Poor truck, RIP.
Posted on 09/26/2008 6:07:53 PM PDT by Tolerance Sucks Rocks
Poor truck, RIP.
They were lending as much on the car’s estimated value as your’s.
If your credit looked anywhere near good on a Honda, Toyota, or Nissan you’re going to get a loan.
You are FOS,,,,
well, I’ve already quadrupled my money on the financial stocks in the last week.
The nice thing about the stock market as opposed to other jobs is that you can always make money regardless of how bad things are going. Caught 8 points on GS, tripled up on WAV, caught the bottom of WAMU under $2. The hardest part is gifuring out is going to buy whom.
But you can’t get into buying baskets of securities like mortgages for under 9 figures. I ain’t got that kinda scratch yet. But I could tell a good loan from a bad one and I can pretty quickly figure out which properties are undervalued. I can do it faster than a recent Harvard grad sitting at JPMorgan.
BTTT
I have not applied for any loans, but within the last week I have received letters from my credit card issuers raising my credit limits and including a packet of blank checks to use.
I made a point a couple of years ago to start paying off any credit card debt and now have very little. They keep upping the credit limit and sending those checks, basically begging me to use them.
Here's what they're telling me.
Two problems are happening. First is that banks are not loaning money to each other. There is an incredible amount of distrust in the banking industry which primarily affects investment and retail banks in that they won't loan money to each other anymore. This is a result of the subprime mess, the SPV's, SIV's and a fear of "who's going down next." This is where the bulk of the "credit crunch" is happening.
The second problem that's being created as a result is that many banks will not loan out money to customers with credit ratings below @ 700. As 670 (or thereabouts) is the "average" credit score this means many people who may be considered "average" are unable to get credit. Banks are going to 'sit' on the money they get from the bailout because they don't know the extent of THEIR exposure as a result of this mess.
The credit score is one factor in why many people aren't able to get credit. The second and most contributing factor is the amount of information banks now have available to them @ their customers. As many of you may know, the credit information reporting services (Trans-Union for example) have gotten much better at profiling consumers. They have a methodology that evaluates a customer based on purchase habits, income and other factors and created a "risk factor" for consumers. Banks are now looking at these results as well in determining when to loan money vs. when not to for their customers.
From many banks point of view, it may not matter to them that someone's been a customer for a long time and has consistently made their monthly payments. Applying for a new loan or an additional loan today means a new level of scrutiny that this country hasn't seen in awhile.
Oh my gosh! Banks are finally acting RESPONSIBLE again!
As an example, when I purchased my first house in 1986 at the age of 23, I had to have 20% down, prove where I obtained the down payment, and prove my income that I could pay for the house. In fact, as both my wife and I worked, the bank REQUIRED we demonstrate we could pay for the house on just ONE of our salaries.
In 1992 when I moved into my current house, I had to prove where I got the 40% down payment (sale of previous home) and again qualify for the loan based on one income.
In my view, this was a lender being responsible with their customer's assets and ensuring they'd get paid back. Rightly so.
As we now know, the Community Re-Investment Act (Carter) and the Clinton Administration's re-writing of Fannie/Freddie charters insisting they purchase loans of low-income borrowers laid the foundation for creating this mess.
We're about to go back to the "good ol' days" of having 20% down for a home, thorough investigation of one's source(s) of income to pay back that loan, and a requirement for a good credit and risk rating to receive that loan.
While "painful" to some in that they won't be able to buy something they can't afford in the first place - this is as it should be.
It's also true that a bunch of greedy unscrupulous SOB's on Wall Street and in the banking/mortgage industry knowingly lent out money to customers they knew couldn't afford their loans, and the customers who knowingly (and I say "unknowingly" too!) took them out created this mess. These loans were then 'repackaged' in various investment vehicles and sold to Fannie Mae/Freddie Mac and other financial institutions who expected a return on their investment. The problem is, many of these "investment vehicles" contain bad loans (or "subprime") that were packaged up with good, and no one seems to know how to 'separate' the bad loans from these packages. The result of this is many banks are writing down entire investment portfolio's simply because they have no way of knowing (or "pricing") the bad loans in their investment portfolio's. This is where the banks and investment houses simply "lost" liquidity in writing down - which means taking off their balance sheets as assets - bad assets.
So let's talk frankly about the "bailout" plan at this point.
The question now on the table for all of us at this point is really pretty simple: Are we simply f**ked, or are we f**ked and owe another $1.5T in debt to bail out the above mentioned a**holes?
"F**ked" means simly that Wall Street and Fannie/Freddie's investors take the first hit in this mess and lose their investment. Taxpayers would have to "pick up" the rest. At least this way, those that created this mess suffer first.
"F**ked" plus owing $1.5T dollars means those that created this mess will likely get to skate free and we taxpayers are stuck holding the bag for this mess and are paying for it in higher taxes, interest rates, etc..
Personally, if I'm f**ked, I don't want to owe another $1.5T in taxes/national debt to bail out a bunch of greedy MF'ers so they can create this mess all over again.
In my view, it's time to swallow the medicine, not bail out Wall Street nor reward bad-behavior, and simply clean-up the mess by letting TRUE CAPITALISM do it's work. It's true that the Markets have been manipulated, but I believe in the power of TRUE CAPITALISM and letting the market work itself out.
And finally while we're cleaning up the mess, there should be a whole lot of people doing the 'perp walk' and being given a blindfold and a cigarette. That in my view not only includes the Franklin Raines (Fannie Mae) of the world it also includes for example Chris Dodd, who took more than $500,000 in campaign contributions from Fannie Mae and was also chairman of the Senate Banking Committee that had oversight of Fannie, Freddie and those who created this mess!
Let us not just give blindfolds and cigarettes to those on Wall Street that created this mess, they should be given to the politicians who helped create this mess too! They benefitted directly - they should suffer the consequences!
Just my .02.
I have friends who are working for "start up" companies. Two of them have left because they see no future in their company. Both have been unable to find investors that want to grow the company. One friend believes his company is on the verge of bankruptcy. The other says they are having a hard time selling their "cutting edge" product to the general public since people are not willing to shell out discretionary bucks at this time. I also know two small business owners who had their credit lines either pulled or reduced.
Credit cards and car loans seem to be ok for folks above a certain credit score. The credit crisis is hitting small/medium businesses hard. This is the engine that creates the most jobs. Obviously, this has a large trickle down effect.
The crisis is hitting businesses harder than consumers with good credit. You would not necessarily have visibility into this problem, which has a huge multiplier effect.
I got a personal loan on Wednesday.
Yes- I know I guy who’s had 2 bankruptcies and was turned down 2 weeks ago for a small loan. Another couple I know have ok credit and just closed on their house— 20% down though.
The system is flushing the bad borrowers away- hey it’s working like it should.
Bought a brand new John Deere 4WD 63 hp tractor with loader and shredder yesterday. Same day credit check and financing with John Deere, no problem. Just what every gal wants for her 37th wedding anniversary! :)
Your was an excellent post, filled with good insight backed with some data.
Like you, I strongly believe in capitalism, and had we followed it more conservatively, we would not be in this mess. The situation you described is being played out around the globe to some extent. Nations are beginning to keep money "within their borders", so this is not merely a local problem. We must solve, or not solve our own problem, but ONLY our own problem. Unfortunately, there are few int'l investors that are in a position to provide any assistance, even if they wanted to.
Our current situation is very similar to the one in summer 1929. The FED made the wrong move and sent us into a depression. Today, the situation is more onerous because the problem is bigger than what the FED currently has the wherewithal to fix.
The value judgment that needs to be made is "should we solve the problem, take a hit on general std of living conditions (more taxes)" or "should we do nothing a slide into a severe recession or possibly a depression". I am not sure the folks fully appreciate this trade off.
My friend at work just refinanced his house. No problem getting the loan (some issues getting the paperwork right but that’s not surprising). Credit is fine for people with excellent credit.
I have not applied for a loan but we get dozens of cc applications each week and many with that “no interest” or low interest feature on balance transfers....hubby got a home depot cc a month ago with 6 months same as cash.....
Congrats on the new car. I haven’t bought anything major lately, but I did receive a credit card offer this week in the mail.
LOL! And you deserve it! Happy Anniversary!
what is an “excellant” credit rating?...mine is high 700’s...
Yes, the situation is similar to 1929. And the years from 2000-2008 are very similar to the years 1920-1929. Specifically, the expansion of credit at an excessive rate.
Here is what gets my goat...Ben Bernanke is supposed to be the master of knowing what the FED should have done to prevent the aftermath of 1929. It is almost as if he has been hoping to be at the helm of the ship in a moment such as this so that he can prove to the world that his theories about the Great Depression are correct.
Here is what gets my goat.....He was at the FED, along with Greenspan for the entire time that the credit bubble was taking place, and voting for rate cut after rate cut just like Greenspan. He was doing nothing to prevent the repeat of the Great Depression during the critical phase,ie, during that credit expansion phase. And now he is supposed to be treated as the Grand Puba expert on how to correct falling into another Great Depression.
Why didn't he cry from the hills that 1929 was getting set up all over again? Now we are supposed to treat him as the Grand Savior preventing Great Depression II? I don't buy it?
Furthermore, I wonder that he may try to fix Great Depression II using methods that may have worked for Great Depression I. You know.. generals fighting yesterdays wars?
good for you guys.....and congrats on your new house....
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