Bankers Need To Recconect With Their Morals?

[Svartalf]

Crash of 2000? I had forgotten that one.

[Audley Strange]

Moral Bankers would destroy the economy by not giving debt to people who should not have debt,

If you call fiscal responsibility "destroying the economy."

In the current economic model, yes fiscal responsibility would destroy the economy, because from peasants to the landowners the majority, are not, as many economists erroneously think "rational consumers". If anything is evidenced over the last forty or so years, its the opposite. The astronomical profits made by banking and especially in investment banking were made because people are NOT rational consumers.

Thee problem with giving debt to people who should not have debt was not created by bankers, it was created by socialist and progressive government regulations that forced banks to issue credit to uncreditworthy persons merely because they were minorities.

As for the banks, they were not forced, been complicit in, certainly. In saying that I do have some sympathy for what you are claiming, though peasants are always a majority, no matter what their skin colour is or what gender they decide upon. Certainly between the Fifties and the Eighties governments did use the optimism of the times to exploit people by giving them sense of higher expectations, which being the muddled chimps that they were became expectations, demands and more and more greed. This ethic was installed in their children just in time for the social experiment to wind down. However the corporations usurped the concept. By flashing shinies at the morons every fifteen minutes and by offering easy credit, they took advantage of the situation... wouldn't you? To me both sides were like seriously mentally handicapped adults playing a game of ideological table tennis where more often than not one or other of them thwacked an audience member in the face, rather than hit the ball.

Had it not been for the Community Reinvestment Act, enacted under that boob Carter, and it's expansion under the direction of Barney Frank and Chris Dodd and others of their ilk, who flatly coerced the large banks into granting mortgages to people who could not afford to repay them, and which created an entire industry of predatory mortgage lending protected and supported by Frank and Dodd using their power over federal banking regulators, banks and mortgage lenders never would have made those risky loans in the first place, and the Credit Default Swap scheme as "insurance" for investors in highly-risky toxic mortgages would never have been invented, and people who lied on their credit apps (a felony) to get a mortgage they couldn't afford would have remained what they were and should have always been in the absence of sufficient income: Renters.

Given the fact that if the bankers refused to loan to unqualified applicants (which in a free mortgage market they ALWAYS DO), and the fact that they were subject to regulatory actions by the feds that would DESTROY them as banks if they refused to make toxic loans, at the behest of Barney Frank, they had no choice but to knuckle-under to Frank and Dodd and make the loans. So, predictably, they created a mechanism to protect their assets by bundling toxic mortgages as risky investment portfolios and selling them to credulous investors on the promise that the "credit default swap" system created by AIG (mostly) would cover them if the mortgages went into default, as the banks knew many of them eventually would.
[/quote]

I'm not sure about all of this, but I think it's another "what the left does the right exploits" thing. But then Carter's been out since what? 1979? 1980? Which was about when those who run elections had so much contempt for the public that they put a senile actor in the titular position and the fucking morons lapped it up. Lower standards of living + refusal to live at those standards = escalating private debt. Escalating investment and risk opportunities.

The banks were doing what banks do, they were investing money belonging to OTHER PEOPLE (depositors and investors), but they were being FORCED by the government to invest it in very, very risky ways, so they tried to cover their asses, and thereby the investments of their depositors and investors, who expect a return, not a loss. So far, nothing inherently "immoral", other than Frank and Dodd's meddling with the free market for mortgages in order to achieve a Progressive/leftist/socialist sociopolitical agenda of "a house in every pot" at the expense of the banks and the economy.

I'll need to read up on this from several points of view before I'm willing to comment. I find your commetary to be so heavily agendised as to overpower the facts that might be in there. If I can be bothered I'll get back to you. I can't dispute or agree with anything based on that, other than that you are wrong about it being Banks do what Banks do. The disolution of the boundaries between capital savings and investment banking is fairly recent, I'm sure it happened under Clinton, which I'm sure even you can grasp would not be a left wing policy, the left wing policy would be for further nationalisation.

[MrJonno]

How many of the US banks now are publically fully or partly owned, I assume the bailout wasn't free money but involved the state actually buying shares in the banks which in theory they might be able to sell later at a profit

[Schneibster]

The banks who can pay TARP money back already have. Depending who you talk to, we lost around US$100 billion, broke even, or gained around US$100 billion (I've seen estimates as high as US$200 billion, but I don't believe that). We more or less broke even, considering we stood to lose over US$15 trillion, around fifteen thousand times as much. Losses were because some of the banks failed anyway.

[Gawdzilla Sama]

We need a "Oxymoronic Thread Title of the Day" thread.

[Horwood Beer-Master]

To be honest Schneibster, I think you're on the wrong side of the Atlantic to be commenting on our summer riots. Even leaving aside comments that have been made by some about hip-hop or whatever, there nonetheless blatantly were cultural aspects to the whole thing, as any fool actually living in this country could plainly see - but they really don't translate very well at all with anything over in the states.

To say "it's because they're all poor and the economies screwed" does not, to my mind, even constitute a useful simplification of what happened and why.

The only positive link I'm personally happy to draw between these rioters and the economic crash, is that they both - in their separate ways - represent the politics of Thatcher coming home to roost.

[Horwood Beer-Master]

...10 years? It was forgotten by some in 10 minutes. The banker-wanker-tory classes over here, and the tea-party muppits in the states, have already entirely convinced themselves that it was too much regulation - not too little - that got us into this mess.

Actually, it was too much regulation, combined with some egregious example of failing to enforce EXISTING regulations that got us into this...

See - I said they'd convinced themselves.

[Seth]

Moral Bankers would destroy the economy by not giving debt to people who should not have debt,

If you call fiscal responsibility "destroying the economy."

In the current economic model, yes fiscal responsibility would destroy the economy, because from peasants to the landowners the majority, are not, as many economists erroneously think "rational consumers". If anything is evidenced over the last forty or so years, its the opposite. The astronomical profits made by banking and especially in investment banking were made because people are NOT rational consumers.

So? There's a sucker born every minute, and commerce depends on people wishing to fulfill "irrational" needs. It's hardly fiscally irresponsible to help fulfill those needs, or make a profit doing so. The key is that if investment banking didn't make its clients money, it wouldn't have clients long. The fact that banks (or bankers) made a lot of money goes to prove the value of their labor, because what they make is but a small percentage of the wealth that they help others to generate.

You seem to be laboring under the mistaken impressions that banks steal money to enrich themselves. They don't, they EARN IT, through a series of voluntary transactions undertaken with clients who trust and use the bank as a vehicle for earning a return on their investments. What the banks, and bankers make is their disclosed and agreed upon salary for managing their clients money properly, nothing more.

Thee problem with giving debt to people who should not have debt was not created by bankers, it was created by socialist and progressive government regulations that forced banks to issue credit to uncreditworthy persons merely because they were minorities.

As for the banks, they were not forced, been complicit in, certainly.

Yes, they were forced, in large part by Barney Frank, in a series of closed-door meetings where he told the Big Six that if they didn't get on the Progressive bandwagon and start lending money to minority applicants they would be subjected to bank examinations that would put them out of business. You have no understanding of the death-sentence for a bank that having FDIC and Federal Reserve bank examiners show up for an audit is. I know a former Federal Reserve bank examiner and she has explained in painful detail how the Fed can threaten and audit a bank into doing whatever the Fed wants. It's one of the real evils of a government central bank system.

In saying that I do have some sympathy for what you are claiming, though peasants are always a majority, no matter what their skin colour is or what gender they decide upon. Certainly between the Fifties and the Eighties governments did use the optimism of the times to exploit people by giving them sense of higher expectations, which being the muddled chimps that they were became expectations, demands and more and more greed. This ethic was installed in their children just in time for the social experiment to wind down. However the corporations usurped the concept. By flashing shinies at the morons every fifteen minutes and by offering easy credit, they took advantage of the situation... wouldn't you? To me both sides were like seriously mentally handicapped adults playing a game of ideological table tennis where more often than not one or other of them thwacked an audience member in the face, rather than hit the ball.

The problem was not "easy credit" it was "fraudulently obtained mortgages." Every single person who falsified a credit app or financial statement, even at the behest of a predatory mortgage broker, committed a federal crime in doing so. But under the CRA and the Frank and Dodd show, such abuses were deliberately overlooked in order to forward the Progressive agenda.

Capitalism and free markets offer consumers what they want, but they both also expect consumers to pay for what they buy. The mortgage crisis was actually an event of the government essentially offering free money to banks and mortgage lenders using people who shouldn't have been given loans as the patsies who would take the fall.

Had it not been for the Community Reinvestment Act, enacted under that boob Carter, and it's expansion under the direction of Barney Frank and Chris Dodd and others of their ilk, who flatly coerced the large banks into granting mortgages to people who could not afford to repay them, and which created an entire industry of predatory mortgage lending protected and supported by Frank and Dodd using their power over federal banking regulators, banks and mortgage lenders never would have made those risky loans in the first place, and the Credit Default Swap scheme as "insurance" for investors in highly-risky toxic mortgages would never have been invented, and people who lied on their credit apps (a felony) to get a mortgage they couldn't afford would have remained what they were and should have always been in the absence of sufficient income: Renters.

Given the fact that if the bankers refused to loan to unqualified applicants (which in a free mortgage market they ALWAYS DO), and the fact that they were subject to regulatory actions by the feds that would DESTROY them as banks if they refused to make toxic loans, at the behest of Barney Frank, they had no choice but to knuckle-under to Frank and Dodd and make the loans. So, predictably, they created a mechanism to protect their assets by bundling toxic mortgages as risky investment portfolios and selling them to credulous investors on the promise that the "credit default swap" system created by AIG (mostly) would cover them if the mortgages went into default, as the banks knew many of them eventually would.
[/quote]

I'm not sure about all of this, but I think it's another "what the left does the right exploits" thing. But then Carter's been out since what? 1979? 1980? Which was about when those who run elections had so much contempt for the public that they put a senile actor in the titular position and the fucking morons lapped it up. Lower standards of living + refusal to live at those standards = escalating private debt. Escalating investment and risk opportunities.

There are few in government since Carter who can escape some responsibility for the evils of the CRA, but it was a politically-popular program with the middle class, and we all know that votes talk. But it wasn't really the bank's fault for doing what they had to do to avoid being shut down.

The banks were doing what banks do, they were investing money belonging to OTHER PEOPLE (depositors and investors), but they were being FORCED by the government to invest it in very, very risky ways, so they tried to cover their asses, and thereby the investments of their depositors and investors, who expect a return, not a loss. So far, nothing inherently "immoral", other than Frank and Dodd's meddling with the free market for mortgages in order to achieve a Progressive/leftist/socialist sociopolitical agenda of "a house in every pot" at the expense of the banks and the economy.

I'll need to read up on this from several points of view before I'm willing to comment. I find your commetary to be so heavily agendised as to overpower the facts that might be in there. If I can be bothered I'll get back to you. I can't dispute or agree with anything based on that, other than that you are wrong about it being Banks do what Banks do. The disolution of the boundaries between capital savings and investment banking is fairly recent, I'm sure it happened under Clinton, which I'm sure even you can grasp would not be a left wing policy, the left wing policy would be for further nationalisation.

The only salient point is that it was improper banking regulations that meddled with the free market that caused the problems. Doesn't really matter who implemented them. When left alone, banks look to their own profits and assess risk very carefully before lending people money. When banking regulations shift the risk to the taxpayers, banks are going to take advantage of that to increase their profits and lower their risks, which is exactly what happened with the bailouts.

Obviously, the great mistake was in bailing the banks, rather than the mortgage holders (those who were NOT fraudsters) out when things crashed.

As for those who falsified their financial statements and got loans they weren't qualified to have and then defaulted on them, they are felons and deserve to be living in cardboard boxes...or steel ones.

[Seth]

How many of the US banks now are publically fully or partly owned, I assume the bailout wasn't free money but involved the state actually buying shares in the banks which in theory they might be able to sell later at a profit

You assume incorrectly.

Obama bought GM for the government, but not the banks. The banks just got TARP loans, which have mostly been paid back. Attempting to nationalize the banks by buying them would have caused a terrific furor, so they never even suggested it...because that's an essential part of the Marxist dialectic.

[Gawdzilla Sama]

[Schneibster]

To be honest Schneibster, I think you're on the wrong side of the Atlantic to be commenting on our summer riots.

Because we don't get newspapers over here in the asshole of the Earth, the US?

Even leaving aside comments that have been made by some about hip-hop or whatever, there nonetheless blatantly were cultural aspects to the whole thing, as any fool actually living in this country could plainly see - but they really don't translate very well at all with anything over in the states.

You're dancing around something. Be straightforward.

To say "it's because they're all poor and the economies screwed" does not, to my mind, even constitute a useful simplification of what happened and why.

Nevertheless...

They are poor.

The economy is screwed.

Not only that but the poor are poorer than ever, and the economy is not just screwed but scary-screwed and showing every sign of getting worse, and any hopes they might have had before the crash are now put off years at best. Not only that but it's being put off farther and farther as no one does anything to fix it and the rich keep getting richer.

They're poor, not stupid.

And these were the worst riots in decades, quite literally and without any hyperbole at all, according to every source I can find.

You're claiming there's no connection and it's "cultural."

OK.

The only positive link I'm personally happy to draw between these rioters and the economic crash, is that they both - in their separate ways - represent the politics of Thatcher coming home to roost.

Now I won't disagree with that.

[MrJonno]

How many of the US banks now are publically fully or partly owned, I assume the bailout wasn't free money but involved the state actually buying shares in the banks which in theory they might be able to sell later at a profit

You assume incorrectly.

Obama bought GM for the government, but not the banks. The banks just got TARP loans, which have mostly been paid back. Attempting to nationalize the banks by buying them would have caused a terrific furor, so they never even suggested it...because that's an essential part of the Marxist dialectic.

Then no wonder Americans are pissed of we actually bought fully or partially failing/failed banks. How can you nationalise something that is bankrupt?. Hopefully we will make a signficiant profit on those banks when they get sold back to the private sector

[Seth]

How many of the US banks now are publically fully or partly owned, I assume the bailout wasn't free money but involved the state actually buying shares in the banks which in theory they might be able to sell later at a profit

You assume incorrectly.

Obama bought GM for the government, but not the banks. The banks just got TARP loans, which have mostly been paid back. Attempting to nationalize the banks by buying them would have caused a terrific furor, so they never even suggested it...because that's an essential part of the Marxist dialectic.

Then no wonder Americans are pissed of we actually bought fully or partially failing/failed banks. How can you nationalise something that is bankrupt?. Hopefully we will make a signficiant profit on those banks when they get sold back to the private sector

Most of the "failed" banks are anything but bankrupt. Most of the ones being closed down by the FDIC are solvent, but they do not meet the extraordinarily high standards of the FDIC for capital reserves because of the poor economy and underperforming mortgages, but they are not insolvent and are not in any real danger of defaulting on their obligations. But it appears to be the agenda of the FDIC under Obama to shut down local banks whenever possible, using depression-era banking laws, in order to centralize banking in the large, international conglomerate banks that are easier to control from Washington.

Which is precisely why people SHOULD take their money out of the big bank conglomerates and put them into their locally owned small banks. That's an exercise of free-market economics that would stabilize the economy by keeping local deposits local, available for local use, and not have them siphoned off overseas.

As for "how can you nationalize something that is bankrupt," the obvious answer is "the way Obama did it to GM," which is to simply illegally seize the assets, defraud the secured GM bond holders, pour public money into the bankrupt company to keep it afloat, and then sell it to the labor unions as a part of a Progressive plan to destroy the free market and enhance Executive authority.

[Gawdzilla Sama]

"extraordinarily high standards" meaning they have their money in bad loans and need to beg off keeping the depositors safe.

[Seth]

"extraordinarily high standards" meaning they have their money in bad loans and need to beg off keeping the depositors safe.

Most of the loans they are in were performing to contract prior to the meltdown. It's hardly their fault that there's a recession on. One of the criteria that the FDIC uses when examining loans is not whether they are in default, but what the CURRENT property valuation is relative to the amount owed. If the value of the property has dropped substantially, as much of it has, even though the mortgagee is still making the payments he/she contracted for, the FDIC considers the loan to be "underperforming" and a higher risk to the FDIC, and that's used to demand that the bank increase its cash capitalization reserves. Often, the FDIC doesn't give a bank a chance to go out and find capitalization to fix the deficit on non-defaulted loans, they just walk in, shut the bank down, and sell its assets to another, bigger bank.

That's why many banks are foreclosing on people who have never missed a payment. The bank can foreclose, take ownership of the property, get the loan off their books, and that doesn't work against them when the FDIC comes around looking for a reason to shut them down. Once again it's the mortgagee who gets fucked in this situation, and they are being fucked, in the end, by the government itself, even if they are current on their payments, merely because the market value of their property is lower than what they owe, which is not their fault in this economy.

Once again the feds fuck with people just because they can.