Posted on 12/10/2007 7:13:37 AM PST by shrinkermd
Now that is a banker's half-truth for the hall of fame. Of course they're not, when their policy is either to just not declare them losses (yet) or just keep them off the balance sheet (because that will bankrupt them), cf. Citibank's multi-billions of write-downs-that-are-not-losses from last week.
Nope, they're not "losses" (wink wink) until the FDIC comes in and shuts the place down.
“Hopefully we learned to not use the Fed Govt to bail out fat cat Bankers who make stupid load decisions.”
Sorry, it wasn’t the “Fat Cat Bankers” that forced lenders to loan to those that shouldn’t have gotten loans.
read this: http://www.openmarket.org/2007/10/17/deval-patricks-role-in-the-mortgage-crisis/
This was a Clinton appointee that coerced lenders to give the less than credit worthy mortgage loans or face federal wrath - and he got personally rich in the process.
Sure.
If the banks lose their shirts, they are going to tighten up the credit regardless.
As they should.
What were the original estimates for losses in the S&L crisis? The actual losses were much less.
Part of the problem is that mortgage loans have been sliced and diced into so many pieces (tranches?), which were sold and resold to the point that it's hard to tell exactly where the rather unsavory pieces are and when they might blow up, if at all. And, the last thing we need is for a fearful and uncertain market to panic.
Something is happening. Perhaps the extent of the problems are hard to fathom, but hopefully the banks will not make the credit crunch worse by going from very loose lending to very tight lending (a shift which affects everyone, even those without mortgages), even in other loan types.
Just remember, though: America survived the Great Depression, but it wasn't pretty.
I'm going to add one clarification to my comment: obviously, the banks should tighten lending standards, and rating agencies should be truthful when rating securitized debts. But, what I was thinking of is that bankers might panic and go from one extreme (very loose lending standards) to another (very tight lending standards), where even those with good credit and income get denied for loans.
As a matter of fact, this has the potential of being far worse than the S&L crisis. We should not let the political use to which the MSM tries to put every economic difficulty to blind us to that.
This has nothing to do with Bush or even Bernanke. They managed to make the crisis a little worse by uncontrolled government spending and sitting by while the trade deficit with China worsened, but basically they inherited this mess.
And it has been made several orders of magnitude worse by the large banking and money management outfits.
Also, it is not just an American problem—it extends to Europe, China, Japan, and the rest of the world.
Much of this goes back to the economic crimes of FDR and LBJ, but the worst of it has been caused by the childishness of the baby boomers, whose philosophy has been, “take out a mortgage on your house to buy toys. Tomorrow will never come.” Of course the lenders and educators and gurus have encouraged this way of thinking. And other boomers packaged the mess as derivatives—more than $75 trillion worth of them—so they could pay themselves big year-end bonuses.
A house of cards.
It took me 40 days to get my first mortgage and you would have thought we were under investigation to be a FBI agent or something, what with credit checks they did in those days.
Now if your breathing you can get a $400,000 home on $9.50 an hour, and be an illegal alien to boot. This is a good idea for whom?
Link?
(I'm learning!)
Sorry! I just couldn't resist!! The Devil and the Demonicrats made me do it!!! (snort!)
BTW my dim recollection was off by about 50%. Today's WSJ puts losses from the S&L crisis at $189B.
I didn’t know we were in Raging Inflation ?
You're not like a cheap suit.
BTW my dim recollection was off by about 50%
No, your dim recollection was pretty close.
Today's WSJ puts losses from the S&L crisis at $189B.
Thanks for the link, but I don't see the $189B figure in there.
We AIN'T!!!
That's why I linked that stupid artickle! That website used to be CBS MarketWatch.com and then it got bought by Dow Jones who just got bought by Rupert the Murdock person.
Just like the Bush administration, neither Dow Jones, nor Murdock have taken time to boot the obnoxious liberal holdovers out the danged door on their miserable malevolent asses yet!!!
They learned their "poison penmanship" in government school all too well!!!
“Something is happening. Perhaps the extent of the problems are hard to fathom, but hopefully the banks will not make the credit crunch worse by going from very loose lending to very tight lending (a shift which affects everyone, even those without mortgages), even in other loan types.”
Yep. My regional bank renigged on the $100k LOC increase for my small business, even though management met the booking benchmark the bank set for the LOC increase. They said no in July leaving me as the CEO with $100k cash shortfall over the summer for a business with 12 people. We came out on top but it was a very painful summer.
Consider that 70% of America is now small business. How many guys/girls business owners have the experience to survive such an experience? I was also fiscally responsible in my personal life so I used my home equity as payroll for the four months management took no pay. If I had used it for that nice new entertainment room or the new wheels like a lot of my upper middle class friends, I would have been sunk. How many other Americans outside of the 5% subprime screwed are not fiscally responsible and will be effected?
As of December 31, 1999, the thrift crisis had cost taxpayers approximately $124 billion and the thrift industry another $29 billion, for an estimated total loss of $153 billion. The losses were higher than those predicted in the late 1980s, when the RTC was established, but below those forecasted during the early to mid-1990s, at the height of the crisis.
That has a ring to it that sounds great.
Here’s what I learned from the S&L crisis. If you bribe 5 or 6 senators, you can almost get away with stealing tens of millions of dollars. And one of those senators will continue to be re-elected and run several times and be treated as a serious candidate for president.
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