200

200 is the number of financial institutions that have gone out of business since the “credit crunch” of early August. Many, many more have gone out of business but they are too small to make this list. Losses at the major financial institutions are expected to top $100B. Although this seems like a lot of money, it’s a drop in the bucket compared to the US GDP of over $13 trillion in 2007. See Source.

The problem as I see it is the real cost in financial losses and suffering for American families who will lose their homes to foreclosure. No government program or loan alteration plan is going to save most of these people, they will have to suffer the consequences of the loans they took. Yes, I believe many were steered into loans they could not afford and who is responsible for this is a hotly debated topic. The reality is that the borrower is going to suffer the negative consequences in the vast majority of these situations. The plans I am hearing about will delay the inevitable for many and may save a few from losing their homes but the consequences will eventually come to most. They took on loans they did not understand and could not ultimately afford.

The lesson is that you need to understand what you are signing when dealing with financial institutions. Get yourself educated and find good, competent, trustworthy help. One axiom I have heard is that the more complicated the program is, the more dangerous it is to your financial health. This certainly turned out to be true for Option ARM’s.