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Posted on 10/15/2008 5:29:41 AM PDT by SJackson
Community banking executives around the country responded with anger yesterday to the Bush administration's strategy of investing $250 billion in financial firms, saying they don't need the money, resent the intrusion and feel it's unfair to rescue companies from their own mistakes.
But regulators said some banks will be pressed to take the taxpayer dollars anyway. Others banks judged too sick to save will be allowed to fail.
The government also said yesterday that it will guarantee up to $1.4 trillion of private investment in banks. The combination of public and private investment is intended to refill coffers emptied by losses on real estate lending. With the additional money, the government expects, banks would be able to start making additional loans, boosting the economy.
(Excerpt) Read more at washingtonpost.com ...
Are banks being forced to “lend” the forcibly injected funds?
Are banks again being forced to “lend” these forcibly injected funds based on racial and socioeconomic quotas instead of credit worthiness?
STOP RIGHT THERE! y'all can figure the rest ...
Nor have I heard of any ban on making high risk loans.
Bank A can use the funds to strengthen their balance sheet or arbitrage the rate they're paying, Bank B can make the loans that got them in trouble in the first place. I'd hope changes have been made at Fannie and Freddie regarding mortgage qualification, but not much has been written about it.
Yep, I trust the government to make a better decision than the free market. Yessirreee!
And what happens when we get Obama's socialized medicical plan? Who decides which people are too sick to recover?
“I’d hope changes have been made at Fannie and Freddie regarding mortgage qualification,”
Yes very much so. The quality of loans coming out now should be very high, at least at my organization.
But the biggest problem is declining property values. Even with all the mistakes made in offering loans to unqualified borrowers, values are the biggest issues.
Most of those bad loans could have been taken care of relatively painlessly had real estate prices just held steady.
Property values declining to the point where middle class buyers can afford to buy with sensible, conventional financing is in fact a solution, not a “problem”.
bump
“Property values declining to the point where middle class buyers can afford to buy with sensible, conventional financing is in fact a solution, not a “problem”.”
Affordability has never been an issue in my area and most of the country. Unless people had to much debt, they could afford a home in most of the country.
If people didn’t know how to manage their credit,then yes it is a problem and those middle class people will have trouble buying a home. But they shouldn’t be buying a home anyway until they clean up their credit.
Declining property values and other forms of deflation, historically is a bigger problem than inflation.
This is a lot worse than asset values declining, especially after a huge assett bubble created by overindulgence in the creation of credit by the Fed.
I for one am quite enjoying the "deflation" in the price of gas, and would like a little more "deflation" in the price of housing.
When drowning in a sea of red ink and watching your ponzi scheme run out, it only makes since to flood the banks with more red ink in hopes you can bring back the good times. Asset prices are still plummeting, deflation is kicking in, nobody is buying anything as they hunker down for the inevitable reset, and banks simply hoard the new funds to cover a decade of loser loans. All this has done is prevent a run on what is left of the financial institutions, but the glory days are not coming back.
Imagine if we suddenly decided not to bankrupt our country, became fiscally responsible, took that same money we are wasting on the financial sector, and reinvested it into our infrastructure and energy independence. At the same time, we slap a level-the-playing field tax on products produced by slave labor in backwater countries so the average American worker has a prayer of competing with them. Of course this would upset the globalists who want to turn us into a bankrupt shell that is totally dependent on the rest of the world, so it will never happen.
If more banks followed suit, there wouldn't be a liquidity problem.
ACORN qualifiers need NOT apply for loans from my bank!
sw
***Declining property values and other forms of deflation, historically is a bigger problem than inflation.***
No, it’s a problem brought on by inflation.
No, they couldn't. In the areas most affected by the bubble, which are going to represent the most severe losses, housing prices had been inflated to the point that the only way anyone would be able to afford houses would be to take out "loans" that they would never pay back.
If someone borrows $200,000 for a house, the only way that money is ever really going to be paid back is if the house is occupied by someone who can afford to pay $2,000/month for it. The debt might be passed on to someone else if the house is resold, possibly for even more money, but if it re-sells for $300,000 all that does is increase the payment required to ever pay back the loan.
The reason housing prices were so high in some areas is that there was no perceived requirement that buyers actually be able to afford the homes they were getting. Indeed, thanks to wondrous goodies like 110% LTV lender-appraised NINJA loans, a buyer who couldn't afford his house could be better off "buying" a house for $400,000 than "buying" the same house for $200,000.
Did Zimbabwe just slash a bunch of zeroes from their currency? I just checked exchange rates and it's about US$1=Zim$203.
Yes, they did slash a bunch of zeros from the currency.
One of my accounts is with a Colorado owned bank. They are doing just fine. They are a full service bank and leave nothing to offer. Why is it that they are doing just fine yet these “powerful” Wall Street banks are collapsing like a cheap suit? Maybe we should simply abolish the Fed and these large international banks? They seem to be poorly operated and cannot control themselves.
The last thing I want to happen is to go to sleep a private-sector employee and wake up as a civil servant.
But then again, I guess we are all civil servants now.
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