TFB’s Stumbles: Week Ending April 4, 2008

By TFB

Here are some interesting articles for this week.

IRS making sure your rebate gets spent (Marketplace, audio) – This April Fool’s story fooled me. It gave me a good laugh.

Iceland’s Biggest Banks Targeted by ‘Unscrupulous’ Speculators (Bloomberg) – Iceland banks under attack. You can’t blame the attackers if your banks  borrowed four times of your country’s GNP.

How Many Points Should I Pay On My Mortgage? Do You Like To Gamble? (My Money Blog) – Another great article by Jonathan. Should you pay points when you get a mortgage? It comes down to a guessing game on whether and when the interest rate will go down after you get your mortgage. If you think it may go down within a few years, don’t pay points. If you think it won’t go down in the next few years, pay points. Also see my previous post “No Cost” Mortgage Refinance: Stepping Down the Ladder.

Accident Victims Face Grab for Legal Winnings (Wall Street Journal) – This article brought out an outcry from many bloggers. Wal-Mart haters, chill. Whoever injured the woman should pay her medical bills and her future income, not Wal-Mart. Wal-Mart already advanced her medical bills. Getting paid back is fair. It’s called subrogation.

McCain Rejects Broad U.S. Aid on Mortgages (New York Times) – Also don’t miss the included pop-up for Candidates’ Proposals on Housing. Although I side with Democrats on many issues, I have to say McCain “gets it” on this one. The mortgage crisis is a result of the burst housing bubble. Mortgage backed securities investors, lenders, and borrowers were all counting on the housing bubble continuing. They bet and they lost. It’s that simple. Losing their home? It’s not their home to begin with.

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Posted on April 4, 2008 under Insurance, Mortgage and Loans.

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5 Comments on TFB’s Stumbles: Week Ending April 4, 2008

  1. mcfnord on April 4, 2008
     

    and if the default of investment banks leads to ten years of economic recession, so be it, right? IT’S THAT SIMPLE. (or is it?)

  2. TFB on April 4, 2008
     

    Don’t underestimate the American economy and don’t get scared into a taxpayer bailout of Wall Street firms. Wall Street firms try to make you believe they are everything. They are not. The real economy runs on the productivity of American people. If some firms fail, new firms will pop up and fill the void. It’s capitalism. Ten years of economic recession? Are you kidding? For what? Because somebody can’t pay their mortgage? When the prices become realistic, somebody will buy the homes and pay the mortgage. All the slicing and dicing of mortgage backed securities only distribute the losses. They cannot increase the total loss. Read this excellent post on Financial Crookery:

    Subprime – a little perspective, please

  3. Kristin on April 4, 2008
     

    The banking industry is taking a page right out of the Bush Administration’s playbook with their fear mongering – if you don’t bail us out, the whole economy will crater!

  4. Ted on April 7, 2008
     

    Maybe I’m missing something on the Wal-mart issue, but I disagree with your assessment as “fair”. Just because lawyers come up with a fancy name for it doesn’t make it right or fair.

    The fact is Wal-mart offered health insurance to their employee and they used it. Its just plain sneaky the way big companies backdoor the legality of this by burying some clause in fine print. If Walmart wanted to recover costs they should make their own suit or join the suit with the plaintiff. Lord knows they have an army of lawyers. Its just wrong.

    What if you were killed in an accident by a drunk driver, TFB, and your wife sued the person responsible for wrongful death? I’m sure you have a lot of term life insurance. Should the life insurance company be able to collect any winnings for “cost recovery”?

    Business looks good for insurance companies if they shift a chunk of their risk to the courts and also use other people’s lawyers as an arm of their litigation staff.

  5. TFB on April 7, 2008
     

    Ted – re: Wal-Mart. Subrogation has a long history of legal precedents. If there are any questions on whether Wal-Mart’s ERISA plan (not Wal-Mart itself) is entitled to recovery, they should be resolved by the courts and judges who hear all the facts, not in the media. In this case, the judges in both the trial court and the appeal court ruled in favor of Wal-Mart’s ERISA plan. The subrogation recovery clause is not buried in the fine prints. It is usually in the Summary Plan Description (SPD) given to all employees. When the accident happens, the employee is also notified about subrogation. The WSJ article even said “It also sent Mr. Shank several notices that he was to inform Wal-Mart’s health plan before he settled any suit.” So before they sued the responsible party, they already knew about this. If they let the plan join their suit and the court agrees, the plan does routinely join those suits. Back to your question about my hypothetical death, if my survivors and their attorney figure it’s worthwhile to file a wrongful death suit after taking into consideration any reimbursement liability, they will. Otherwise they will just take the life insurance and let the employer’s plan or their insurance company sue the responsible party if they’d like.

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