 'Socialist!'.
Raising the Minimum Wage only benifits those who are working minimum wage, but it does effect most employers.
And increasing Wages does not have a direct effect on the buying power of those who, supposedly, benifit.
By increasing wages, you also increase the expenses of the employers. Expenses which are passed on to their customers, which includes everyone. Both those working minimum wage and not working minimum wage.
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.
He was talking about a better, higher minimum wage, something I've heard described here in America as 'hurting the job creators', 'forcing work overseas' and 'Socialist!'.
It's not accurate, but 'Murica, right?
'Murica... right on!
Also, most Union shops base their wages in part of the federal minimum wage... if they go up, they automatically get a wage increase.
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
NO no that won't work. We need open borders and H1B visas for everyonez.
This can only work to a certain extent, like everything, it is a good idea to help to get the American Economy going, this would help the rest of the world (it's a sad day when the whole world depends on a few countries to do well), as long as the banks and Obama don't over do it it should be fine.
Although it would help if people got more money, higher minimum wage, for right now (most people know my political beliefs by now), all governments need to stop helping the employer and start helping the employee.
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.
Minimum wage comes to mind...
Go here... 1979 U.S. minimum wage adjusted for inflation: $9.38 /hr. So... has minimum wage been wrong all this time?
Raising the Minimum Wage only benifits those who are working minimum wage, but it does effect most employers.
And increasing Wages does not have a direct effect on the buying power of those who, supposedly, benifit.
By increasing wages, you also increase the expenses of the employers. Expenses which are passed on to their customers, which includes everyone. Both those working minimum wage and not working minimum wage.
No, it only DIRECTLY beneifts those who are working minimum wage. It INDIRECTLY benefits EVERYONE - including employers - by increasing the amount of money available to spend on... well, everything. This means increased revenue, which leads to increased profit and (hopefully) pay for those making MORE than minimum wage.
If the federal minimum wage had been updated since 1974 using the Social Security AWI, it would now stand at $10.74 an hour. That's quite a bit more than the $9.16 an hour it would be if it had been updated for inflation using the CPI. It's a whole lot more than today's $7.25 an hour federal minimum wage.
A very strong case can be made for a $10.74 minimum wage, which is only 50 cents higher than San Francisco's CPI-adjusted minimum wage.
But that's not the end of the story. The Social Security AWI is based on the changes in people's average annual wages over time. Wages, however, have not kept pace with rising economic prosperity.
Since the 1970s ordinary workers' wages have failed to rise along with the economy as a whole. The massive rise in non-wage income (dividends, interest, and capital gains) has made workers' wages a smaller and smaller slice of the overall pie. America's total personal income per capita — including income from all sources — has risen much faster than the Social Security AWI.
Between 1974 and 2011 the AWI rose a cumulative 17 percent (adjusted for inflation). Per capita personal income, on the other hand, rose 57 percent (adjusted for inflation). Had the minimum wage been indexed to per capita personal income growth starting in 1974, the minimum wage today would be $14.41 an hour.
That's a far cry from $7.25.
By today's standards $14.41 an hour might sound like a lot for a minimum wage, but it doesn't have to stop there. At the top 1 percent of the American income distribution, average incomes rose 194 percent between 1974 and 2011. Had U.S. minimum wages risen at the same pace as U.S. maximum wages, the minimum wage would now be $26.96 an hour.
The difference between $7.25 an hour and $26.96 an hour shows just how much inequality has increased in America over the past four decades.
In short, if minimum wage had increased at the same rate the averge, it would be $14.41.
Interest adjusted, the highest minimum wage has been worth was around $10.50 in the late sixites. And yet at that time, the average America could much better afford a house, car, and college education for thier kids then the average America can now. Why do you suppose that was?
Vulcan wrote: Rather than push banks to loan money to people who can't afford to pay it back, perhaps he should be pushing corporations to PAY people enough so they don't NEED the loans in the first place?
SOCIALISM!!!
J'accuse!
wat?
Socialism gives ya moar money?? how? o.O
@Vulcan... not sure how the government can force business to pay the employee more... other than enacting policies that encourages business environments that creates abundance in jobs, thus forcing businesses to compete (offer higher wages) for workers.
Minimum wage comes to mind...
Which only effect a portion of the labor force in a positive way, but it does effect prices in a negative way by increasing the cost of anything that has minimum wage labor involved in its production. And most products are in some way related to minimum wage labor. So the cost for someone making above minimum wage to buy the same product has increased with no equivilant increase in wage, IE: that person has had his purchasing power reduced.
The people that did actually benifit from the wage increase will also have to pay more for products due to the increase. So the net gain of the minimum wage increase is very small or non-existant.
The only people not hurt are the companies themselves, they can simply raise the prices of their products to compensate.
No, it only DIRECTLY beneifts those who are working minimum wage.
Not quite... there alterior motives to why most Union shop push for increased minimum wage. Labor unions often peg their negotiated wages to the minimum wage. Increases in the minimum wage can therefore trigger new wage negotiations or immediate pay hikes for unionized employee.
Interest adjusted, the highest minimum wage has been worth was around $10.50 in the late sixites. And yet at that time, the average America could much better afford a house, car, and college education for thier kids then the average America can now. Why do you suppose that was?
Part of it is obviously the cost of goods. Taxation of goods and services has also increased fairly dramatically since the sixties (case in point, cigarettes).
I'd also hazard that another part is in our upbringing, as well as the purchases that people make. Things like cable are definitely not necessary, and weren't even available as such in the 60s, yet how many households will use the phrase "i have to have X on TV". In essence the things that many people insist that they "need" are not needs, but tie up our money on a long term basis, to where it takes away many people's purchasing power.
I don't quite understand the persistent moaning about Obama by some on this sight, i am not an American, i'm Scottish, and i would give a leg for Obama to run my country.
BACK ON TOPIC
As i said earlier as long as Obama doesn't push things to far the idea should work.
strybjorn Grimskull wrote: I don't quite understand the persistent moaning about Obama by some on this sight, i am not an American, i'm Scottish, and i would give a leg for Obama to run my country.
Does Scotland have an extensive drone program? I don't think he'd go, otherwise.
BACK ON TOPIC
As i said earlier as long as Obama doesn't push things to far the idea should work.
*(Upper) middle class people take out loans far in excess of their ability to repay in order to buy real estate for the purpose of immediately selling it again at a higher price, because reality TV tells them that's a magic money fountain*
*The credit industry plays a giant shell game, operating on the principle that if they make it confusing enough it literally becomes magic*
*Real estate market crashes, the people who bought it to sell are forced to default on the loans, the shell game ends, revealing that the people who concocted it ran off with much of the money, laughing and mooning us as they went, recession follows as interest rates skyrocket*
"Clearly this is regulation's fault! That and poor people who took out loans they could and did repay/are repaying!"
Monster Rain wrote: That rant was based on nothing that I can percieve in either the news or the contents of this thread.
Well done.
Really? When the overwhelming response in this thread is "isn't that what got us into this mess in the first place?" pointing out that "no, it really wasn't," isn't based on the contents of this thread?
Sir Pseudonymous wrote: *(Upper) middle class people take out loans far in excess of their ability to repay in order to buy real estate for the purpose of immediately selling it again at a higher price, because reality TV tells them that's a magic money fountain*
*The credit industry plays a giant shell game, operating on the principle that if they make it confusing enough it literally becomes magic*
*Real estate market crashes, the people who bought it to sell are forced to default on the loans, the shell game ends, revealing that the people who concocted it ran off with much of the money, laughing and mooning us as they went, recession follows as interest rates skyrocket*
"Clearly this is regulation's fault! That and poor people who took out loans they could and did repay/are repaying!"
I think people should be forced to be poor for X amount of years when they start off in life. It teaches you the value of the dollar (which isnt much) and how to make a $200 paycheck stretch into a $300 paycheck. If that was how it was done, then people probably wouldnt take out loans and lines of credit like they made $500k a year when they really only make $200k a year. Just saying. And I agree, blame us poor folk, because obviously its us that get approved for loans on housing and realestate and default on them!...oh wait no thats not right
Monster Rain wrote: That rant was based on nothing that I can percieve in either the news or the contents of this thread.
Well done.
Really? When the overwhelming response in this thread is "isn't that what got us into this mess in the first place?" pointing out that "no, it really wasn't," isn't based on the contents of this thread?
Monster Rain wrote: That rant was based on nothing that I can percieve in either the news or the contents of this thread.
Well done.
Really? When the overwhelming response in this thread is "isn't that what got us into this mess in the first place?" pointing out that "no, it really wasn't," isn't based on the contents of this thread?
I was more referring to blaming the poor for the problem. I don't think that happens, at least not in the numbers you seem to be implying. I read a fair amount of news, and it seems that most publications put the blame squarely on the deregulation of these banks that was spurred by the government.
KC, as an aside, I hope you realize how much your ironic, off topic, trollish post amused me just now.
KingCracker wrote: I think people should be forced to be poor for X amount of years when they start off in life. It teaches you the value of the dollar (which isnt much) and how to make a $200 paycheck stretch into a $300 paycheck.
While I'm not sure I agree with this exact sentiment, this does make me think of something I've often espoused: I wish they would teach some more practical things in school, and not in a specialized class, but as part of the general curriculum. Some of the things this class would teach:
How to change a tire on your car
How to balance a checkbook
How to prepare for a job interview
Why you shouldn't buy HDMI cables at Best Buy
How to unclog a toilet
Why you shouldn't talk to the police
How to jumpstart a car
How to check your oil
How to make a budget
Monster Rain wrote: That rant was based on nothing that I can percieve in either the news or the contents of this thread.
Well done.
Really? When the overwhelming response in this thread is "isn't that what got us into this mess in the first place?" pointing out that "no, it really wasn't," isn't based on the contents of this thread?
I was more referring to blaming the poor for the problem. I don't think that happens, at least not in the numbers you seem to be implying. I read a fair amount of news, and it seems that most publications put the blame squarely on the deregulation of these banks that was spurred by the government.
KC, as an aside, I hope you realize how much your ironic, off topic, trollish post amused me just now.
This thread was basically just an echo chamber of it, though. The media was any number of things, depending on the station and the phases of the moon.
KingCracker wrote: I think people should be forced to be poor for X amount of years when they start off in life. It teaches you the value of the dollar (which isnt much) and how to make a $200 paycheck stretch into a $300 paycheck.
While I'm not sure I agree with this exact sentiment, this does make me think of something I've often espoused: I wish they would teach some more practical things in school, and not in a specialized class, but as part of the general curriculum. Some of the things this class would teach:
How to change a tire on your car
How to balance a checkbook
How to prepare for a job interview
Why you shouldn't buy HDMI cables at Best Buy
How to unclog a toilet
Why you shouldn't talk to the police
How to jumpstart a car
How to check your oil
How to make a budget
Excluding car stuff, all of that was taught to me in school. Granted it was electives.
While this might show Dakka how woefully terrible I am at being an adult, I was taught how to balance a checkbook in my 6th grade math class and my father who was a banker for 15+ years. I don't do it currently, and I'm not entirely sure why I would change to learn how to properly balance a checkbook. In today's digital age, I currently keep a check register (though rarely do I check it against my bank statement), but I can, at any hour of the day, log on to my bank's website and get a "current" balance of my checking account. And from there I can compare those numbers against my upcoming expenses...
Currently in my bank account I have 205.86 (I really don't care if Dakka knows how poor or rich I am atm). My current expenses for the next week include my cell phone payment, and my student loan payment, as well as 2 tanks of gas. I know that I currently have enough for 1 tank of gas and my cell phone payment. But looking ahead to what I need to pay in the next week, I know that I get paid tomorrow.
I guess what I'm saying is that I can compare things in real time that balancing a checkbook against my bank statement actually leads me to getting confused about the actual level of funds that I have.
With my rambling being said, I had to learn everything in Ouze's list from my own experiences outside of school (whether it was from a job or just my own curiosity)
While I'm not sure I agree with this exact sentiment, this does make me think of something I've often espoused: I wish they would teach some more practical things in school, and not in a specialized class, but as part of the general curriculum. Some of the things this class would teach:
How to change a tire on your car
How to balance a checkbook
How to prepare for a job interview
Why you shouldn't buy HDMI cables at Best Buy
How to unclog a toilet
Why you shouldn't talk to the police
How to jumpstart a car
How to check your oil
How to make a budget
NANNY STATE! SOCIALISM!
In all fairness, they schools can't take valuable time teachign that crap. They have to make sure kids pass tests so the school can get funding. Learning any of those thing sont he list will NOT help a student pass the standardized tests which are how the schools make their money from the Feds and State.
While I'm not sure I agree with this exact sentiment, this does make me think of something I've often espoused: I wish they would teach some more practical things in school, and not in a specialized class, but as part of the general curriculum. Some of the things this class would teach:
How to balance a checkbook
How to make a budget
If a Congress Person/Senator cannot balance their household checkbook, or make a budget for their house, then they should not be permitted to run for office and have a say in the nation's finances.
When's the last time any of you actually WROTE a check? I've had my current bank account for something like five years now and I have yet to go through a single check book more then half way. I don't bother balancing my check book because I keep track of my inlays and outlays through online banking.
KalashnikovMarine wrote: When's the last time any of you actually WROTE a check? I've had my current bank account for something like five years now and I have yet to go through a single check book more then half way. I don't bother balancing my check book because I keep track of my inlays and outlays through online banking.
Um... Sunday night, wrote a check for my car payment. The only way to pay my car loan online is by opening an account with the bank that owns my loan, I'm not a fan of the bank or their customer service, so I refuse to open an account with them.
Okay there you go, my car payment is through my insurance company and is electronic, as were my utilities and rent the last time I was paying for them directly, cell bill? Electronic, the last check I had to write was for a traffic ticket, and slightly before that I had to pay the balance of my tuition this semester. Two for the year so far.
R To build credit get a credit card with a small limit and don't be stupid with it.
