Yesterday the House of Representatives rightly defeated a bailout package that would have largely let the Wall Street financial speculators off the hook for their idiotic and greedy behavior of the past decade. This morning on the Today show, the so-called “financial reporters were trying to incite a panic amongst their viewers to try and get them to call their representatives to pass the bill. Among the items included in a “report” on why this bailout is so important was a mention that interest rates on 30 year fixed rate mortgages had climbed by 0.25 percent over the last six months. This little tidbit in and of itself is absolutely meaningless. Fluctuations of a quarter point meant nothing earlier this decade and they don’t mean any more now. What might have provided some context to this argument would have been a mention on what the actual rates are right now for a 30 mortgage, but none was forthcoming. Based on this you might expect that we were back in the 18 percent days of the early Reagan years.
In fact a quick check online of mortgage interest rates shows a 30 year fixed loan running about 5.8-5.9 percent. That’s less than half a point more than the rate we got when we refinanced in 2002 (5.5 percent). Yes it’s higher but not ridiculously higher.
The report then goes on to ask why we should pay to bail out banks because our neighbors lied on their loan applications. First of all this is not only irresponsible, it’s also a lie! The reality is that most people didn’t lie on their loan applications, the banks lied to themselves in ignoring the financial resources of borrowers in making the loans. Banks loaned people way more money than they could afford to repay based on the false premise that prices would continue to climb and they could dump off the risk on unwitting investors in mortgage backed securities.
Why is NBC so desperate to create a financial panic? Could it have anything to do with the fact that NBC is owned by General Electric? And the fact that a large unit of that company is GE Capital which is heavily into the leasing and finance business? What is the likelihood that GE Capital is up to their eyeballs in this fiasco and they are looking for a handout? I’m guessing its pretty high. I would say that after you call your Representative and Senator and encourage them not to bail out Wall Street, your next call should be to NBC to tell them to stop yelling fire in the crowded theater.