will further bank regulation torpedo the economy even further?

#51
#51
nbakerld said:
Maybe you don't understand that loans to small businesses would still exist outside of the current system.

As far as privileges go: the law says that FDIC banks are the only entities that can practice fractionalized banking. That's a huge advantage. So they take money from you and I...lend it right back to us...and then the bank is FDIC insured ultimately by you and I (the taxpayer). I'd say they enjoy privilege.
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I can assure you that I understand the finance system, micro and macro, just fine. If you think Joe can go open a Piano Shop using a system outside the current one, then you definitely don't understand the scope of small business lending in America and just how much it drives our economy.

Sounds like you're struggling with how banks are capitalized. That taking money from you and I is actually a loan to the bank for a return and knowing full well that they leverage that capital up to make loans and generate returns. That has nothing to do with taking money. It's a voluntary contract entered by both sides. Your fractionalized banking bent and "only entities that can practice" is just semantics. I can go tomorrow and raise equity for the purpose of securing a large line of credit to go and do whatever. How is that any different? The FDIC insurance pool is paid for by the banks, by and large. Sure, we're the ultimate backstop, but only in rare instances has that mattered. Finally, no one is obligated to use the banks. You can go out tomorrow and form your gold standard bank and wear it out. Good luck.
 
#52
#52
rjd970 said:
It's like a company giving their product out for free, then when they go under, blaming the consumer for taking the free goods.

Looking at what happened at the major banks, the underwriting for loans...etc...it is especially rich you can sit there and say it was "pure greed" on the consumer side and not even make a passing mention of the lending side.
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It starts with a customer walking into a bank. The banks were not going door to door trying to persuade people to buy houses. People with $30K incomes seriously thought it was a good idea to buy multiple houses for which they had no business buying. At some point, people have to take personal responsibilty for the actions they did.
 
#53
#53
BigPapaVol said:
I can assure you that I understand the finance system, micro and macro, just fine. If you think Joe can go open a Piano Shop using a system outside the current one, then you definitely don't understand the scope of small business lending in America and just how much it drives our economy.

Sounds like you're struggling with how banks are capitalized. That taking money from you and I is actually a loan to the bank for a return and knowing full well that they leverage that capital up to make loans and generate returns. That has nothing to do with taking money. It's a voluntary contract entered by both sides. Your fractionalized banking bent and "only entities that can practice" is just semantics. I can go tomorrow and raise equity for the purpose of securing a large line of credit to go and do whatever. How is that any different? The FDIC insurance pool is paid for by the banks, by and large. Sure, we're the ultimate backstop, but only in rare instances has that mattered. Finally, no one is obligated to use the banks. You can go out tomorrow and form your gold standard bank and wear it out. Good luck.
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Just obligated to insure them.

Easy lending results in a lot more failed businesses. If we junked the system how do you know that venture capital and hard money lending wouldn't produce just as many winners? Or a more efficient outcome (less winners, but significantly less losers)?
 
#54
#54
I think that looking at the situation requires some causal analysis. Yes, at a more basic level, people were taking on loans they couldn't afford. Lenders weren't going door to door, but products like new or additional mortgages, debt consolidation and lines of credit were too easily available and being advertised like nobody's business.

Bham mentioned something I agree with earlier. Increased transparency across the board for accurate risk assessments needs to occur. "magic black box" investments and the like needed to be curbed, but aside from regulation, there seems to be some pushback against measures for mere transparency -- why is this? I'm relatively lay when it comes to money markets in the us, but why wouldn't we want something like a simple push for increased financial literacy and transparency?
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#55
#55
milohimself said:
Bham mentioned something I agree with earlier. Increased transparency across the board for accurate risk assessments needs to occur. "magic black box" investments and the like needed to be curbed, but aside from regulation, there seems to be some pushback against measures for mere transparency -- why is this? I'm relatively lay when it comes to money markets in the us, but why wouldn't we want something like a simple push for increased financial literacy and transparency?
Posted via VolNation Mobile
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where are you seeing a pushback against transparancy? i haven't seen it. the suggested regulation i've seen of the derivatives market wouldn't help tranparancy. many, if not most, of these instruments are not cookie cutter and therefore having a regulated market doesn't tell you anything when it comes to price and risk. a better question should be why the banks had billions of these things off balance sheet and why it wasn't disclosed. wasn't enron supposed to have ended phantom off balance sheet transactions?
 
#56
#56
VolsNSkinsFan said:
It starts with a customer walking into a bank. The banks were not going door to door trying to persuade people to buy houses. People with $30K incomes seriously thought it was a good idea to buy multiple houses for which they had no business buying. At some point, people have to take personal responsibilty for the actions they did.
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So you're saying the bank has nothing to combat stupidity? Someone comes in for a mortgage for a 3rd residence with a low salary and...it's their fault the bank approved it? Split fault at best.
 
#57
#57
What do you advocate to promote ethical accounting then? There were government regulators prior to the derivatives bust who saw it coming but were shut down.

I'm a bit scatterbrained between classes ATM but interested to see if there is any consensus on a pattern of issues and if so, what if any measures there might be for any change aside from "well that was dumb, better not do it again."

Seems like this last one had the potential to do all of us in.
Posted via VolNation Mobile
 
#58
#58
KiffinKiller said:
So you're saying the bank has nothing to combat stupidity? Someone comes in for a mortgage for a 3rd residence with a low salary and...it's their fault you approved it? Split fault at best.
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yet the bankers should be in jail (many are saying that) while the ones who can't pay should be able to have their loans modified or in many instances stay in their residence until the long process of foreclosure is done? Both should suffer for being idiots
 
#59
#59
utvolpj said:
yet the bankers should be in jail (many are saying that) while the ones who can't pay should be able to have their loans modified or in many instances stay in their residence until the long process of foreclosure is done? Both should suffer for being idiots
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this. apparently not only do you get to live rent free in your house until the bank gets around to foreclosing you, but also it's not your fault. nice.
 
#60
#60
utvolpj said:
yet the bankers should be in jail (many are saying that) while the ones who can't pay should be able to have their loans modified or in many instances stay in their residence until the long process of foreclosure is done? Both should suffer for being idiots
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I'll agree. Though I do think the one's in charge of major banking decisions should be at least a little more responsible for financial decisions than the common American consumer.
 
#61
#61
KiffinKiller said:
I'll agree. Though I do think the one's in charge of major banking decisions should be at least a little more responsible for financial decisions than the common American consumer.
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why? who is more responsible for YOUR OWN FINANCES than you? that's absurd. i've never understood why giving people more money then they deserve is preditory. i'll gladly take your free money if you don't want it.
 
#62
#62
KiffinKiller said:
So you're saying the bank has nothing to combat stupidity? Someone comes in for a mortgage for a 3rd residence with a low salary and...it's their fault the bank approved it? Split fault at best.
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Some people lied and committed fraud to get those mortgages. If one bank wouldnt loan them the $, they would move on to the next. When I got a loan in 07, I just wrote down what I made and they believed me. Of course I knew what I could and couldnt afford.

If an ATM machine is broken and money is flying out of the machine, that isnt your money to take.

Yes the banks made mistakes, but people need to ultimately be responsible for their own actions
 
#63
#63
KiffinKiller said:
I'll agree. Though I do think the one's in charge of major banking decisions should be at least a little more responsible for financial decisions than the common American consumer.
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Why is that? They hand you a piece of paper that shows what your payments will be. If you can't look at those numbers and realize that paying your mortgage will be difficult at best then I have no sympathy for you. And if you decided on a stated income loan knowing it was a lie then you deserve even more ridicule

I do not own an expensive house or a Mercedes or a large boat. Why would that be? Don't I deserve those things?
 
#64
#64
utvolpj said:
Why is that? They hand you a piece of paper that shows what your payments will be. If you can't look at those numbers and realize that paying your mortgage will be difficult at best then I have no sympathy for you. And if you decided on a stated income loan knowing it was a lie then you deserve even more ridicule

I do not own an expensive house or a Mercedes or a large boat. Why would that be? Don't I deserve those things?
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I'm not staunchly opposed to what you're saying - I operate under the belief that the average American is not as smart as those in charge of banks' mortgaging and loans decisions.

Banks need to protect themselves don't they? I guess I'm just wondering how they got by without doing checks before giving out mortgages and loans.
 
#65
#65
KiffinKiller said:
I'm not staunchly opposed to what you're saying - I operate under the belief that the average American is not as smart as those in charge of banks' mortgaging and loans decisions.
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maybe not smarter but knowing how much to afford is really basic math. Take your income and subtract expenses.

KiffinKiller said:
Banks need to protect themselves don't they? I guess I'm just wondering how they got by without doing checks before giving out mortgages and loans.
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there were but you had many lying about income too. Not to mention the banks were under pressure from the gov't to give out these kinds of loans. Don't want to end up on the nightly news that your bank is being looked at for discrimination. It was just a whole bunch of things but in the end the responsibility for my life and money ends with me.
 
#66
#66
utvolpj said:
maybe not smarter but knowing how much to afford is really basic math. Take your income and subtract expenses.



there were but you had many lying about income too. Not to mention the banks were under pressure from the gov't to give out these kinds of loans. Don't want to end up on the nightly news that your bank is being looked at for discrimination. It was just a whole bunch of things but in the end the responsibility for my life and money ends with me.
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Ok. I'm not disagreeing with your opinion on personal responsibility - I think we understand each other as far as people in positions of power making foolish decisions. It doesn't lessen the stupidity of the average American overreaching - all that bad debt is hard for me swallow even now.
 
#67
#67
utvolpj said:
yet the bankers should be in jail (many are saying that) while the ones who can't pay should be able to have their loans modified or in many instances stay in their residence until the long process of foreclosure is done? Both should suffer for being idiots
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So the banks should be bailed out for their part and the consumer doesn't?

The difference here is people generally seem to be fine with the banks still being in business for their part, while the moron that took the loan is on his own.

Like it was said earlier, at best, there is split responsibility. It's true, the banks suffered losses and people were canned, but they are, in fact, still in business. They got bailed out and the average consumer didn't...and here we are griping about the ones that did with arguments of not being responsible for their decision.

IMO there is a double standard here.
 
#68
#68
droski said:
why? who is more responsible for YOUR OWN FINANCES than you? that's absurd. i've never understood why giving people more money then they deserve is preditory. i'll gladly take your free money if you don't want it.
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Was the consumer not thinking the same thing? If the banks want to give me money that I have no business getting, I'll take it and try to turn a profit.
 
#69
#69
VolsNSkinsFan said:
Some people lied and committed fraud to get those mortgages. If one bank wouldnt loan them the $, they would move on to the next. When I got a loan in 07, I just wrote down what I made and they believed me. Of course I knew what I could and couldnt afford.

If an ATM machine is broken and money is flying out of the machine, that isnt your money to take.

Yes the banks made mistakes, but people need to ultimately be responsible for their own actions
Click to expand...

You're crazy if you think shotty underwriting wasn't a bigger issue.
 
#70
#70
rjd970 said:
So the banks should be bailed out for their part and the consumer doesn't?

The difference here is people generally seem to be fine with the banks still being in business for their part, while the moron that took the loan is on his own.

Like it was said earlier, at best, there is split responsibility. It's true, the banks suffered losses and people were canned, but they are, in fact, still in business. They got bailed out and the average consumer didn't...and here we are griping about the ones that did with arguments of not being responsible for their decision.

IMO there is a double standard here.
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i don't understand why staying in business is some sort of lack of punishment. 99% of bank employees had nothing to do with the banks needing tarp. why should they get punished more then they have already (thru layoffs and their stock being worth zero) because some guy in a back room they've never seen screwed up? as for the moron who took the loan they've been able to walk away from the house without the banks going after them personally and many of them have gotten free rent for years while fighting the fight.
 
#71
#71
utvolpj said:
Why is that? They hand you a piece of paper that shows what your payments will be. If you can't look at those numbers and realize that paying your mortgage will be difficult at best then I have no sympathy for you. And if you decided on a stated income loan knowing it was a lie then you deserve even more ridicule

I do not own an expensive house or a Mercedes or a large boat. Why would that be? Don't I deserve those things?
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I just love all the defense of the banks in here with the tough love talk to the consumer.

There is balanced blame. I have no sympathy for the banks that knew these loans were risky, at best. The money was flowing and that is all they cared about.
 
#72
#72
rjd970 said:
Was the consumer not thinking the same thing? If the banks want to give me money that I have no business getting, I'll take it and try to turn a profit.
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of course. which is why they are to blame more than the people giving them the money. i.e. they should suffer the consequences of their actions.
 
#73
#73
droski said:
i don't understand why staying in business is some sort of lack of punishment. 99% of bank employees had nothing to do with the banks needing tarp. why should they get punished more then they have already (thru layoffs and their stock being worth zero) because some guy in a back room they've never seen screwed up? as for the moron who took the loan they've been able to walk away from the house without the banks going after them personally and many of them have gotten free rent for years while fighting the fight.
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I wasn't condemning the average joe working at the banks. I was mainly pointing to those responsible the mortgage departments. What changed in the last 5 - 10 years that made banks stop doing homework before giving out debt?
 
#74
#74
KiffinKiller said:
I wasn't condemning the average joe working at the banks. I was mainly pointing to those responsible the mortgage departments. What changed in the last 5 - 10 years that made banks stop doing homework before giving out debt?
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try getting another job in the mortgage industry if you worked for indymac or any of the other guys who falsified documents. what changed was 25+ years of the housing market going straight up. built into every model was the historical default rate of these types of mortgages. of course these types of mortgages have only been around for 20 years and generally people don't default on their mortgages as long as housing prices continue to go up. as i said bubble mentality. talk to people about gold today and see how many expect a massive drop in value. edit: things always look obvious in retrospect. i bet those who bought etoys back in the day feel really really stupid too. hell i was arguing we had a housing bubble in 02.
 
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#75
#75
droski said:
try getting another job in the mortgage industry if you worked for indymac or any of the other guys who falsified documents. what changed was 25+ years of the housing market going straight up. built into every model was the historical default rate of these types of mortgages. of course these types of mortgages have only been around for 20 years and generally people don't default on their mortgages as long as housing prices continue to go up. as i said bubble mentality. talk to people about gold today and see how many expect a massive drop in value.
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I'm not condemning the innocents who worked for the "indymacs". I am condemning precisely those who falsified the documents.
 
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