So, banks did it to themselves too.
Wow, Tesla laying off more than 10% of its world wide workforce, two Top Executives leaving
- Thread starter alarmguy
- Start date
- Status
I'm not asking you to validate what I wrote. What I wrote is how it went down. No one is running around placing blame anywhere other than where it belongs. This is pretty basic stuff and you have a very poor understand of these issues.
There's no way it's happening with only cameras. Much like switchgear in the car, they were too cheap to use what hardware is needed for full autonomous driving.
Last edited:
Respectfully, you have it backwards. The banks did have a gun to their heads, aka regulation. Deregulation removed the gun. Bankers got bonuses for selling loans. Loans got cheaper and qualifying became "easy qualify" where you wrote down a number on the loan app to fit the payment. Banks were not required to validate; deregulation was a bad joke. This process helped me greatly pay off my home, as I used the teaser rates to minimize interest expense and re-fied as the low variable rate expired. I was able to pay every nickel I had into the principal.
The banks offered the loans to originate more loans; that's their business. Why wouldn't home owners take advantage? Not to mention the banks did not have sufficient capital to even offer these loans! Certainly people on both sides of the contracts behaved irrationally but the difference the common man is not well versed; the banks have the responsibility to be as they are the guardians of their investor's capital.
If you don't believe me, read Alan Greenspan's take on the matter.
Because they couldn't afford to.
According to deregulation and the lenders they did.
Banks couldn’t afford issuing those loans, too. Actually, responsibility is on the banks. They are custodian of contract. They have necessary knowledge. Same like we don’t expect from welder to know banking, we don’t expect from banker to know welding.
That is why we have licenses, certificates, degrees etc. They come with privilege, but above all responsibility. The problem is, we as a society decided to pitch in who is accountable.
That doesn't change anything regarding the empty pockets of the borrowers. Look, 50 years ago people would have walked away from that type of financial nonsense. Today with the lack of financial common sense, anything is possible.
50yrs ago banks would not do that in wildest dreams, nor they could.
Here I can somewhat agree with you. It's a bit like the way the FBI set up John DeLorean with the whole, "Cocaine For Cars" bust. The banks tempted these nitwits with nothing borrowers, with no money down loans. Just sign here. They played on their financial weakness.
Then "piggybacked" them with loaning additional money for the down payment. But it doesn't excuse the borrower, anymore than it excuses DeLorean for going through with it. Both knew what they were doing was risky, but said, the hell with it, I'm going for it.
DeLorean was eventually acquitted. But it still cost him dearly. As it did the people who fell for false housing profits that never materialized.
100% agree.
This is a strawman argument because it's not relevant to what we are discussing - the need for regulation. As others have already said, you have it backward. We don't regulate individuals making bad financial decisions. The federal government through the Constitution regulates interstate commerce at the level of businesses. The banks accepting zero down mortgages explains WHY individuals took out mortgages they could not afford. They had NO skin in the game and they knew if they couldn't afford to pay the mortgage they could just walk away with minimal loss. If you have 20% down, you lose that money, and that's big inceptive to not get in over your head. The BANKS made the decision to offer no money down mortgages to subprime borrowers. The BANKS have underwriting departments whose sole job is due diligence. The BANKS failed here.
It's very relevant because it relates to financial common sense on BOTH ends of the contract. Or rather the lack of it. What I'm seeing that your not, is how much financial common sense and responsibility is totally lacking today. On BOTH ends of the deal.
And not just in mortgage contracts either. 50 years ago if banks offered that, people would have laughed and walked away. The fact they could or could not have offered it really wouldn't have mattered. And so you go ahead place regulations on banks to prevent them from doing it again.
That alone should tell you something. Not only do they lack the financial common sense. They don't learn from their mistakes. They're more than willing and able to stick their finger in the light socket again.
I have no doubt in my mind this, or something like this will happen again. Perhaps much worse. It won't be brought on by lack of regulation. But by lack of peoples respect for money across the board. On both ends of the contract.
As they say, it takes two to tango. We have become a nation of debtors and spenders. Buy now, and worry about paying for it later. This is the big picture we're looking at today.
And the government who we want to regulate all of this per the Constitution, are worse at it than the citizens, commerce, and businesses they're supposed to be regulating. Look at our national debt. One would think the government is in a spending contest.
And they're winning. Perhaps I see it better because I'm older. I don't know. But I do know it's getting worse, not better. And that's what scares me. Not having enough, "regulations".
Last edited:
But the WHY is important. 50 years ago the banks who originated the loans were on the hook if it wasn't repaid. Now originating banks sell the loans immediately and so there is NO incentive to make sure borrowers can repay the loan. The idea of mortgage-back securities was it was supposed to mitigate risk by bundling together a whole bunch of mortgages of various credit worthiness so that if a few riskier mortgages failed, you still have less risky mortgages bringing in income to the security. As time went on a greater proportion of the mortgages bundled into MBSs were subprime. The real problem however were the credit default swaps. These were insurance policies against the mortgages in MBS defaulting. In another blunder, ANY company could take out an insurance policy on ANY MBS. This is equivalent to allowing 100 people to take out an insurance policy on ONE house owned by an out of work person with poor credit. When that one person defaults on their house, the companies selling the credit default swaps had to pay all 100 people the full value of insurance policy. You then had companies that issued credit default swaps taking out credit default swaps other companies who issued them credit default swaps. The result was when relative few MBS defaulted, the payout required from all the credit default swaps issued essentially would've made the insurance companies issuing them insolvent. When AIG couldn't pay out, the companies they owed money to but who also issued credit default swaps to other companies couldn't payout. Regulation does not allow more than one homeowner insurance policy on your house for this very reason. These companies should've never been allowed to issue the credit default swaps in such a way that it exceeded their capital reserves and their ability to meet these obligation. THIS IS CLEARLY THE FAULT OF INSUFFICIENT REGULATION.
Last edited:
The problem was that selling of bad loans continued up the chain. Everyone nearer the bottom who knew the borrower was not qualified had no reason to care because they would get paid anyway. The borowers had no reason to care either. What's the worst that could happen, they'll get bad credit? They already have bad credit.
This is how rational capitalists are expected, required, to act. Anyone who would leave money on the table instead of putting it in their pocket, because of nagging thoughts that doing the deal might be bad for the country overall, is something other than a capitalist.
At the end of the line, the situation was judged to have become "too big to fail" and the government bailed them out.
Everyone from the borrower to the very top ended up making money after all. The government took a bath. It is in the government's interest not to let it happen again. The answer is to regulate banks.
This is how rational capitalists are expected, required, to act. Anyone who would leave money on the table instead of putting it in their pocket, because of nagging thoughts that doing the deal might be bad for the country overall, is something other than a capitalist.
At the end of the line, the situation was judged to have become "too big to fail" and the government bailed them out.
Everyone from the borrower to the very top ended up making money after all. The government took a bath. It is in the government's interest not to let it happen again. The answer is to regulate banks.
Last edited:
The government didn't really "take a bath", because they own the printing presses. We sorta did through the inflation it caused.
Yes, because bankers have failed to manage themselves.
By definition, as a fiduciary, a bank's primary duty is the management and care of property for others. The Board of Directors and senior management must be able to identify, measure, monitor and control the risks inherent in fiduciary activities, and respond appropriately to changing business conditions.
History has shown the banking industry to be poor stewards of their investor's assets. As you say, the answer is to regulate.
No, you don't!
One of the biggest myths, in America at least, is that its citizens have property ownership rights. There is no such thing as property ownership when the government has a permanent lien on your property.
Making it even worse is that property taxes are reassessed every year based on the opinion of the government. Property taxes should be based on the original purchase price of the home. This is how people budget their home purchase.
Add to that the fact property taxes vary, even for homes in the same subdivision and/or area. Why is it that some people pay more or less when they are using the same amount of community services?
Scott
1) How can the banks be the guardians of their investors capital when we have a fiat currency? In America only 15% of the total of our "cash" actually exists! The other 85% is a ledger item on a spreadsheet.
2) Alan Greenspan is the biggest single reason for many of the financial problems we have today, inflation in particular. The after effect of Alan Greenspan's cheap money policy doesn't even leave room for the Federal Reserve to manage inflation because interest rates have been too low for far too long.
Bring back Paul Volcker.
Scott
Last edited:
Just to clarify the "we", the public is taking the inflation bath, not the government.
Scott
- Status
