Business behavior

[will_m]

We all hear about how right before the housing crisis, banks were lending to anyone with little regard to verifiable income. Sub prime loans got people into homes with inflated prices. As long as you could afford the "teaser" rate, you were approved.

Now, the teaser rate resets to a much larger payment that those who could barely afford the teaser rate could never affors the normal rate. Forclosures are rampant and the banks are taking massive loses and are stuck with houses they can't sell and aren't worth much in a market where values have plummeted.

When the crisis started to happen, cash flow to the banks became an issue and many lost money as did investors in there mortgage securities. This, in part, led to the financial collapse that is affecting us now. As a result, the banks are not lending like they used to but are tightening the rules and begging for help from the government.

This begs the question; Why did it happen in the first place? Anyone with a simple accounting degree should have seen that lenind to someone who had trouble with a teaser rate would not be able to afford the normal rate even if they refinanced. They made the mistake and now they want to be helped?

Should the banks have been allowed to fail?

Should those investors who bought these mortgage securities lose all their investment?

At what point do the banks take responsibilty for this?

[Doyle Brunson]

If the wisdom of JUOT didn't see it coming, who could?

Regulators and lax enforcement is to blame, just like how the thrifts tried to bloat their balance sheets w/ junk debt in the 80's.

[will_m]

And how should the banks pay for their stupidity? They caused this and someone had to know this kind of implosion was coming.

[GreenGeep]

Originally Posted by will_m

Should the banks have been allowed to fail? Should those investors who bought these mortgage securities lose all their investment? At what point do the banks take responsibilty for this?

Yes. Yes. and I see no reason why they shouldn't take all the responsibility all the time.

Originally Posted by will_m

And how should the banks pay for their stupidity? They caused this and someone had to know this kind of implosion was coming.

They shouldn't get a hand up from the government.


Die Hard Libertarian, 100% Free Market FTW!

[ScoobnaCJ]

Originally Posted by will_m

And how should the banks pay for their stupidity? They caused this and someone had to know this kind of implosion was coming.

the banks caused it?




really?


i remember Bush, McCain, and other R members of the house and senate warning of the detriment that the collapse of Fannie and Freddie would have on our economy if, and the need for more oversight of both of them................... also remember Barney Frank and Chris Dodd essnetially calling the Repubs, chicken little while completely denying/ignoring the problem.

[SGNellett]

Originally Posted by ScoobnaCJ

the banks caused it? really? i remember Bush, McCain, and other R members of the house and senate warning of the detriment that the collapse of Fannie and Freddie would have on our economy if, and the need for more oversight of both of them................... also remember Barney Frank and Chris Dodd essnetially calling the Repubs, chicken little while completely denying/ignoring the problem.

Which was caused by the Community Re-investment Act which essentially threatened to penalize banks if they didn't loosen lending standards, ultimately resulting in the NINJa loans, not to mention, the banks were all told that the Fed would insure the loans if they failed, but then when push came to shove, there were WAY too many bad loans for the fed to bury. Again, how is this the banks fault? This should be laid right at the feet of Barney Frank and Chris Dodd and a few of their cronies, including the Prevaricator in Chief who was a major proponent of the CRA!

[Dennis 'd Menace]

Community Re-investment Act had but a tiny bit part, but being a huge industry, that bit part was still pretty big. A major part of it was lax enforcement and regulators along with the loan officers in the bank branches that were lending out what ever they could since it was not their money, in order to get their numbers as high as possible to enjoy the nice bonuses that went with the big numbers. A stop should have beeen put down further up the chain, but it wasn't.

[will_m]

Originally Posted by Dennis 'd Menace

Community Re-investment Act had but a tiny bit part, but being a huge industry, that bit part was still pretty big. A major part of it was lax enforcement and regulators along with the loan officers in the bank branches that were lending out what ever they could since it was not their money, in order to get their numbers as high as possible to enjoy the nice bonuses that went with the big numbers. A stop should have beeen put down further up the chain, but it wasn't.

You also forgot how some cities (Baltimore) sued banks to get more bad loans made so people could buy houses in depressed neighborhoods. Now, those same cities are suing the same banks over making those loans in the first place.

And since lax enforcement caused part of this, then I need not hear the banks saying they can self police themselves.

[Jerk!]

Originally Posted by Dennis 'd Menace

Community Re-investment Act had but a tiny bit part, but being a huge industry, that bit part was still pretty big. A major part of it was lax enforcement and regulators along with the loan officers in the bank branches that were lending out what ever they could since it was not their money, in order to get their numbers as high as possible to enjoy the nice bonuses that went with the big numbers. A stop should have beeen put down further up the chain, but it wasn't.

Im glad that you can disspell the whole community re-investment act as the cause of all that is wrong with the world as many (R)'s do here