Homebuilder CEO says subprime regulation needed

“I think there ought to be regulation of subprime. I think there ought to be regulation of prime. I don’t think that the economy is best left to its own devices almost ever. The excesses that are permitted in the mortgage industry can and perhaps have led us into a dark hole.”- Robert Toll, Chief Executive of Toll Brothers

He sounds downright socialist, doesn’t he, saying capitalism shouldn’t be left to its own devices, eh?

Those two Bear Stearns hedge funds that invested in subprime are now virtually worthless. Golly, wasn’t it just a few weeks ago the talking heads of the financial world were assuring us everything was fine? Maybe they were trying to buy time to find a way to sell the toxic mortgage bundles they own.

Financial cancer spreading through the credit markets: subprime not contained, says SeekingAlpha, one of the best financial sites around. All mortgages, and their associated bonds, are feeling the pain now, not just subprime. This also negatively impacts credit markets too.

One big problem the hedge funds face is redemptions. When nervous investors decide to pull out their funds, the funds have to sell their quality stuff to raise the money. They literally can’t sell the mortgage bonds because a) many are worthless and b) there’s no way to determine what to price them at. Thus they are forced to sell the good stuff and end up with a portfolio of garbage. We are talking hundreds of billions of dollars here, maybe trillions.


  1. “He sounds downright socialist, doesn’t he, saying capitalism shouldn’t be left to its own devices, eh?”

    Actually he sounds downright capitalist. That’s Adam Smith’s capitalism, not Ayn Rand’s.

  2. No if he was really a socialist he would be talking about how one of the main necessities for living and survival, such as a place to live should not be a commodity for others to profit from.

    The reason that housing is being made so unaffordalbe is because it has become a commodity to use for speculation, swindle, and out right theft. This so-called real estate market has become just another way to transfer wealth from the working classes to the wealthy.

  3. Interesting that the U.S. has one of the highest homeownership rates in the world (68%)– higher than most European countries and far higher than most historical civilizations. Two-thirds of our population lives in a home they own!

    Sure there’s room for improvement when 32% of opur population can’t afford to own their own home– and when sub-prime lenders try to make them believe they CAN afford it. And yes, companies like Toll Brothers make money for their investors building homes– and companies like Bank of America make tons of money lending buyers the funds to buy. But Toll in turn employs thousands of people who make a decent wage building those homes, and Bank of America pays interest to folks tolerant enough of poor service to put money in their bank.

    I’m fortunate enough to own my home outright, thanks to good timing and conservative financial management. That’s a dream most Americans (of any class) will never achieve. But I also don’t buy into the Madison Avenue message that I need more, bigger, better, faster, greener, and more convenient. I’m not rich, but I don’t need to be. I know better than to believe that more “stuff” will make me happier.

  4. Toll brothers hires illegal and other immigrant workers for low wages, and has been caught housing these peole in very sub-standard conditions, like inside commercial garages etc.

    I am not against immigrants legal or illegal who are looking to make a living some how some way just like everyone else.

    But what I am against is allowing these capitalists pigs to take advantage of people like this just so they can boost their bottom line.

    Because of the unaffordability of housing many people go homeless. There have been families living out of their cars, and these people work for the most part, but yet they cannot afford housing . And they cannot even afford to move anywhere else since they need their jobs, and are uncertain about finding other work.

    There are other people in the area I live in ( A working class neighborhood) which have been losing their homes because they can’t make their mortagage payments, because they lost their jobs or someother economic hardships.

    And others have lost their home because they have fallen behind in their property taxes, since they have been trying to keep up with all their other bills.

    So no one in the US never really owns their house out right.

    Only in a society where housing is part of a human right, and not a commodity, to be explioted, or expropriated could there ever be real ownership, in the mean time we are all renters in one way or another, and we all could lose the ability to afford even that very easily.

  5. Correction I meant:

    in the mean time we “IN THE WORKING CLASSES” are all renters in one way or another, and we all could lose the ability to afford even that very easily.

    Those in the ruling class are not subject to to the same economic instability as we are.

  6. Well, I accept that instability as a fact of life. I’ve lived on couches because I couldn’t find work and lost my home. (A home I couldn’t afford but was convinced otherwise, BTW, just before the LAST housing bubble burst in 1990. I learned from that.)

    Now I don’t have to live on couches. As long as I make my $600 a year property tax payment (which pays for the local schools), no one can touch my home. And as long as I’m realistic with my expenses, that’s no problem. I don’t wear Nikes. I drive a Saturn. And I don’t follow fashion.

    As for housing being a right, I think that’s a great idea– in principle. But people who don’t work for their shelter rarely take good care of it. (I was one of those, once, too.) Eliminate the risk of being human and you eliminate our character as well. I’m not saying that’s an excuse for exploitation. Those are not the only possible alternatives.

Comments are closed.