Banks want a bailout

[smack Down]

http://www.nytimes.com/2008/02...ewanted=all&oref=login

There go the banks asking for more hand outs. but if you where to try and regulate them they would go crying about how they should be free to charge what ever interest rates they want. Lend however they want but when they start losing money they expect the tax payers to bail them out.

 

[bctbct]

NO

Next question please....

 

[GrGr]

The taxpayers don't have any money so they can't bail the banks out.

/shrug

 

[Phokus]

Hahaha, the banks can go screw themselves, it's their fault that they came up with those horribly unrealistic mortgages.

 

[Lemon law]

As the Bank of America says in its own self serving ways says---?We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,? the financial institution noted.

But in round numbers, the banks have made something on the order of 800 billion in bad mortgage loans, So they want 200 billion to be given to them. The point is, that same 200 billion, if given to homeowners, could reduce payments to the point where the bad loans became good. And in fact, much less than 200 billion would be required to do that.

The point is that the banking industry did much to create the crisis with aggressive marketing of dubious loans, they made their bed, and should suffer some financial pain for it. And the way to show some progress would be to
cut the salaries and bonuses of their top executives who make hundreds of millions of dollars a year for making bad decisions. That should be a down payment to start.

The banks created this crisis by over selling of loans with skyrocketing ARM's without checking for verified income. Why should I, as a taxpayer, bail out these overpaid idiots? And why should I, as a taxpayer, bail out wealthy investor's who were foolish enough to trust the judgment of those same banks? These investors made a bad investment, and if they don't want it to be an even worse investment, they won't invoke the arm clauses built in that make the loans untenable.

As far as I am concerned, the pain should be shared by foolish home buyers, the banks, and by investors who bought entire packages of foolish loans. And a package of government regulations to prevent such future foolishness should be in place before the government kicks in a single dime. Then something along the lines of what Mr. Taylor suggests could prove to be a good idea.

But bail out the banks directly, no no no and a thousand times no.

 

[smack Down]

As the Bank of America says in its own self serving ways says---?We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,? the financial institution noted.

Right they need to make sure their bailout isn't marketed as such. They want to market their bailout as a way to save peoples homes. As if a lot of people are going to go homeless when we have a massive oversupply of homes.

 

[Exterous]

Wait....isn't Bank of America the one giving out free money ($75) just for signing up for an account and now they want to be given lots of money? Now I know that it might not be in the same dollar amounts but this strikes me as fiscal irresponsibility

 

[blackangst1]

Originally posted by: smack Down
http://www.nytimes.com/2008/02...ewanted=all&oref=login

There go the banks asking for more hand outs. but if you where to try and regulate them they would go crying about how they should be free to charge what ever interest rates they want. Lend however they want but when they start losing money they expect the tax payers to bail them out.

Arent they already regulated? I seriously doubt they would "go crying" about not being able to charge what they want. The banking industry is well aware of usery laws and I dont see them trying to overturn them. They know better.

We bailed out S&L's and the airlines, why not banks?

 

[Jhhnn]

Actually, banking has been extensively deregulated over the last 30 years, mostly in baby steps-

http://www.prospect.org/cs/art...cle=the_bubble_economy

A little bit here, a little more there, etc, until the greedy bastids overextend the system- which was the reason for regulation in the first place...

The problem, unfortunately, is that we can't allow a lot of bank failures, simply because there are so few of them left... deregulation has allowed for huge amounts of consolidation in the industry, and when those who remain all charge off a cliff together, we go along for the ride...

We depend on banking in no small way, so we need to try to keep it healthy to serve the public interest, even if that means accepting the greed of those who run it...

Not the greed of the last few years, however... I say leave it alone until failures actually occur, then have a plan to salvage/ rebuild if that really occurs...

There's a message in all this for the free-market wingnuts-

Be careful what you wish for, because if you get it, you may not like it at all...

 

[Jaskalas]

The banks like heroin addicts don?t need more heroin. They need to suffer withdrawal and live or die based on their own merits. We shouldn?t dig our hole deeper by pretending we can bail out this mess of irresponsibility.

 

[WhipperSnapper]

Oh no! Those poor, poor banks! These wealthy institutions, filled with economists, financial analysts, and greedy executives, they just didn't see it coming and don't know what hit them! My heart bleeds and I cry little itty bitty black tears for them!

The banks want a bailout but at the same time I would bet that almost all of their executives claim to support a free market economy and would oppose socialized medicine because they support a free market economy. I bet they wouldn't hesitate to foreclose on someone's house or charge someone who made a mistake a bounced check fee and what not. Maybe the bank bailout could be financed by raising taxes on the wealthy? F-them I say. They soiled their own bed, they should have known better, and they deserve to suffer lower profits and falling stock values.

 

[WHAMPOM]

Originally posted by: blackangst1

Originally posted by: smack Down
http://www.nytimes.com/2008/02...ewanted=all&oref=login

There go the banks asking for more hand outs. but if you where to try and regulate them they would go crying about how they should be free to charge what ever interest rates they want. Lend however they want but when they start losing money they expect the tax payers to bail them out.

Arent they already regulated? I seriously doubt they would "go crying" about not being able to charge what they want. The banking industry is well aware of usery laws and I dont see them trying to overturn them. They know better.

We bailed out S&L's and the airlines, why not banks?

NAH! Let the free market system work, businesses thst make bad decisions go under.
That bail-out by another name, that's funny! Must be how the banks sold themselves
on the bad mortages.

 

[Capt Caveman]

Bailing out the banks actually helps everyone. People need to do some research and realize this sub-prime mortgage crisis effects everything from people, non-profits, other business with excellent credit to borrow. These companies aren't able to expand and hire to help offset the downsizing by other companies.

Small Example - Subprime crisis filters to Mass. nonprofits

People need to look at macro-economic level instead of thinking that only people/companies with sub-prime mortgages suffer.

 

[Fern]

Originally posted by: Lemon law
As the Bank of America says in its own self serving ways says---?We believe that any intervention by the federal government will be acceptable only if it is not perceived as a bailout of the bond market,? the financial institution noted.

But in round numbers, the banks have made something on the order of 800 billion in bad mortgage loans, So they want 200 billion to be given to them. Where do you get this number from? The point is, that same 200 billion, if given to homeowners, could reduce payments to the point where the bad loans became good. And in fact, much less than 200 billion would be required to do that.

This is from the article:

The government would buy the mortgages at their true current value, perhaps through an auction, at what would probably be a big discount from the original loan amount. The mortgage lenders, or the investors who bought mortgage-backed securities, would be free of the bad loans but would still have to book their losses.

The point is that the banking industry did much to create the crisis with aggressive marketing of dubious loans, they made their bed, and should suffer some financial pain for it. And the way to show some progress would be to
cut the salaries and bonuses of their top executives who make hundreds of millions of dollars a year for making bad decisions. That should be a down payment to start.

The banks created this crisis by over selling of loans with skyrocketing ARM's without checking for verified income. Why should I, as a taxpayer, bail out these overpaid idiots? And why should I, as a taxpayer, bail out wealthy investor's who were foolish enough to trust the judgment of those same banks? These investors made a bad investment, and if they don't want it to be an even worse investment, they won't invoke the arm clauses built in that make the loans untenable.

As far as I am concerned, the pain should be shared by foolish home buyers, the banks, and by investors who bought entire packages of foolish loans. And a package of government regulations to prevent such future foolishness should be in place before the government kicks in a single dime. Then something along the lines of what Mr. Taylor suggests could prove to be a good idea.

But bail out the banks directly, no no no and a thousand times no.

IMO, the US gov has no business investing in risky debt instruments.

The banks can do this themselves since they're willing to take the loss now. If the whole point, which it seems to be, is to get the loans off their books the banks can get together and set up a new company - in a joint venture - and transfer the loans to it. If the loans are properly discounted, they should be able to raise money from investors to finance the deal.

In fact the "banking official" says so himself:

Mr. Taylor estimated the government might end up buying $80 billion to $100 billion in mortgages. But he said the government could recoup its money if it was able to buy the mortgages at a proper discount, repackage them and sell them on the open market.

This is a project for bankers, not government employees.

Fern

 

[Fern]

Originally posted by: Jhhnn
The problem, unfortunately, is that we can't allow a lot of bank failures, simply because there are so few of them left...

-snip-

WTH are you talking about?

BS, we have thousands of banks in the USA. Just not all mega huge.

From Wiki:

The US had by far the most banks (7,540 at end-2005) and branches (75,000) in the world. The large number of banks in the US is an indicator of its geography and regulatory structure, resulting in a large number of small to medium sized institutions in its banking system.

Jeez, I live in a small rural type area (city pop 20K, county pop 100K). We've had several new banks formed, all of which are growing, in just the past few years.

Fern

 

[LegendKiller]

I am all for reaping what you sow. However, people need to look beyond the "greedy banks" to see what kind of damage letting a large portion of the banking system fail.

 

[smack Down]

Originally posted by: Capt Caveman
Bailing out the banks actually helps everyone. People need to do some research and realize this sub-prime mortgage crisis effects everything from people, non-profits, other business with excellent credit to borrow. These companies aren't able to expand and hire to help offset the downsizing by other companies.

Small Example - Subprime crisis filters to Mass. nonprofits

People need to look at macro-economic level instead of thinking that only people/companies with sub-prime mortgages suffer.

If you care about the cost to non-profits then advocate that they get bailed out and not the banks in some round about way to maybe help the non-profits.

 

[Dissipate]

Originally posted by: LegendKiller
I am all for reaping what you sow. However, people need to look beyond the "greedy banks" to see what kind of damage letting a large portion of the banking system fail.

An investment banker in favor of bailing out the banks? I'm shocked, SHOCKED!

The banks are criminal organizations. First they create massive inflation for decades and now they want more bailouts? As I have said before, billions for bankers, debt and inflation for the rest of us.

Is there any other industry where you can get guaranteed profits with risk free loans??

 

[Fern]

Originally posted by: Capt Caveman
Bailing out the banks actually helps everyone. People need to do some research and realize this sub-prime mortgage crisis effects everything from people, non-profits, other business with excellent credit to borrow. These companies aren't able to expand and hire to help offset the downsizing by other companies.

Small Example - Subprime crisis filters to Mass. nonprofits

People need to look at macro-economic level instead of thinking that only people/companies with sub-prime mortgages suffer.

The article you cite doesn't make a whole lot of sense. Check this bit:

investors buying the Brandeis bonds in weekly auctions that determine the variable rates have demanded to be paid interest rates above 7 percent, far above the roughly 2 percent the school estimates it would be paying if its bonds weren't insured.

So drop the damn insurance.

Other than people with sub-prime loans, the only ones perhaps unfairly affected by this are those who need to sell their homes (say for an employment related move) and are in an area with a lot of defualted homes flooding the market.

I say let the markets worked this out, and let the banks take it in the shorts.

Fern

 

[LegendKiller]

Originally posted by: Dissipate

Originally posted by: LegendKiller
I am all for reaping what you sow. However, people need to look beyond the "greedy banks" to see what kind of damage letting a large portion of the banking system fail.

An investment banker in favor of bailing out the banks? I'm shocked, SHOCKED!

The banks are criminal organizations. First they create massive inflation for decades and now they want more bailouts? As I have said before, billions for bankers, debt and inflation for the rest of us.

Is there any other industry where you can get guaranteed profits with risk free loans??

ROFL, so now it's the investment banks who cause inflation. Please, do the world a favor and shut up.

Destroying the banking system does not prevent inflation, as there was inflation long before. Inflation is not an evil thing provided wages increase with it.

Again, I am all for letting banks take their due punishment. I, for one, have not taken any of these positions, nor will my bank. We have had less than $500MM in writedowns because they have been pretty conservative. I love how you try to undercut my point by thinking that I am a banker for bankers. Sorry, but I am a lot more pragmatic than that. I also am a lot more realistic in knowing that our economy can't survive without intermediaries and aggregation of the monetary system. I'd be all for more regulatory control and higher capital reserves, since I think the industry, as a whole, is too leveraged in certain areas.

Don't be a dipshit and pigeonhole me, I am far more complex and intelligent than you'll ever appreciate. If you would phrase your points as questions, asking whether I would like some banks to pay for their stupidity, you might find us a lot closer in points than you may think.

As far as letting banks fail. That's not really an option, they are already hurting letting them fail would cost thousands of non-exec jobs, billions in lost revenue, and could damage the economy for trillions. Contraction of the banking system would have massive effects.

It's a difficult situation, one that won't be easy to fix. I don't know what the answer is, but it's not getting all ridiculous like you are.

 

[LegendKiller]

Originally posted by: Fern

Originally posted by: Capt Caveman
Bailing out the banks actually helps everyone. People need to do some research and realize this sub-prime mortgage crisis effects everything from people, non-profits, other business with excellent credit to borrow. These companies aren't able to expand and hire to help offset the downsizing by other companies.

Small Example - Subprime crisis filters to Mass. nonprofits

People need to look at macro-economic level instead of thinking that only people/companies with sub-prime mortgages suffer.

The article you cite doesn't make a whole lot of sense. Check this bit:

investors buying the Brandeis bonds in weekly auctions that determine the variable rates have demanded to be paid interest rates above 7 percent, far above the roughly 2 percent the school estimates it would be paying if its bonds weren't insured.

So drop the damn insurance.

Other than people with sub-prime loans, the only ones perhaps unfairly affected by this are those who need to sell their homes (say for an employment related move) and are in an area with a lot of defualted homes flooding the market.

I say let the markets worked this out, and let the banks take it in the shorts.

Fern

It's impossible to really know what the bonds would pay without insurance, I highly doubt it'd be 2%. I am pretty sure they can't fix it, but that depends on the documents

 

[ericlp]

I'd rather see the tax $$$ go to help out the person who barrowed the money and lost his/her home. Not the sleaze that leant it....

 

[LegendKiller]

Originally posted by: ericlp
I'd rather see the tax $$$ go to help out the person who barrowed the money and lost his/her home. Not the sleaze that leant it....

So you want to bail out the people who knew they couldn't afford the house but still got a mortgage because they thought their house would appreciate forever?

As far as the "sleeze" who lent it. Why don't you really think about who that is, because it's pension funds, mutual funds, insurance companies, foreign and domestic investors...etc.

 

[smack Down]

Originally posted by: LegendKiller

Originally posted by: ericlp
I'd rather see the tax $$$ go to help out the person who barrowed the money and lost his/her home. Not the sleaze that leant it....

So you want to bail out the people who knew they couldn't afford the house but still got a mortgage because they thought their house would appreciate forever?

As far as the "sleeze" who lent it. Why don't you really think about who that is, because it's pension funds, mutual funds, insurance companies, foreign and domestic investors...etc.

Better then the banker who assumed the house would appreciate forever and could always foreclose and make a healthy profit.

 

[GrGr]

Originally posted by: LegendKiller

Originally posted by: Dissipate

Originally posted by: LegendKiller
I am all for reaping what you sow. However, people need to look beyond the "greedy banks" to see what kind of damage letting a large portion of the banking system fail.

An investment banker in favor of bailing out the banks? I'm shocked, SHOCKED!

The banks are criminal organizations. First they create massive inflation for decades and now they want more bailouts? As I have said before, billions for bankers, debt and inflation for the rest of us.

Is there any other industry where you can get guaranteed profits with risk free loans??

ROFL, so now it's the investment banks who cause inflation. Please, do the world a favor and shut up.

Destroying the banking system does not prevent inflation, as there was inflation long before. Inflation is not an evil thing provided wages increase with it.

Again, I am all for letting banks take their due punishment. I, for one, have not taken any of these positions, nor will my bank. We have had less than $500MM in writedowns because they have been pretty conservative. I love how you try to undercut my point by thinking that I am a banker for bankers. Sorry, but I am a lot more pragmatic than that. I also am a lot more realistic in knowing that our economy can't survive without intermediaries and aggregation of the monetary system. I'd be all for more regulatory control and higher capital reserves, since I think the industry, as a whole, is too leveraged in certain areas.

Don't be a dipshit and pigeonhole me, I am far more complex and intelligent than you'll ever appreciate. If you would phrase your points as questions, asking whether I would like some banks to pay for their stupidity, you might find us a lot closer in points than you may think.

As far as letting banks fail. That's not really an option, they are already hurting letting them fail would cost thousands of non-exec jobs, billions in lost revenue, and could damage the economy for trillions. Contraction of the banking system would have massive effects.

It's a difficult situation, one that won't be easy to fix. I don't know what the answer is, but it's not getting all ridiculous like you are.

It is called reality. If the banks are bust they are bust. If you have the taxpayers bail out the banks, with money they do not have, you create a Holy Cow out of the banks. The banks will be fed whatever it takes to keep the Bubble reality going. And someone else will have to pay. There is no escaping the bill. The only question is Who will pay. The banks deliberately put themselves in this position joyfully bragging how Great they were each step of the way. Let them pay.