Obama Will Require Banks to Expand Lending as Condition for Aid

#1
SavageOrangeJug

SavageOrangeJug

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#1
A "push for lending" is one of the main reasons the economy is in the tank. Have no fear, Barney Frank says we are safe.

“It is a mistake to assume that the Obama administration hasn’t learned from the mistakes of the Bush administration,” Frank, a Massachusetts Democrat, said yesterday. “I believe they’re going to do it very differently.”
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Liberals haven't learned ANYTHING! :shakehead:

Feb. 2 (Bloomberg) -- President Barack Obama will require banks to boost lending to consumers and companies in return for taxpayer aid from the $700 billion bailout fund, in a departure from Bush administration policy, a key lawmaker said.

“You’re going to see the Obama administration,” learning lessons from the first phase of the program, “push for much more lending,” House Financial Services Committee Chairman Barney Frank, who helped write the financial-rescue law, said yesterday on ABC television’s This Week program. “There are going to be some real rules in there.”
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Obama Will Require Banks to Expand Lending
 
#2
#2
SavageOrangeJug said:
A "push for lending" is one of the main reasons the economy is in the tank. Have no fear, Barney Frank says we are safe.



Liberals haven't learned ANYTHING! :shakehead:



Obama Will Require Banks to Expand Lending
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isnt that what got us into the mess were in right now? The dems pretty much making banks lend to people they normally wouldnt lend to,, yah, lets give someone a loan for 200,000 when they only make 30,000 a year, thats a great idea. good call barackstar
 
#3
#3
I think it's a great idea and ahoyldhave been a part of the original plan. I actually believed it was. I get your point, but he's not asking to underwrite bad loans, simply that banks again underwrite.
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#4
#4
I could of sworn Barney Frank was heavily involved in the first stimulus package. What a tool to try and pass it off on Bush, when if it had worked it would be the great triumph of the democrat-controlled congress.
 
#5
#5
BigPapaVol said:
I think it's a great idea and ahoyldhave been a part of the original plan. I actually believed it was. I get your point, but he's not asking to underwrite bad loans, simply that banks again underwrite.
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BPV, do you honestly think that Obama's rules won't have loan requirments that equal entitlements for special interest groups?
 
#6
#6
sure ghetto b*tch barbie, you can have a 180k loan for a house when you work part time at the slurp and gulp
 
#8
#8
SavageOrangeJug said:
BPV, do you honestly think that Obama's rules won't have loan requirments that equal entitlements for special interest groups?
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I do. He's not going to require that type of lending and he's not going to mandate bad loans.

The bottom line is that banks have totally left the lending business and he's forcing them back into it if they want bailout funds. It's what Paulson was trying to do in the first place, but he left the teeth out of the loan agreements.

Banks are scared to death because of the general environment and the Feds are killing them on loans. If Obama can somehow back down the fed (by basically changing the mark to market rules temporarily) and convince bankers that loans originated today are being lent into the 2 -3 years into the future market, he will have done exactly what needs to be done.

It's not genius, he just found, with a lot of help, the weakness in the original plan.
 
#9
#9
GASOUTHERNVOL said:
sure ghetto b*tch barbie, you can have a 180k loan for a house when you work part time at the slurp and gulp
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I dont know of anybody from the ghetto that gets or ever got 180k loans get your facts straight. And this statement was offensive anyway.
 
#11
#11
k-town_king said:
I dont know of anybody from the ghetto that gets or ever got 180k loans get your facts straight. And this statement was offensive anyway.
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the point was using an extreme example to show the point, and in fact the problems with the banks stemed from the banks having to give loans to people that the banks normally wouldnt give to, plain and simple,,, and get over it
 
#12
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GASOUTHERNVOL said:
the point was using an extreme example to show the point, and in fact the problems with the banks stemed from the banks having to give loans to people that the banks normally wouldnt give to, plain and simple,,, and get over it
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incorrect.
 
#14
#14
I'm with BPV on this one.

The loans should not be made unless it is to unlock the credit markets. They arguably shouldn't be made at all -- I understand that ponit of view -- but they definitely should not be made so that the larger banks can just shore up their own bottom lines, pay out big bonuses and golden parachutes, or buy other smaller regional banks. That doesn't move the economy, at least not in the sense that it doesn't address the original problem.
 
#15
#15
The money should be used for credit markets, nothing else. BPV in on the money here.
 
#16
#16
until they solve the mark to market problem these banks wont loan. they are terrified that any loan they make will get immediately written down. edit: looks like bpv made my point
 
#17
#17
droski said:
until they solve the mark to market problem these banks wont loan. they are terrified that any loan they make will get immediately written down. edit: looks like bpv made my point
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Its not just that they are afraid of bad loans -- its that they think they can make a lot more money in the long run using the bailout dollars to buy the troubled regional banks.

That's the most frustrating thing about this: We borrowed money from ourselves, to loan it to private banks, so that they could invest it in buying other banks, so as to make big profits five years down the line.
 
#18
#18
lawgator1 said:
Its not just that they are afraid of bad loans -- its that they think they can make a lot more money in the long run using the bailout dollars to buy the troubled regional banks.

That's the most frustrating thing about this: We borrowed money from ourselves, to loan it to private banks, so that they could invest it in buying other banks, so as to make big profits five years down the line.
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they'd like to do this, but frankly at this point the banks need the capital to survive. they don't have enough capital to loan and certainly don't have enough to buy other banks outright.
 
#19
#19
GASOUTHERNVOL said:
enlighten me then
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we have built up large inventories of housing and when the money train of home loans stopped, the buyers went away. When those buyers went away, that inventory got crushed on price, along with all of those producing that inventory.

The real estate market has taken a nearly universal 20+% devaluation. When banks make loans to even good borrowers, they use those real estate valuations in living up to regulatory limits on the amounts they could loan. When those valuations dropped, the vast majority of their loans were out of kilter, thus absorbing the regulatory capital required in the bank. If the bank loses regulatory capital, which is there to absorb losses, it must replace that capital, generate deposits, dispose of assets or do whatever necessary to keep its mandated capital ratios in line with regulatory guidelines. Otherwise, the fed walks in, eats any equity and shuts down the bank.

Across the board, you have seen bank equity and Tier 1 capital being eaten when banks have to mark all of their real estate loans to market values. Hence the banks no longer can make any loans.

Long story short, large scale real estate devaluation has killed the banking industry, on paper.
 
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