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The Forum > General Discussion > Home Owners and Bank Protection Bill

Home Owners and Bank Protection Bill

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Oliver,

Its all very nice in theory, and if the US could just let the finacial institutions pay for the bad decision without adversely affecting everyone else, I would be right there with you.

But, if the banks and financial institutions fail, leading to general economic collapse, then people's superannuation, life savings, jobs, homes are all at stake.

Everyone else

Do all of you people who seem happy for the economy to go down realise that it is eminently possible the rest of us will go down with the ship.

Also, lets not forget that the housing bubble and bad loans were as much the fault of the millions of people who borrowed money they could not afford to pay back, as the lenders.
Posted by Paul.L, Tuesday, 30 September 2008 7:10:54 PM
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I was presented with this petition from my factory neighbour.His debt is 5 times mine and he is under serious stress.If he sells he will still be mortaged to the bank.In Australia unlike the US the banks can sell up your mortaged property and hound you for the rest of your assets.

The demise of the US has serious ramifications for us all.They account for 25% of the world's economy.We are being re-assured that our banking system is better regulated and more stable than the US,but the reality of our balance of payments deficit is similar to the US pro rata and our debt to earnings ratio is 35% higher than the US.

Stability and reassurance are the key words,since panic will be our death nell.The present downward spiral needs a circuit breaker and even Malcolm Turnbull admits that we are in unchartered waters.As the banks try to recoup their loses,they are destroying the very fabric which supports them.There needs to be a balance struck whereby the banks must realistically must suffer loses caused by their own poor judgement.Banks do not produce things of tangible worth,they are but the gate keepers of the medium of exchange.
Posted by Arjay, Tuesday, 30 September 2008 7:37:44 PM
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*In Australia unlike the US the banks can sell up your mortaged property and hound you for the rest of your assets.*

Arjay, thats exactly one reason why Australian banks are so much
safer then US banks. In the US, if people overpay for a house,
they can hand in the keys if values drop, causing the present
problem of a collapse in their financial system.

Yes, our current account is bad and we need to borrow around 120
billion a year, as Aussies don't save much. Why do they not
change the tax rules, to give people an incentive to save?

*There needs to be a balance struck whereby the banks must realistically must suffer loses caused by their own poor judgement*

You will find that is already happening. Those companies that went
too far, like Alco finance etc, have paid the price. Others, like
GE finance, are leaving Australia with their tail between their legs.
Its those who tried to introduce the US system here, that are
paying a price.

Our most cautious banks recently, ie Westpac and Commonwealth,
are coming through all this pretty well. David Morgan of Westpac
had predicted it would happen, it was just a question of when.
That's why I own some Westpac shares :)
Posted by Yabby, Tuesday, 30 September 2008 8:45:52 PM
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Paul.L

"Also, lets not forget that the housing bubble and bad loans were as much the fault of the millions of people who borrowed money they could not afford to pay back, as the lenders."

The people given low-doc loans were conned. The repayment terms were initially affordable but were always set to be increased, a fact not pointed out to the recipients at the time they took the loans. The lenders were definitely at fault and should be held to account.
Posted by Bronwyn, Wednesday, 1 October 2008 1:19:55 AM
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No Arjay, not a good idea.

Last time I looked Bills are supposed to be tabled in the Parliament, and come from Members thereof. The events of last week in Canberra should have focussed attention upon that fact.

It is of course reasonable for suggestions in respect to public policy to come from elsewhere than the Parliament. Your opening post, and indeed the topic title imply that the CEC has drafted a Bill, which, of course, if the Parliament wished, it could adopt. Such Bill would be a package deal. I have but one question. Has any Member of either House been elected upon a Citizens Electoral Council of Australia platform? I think not. However, should a package deal be adopted as proposed by the CEC, it would tend to enhance its credibility electorally.

Citizen initiated referenda are the central plank of the CEC's platform. Of necessity, the future introduction of such would involve alteration of Section 128 of the Constitution, the rules laid down in which constitute the peoples' last line of defence against bad law.

The very last thing needed by Australia at present is electoral 'outsiders' proposing alteration to the Constitution. What is most needed is elected 'insiders' acting fully in accordance with it.

Citizen initiated referenda, whilst superficially appealing to a disillusioned and betrayed electorate, are a recipe for the overthrow of Parliamentary democracy in favour of whoever effectively controls the media. Don't kid yourself that it will be the citizens.

Such criticism does not address the proposal of the Bill itself, however, which I see as being proposed as a remedy to a 'straw man' scenario. You say:

"Many of you may not be aware that banks when strapped for funds can call in a loan at a moments notice even if you don't default, ....".

This may be true with respect to overdraft loans, but the majority of home loans are contracts; contracts which, if you are not in default in repayment thereof, cannot be called in.

Are you talking about property values in relation to loan security clauses permitting call-ins?
Posted by Forrest Gumpp, Wednesday, 1 October 2008 6:31:43 AM
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Oliver “Let the Free Market work. It is their right to inves, to win or loose.”
I wholeheartedly agree

PaulL “financial institutions pay for the bad decision without adversely affecting everyone else, I would be right there with you.”

When it ends up the taxpayer baling out banks,

The “tax payer” is “everyone else”.

Regarding “Also, lets not forget that the housing bubble and bad loans were as much the fault of the millions of people who borrowed money they could not afford to pay back, as the lenders.”

No one can ever protect people from their own greed and foolhardiness?

Back in 1987 I recall a family who borrowed $2 million to put into a rising stock market super scheme (before it became popular), secured against family houses.

The plan was the investment would grow and reinvest dividends etc and they would use profits from their family business to finance the loan interest.

By 1989 they were over half a million down on market value (25%) the bank obviously required them to repay part of the loan to reduce the leverage back to the loan agreed %, the only way of doing that was to sell the investments at a 25% discount or sell their homes.

Oh and their family business (making knitted ladies garments) fell into a deep hole along with a lot of other TCF small businesses at the time.

They ignored the advice of their accountant/tax agent back in 1987 to avoid leveraged share investments because of the market volatility.

So, would they share with me their leveraged profits had their scheme had gone the other way?

And therefore, should I, joe taxpayer, be expected to bale out the foolhardy idiots above,

I think the answer is “NO” on both counts
Posted by Col Rouge, Wednesday, 1 October 2008 8:37:30 AM
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