OT: Do you think banks are finished hurting the American Consumer?

[ti_boi]

They give people more than enough rope to hang themselves.

But are they finish decimating the poor and middle class in this country?

Discuss.

[Ginger]

Do you think the American Consumer is done hurting the American Consumer???

[gt6267a]

are you implying the morons who spent the money they don't have are not responsible and its actually the banks we should blame?

[ti_boi]

are you implying the morons who spent the money they don't have are not responsible and its actually the banks we should blame?

I am saying that predatory lending has killed our economy.

Find out the Usury limit in your state.....they vary widely!

http://www.lectlaw.com/files/ban02.htm

[gt6267a]

I am saying that predatory lending has killed our economy.

i don't understand. if i offer to let you borrow a dollar, frn, whatev how is that predatory? the responsibility of an individuals actions lies with ... the individual or a bank?

[97CSI]

Feel certain that once the banks have spread their largess around to enough congresspeople that all investigations will find that there was no 'predatory lending' and the banks will not suffer. Exactly as things turned out in the 'credit card investigation' of last year. Minimal smoke, no flame and tons of money heaped on our esteemed members of congress.

[Ginger]

I am saying that predatory lending has killed our economy.

It's a chicken and the egg kind of thing. Although, here you can trace which did come first.

People thought they were pulling one over on the banks for momentary pleasure.
"Can you believe the bank loaned me the money for this $50,000 SUV? I can only make payments for a couple months, then it's going back to the bank."

No...really.
And I can't believe the person who made X per year actually applied for the loan when they knew it would default.

[TMB]

What is predatory?

Offering to loan money and actually expecting it to be repaid? Or answering the call of the consume at any cost consumer for new loan products to allow them to continue to consume?

Where does the "predatory" fit in?

[ti_boi]

What is predatory?

Offering to loan money and actually expecting it to be repaid? Or answering the call of the consume at any cost consumer for new loan products to allow them to continue to consume?

Where does the "predatory" fit in?


UNFAIR OR "PREDATORY" LENDING practices are a complex problem. Difficult to define, predatory lending refers to a variety of abusive lending practices that may occur singly or in combination: excessive or hidden fees, refinancing of loans at no benefit to the borrower, offering a loan knowing the borrower lacks the means to repay it, and using high-pressure sales tactics to sell a loan (U.S. Department of Housing and Urban Development [HUD] 2003*). It is usually undertaken by brokers, creditors, or even home improvement contractors. Most prevalent in the subprime mortgage market, borrowers typically use the collateral in their homes for debt consolidation or other consumer credit purposes.

Source: http://www.solutionsforamerica.org/viableecon/predatory-lending.html

[William]

I think some of you are missing the point. When I was younger I was turned down by the bank for a loan because they didn’t think I made enough to pay back the loan in a timely fashion. They asked for work information, proof of income, references, and checked them inside and out. Called my work to verify the information I supplied was true. They did the same when we bought our first house. Point here is that if the people really didn’t make enough to justify the loan, why is the bank approving the loan? If a person can’t really afford a $50,000 car, why did the bank approve the loan?

I’m not saying there aren’t people out there who lie to try and get a loan, but it’s up to the banks to check and make sure.




William

[Fixed]

it's a wondeful life ..banks are good
cheers

[J.Greene]

?

I’m not saying there aren’t people out there who lie to try and get a loan, but it’s up to the banks to check and make sure.
William

You'd be surprised at how much employee fraud is at fault. Sales employees at banks commonly "do what it takes" to get a loan past underwriters.

Sub prime loans were mostly sold as packaged investments. The capital came from everywhere to fund them. If a bank has a borrower and has someone who will buy the eventual loan, the deal will get done.

JG

[gt6267a]

I’m not saying there aren’t people out there who lie to try and get a loan, but it’s up to the banks to check and make sure.

William

what about looking at your finances and deciding whether or not it is possible to repay the loan irrespective of whether or not the bank will offer it?

don't worry, i agree the banks are responsible for themselves in not extending credit to someone who is unable to repay it. that said, why is there not at least a similar disdain for people accepting loans they can't repay?

[Tom]

Good, prudent, boring banking doesn't sex up the stock price. Why do you think they call stocks that pay high dividends "widows and orphans stocks"? People don't make short term high yield gains trading those... you make your money hanging on to them. Many bank stocks go by that model, though.

The deal is, any loan is secured by the item you're purchasing. The people writing the loans make two calculations: first the item is going to be worth what it is bought for, and second that a certain fraction of the people taking out the loans will actually pay them back. In certain markets, they made a miscalculation.

Banks are very highly regulated. You have no idea how many audits come through the place from how many directions: OCC, Fed, SEC, you name it. It is highly criminal to knowingly over value the properties you're loaning money against and they go after the highest guys they can get when that happens.

Responsibility starts with the individual, though. When did enough people in our society lose the value system that causes us to actually pay back our obligations, enough so that it has begun to affect the economy?

Do we blame the liquor stores for making us alcoholics?

[William]

what about looking at your finances and deciding whether or not it is possible to repay the loan irrespective of whether or not the bank will offer it?

don't worry, i agree the banks are responsible for themselves in not extending credit to someone who is unable to repay it. that said, why is there not at least a similar disdain for people accepting loans they can't repay?

I agree that people shouldn't accept loans they can't repay. But I think the reality is that a lot of folks don't really know if they can qualify or not and rely on the bank to do the numbers. If the bank says, "hey, you qualify", the response is likely, "Hey, we qualify"....but not understanding why, the percentages tacked on, or that they shouldn't. People want the American dream, but many don't know what it actually costs to get it.

I still think the burden is on the banks in this debacle.



William

[ti_boi]

what about looking at your finances and deciding whether or not it is possible to repay the loan irrespective of whether or not the bank will offer it?

don't worry, i agree the banks are responsible for themselves in not extending credit to someone who is unable to repay it. that said, why is there not at least a similar disdain for people accepting loans they can't repay?


Every spring and summer, you are sure to spot stories in the press about shark attacks off the cost of Florida, Long Island, and California. You rarely see a story, however, about the loan sharks attacking homeowners all across the United States.

Many people believe that the current mortgage meltdown has been caused primarily, if not exclusively, by homeowners whose appetite for credit far exceeds their ability to repay their debts. This is far from the truth. Mortgage originators acting more like street toughs than representatives of lending institutions have contributed far more to the current crisis. Instead of acting as professionals, they have led homeowners out into the water and essentially bitten off their arms and legs.

Read this comment, which was left here on Flipping Frenzy just yesterday afternoon by Lisa Ashton, from Saunderstown, Rhode Island:

“I am a single mom of two kids–one in college, one in high school. I have raised my kids alone in my home for all this time. I have owned my home for 21 years, actually built it with my ex husband. I hold down three jobs currently to try and make ends meet. I am a registered nurse in a school system.”

“I refinanced my mortgage in April of 2006 with Aegis Lending Corporation. They did a ‘no doc’ loan and lied about how much I made to make a high mortgage amount work. I was trying to take out $25,000 to finance my daughter’s college needs at the time. They said I made enough to cover a $493,000 mortgage! In reality I earn only about $55,000. I now have house payments that eat up about 98 percent of my monthly income.”

“They also hired an appraisal company (Macloud Appraisers in Narragansett, RI ) who somehow agreed to appraise my home for $560,000 when the town only values my property at $320,000, and it would probably sell for about $400,000 on the market today.”

“To bring my interest rate down to 6.5 percent, Aegis charged me $30,893 in discount points at closing. That would have meant that their standard interest rate was 14 percent! What sort of ARM starts out at 14%?”

“Now you may wonder why I would agree to such an arrangement. Well, Aegis advised me to stop paying my mortgage while they were refinancing me, because it would screw up the payoff amount they received. Admittedly, I was naive in following their advice–I stopped paying my mortgage. After all, they had already approved my loan.”

“Aegis failed to provide me with a closing packet prior to the closing date to review. They didn’t even tell me what to expect in terms of a monthly payment. I discovered all of this on closing day, when I was already two payments behind on my existing mortgage. I realized that if I refused to sign for the new mortgage, I would be in big trouble with my previous mortgage company, so I signed the papers.”

“Aegis told me not to worry. Within six months, I could refinance with them again and lower my payment to $2918 per month. (I currently earn about $3600 take home.)”

“Instead of refinancing my loan, Aegis sold it within a week after closing to GMAC Mortgage company and then filed for Chapter 11 Bankruptcy. Now I was really stuck.”

“I have gone through all of my retirement ($30,000) and all of my savings ($15,000) and maxed out every credit card to stay current with my mortgage for this past year or so. No one will refinance me, and now since I’m so maxed out on credit cards, I’ve watched my credit scores plummet well over 100 points in the past four months.”

“GMAC has told me they will NOT work with me to help me out. I have called them for the past three months asking about some way to help me, so I don’t end up in foreclosure. They have told me that they rather have my home.”

“September 2007 was the first time in 21 years I’ve ever missed a payment on my home, and I’m just sick about it. I did receive something from the court stating I could file a claim against Aegis Mortgage–a ‘proof of claim’ form–but who knows how long that will take to work through the system. By that time, my children and I will have been evicted from our home.”

“So that’s my story. I can’t lose this home. I’ve worked so hard to keep it. It’s my children’s safety net. This is all they’ve known, and I can’t take it away from them. I won’t. But I don’t know what to do.”

This is just one story, but it is representative of what has been happening in every state in the Union–lenders preying on homeowners who have been duped into trusting the system and the professionals who run it. It is the equivalent of going into a doctor’s office and intentionally been diagnosed as having cancer. The “doctor” prescribes a host of expensive tests, medications, treatments, and therapies just to jack up your fees, and then flies out of the country when your money runs out.

SOURCE: http://www.flippingfrenzy.com/2007/10/06/swimming-with-the-loan-sharks/

[William]

Do we blame the liquor stores for making us alcoholics?

The difference is you have the money to buy it. If you don't, you can't buy it. The banks didn't say that to the folks that really didn't have the $$ to pay it back.


imho,

William

[Lifelover]

...Do we blame the liquor stores for making us alcoholics?


Of course not. We blame the bartender!

[ti_boi]

Good, prudent, boring banking doesn't sex up the stock price. Why do you think they call stocks that pay high dividends "widows and orphans stocks"? People don't make short term high yield gains trading those... you make your money hanging on to them. Many bank stocks go by that model, though.


AT&T was a 'widows and Orphans stock' in 1999. Hope that wasn't in your portfolio.

[Tom]

Person agrees to sign a loan that is equivalent to 98% of their take home pay.

They're an idiot. It's that simple.

[Viper]

Do you think the American Consumer is done hurting the American Consumer???

+ 1 million.

Personal accountabilty. Never blame others. Look in mirrors.

Lessons great parents teach their kids. Then the kids grow up, forget everything, forget their own responsibilities, blame others and don't buy Windex for their mirrors.

[Pete Serotta]

There are banks out there charging 20 to 29% per annum PLUS late charges of $40/month if you do not make the minimum payment...

No the banks do not cut off credit to these folks even if they do not make the minimum payment,, They just charge fees>>> FOR it is a great business.

Yes those who borrow have to take responsibility, but BANKS have a LARGE blame in feeding the mess....Example- - go get that electronic device or kitchen upgrade....After all there is NO interest for 6 or 12 months>>>>> Guess what happens if you do not pay it off before the end of the year??

The bank, in fine print, states the finance charges will be 21% sometimes more for the past year You "had no payment or interest". They are very kind and add that amount to what you owe and charge you interest on that interest also :D . They are really your friend for they will also then add that $40 plus late fee every month if you can not make the minimum payment :D

This is like legalized loan sharking.....I believe that we must take responsibility for our actions BUT not all of us have the discipline to pass on that "instant gratification". If banks were not legally allowed to charge interest rates higher than even junk bond kings pay - the banks would be less willing to lend to folks who are bad risks. Additionally if banks had to keep the debt until repaid , instead of selling it in SIV =or CDO or whatever the term of month is - - they would also have to take responsibility for their actions. Instead they sell the debt, collect fee for management and excess interest AND then if defaults occur like we are having now...they get others to pay also....What a great business.

I will give you an example of a young couple that I did a financial evaluation for recently, THey borrow 2500 from HOME DEPOT for six month no payment/interest. That was over a year ago. NOW because of interest, late fees, etx....they owe 3300. YES they should have never taken the loan for they are unable to make even the minimum payment. That incurs a $45/month late fee. The minimum payment is $100/month so they owe more every month due to late fees and interest then they did the prior month (and they have torn up the card). We will get the bank to work out a payment schedule for payoff that does not incur that $45/fee every month BUT this is just one case, MOST folks do not have someone that can help them thru the "bank hell"

I am fortunate for my kids hate credit card debt as much as i do....It is a form of financial cancer for too many.

For you folks out there.....pay off those credit cards.......They are not your friends. Yeah we all need them at times BUT they shold be for emergencies....OK I will get off my soap box. PETE




I am saying that predatory lending has killed our economy.

Find out the Usury limit in your state.....they vary widely!

http://www.lectlaw.com/files/ban02.htm

[ti_boi]

Technology in the form of supercomputers has really made the GOTCHA ECONOMY possible....smaller fees applied monthly and just below the threshold of pain for consumers -- have also made the lenders billions!

http://www.amazon.com/Gotcha-Capitalism-Hidden-Every-Day/dp/0345496132

Coughing up $4 fees for ATM transactions. Iron-clad cell phone contracts you can’t get out of with a crowbar. Paying big bucks for insurance you don’t need on a rental car or forking over $20 a day for supposedly “free” wireless internet. Every day we use banks, cell phones, and credit cards. Every day we book hotels and airline tickets. And every day we get ripped off.
How? Here are just a few examples of how big business can get you:

• You didn’t fill up the rental car with gas?
Gotcha! Gas costs $7 a gallon here.
• Your bank balance fell to $999.99 for one day?
Gotcha! That’ll be $12.
• You miss one payment on that 18-month same-as-cash loan?
Gotcha! That’ll be $512 extra.
• You’re one day late on that electric bill?
Gotcha! All your credit cards now have a 29.99% interest rate.

But not for much longer. In Gotcha Capitalism, MSNBC.com’s “Red Tape Chronicles” columnist Bob Sullivan exposes the ways we’re all cheated by big business, and teaches us how to get our money back–proven strategies that can help you save more than $1,000 a year.

Now perhaps you'll think like I do, that the proliferation of hidden fees-and not identity theft-is the fastest-growing white-collar crime in America.

For consumers making $45,000 or less a year, that $946 in hidden fees can mean one less vacation per year, or no evening classes for additional job training. It can take a huge bite out of a family's retirement savings.

And that number is conservative. For starters, to make the study manageable, we limited the survey to ten likely culprits: cellular phones, credit cards, banks, airline travel, hotels, cable TV/ satellite, home Internet access, retirement services, insurance, and groceries. Detailed industry-by-industry discussion of these fees can be found in the Toolkit Section, Chapter 4.

Remember, this $946 total is an average. So for every consumer who manages to exert Herculean effort and minimizes hidden-fee expenses to a tidy $200 or $300, there's another who pays nearly $2,000 a year. It also only represents the sneaky-fee take among those ten industries-obviously, other kinds of companies stick their customers with fees, too.

Finally, this $45 billion total-that's just the sneaky fees consumers know about. Others are surely lurking out there underneath mountainous monthly bills that busy consumers miss, and couldn't reveal to us when asked.

[Lifelover]

I agree with the "PREDATORY" label and put a small amount of blame on the banks. However, the main blame goes to the people taking the money from the sharks.

The SHark attack is a good analogy. The ocean is filled with sharks. Every time you swim in it you are potentially swimming with sharks. Some sharks bite, some don't. If you go swimming you better know which ones you are swimming with.

A Great White might look like a nurse shark from a distance but whne they show thier teeth (you loan contract) it easy to tell the difference.

I'm in debt over my head and it's my fault. I happen to have a pretty decent rate on all my loans but I have still gotten in deeper than I can currently handle. Who do I blame?

[Viper]

Buyer Beware. I've been screwed over by freaky hot chicks more than banks atmo. I'm still not giving up. Quote me.

[swoop]

predatory lending?
like this:

[TMB]

The only thing this tells me is that the borrower is a complete idiot.

Just because the bank tells you CAN borrow money doesn't mean you need to take it.

If she wanted $25,000 and took $490,000 because she "could" - who's fault is that? It is hers.

Stupid consumers refusing to take responsibility for themselves and understanding what they are doing.

It is not the Bank's responsibility to look after you. They are a business trying to sell you something - when did that basic conflict of interest cease to be recognized?

It is your responsibility to understand what you are doing and what you are signing, and if you don't or can't, then talk to someone who can.

Every spring and summer, you are sure to spot stories in the press about shark attacks off the cost of Florida, Long Island, and California. You rarely see a story, however, about the loan sharks attacking homeowners all across the United States.

Many people believe that the current mortgage meltdown has been caused primarily, if not exclusively, by homeowners whose appetite for credit far exceeds their ability to repay their debts. This is far from the truth. Mortgage originators acting more like street toughs than representatives of lending institutions have contributed far more to the current crisis. Instead of acting as professionals, they have led homeowners out into the water and essentially bitten off their arms and legs.

Read this comment, which was left here on Flipping Frenzy just yesterday afternoon by Lisa Ashton, from Saunderstown, Rhode Island:

“I am a single mom of two kids–one in college, one in high school. I have raised my kids alone in my home for all this time. I have owned my home for 21 years, actually built it with my ex husband. I hold down three jobs currently to try and make ends meet. I am a registered nurse in a school system.”

“I refinanced my mortgage in April of 2006 with Aegis Lending Corporation. They did a ‘no doc’ loan and lied about how much I made to make a high mortgage amount work. I was trying to take out $25,000 to finance my daughter’s college needs at the time. They said I made enough to cover a $493,000 mortgage! In reality I earn only about $55,000. I now have house payments that eat up about 98 percent of my monthly income.”

“They also hired an appraisal company (Macloud Appraisers in Narragansett, RI ) who somehow agreed to appraise my home for $560,000 when the town only values my property at $320,000, and it would probably sell for about $400,000 on the market today.”

“To bring my interest rate down to 6.5 percent, Aegis charged me $30,893 in discount points at closing. That would have meant that their standard interest rate was 14 percent! What sort of ARM starts out at 14%?”

“Now you may wonder why I would agree to such an arrangement. Well, Aegis advised me to stop paying my mortgage while they were refinancing me, because it would screw up the payoff amount they received. Admittedly, I was naive in following their advice–I stopped paying my mortgage. After all, they had already approved my loan.”

“Aegis failed to provide me with a closing packet prior to the closing date to review. They didn’t even tell me what to expect in terms of a monthly payment. I discovered all of this on closing day, when I was already two payments behind on my existing mortgage. I realized that if I refused to sign for the new mortgage, I would be in big trouble with my previous mortgage company, so I signed the papers.”

“Aegis told me not to worry. Within six months, I could refinance with them again and lower my payment to $2918 per month. (I currently earn about $3600 take home.)”

“Instead of refinancing my loan, Aegis sold it within a week after closing to GMAC Mortgage company and then filed for Chapter 11 Bankruptcy. Now I was really stuck.”

“I have gone through all of my retirement ($30,000) and all of my savings ($15,000) and maxed out every credit card to stay current with my mortgage for this past year or so. No one will refinance me, and now since I’m so maxed out on credit cards, I’ve watched my credit scores plummet well over 100 points in the past four months.”

“GMAC has told me they will NOT work with me to help me out. I have called them for the past three months asking about some way to help me, so I don’t end up in foreclosure. They have told me that they rather have my home.”

“September 2007 was the first time in 21 years I’ve ever missed a payment on my home, and I’m just sick about it. I did receive something from the court stating I could file a claim against Aegis Mortgage–a ‘proof of claim’ form–but who knows how long that will take to work through the system. By that time, my children and I will have been evicted from our home.”

“So that’s my story. I can’t lose this home. I’ve worked so hard to keep it. It’s my children’s safety net. This is all they’ve known, and I can’t take it away from them. I won’t. But I don’t know what to do.”

This is just one story, but it is representative of what has been happening in every state in the Union–lenders preying on homeowners who have been duped into trusting the system and the professionals who run it. It is the equivalent of going into a doctor’s office and intentionally been diagnosed as having cancer. The “doctor” prescribes a host of expensive tests, medications, treatments, and therapies just to jack up your fees, and then flies out of the country when your money runs out.

SOURCE: http://www.flippingfrenzy.com/2007/10/06/swimming-with-the-loan-sharks/

[ti_boi]

predatory lending?
like this:
I like it.....does it come in a 61cm and do you take VISA? :banana:

[J.Greene]

predatory lending?
like this:

Is that Jack's latest track bike? It's only a matter of time before he has those wheels.

JG

[whitecda]

I've been screwed over by freaky hot chicks more than banks atmo.

uhhhh can I get a loan? I've got all the paperwork right here. Seriously :D


I love walking the dog around a big neighborhood around the block here. HUGE homes, many of which don't have any furniture. Just because some paper pusher is willing to loan them the dough to get into the house, doesn't mean these folks are looking at their finances realistically. Our lenders have always been willing to loan us more, MUCH more. But it comes down to be able to sleep at night with the monthly mortgage payment. Personal responsibility.


Which brings us back to the freaky hot chicks......

[Hardlyrob]

Both banks and consumers are part of the problem. The situation cited by Ti-Boi is both predatory and abusive, but the woman involved is also at fault for taking a $490,000 loan to pay a $25,000 expense.

One aspect of this credit crunch / sub prime lending / mortgage debacle that most people aren't talking about is the long time frame. We're just seeing the beginning of the failures (Countrywide) and illiquidity in the debt markets. The loans made in 2006 and 2007 haven't re-set their interest rates yet - that fun comes this year and next. '06 and '07 were probably the worst years for predatory lending as they were the trailing edge of the bubble. While we're seeing the defaults in the loans that the borrower couldn't pay at the initial interest rate, that will only get worse when the loans that the borrower can handle at the initial rate re-set by 2% to 8%.

Beyond the individual stories of pain as posted earlier, this is screwing up the stock market and the debt markets. If a company has bundled a few thousand loans in to a CDO or SIV and sold it to a few thousand investors assuming historical default ratios (2% or so), and they are now seeing 15 to 25% defaults - these investments are impossible to value and impossible to trade. That's what's behind the credit crunch - and this is just the beginning. Some of what I've been reading says it will be larger and longer than the savings and loan debacle of the '90's. The write downs will be truly staggering. This is a slow motion train wreck.

No cheer here.

Rob

[William]

By saying “Buyer Beware”, you’re saying it’s the individuals responsibility, not the lender. That’s fine and I agree with it to a point. Unfortunately this allows the unscrupulous lenders to go after the ignorant & uneducated. Then in the end, we all have to bail them out.

Buy saying the lender shouldn’t have taken the risk in lending to someone who doesn’t qualify, it ends there and the loan is not processed. No one to bail out. Though not saying that the banks won’t come up with something else to bail them out on. Savings and Loan anyone?? :rolleyes:



William


PS: Did someone say Hot Freaky Chicks??? :confused:

[ti_boi]

Bank of America Corp., the biggest U.S. bank by market value, agreed to buy Countrywide Financial Corp. for about $4 billion, five months after making a money- losing $2 billion investment in the unprofitable mortgage lender.

Bank of America will acquire Countrywide for approximately $7.16 a share in stock, the Charlotte, North Carolina-based company said in a statement today. The offer is 7.6 percent below Countrywide’s closing share price on the New York Stock Exchange.

“I hope Bank of America isn’t throwing good money after bad,” said Eric Schopf, a fund manager at Baltimore-based Hardesty Capital Management LLC, which owns 216,000 Bank of America shares, before the takeover announcement. “They struck a deal that wasn’t very attractive. Hopefully they can get it right the second time around.”

[93legendti]

Technology in the form of supercomputers has really made the GOTCHA ECONOMY possible....smaller fees applied monthly and just below the threshold of pain for consumers -- have also made the lenders billions!

http://www.amazon.com/Gotcha-Capitalism-Hidden-Every-Day/dp/0345496132

Coughing up $4 fees for ATM transactions. Iron-clad cell phone contracts you can’t get out of with a crowbar. Paying big bucks for insurance you don’t need on a rental car or forking over $20 a day for supposedly “free” wireless internet. Every day we use banks, cell phones, and credit cards. Every day we book hotels and airline tickets. And every day we get ripped off.
How? Here are just a few examples of how big business can get you:

• You didn’t fill up the rental car with gas?
Gotcha! Gas costs $7 a gallon here.
• Your bank balance fell to $999.99 for one day?
Gotcha! That’ll be $12.
• You miss one payment on that 18-month same-as-cash loan?
Gotcha! That’ll be $512 extra.
• You’re one day late on that electric bill?
Gotcha! All your credit cards now have a 29.99% interest rate.

But not for much longer. In Gotcha Capitalism, MSNBC.com’s “Red Tape Chronicles” columnist Bob Sullivan exposes the ways we’re all cheated by big business, and teaches us how to get our money back–proven strategies that can help you save more than $1,000 a year.

Now perhaps you'll think like I do, that the proliferation of hidden fees-and not identity theft-is the fastest-growing white-collar crime in America.
For consumers making $45,000 or less a year, that $946 in hidden fees can mean one less vacation per year, or no evening classes for additional job training. It can take a huge bite out of a family's retirement savings.

And that number is conservative. For starters, to make the study manageable, we limited the survey to ten likely culprits: cellular phones, credit cards, banks, airline travel, hotels, cable TV/ satellite, home Internet access, retirement services, insurance, and groceries. Detailed industry-by-industry discussion of these fees can be found in the Toolkit Section, Chapter 4.

Remember, this $946 total is an average. So for every consumer who manages to exert Herculean effort and minimizes hidden-fee expenses to a tidy $200 or $300, there's another who pays nearly $2,000 a year. It also only represents the sneaky-fee take among those ten industries-obviously, other kinds of companies stick their customers with fees, too.

Finally, this $45 billion total-that's just the sneaky fees consumers know about. Others are surely lurking out there underneath mountainous monthly bills that busy consumers miss, and couldn't reveal to us when asked.
Congratulations. You have become Ahnieda Ride.

It's a shame credit cards can't be used for free. If only they had a vehicle to pay for stuff other than credit cards...let's see: I KNOW! We can call them CHECKS! How about another, let's see, oh yes: CASH! Or, certified/cashier's check!

Or, a DEBIT CARD!

(I have to copyright these ideas.)

I always thought banks tried to make money. Silly me, they make loans that people can't repay. Hmmm, how do they pay their employess? Never mind! Banks are evil!

[ti_boi]

Congratulations. You have become Ahnieda Ride.

It's a shame credit cards can't be used for free. If only they had a vehicle to pay for stuff other than credit cards...let's see: I KNOW! We can call them CHECKS! How about another, let's see, oh yes: CASH! Or, certified/cashier's check!

Or, a DEBIT CARD!

(I have to copyright these ideas.)

I always thought banks tried to make money. Silly me, they make loans that people can't repay. Hmmm, how do they pay their employess? Never mind! Banks are evil!

Banks need to be regulated......left to their own devices they are becoming a real threat to economic stability.

Let's see you finance a college education or an addition to your home on a Debit Card

[Spinner]

... a drink and it will be drank. give a junkie a fix and it will be shot. give someone with a poor credit history credit and it will be used. anyone with substantial credit card dept either had some bad luck, made some bad decisions, or both.


it didn't take a genius to see this debacle coming. those who agreed to the loans need to shoulder some responsibility, however the six and seven figure dudes at the banks should be the real fall guys, but that won't happen.

[goonster]

I have owned my home for 21 years, actually built it with my ex husband.

I refinanced my mortgage in April of 2006 with Aegis Lending Corporation. They did a ‘no doc’ loan and lied about how much I made to make a high mortgage amount work. I was trying to take out $25,000 to finance my daughter’s college needs at the time. They said I made enough to cover a $493,000 mortgage! In reality I earn only about $55,000. I now have house payments that eat up about 98 percent of my monthly income.

21 Years in a home, apparently no equity, and she takes out a mortgage for 30%+ of what the house is worth? Madness. She was in big, big trouble before the refi, but apparently didn't know it.

Sorry. Not everybody gets to go to college.

However, if the lender in this case had been an individual, we'd clearly recognize their actions as illegal, or at least highly unethical:

- Misstating income to get the deal done (fraud, no?)
- Colluding with an overgenerous appraiser
- Acting in bad faith to do a deal that the borrower obviously can't afford
- Acting in bad faith when promising to refinance in a few months, while having no accountability on this whatsoever
- Flipping the loan one week after closing, thereby relinquishing all responsibility
- Charging truly exorbitant closing costs

If this lender had an ounce of responsibility, they'd have said, "sorry, we can't help you." Instead, the screw their customer at every possible turn.

[93legendti]

Banks need to be regulated......left to their own devices they are becoming a real threat to economic stability.

Let's see you finance a college education or an addition to your home on a Debit Card

Yes, regulate EVERYTHING and don't save a dime. Whining is easier than saving and controlling your own finances. People should be able to borrow money at no costs to themselves.

[Viper]

Did Captain Kirk sit around and serve wine and cheese to his crew when Khan Noonien Singh came aboard the Enterprise, from the S.S. Botany Bay, where Khan stole the heart of hotty historian, Marla McGivers, tried to overthrow the entire crew? No. Captain Kirk knew the risks, he ran down to engineering after convincing Marla McGivers to do the right thing; Captain Kirk ran to, not from Ricardo Montalban, engaged in hand-to-hand combat against a genetic superhuman who was on EPO, steroids and lots of makeup. Captain Kirk risked his life and his toupee.

Khan = The Bank, selling the crew of the USS Enterprise on low interest rate loan.
Kirk = A responsible, accoutable individual who said, "No".
Marla McGivers = a 1960's Hannah Montana who is one of just a few women who loved someone else instead of Captain Kirk.

Air Date: 1967-02-16
Stardate: 3141.9

http://www.youtube.com/watch?v=pKnttwx0P6I


http://www.youtube.com/watch?v=4V1rScsN9wo&feature=related


http://www.youtube.com/watch?v=AI1dP80GA60

[Ozz]

UNFAIR OR "PREDATORY" LENDING practices are a complex problem. ...It is usually undertaken by brokers, creditors, or even home improvement contractors....Source: http://www.solutionsforamerica.org/viableecon/predatory-lending.html
uh...."banks" are regulated....as your source states, the problems you see happen with finance companies an the like....infrequently with commercial banks.

Finance companies do not take deposits, and are not as strictly regulated.

I belive "complex" is an understatement, but press is happy to dumb it down for the consumer so we can all jump on the bandwagon and "BURN THE WITCH!"

[ti_boi]

Yes, regulate EVERYTHING and don't save a dime. Whining is easier than saving and controlling your own finances. People should be able to borrow money at no costs to themselves.


Reasonable cost........consistent from lender to lender.....eliminate universal default and subprime rates.....as well as unreasonable penalties. I feel very strongly about this issue. It is our next tax payer bailout. Where is the logic that says a risky loan can be made at a HIGHER rate and that way the borrower can be assured to never be able to pay it off. This mess is going to be unbelievably costly for everyone.

[Ozz]

... It is our next tax payer bailout.....

I am more intrigued about this Concerns about Chrysler (http://www.msnbc.msn.com/id/22489611/) ....are we going to go on this ride again? Where is Lee Iacocca??


... Where is the logic that says a risky loan can be made at a HIGHER rate and that way the borrower can be assured to never be able to pay it off.

Logic:
Borrower is desperate for money / loan
Borrower is not too smart
Borrower lacks basic understanding of credit
Broker (not a bank) can charge high fees and collect commissions
Broker sells loan and has no interest in whether loan is ever paid back

Borrower is happy (for a little while)
Broker is happy - he gets to buy new Porsche and pick up chicks

When the ***** hits the fan, the broker is off selling used cars until the next real estate boom / mortgage lending goldrush.

Cheers.

[T-Crush]

Just because you can, does not always mean you should. Like others have written, our family goes through periods of over spending which is then followed with some painful fiscal discipline, but as the "parents", these are the responsibilities my wife and I accept, and the life lessons we teach our four kids. In most cases, where there is not a sudden and unexpected job loss or other catastrophic issue, it is the responsibility of the borrower to borrow what they can repay. And lenders that misrepresent their products and provide advice like what was posted earlier (stop paying your mortgage?) should get what they deserve.

The system is not as flexible as it was "back in the day" either. When these loans were originated and serviced by your local bank or Bailey Brothers Building & Loan, when things got tough, we had the flexibility to make arrangements that were satisfactory to all parties. Now, loans are pooled and securitized, and the originator quickly losses the flexibility to easily restructure the debt. There are investors that have acquired every little slice of these pools (first payment, last payment, interest only, etc.) and any change to a loan in the pool requires more approvals than any of us realize. Any action taken by our government to "freeze" rates or otherwise make this problem easier to live with from the borrower's perspective will negatively impact a group of investors in a way they couldn't have contemplated when they made their investment decisions, and they were not the shark.

There is no easy way out of this.

[Z3c]

Ti boi,

IMHO you typlify the problem. How can you realistically blame the lender? Everyone who borrowed did it of their own free will.

It is an issue with our society; people are so hungry to have/buy/own more that they are willing to take financial risks that just don't make sense for their situations. It does not make it wrong for someone to offer these risks! IMHO, there are a lot of cars produced that are significantly lower in quality than others; think how much money some people would save if they drove a Honda. Does that make Ford/GM/Dodge(read Consumers Report) a bad guy? How many of these bank "victims" are driving an SUV to work everyday by themselves on paved roads? If they had choosen a Prius maybe their finances would be fine.. Does that make SUV mfg'rs heinous?

C'mon, reality please, lack of individual responsibility is what is killing us.

Scott

[ti_boi]

Ti boi,

IMHO you typlify the problem. How can you realistically blame the lender? Everyone who borrowed did it of their own free will.

It is an issue with our society; people are so hungry to have/buy/own more that they are willing to take financial risks that just don't make sense for their situations. It does not make it wrong for someone to offer these risks! IMHO, there are a lot of cars produced that are significantly lower in quality than others; think how much money some people would save if they drove a Honda. Does that make Ford/GM/Dodge(read Consumers Report) a bad guy? How many of these bank "victims" are driving an SUV to work everyday by themselves on paved roads? If they had choosen a Prius maybe their finances would be fine.. Does that make SUV mfg'rs heinous?

C'mon, reality please, lack of individual responsibility is what is killing us.

Scott

Read this article about the mfg and marketing of the SUV and tell me that the MFGs are were not knowingly duping the public and selling them something that was not only harmful, but dangerous....

http://www.gladwell.com/2004/2004_01_12_a_suv.html


As Keith Bradsher writes in "High and Mighty"—perhaps the most important book about Detroit since Ralph Nader's "Unsafe at Any Speed"—what consumers said was "If the vehicle is up high, it's easier to see if something is hiding underneath or lurking behind it. " Bradsher brilliantly captures the mixture of bafflement and contempt that many auto executives feel toward the customers who buy their S.U.V.s. Fred J. Schaafsma, a top engineer for General Motors, says, "Sport-utility owners tend to be more like 'I wonder how people view me,' and are more willing to trade off flexibility or functionality to get that. " According to Bradsher, internal industry market research concluded that S.U.V.s tend to be bought by people who are insecure, vain, self-centered, and self-absorbed, who are frequently nervous about their marriages, and who lack confidence in their driving skills. Ford's S.U.V. designers took their cues from seeing "fashionably dressed women wearing hiking boots or even work boots while walking through expensive malls. " Toyota's top marketing executive in the United States, Bradsher writes, loves to tell the story of how at a focus group in Los Angeles "an elegant woman in the group said that she needed her full-sized Lexus LX 470 to drive up over the curb and onto lawns to park at large parties in Beverly Hills. "


"The truth, underneath all the rationalizations, seemed to be that S.U.V. buyers thought of big, heavy vehicles as safe: they found comfort in being surrounded by so much rubber and steel. To the engineers, of course, that didn't make any sense, either: if consumers really wanted something that was big and heavy and comforting, they ought to buy minivans, since minivans, with their unit-body construction, do much better in accidents than S.U.V.s. (In a thirty-five m.p.h. crash test, for instance, the driver of a Cadillac Escalade—the G.M. counterpart to the Lincoln Navigator—has a sixteen-per-cent chance of a life-threatening head injury, a twenty-per-cent chance of a life-threatening chest injury, and a thirty-five-per-cent chance of a leg injury. The same numbers in a Ford Windstar minivan—a vehicle engineered from the ground up, as opposed to simply being bolted onto a pickup-truck frame—are, respectively, two per cent, four per cent, and one per cent. ) But this desire for safety wasn't a rational calculation. It was a feeling. "

Thank you for providing an excellent example that illustrates my point perfectly. Ti_boi

[Z3c]

Oh , I agree but regardless, people are buying them of free choice.

But my point is that you cannot blame the organization for offering up a choice. The lending industry didn't do anything wrong; their mutually agreed to end of each and every deal is being met.

Scott

[ti_boi]

Oh , I agree but regardless, people are buying them of free choice.

But my point is that you cannot blame the organization for offering up a choice. The lending industry didn't do anything wrong; their mutually agreed to end of each and every deal is being met.

Scott


OK, but people are being lied to. They are being duped. How many of those SUV buyers understood the dynamics of rollover....? How many of the loan buyers understood the implications of a balloon payment?

[Z3c]

If you don't understand a ballon payment you should not be signing up for one! You must be kidding?? How many people undestand the cost of a cartridge when they buy a printer? How many people...

Hence my point about our society; we don't research, we simply see a chance to have a (fill-in the blank) like our neighbor has so we sign and grab.

I am done with this thread; I am going to ride my bike.

Have fun,

Scott

[goonster]

But my point is that you cannot blame the organization for offering up a choice.


Yes, you can.

If you open up a booth, charge a buck, and offer your "customers" a choice between a door that says "Donuts" and a door that says "Bear Trap", two out of a thousand* will be blind, drunk or demented and will walk into the bear trap.

I would blame you for that.

(* = STATISTICS! I SWEARZ THEY IS FO REAL, YO.)

[1centaur]

Good thread.

First, as stated, the problem of predatory lending comes a lot less from "banks" than from "mortgage lenders." Complicating that is that some banks bought mortgage lenders after watching them make a lot of money for years, but generally a true commercial banker making a loan is less likely by far to be going through all those machinations of fake appraisals and "just sign this" to hit the volume target for the month. Banks taking huge write-offs today on SIVs are not doing so based on their own loans so much as structured products built on bad loans. Ironically, they bought a lot of loans in levered form they would not have made themselves in unlevered form, in part because the AAA-parts of those structures were mis-rated by the agencies.

Second, while I am a big personal responsibility guy, I also have to note that liberals tend to speak in terms of what "should be" (proudly) while conservatives pride themselves on focusing on "what is." In this case, having the masses understand all the numbers and contracts is a "should be" concept; "what is" is that lots of people are dumb about money, dumb about legal obligations, greedy, etc. What are annoying personal characteristics should not lead to personal and societal economic devastation just because there are plenty of people unscrupulous enough and clever enough to exploit those personal shortcomings. Our lender liability laws will get tougher, as will disclosure standards, though neither will be enough because there is no "enough" if the goal is to get dumb greedy clueless people to understand mortgage contracts. Forcing lenders to retain some risk from each loan may happen, but the availability of credit will decline greatly (note well - the housing price rebound may not be strong because of changes in the credit market). Increasing capital ratios for structured products will do the same, as will tougher ratings from the agencies. Bottom line - the ability of poor people to buy a house will decrease markedly for a LONG time to come. Life long renting will be the result. Many will view that as bad - there may be political attempts to rob the rich to buy poor people houses, we'll see.

Third, charging different rates for different risks (prime vs. subprime, to simplify) makes all the sense in the world. Other factors should mitigate the risk of pricing to sure default (like loan-to-value ratios and fair appraisals), but not rate itself.

Finally, all those non-housing fees that get levied across product lines are just capitalism at work. You don't have to be a rocket scientist to avoid them, and they are just part of the pricing structure. They are a moral hazard fees and more fairly allocate costs vs. the alternative, which is raising prices for everyone so the non-delinquent get to pay the costs of the delinquent. There's enough of that going around already.

[ti_boi]

I am going to ride my bike.

Have fun,

Scott


LUCKY!~ :cool:

[Ahneida Ride]

Banks practice "fractional reserve" on a 10 to one ratio.
See link below for an article written by the fed itself on how fractional
reserve banking "expands" the money supply.

Modern Money Mechanics (http://landru.i-link-2.net/monques/mmm2.html)

For every $1, they have in the vault, they can create up to 10 receipts
for that $1. An absurdity. If your loan was created by fraction reserve, you
are in effect paying interest on nothing or infinite interest.

The original $1 was also created outa nothing by the fed to purchase an
unsold government bond.

The fed (a private corporation) is there to create $$$$ for the government and to impose artificial interest rates via a cartel. Thus banks do not
compete and fraction reserve banking is not exposed for the Ponzi scheme it is.

Every day prices escalate due to the dilution of our currency.
The $ is down about 50% against the Euro and even Iceland's currency!
Americans are becoming indentured servants are they strive to keep up
with the tax of inflation (frn dilution).

We own nothing.... We rent our houses, cars, bikes, stereo, clothes, food
from the banks and pay an usury rate of 20% on credit cards. Merchants
pay 2-5% on each credit card transaction. (They just tag that cost on to
the price.)

I urge all Americans to understand fraction reserve banking,
the fed. Wealth is being concentrated in the hands of a few.

Please consider if you will the remarks by the current fed chairman.
The link is provided below. The quotes are excerpted from the conclusion of
Mr. Bernanke's talk.

Speech by current fed chairman, Ben Bernanke (http://www.federalreserve.gov/BOARDDOCS/SPEECHES/2002/20021108/
default.htm)


The best thing that central bankers can do for the world is to avoid such crises by providing the economy with, in Milton Friedman's words, a "stable monetary background"--for example as reflected in low and stable inflation.

Americans must accept inflation?

Let me end my talk by abusing slightly my status as an official representative of the Federal Reserve. I would like to say to Milton and Anna: Regarding the Great Depression. You're right, we did it. We're very sorry. But thanks to you, we won't do it again.

Thanks for the "doing" the first great depression. Another great depression won't happen?

My family survived the horrors of the great depression only because my grandfather was an iceman and people needed ice.

[shoe]

you know it really seems like a a double edged sword..but it has created an eye opener for alot of people and made housing affordable again for people like me.....should be an interesting transition period for this country these next few years....dave

[93legendti]

The media scrambled to find another doom and gloom subject after the Surge worked, so they found another: banking.

The media tried to make the "America is the only western democracy where IMR's went up" gloom scenario stick, but the people smart enough to read the articles realized it was a canard.

As I understand it, 94% of USA home owners pay their mortgages on time...

The sky is falling.

[ti_boi]

The media scrambled to find another doom and gloom subject after the Surge worked, so they found another: banking.

The sky is falling.


I'm putting on my tin foil helmet and hiding in the basement as we speak.

http://en.wikipedia.org/wiki/Tin-foil_hat

[goonster]

As I understand it, 94% of USA home owners pay their mortgages on time...

Perhaps, but the high rates of foreclosures have affected a few overinflated, high-profile markets disproportionately.

Also, I'll bet it's not 94% of overall outstanding mortgage balances.

[michael white]

here's an idea:

I'll open a shyster joint with room in front for Escalades. They drive in, gimme all their dough, I give em a little plastic card and a lollypop. Everybody wins!

[jimcav]

Surge worked.
it is a mess over there. violence thankfully down in terms of US life lost in many areas. not so great in other areas for civilian casualties.
I try not to let my personal political or military association ally itself with propaganda from any source. oh well, likely most have no direct contact with the situation and so pick some sound bite from one side or other, as it pesonally appeals to them, as indicative of reality.

off topic i know.

on topic: guilty--visa was 20k, thanks to look 585 down to 18. pretty simple, i like bikes, and "we" wanted the basement finished after we had our 2nd. Reality--could not afford both, but I figured in 18 mo to 2 years i'd pay it down. but, it is 6 months now. and we are timed on the wrong side of buy low sell high for the house.

for me, i'll take a hit on the house and be forced to have, for the first time since 1999, what my wife would call a reasonable number of bikes--one, and one backup (which is only reasonable since i commute by bike)

I feel very badly for those (and i see young enlisted guys who get taken on car and payday advance loans all the time) who don't undertand the loan terms and trust in what someone is telling them, rather than being able to read and understand the fine print. I've seen more than one young sailor who told a dealer he could not afford it, and then sadly answered the question "well, how much can you affod as a car payment, can you afford 300 a month" and they walk out with something stuctured that way, initially...

If you aren't around people working really hard, who are also on food stamps and WIC, i don't think you get how hard the choices become for some--they have to resort to credit at times, or a payday loan--because things are that way.

jim

[jeffg]

Ahneida says:

"Every day prices escalate due to the dilution of our currency.
The $ is down about 50% against the Euro and even Iceland's currency!
Americans are becoming indentured servants are they strive to keep up
with the tax of inflation (frn dilution)."


What about when the dollar was more valuable than the Euro? Over the past 30 years, the relative strength of US and other world currencies has moved in both directions rather than as a simple downward spiral as your quote suggests. Currencies fluctuate based on more complex dynamics than simply frn dilution. Last time I checked, Europe was not on the gold standard either.

[PaulE]

In addition to the S&L crisis, we've also had the Black Monday market crash of 1987, Long Term Capital Management, the internet stock bubble and Enron and other energy trading debacles.

The ratings agencies were asleep at the wheel again, giving investment grade ratings to SIV portfolios of subprime loans.

As others have pointed out, a big part of the problem is/was the mortgage brokers whose only concern was to close the loan and earn their commission. Any compensation plan incentivises people to do what they will be paid for and ignore that which they do not get paid for. When you only get paid if the loan closes, and bear no financial risk if the loan isn't subsequently repaid, you do what you need to do to get paid.

If the poor (some say stupid) consumers knew about the fees, penalties, rate adjustments or balloon payments, they probably didn't care because they never thought they would matter. A relatively long period of rising real estate prices and low interest rates let many of these consumers continuously refinance their mortgages at higher amounts with lower monthly payments. I can take out more cash to buy an SUV and go to Orlando for a week with the family, and my mortgage payment will be less to boot? Wow. Well, the rate can adjust up? So what, I'll just refinance again, right?

Goldman Sachs reportedly saw what was coming and got out before the music stopped (but never-the-less continued to sell it to their clients, after all, they're big boys, not dummies!). Merrill Lynch, Citibank and others didn't. This will be with us for a long time to come.

After this passes, there will be another debacle of some sort or another.

[bozman]

Do you think the American Consumer is done hurting the American Consumer???

post of the new year!

[93legendti]

Perhaps, but the high rates of foreclosures have affected a few overinflated, high-profile markets disproportionately.

Also, I'll bet it's not 94% of overall outstanding mortgage balances.

I don't disagree. I heard that stat a few times and I am trying to check it, but so far have not turned up a yea or nea on the 94% stat.

[ti_boi]

post of the new year!


Pithy.....but in fact....It cuts both ways. The American consumer is damned if they do and damned if they don't.

In fact if the consumer....stops spending....and enters into austerity...forced or not....the economy will enter a massive and prolonged recession. ;)

"An expanding labor market represents one of the last remaining supports for consumer spending, which drives about 70 percent of all economic activity. Battered by rising energy costs and a slumping housing market, consumers have already pulled back, with US retailers yesterday reporting December sales rose less than 1 percent from a year ago, according to the International Council of Shopping Centers, a trade group in New York, marking the worst holiday shopping season since the last recession.

As long as the job market expands, even at a slow pace, consumer spending should grow enough to keep the economy out of recession, economists said. But should layoffs accelerate, consumer spending will plunge, taking the economy with it.

"People may become cautious, but they won't cut spending if they have a job," said Mark Zandi, chief economist at Moody's Economy.com, a West Chester, Pa., forecasting firm. "But if they lose jobs, they cut spending, and that leads to a downward spiral" as companies react to the slower demand and cut more jobs."
http://www.boston.com/business/articles/2008/01/11/bernanke_economy_deteriorating/

[manet]

Do we blame the liquor stores for making us alcoholics?

no, but i still like to stop during my rides and pee on their doorsteps, seeing as the manet tombstones are only attainable by rides the length done by dewds such as the likes of TT, znfdl, and RA.

[bozman]

there is blame enough for both sides. that said, if people took more responsibility for their actions and had a more realistic view of what they can/cannot afford then they might not put themselves into some of these situations. perhaps we need to downsize the american dream. we all can't be Gordon Gekko (and I am certainly not.)

[Kevan]

there is blame enough for both sides. that said, if people took more responsibility for their actions and had a more realistic view of what they can/cannot afford then they might not put themselves into some of these situations. perhaps we need to downsize the american dream. we all can't be Gordon Gekko (and I am certainly not.)

American Idol with that attitude.

[stevep]

its not just the misled or misunderstood consumer who was fooled here.
today merrill lynch has written down 15 billion and likely a lot more to come.
citi group wrote off 8 bil last month w/ more to come...not to mention countrywide basicly just folded...

if you blame the poor guy who finally thought he owned some property cause he got slick talked by an unscrupulous mortgage broker.." dont worry, you can refinance in a couple of years when the rate is scheduled to go up...dont worry about it..."
you should be slaying these corporations full of accountants and lawyers who also failed to read the paperwork or failed to do any diligence whatsoever.

because in many cases, this is your money they are losing.

[Viper]

there is blame enough for both sides. that said, if people took more responsibility for their actions and had a more realistic view of what they can/cannot afford then they might not put themselves into some of these situations. perhaps we need to downsize the american dream. we all can't be Gordon Gekko (and I am certainly not.)

Gordon Gekko II:

http://news.bbc.co.uk/2/hi/entertainment/6628101.stm

[97CSI]

If you aren't around people working really hard, who are also on food stamps and WIC, i don't think you get how hard the choices become for some--they have to resort to credit at times, or a payday loan--because things are that way. jimOr the 80-yr-old widow who has just been turned down for her meds at the pharmacy window because her new co-pay is not $50 instead of $15. Heart breaking to see what we do with our old and poor while the rich get richer.

[swoop]

institutional stupidity, greed, and bad judgement bedded down with personal stupidity, greed, and bad judgment make good bed-mates.
existential denial of death gone wild.

the beauty is that you can't outrun consequences... but the shadow is the consequences affect all of us.

the real issue underneath (to me) is... that the middle class has gone the way of the ice caps. this is just the reaction. we can look at the reaction and miss the greater truth... and to me its... holy crap... where is that robust middle class?

[ti_boi]

holy crap... where is that robust middle class?

Outsourced...................I believe.

[torquer]

are you implying the morons who spent the money they don't have are not responsible and its actually the banks we should blame?

By that logic we should only go after the junkies and give the pushers a bye.

[Fixed]

bro i'm dumb but this is the way i see it ..
you can't spend more than you make.... simple isn't it ?
cheers :beer:

[CNY rider]

bro i'm dumb but this is the way i see it ..
you can't spend more than you make.... simple isn't it ?
cheers :beer:

Actually the American consumer has spent the last 10 years defying that simple logic.

It's kind of like Wiley Coyote when he runs off a cliff. At first he hovers there, and thinks things might be fine.
Eventually natural laws like gravity and the fundamentals of economics win out.
The ground is going to feel very hard for some people.

[ti_boi]

bro i'm dumb but this is the way i see it ..
you can't spend more than you make.... simple isn't it ?
cheers :beer:


I would agree with the premise here, but will say that good credit and a satisfactory transaction requires trust on the side of both parties.
While a pay as you go/cash only lifestyle may sound practical, there are important purchases that no one can make without credit.

[goonster]

you can't spend more than you make.... simple isn't it ?


Don't confuse us with simple and obvious truths. Sheesh. :no:

Actually, it used to be "don't spend more than you can reasonably expect to repay in your lifetime", but it turned out that cramped a lot of folks' style.

[A.L.Breguet]

Are American borrowers finished burying themselves? Unfortunately, no.

[nm87710]

While a pay as you go/cash only lifestyle may sound practical, there are important purchases that no one can make without credit.

Nobody needs credit for any purchase - yes ANY purchase. To think one can only be happy in life if they borrow is just American marketing hyperbole. People want things and choose credit to get them. Delayed gratification isn't America's strength. Whining about how banks, capitalists, financial markets, etc. are destroying the US is naive. It's always easier to blame somebody else. A quick look in the mirror shows the real culprits.

[ti_boi]

Nobody needs credit for any purchase - yes ANY purchase. To think one can only be happy in life if they borrow is just American marketing hyperbole. People want things and choose credit to get them. Delayed gratification isn't America's strength. Whining about how banks, capitalists, financial markets, etc. are destroying the US is naive. It's always easier to blame somebody else. A quick look in the mirror shows the real culprits.


Yeah in my day.....we paid cash for our homes, cars, educations....and we liked it! We walked 10 miles in foot deep snow bare foot....cause we couldn't afford shoes....and we had zero body fat. Dammit! :beer:

Sing it Shania:

http://www.youtube.com/watch?v=I42c6RP04xU

Ka-Ching

[jimcav]

Nobody needs credit for any purchase - yes ANY purchase. To think one can only be happy in life if they borrow is just American marketing hyperbole. People want things and choose credit to get them. Delayed gratification isn't America's strength. Whining about how banks, capitalists, financial markets, etc. are destroying the US is naive. It's always easier to blame somebody else. A quick look in the mirror shows the real culprits.
i've seen situations where housing, medical expenses, transportation to a job etc required people to get loan of some sort.
the alternatives in each case were lose their home (sure they could possibly have rented or lived in a car), get sicker and lose their job, lose their job.

but in general with careful planning, little luck, and plenty of discipline, you can do as you say on most things.

jim

[goonster]

To think one can only be happy in life if they borrow is just American marketing hyperbole. People want things and choose credit to get them.

Americans max out their credit cards and are happy.
Germans have full savings accounts and wallow in despair.

- Thomas Gottschalk -

[Pete Serotta]

There is plenty of blame and greed to go around :D

Nobody needs credit for any purchase - yes ANY purchase. To think one can only be happy in life if they borrow is just American marketing hyperbole. People want things and choose credit to get them. Delayed gratification isn't America's strength. Whining about how banks, capitalists, financial markets, etc. are destroying the US is naive. It's always easier to blame somebody else. A quick look in the mirror shows the real culprits.

[Pete Serotta]

Yeah in my day.....we paid cash for our homes, cars, educations....and we liked it! We walked 10 miles in foot deep snow bare foot....cause we couldn't afford shoes....and we had zero body fat. Dammit!

[ti_boi]

Bankers’ write-downs
UBS $13.7 bln
Citigroup *$13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America *$3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Bros. $0.8 bln
Total: $72.3 bln
Data: Companies, since Q3

[Len J]

Full of so much bunk & blaming.

Sure there are predatory lenders out there......I think I learned that in kindegarten

Sure there are stupid people out there.........I think P T barnum said that a while ago.

If it sounds too good to be true...it probably is. Learned that in grade school.

I Don't believe this is an all blame to one side or the other thing.

I believe this is 30% a lender problem & 70% a borrower problem. Can you spell Greed...on both sides.

Anyone who tells the kind of stories told in this thread and defends the borrower needs to work on reading comprehension.

Sub Primes are a small part of the mortgage business
Un-ethical sub prime lenders are a small subset of the sub prime lenders. Everything else is publicity.

As to the writeoffs.....Banks are using this "window" to clean up more messes than just sub-primes.

Have there been abuses by lenders...sure. But do a search on this thread and you will read advice in this forum to just walk away from loans.......but I'm sure that's only what these evil lenders deserve.

As to the evil Bank fees. Terms are all in writing.......How evil could the banks be if borrowers actually sat down and read the terms? Yea, that's the banks problem.

Let's protect ourselves from ourselves.

Len

[stevep]

so far.
merrill went up to 15b today.
lot more money to come yet.
get out yr credit cards boys and girls


Bankers’ write-downs
UBS $13.7 bln
Citigroup *$13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America *$3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Bros. $0.8 bln
Total: $72.3 bln
Data: Companies, since Q3

[ti_boi]

Full of so much bunk & blaming.

Sure there are predatory lenders out there......I think I learned that in kindegarten

Sure there are stupid people out there.........I think P T barnum said that a while ago.

If it sounds too good to be true...it probably is. Learned that in grade school.

I Don't believe this is an all blame to one side or the other thing.

I believe this is 30% a lender problem & 70% a borrower problem. Can you spell Greed...on both sides.

Anyone who tells the kind of stories told in this thread and defends the borrower needs to work on reading comprehension.

Sub Primes are a small part of the mortgage business
Un-ethical sub prime lenders are a small subset of the sub prime lenders. Everything else is publicity.

As to the writeoffs.....Banks are using this "window" to clean up more messes than just sub-primes.

Have there been abuses by lenders...sure. But do a search on this thread and you will read advice in this forum to just walk away from loans.......but I'm sure that's only what these evil lenders deserve.

As to the evil Bank fees. Terms are all in writing.......How evil could the banks be if borrowers actually sat down and read the terms? Yea, that's the banks problem.

Let's protect ourselves from ourselves.

Len


Watch this video...........It's called Maxed Out....and then tell me the deck isn't stacked.....

http://video.google.com/videoplay?docid=-4840432044369494646

"Evil.....is the complete lack of Empathy!"

[stevep]

Sub Primes are a small part of the mortgage business
Un-ethical sub prime lenders are a small subset of the sub prime lenders. Everything else is publicity.


i dont think its that small len.
real estate slowed to a crawl, real estate values in decline, construction slows to a crawl, this thing is at the beginning.
plus look at ti boys list.
this is not small $$$

assign blame if you want but the problem is ours.

[Len J]

That:

A.) those writeoffs were for more than just mortgages, and include other loan writeoffs? &

B.) That $72 billion represents 1/2 of 1% of all outstanding US morgages (Approx $14.0 trillion as of the end of the second QTR of 2007)? &

c.) Those writeoffs include international loan writoffs.

What was your point again?

Len



Bankers’ write-downs
UBS $13.7 bln
Citigroup *$13.7 bln
Morgan Stanley $10.3 bln
Merrill Lynch $8.4 bln
HSBC $3.4 bln
Bank of America *$3.3 bln
Deutsche Bank $3.1 bln
Barclays $2.7 bln
Royal Bank of Scotland $2.6 bln
Credit Agricole $2.3 bln
Bear Stearns $1.9 bln
Credit Suisse $1.9 bln
JP Morgan Chase $1.6 bln
Goldman Sachs $1.5 bln
Wachovia Bank $1.1 bln
Lehman Bros. $0.8 bln
Total: $72.3 bln
Data: Companies, since Q3

[97CSI]

assign blame if you want but the problem is ours.Unfortunately, the scumbags in congress will make it our problem by bailing out everyone on both sides of this issue. So those of us who practice our own fiscal responsibility will get shafted and pay for those who do not so they can continue to live in houses that often cost much, much more than mine.

[ti_boi]

That:

A.) those writeoffs were for more than just mortgages, and include other loan writeoffs? &

B.) That $72 billion represents 1/2 of 1% of all outstanding US morgages (Approx $14.0 trillion as of the end of the second QTR of 2007)? &

c.) Those writeoffs include international loan writoffs.

What was your point again?

Len


The point is that the banks....have ruined people here Len....they have royally screwed not only the economy, but in that number are lives and livelihoods....watch the Maxed Out video....

[chuckroast]

20+ years ago we all bailed out the S&L meltdown. Life went on.

Ultimately we'll all bail this out. Life goes on.

There will never be a shortage of suckers who think they can get something for nothing and crooks who are happy to sell to them.

[JohnS]

It sounds to me like ti boi, or someone very close to him, bit off more than they can chew and now is angry at big business. He's taking this waaaay too personally...

[Len J]

i dont think its that small len.
real estate slowed to a crawl, real estate values in decline, construction slows to a crawl, this thing is at the beginning.
plus look at ti boys list.
this is not small $$$

assign blame if you want but the problem is ours.

Total Bank Writoffs (Including Motgages, commercial loans and other loans, both foreign & Domestic) = $72.3 Billion

Total Mortagage Loans Outstanding as of 2nd QTR 2007...(US Only) = $13.98 Trillion.

Loss rate (assuming all losses were US Mortagages (which they are not)) = .52% (1/2 of 1 %)

Most companies have a higher loss rate on their receivables than this.

It's the law of large numbers.

This is a very low loss rate.....just bigger than normal.

Len

[ti_boi]

It sounds to me like ti boi, or someone very close to him, bit off more than they can chew and now is angry at big business. He's taking this waaaay too personally...


Not really Johnny....But it is a cause that I believe in unjust and wrong. I've heard your noise in the past...you like to attack personally. I have not done that here.

[Len J]

The point is that the banks....have ruined people here Len....they have royally screwed not only the economy, but in that number are lives and livelihoods....watch the Maxed Out video....

No......

The point is that people got greedy,....and banks got greedy...and they did it together.

Much todo about nothing.

The % of extreme "screwings" are very very small.

Len

[ti_boi]

No......

The point is that people got greedy,....and banks got greedy...and they did it together.

Much todo about nothing.

The % of extreme "screwings" are very very small.

Len

Did you watch it....MAXED OUT ?????????????? No, right.

I like the part about the banks actually writing the new bankruptcy laws....and the 'Ethics' Czar hired by GW Bush who was the CEO of predatory credit card issuer Providian (now WAMU)-- did you get to that part yet. This is just unfolding Len. Just getting started. It's gonna change the whole landscape of this country's economy.

Not to mention the fact that while most of you guys are living out your golden years and wondering which early bird special to hit next--everyone who still works will be paying this tab off while we figure out how to cover the boomers retirement and social security benefits and the war in Iraq......should be a blast. Any tax payer has to have some concerns here.....rose colored glasses aint cutting it.

[nm87710]

As to the writeoffs.....Banks are using this "window" to clean up more messes than just sub-primes. Len

As I once told a Fortune 100 CFO, If ya gotta eat turd don't nibble and don't go back for seconds.

[coopdog]

ti boi,

Have you read a newspaper recently? Yes, many banks lent money to people who can't repay, and guess who is getting hammered... the banks! Have you seen their stock prices lately? Chase, Citi, BoA, American Express, they're all getting hammered to the point they don't know what to do. CountryWide is bankrupt. I guess you keep your money in your mattress and have never borrowed money. Good for you.

[JohnS]

Not really Johnny....But it is a cause that I believe in unjust and wrong. I've heard your noise in the past...you like to attack personally. I have not done that here.Naw, I'm not getting personal, just wondering why you climbed up on the soapbox all of a sudden...

[Len J]

Did you watch it....MAXED OUT ?????????????? No, right.

I like the part about the banks actually writing the new bankruptcy laws....and the 'Ethics' Czar hired by GW Bush who was the CEO of predatory credit card issuer Providian (now WAMU)-- did you get to that part yet. This is just unfolding Len. Just getting started. It's gonna change the whole landscape of this country's economy.

Not to mention the fact that while most of you guys are living out your golden years and wondering which early bird special to hit next--everyone who still works will be paying this tab off while we figure out how to cover the boomers retirement and social security benefits and the war in Iraq......should be a blast. Any tax payer has to have some concerns here.....rose colored glasses aint cutting it.

I saw it.....and it's an absolute joke.

It was a totally one sided view of one tiny slice of the industry focusing on a limited number of abvuses and extrapolating them as if that were the way 100% of the industry works. It wasn't worth the tape it was printed on.........unless you wanted to encite the victim mentatlity deep within us...........

Yea, it was those bad guys responsible!

Len

[97CSI]

While 'Maxed Out' gives one the end results, this will give you the 'real' story on the rich fat-cats who are on top of it all...........
http://www.youtube.com/watch?v=SJ_qK4g6ntM&eurl=http://blog.pmarca.com/

[Len J]

Watch this video...........It's called Maxed Out....and then tell me the deck isn't stacked.....

http://video.google.com/videoplay?docid=-4840432044369494646

"Evil.....is the complete lack of Empathy!"

I have empathy.......for the very small % that were actually victims.

I Have empathy for the kids suffering because their parents got greedy.

Len

[CNY rider]

ti, let me try to explain this another way.
Forget the ethics and morality lectures for a moment please.

When a bank or lender offers to loan you money to "buy" a house you can't afford, there are times it makes perfect sense to take them up on the offer. If you can accept that you will live in the house for a few years, not build equity by making a minimal payment, and then walk away if the house has not appreciated in price, then you should do it.

For those who understand options theory, it can be expressed this way: The bank is selling you both a call option and a put option on the home and the loan, and they are charging you almost nothing for it.

The call option allows you to keep the property if its value increases. You can then sell it, pay off the loan and pocket the profit.

The put option allows you to walk away, stick the property and loan back to the lender, and maybe take some damage to your credit rating as collateral damage. Big whoop.

No smart option trader wants to be short naked options but that's exactly what lenders have done to themselves. Borrowers, while not options traders, have acted in an economically rational way by taking these loans IF they have the ability to walk away in a few years without disruption in their lives. So yes if you have a job you like, and two kids in the local school, then this is not a good strategy.

And as happens to bad options traders, the lenders are getting destroyed. Look at the market capitalizations of outfits like Citi, Wash Mu, Countrywide etc. It's they and their shareholders that are taking the beating.

[Viper]

I have empathy.......for the very small % that were actually victims.

I Have empathy for the kids suffering because their parents got greedy.

Len

I agree with Len J 100%.

Clint Eastwood, the preacher man, 'Pale Rider', can't stroll into everyone's town and help them help themselves nor can he pull a financial 'Eiger Sanction' and help everyone out. People need to climb or fall off their own financial mountain.

[ti_boi]

Naw, I'm not getting personal, just wondering why you climbed up on the soapbox all of a sudden...


Two reasons.....one I think that it is a fascinating, and perhaps one of the biggest debacles of our time....and two....I am concerned about the future here.

[Viper]

Two reasons.....one I think that it is a fascinating, and perhaps one of the biggest debacles of our time....and two....I am concerned about the future here.

Dude, rent/buy 'Pale Rider' and 'The Eiger Sanction' atmo. :cool:

http://www.imdb.com/title/tt0072926/trailers-screenplay-E11752-310




.

[ti_boi]

ti, let me try to explain this another way.
Forget the ethics and morality lectures for a moment please.

When a bank or lender offers to loan you money to "buy" a house you can't afford, there are times it makes perfect sense to take them up on the offer. If you can accept that you will live in the house for a few years, not build equity by making a minimal payment, and then walk away if the house has not appreciated in price, then you should do it.

For those who understand options theory, it can be expressed this way: The bank is selling you both a call option and a put option on the home and the loan, and they are charging you almost nothing for it.

The call option allows you to keep the property if its value increases. You can then sell it, pay off the loan and pocket the profit.

The put option allows you to walk away, stick the property and loan back to the lender, and maybe take some damage to your credit rating as collateral damage. Big whoop.

No smart option trader wants to be short naked options but that's exactly what lenders have done to themselves. Borrowers, while not options traders, have acted in an economically rational way by taking these loans IF they have the ability to walk away in a few years without disruption in their lives. So yes if you have a job you like, and two kids in the local school, then this is not a good strategy.

And as happens to bad options traders, the lenders are getting destroyed. Look at the market capitalizations of outfits like Citi, Wash Mu, Countrywide etc. It's they and their shareholders that are taking the beating.


Outstanding post........................OK, but don't you think that things like tax bases.....pension funds.....and other services are going to take a beating here?

[ti_boi]

Dude, rent/buy 'Pale Rider' and 'The Eiger Sanction' atmo. :cool:

http://www.imdb.com/title/tt0072926/trailers-screenplay-E11752-310




.


Seen em both....love em....Clint is ripped in the Eiger Sanction...first time I saw it I was about 17 and started hitting the weights the very next day. :cool:

[JohnS]

It all comes down to people letting that ole high school peer pressure/keeping up with the Joneses mentality run their life.

[CNY rider]

Total Bank Writoffs (Including Motgages, commercial loans and other loans, both foreign & Domestic) = $72.3 Billion

Total Mortagage Loans Outstanding as of 2nd QTR 2007...(US Only) = $13.98 Trillion.

Loss rate (assuming all losses were US Mortagages (which they are not)) = .52% (1/2 of 1 %)

Most companies have a higher loss rate on their receivables than this.

It's the law of large numbers.

This is a very low loss rate.....just bigger than normal.

Len


"Total bank writeoffs" don't even begin to approximate the damage. Most of the "writing off" occurs at the end of the process which we have just entered. Have you looked at how much REO Countrywide has on their books?
More importantly look at the amount of derivatives that are in danger. All these mortgages were sliced and diced into different debt instruments, packaged using 10X leverage, then sold to "sophisticated" buyers who were using 15X leverage. You only need single digit percentage losses on highly levered instruments that were never supposed to decline, to trigger catastrophic losses. For the most part those losses are not being reflected on balance sheets yet.
Of note, had CFC gone bankrupt yesterday, it would have forced many hands into acknowledging the true extent of their losses.

Banks are not taking most of the damage here.

[Len J]

"Total bank writeoffs" don't even begin to approximate the damage. Most of the "writing off" occurs at the end of the process which we have just entered. Have you looked at how much REO Countrywide has on their books?
More importantly look at the amount of derivatives that are in danger. All these mortgages were sliced and diced into different debt instruments, packaged using 10X leverage, then sold to "sophisticated" buyers who were using 15X leverage. You only need single digit percentage losses on highly levered instruments that were never supposed to decline, to trigger catastrophic losses. For the most part those losses are not being reflected on balance sheets yet.
Of note, had CFC gone bankrupt yesterday, it would have forced many hands into acknowledging the true extent of their losses.

Banks are not taking most of the damage here.

Not completely true.

Banks are required by both Bank regulations and GAAP to estimate future losses on existing loans and reserve accordingly. In addition, the market rewards one hit and punishes many hits....another incentive to clean the house once.

As to the derivitives...they are the most informed investors....they got large returns and took large risks.......no sympathy here.

Len

[CNY rider]

Outstanding post........................OK, but don't you think that things like tax bases.....pension funds.....and other services are going to take a beating here?


A hugely painful beating, very variable by geographic distribution.

That's why S&P puts have been my favorite trade for the last 4 months. :beer:

[TMB]

................

[stevep]

and the news keeps coming.

NEW YORK (Reuters) - Citigroup <C.N> will announce plans to cut payrolls by 17,000 to 24,000 people when it reports earnings on Tuesday, CNBC television reported on Monday, adding that the layoffs could take place over a year.

CNBC also reported that the bank could report write-downs of up to $24 billion.

(Reporting by Christian Plumb, editing by Mark Porter)

[ti_boi]

Beijing Blocks Deal For Citigroup Stake Discord Persists In China About How To Deploy Cash Hoard
By RICK CAREW in Hong Kong, JASON DEAN in Beijing and DAVID ENRICH in New York
January 14, 2008 1:13 p.m.

Once again, Wall Street came knocking on Beijing’s door. This time it went home empty-handed.

The Chinese government’s apparent rejection of a planned multibillion-dollar investment in Citigroup Inc. by state-owned China Development Bank suggests there may be limits to Beijing’s status as a cash source for Western banks eager to plug holes in their balance sheets.

It also illustrates how, despite China’s recent spate of prominent deal-making abroad, there remains considerable disagreement in Beijing over exactly how China’s money should be deployed.

People familiar with the situation say China’s senior leadership decided against backing the investment plan, which had been in the works for weeks. The letdown comes after China’s sovereign-wealth fund, China Investment Corp., pumped $5 billion into Morgan Stanley in December to help rebuild its capital base.

Citigroup had hoped to sell a stake valued at about $2 billion to China Development Bank as part of a second round of fund raising to improve its books, in the wake of losses from its exposure to U.S. subprime lending and its decision to fold off-balance-sheet investments into its own accounts. Citigroup hopes to announce a cash infusion from sovereign-wealth funds and other investors Tuesday when it is due to report its fourth-quarter earnings and announce more write-downs.

Citigroup now is expected to eliminate 20,000 to 30,000 jobs, according to people familiar with the matter. While some employees got pink slips last week, most of the layoffs are expected to get under way this week.

[C5 Snowboarder]

A man or woman has to know his or her limitations! Just ask Clint.
The consumer is responsible 100% and it is time we stop raising stupid people. Stupid people are those with high credit card debt. :crap: :crap:

[ti_boi]

A man or woman has to know his or her limitations! Just ask Clint.
The consumer is responsible 100% and it is time we stop raising stupid people. Stupid people are those with high credit card debt. :crap: :crap:

:beer:

[JohnS]

A man or woman has to know his or her limitations! Just ask Clint.
The consumer is responsible 100% and it is time we stop raising stupid people. Stupid people are those with high credit card debt. :crap: :crap:
+100 Stupidity has nothing to do with intelligence.

[stevep]

A man or woman has to know his or her limitations! Just ask Clint.
The consumer is responsible 100% and it is time we stop raising stupid people. Stupid people are those with high credit card debt. :crap: :crap:

there is a deep pool of fraud and misrepresentation in this...
the rating agencys, the pooling of these worthless loans, the morons who bought in for big commissions, and the people who are luckless enough to get stuck at the end with a pile of worthless paper, the 20,000+ citi employees who will be out of work, etc.

the least blame goes to the poor bastaard who got a loan that he hoped to renegotiate in 2 years when it went up but now he cant.

[cloudguy]

A man or woman has to know his or her limitations! Just ask Clint.
The consumer is responsible 100% and it is time we stop raising stupid people. Stupid people are those with high credit card debt. :crap: :crap:


Give me a friggin' break. Its been known for more than 100 years that capitalism in its purest (unregulated) form is a failed system. Think of child labor exploitation, monopolies, etc., etc. The fact is that human greed (which is the basis of capitalism) will always lead to instabilities that leave most of the population in bad shape. This is why regulation of capitalist enterprises by the government is essential. In this case, the system was not regulated and now many people are really bad off. Its not that people are stupid. Its that human nature (GREED) in the form of unregulated capitalism is susceptible to catastrophe.

[C5 Snowboarder]

Give me a friggin' break. Its been known for more than 100 years that capitalism in its purest (unregulated) form is a failed system. Think of child labor exploitation, monopolies, etc., etc. The fact is that human greed (which is the basis of capitalism) will always lead to instabilities that leave most of the population in bad shape. This is why regulation of capitalist enterprises by the government is essential. In this case, the system was not regulated and now many people are really bad off. Its not that people are stupid. Its that human nature (GREED) in the form of unregulated capitalism is susceptible to catastrophe.

I can certainly see why you would say that..
Would you also agree with the safety statements you find on some products like:

1. Do not use this blow dryer while in the bath tub or shower.
2. Do not smoke while filling your gas tank.
3. Do not place this plastic bag over your head.
4. Do not eat this powder ( on a Laser printer toner cartridge)
5. Do not use for drying pets. ( on a microwave)

Yes -- lets get everyone so stupid they do not have to think or train their kids... Great Fnnn idea Guy! Go for it please let us know where you are so we can watch out for you too!

[97CSI]

I can certainly see why you would say that..
Would you also agree with the safety statements you find on some products like:

1. Do not use this blow dryer while in the bath tub or shower.
2. Do not smoke while filling your gas take.
3. Do not place this plastic bag over your head.
4. Do not eat this powder ( on a Laser printer toner cartridge)
5. Do not use for drying pets. ( on a microwave)

Yes -- lets get everyone so stupid they do not have to think or train their kids... Great Fnnn idea Guy! Go for it please let us know where you are so we can watch out for you too!It is obvious that there are many stupid people out there. Look at who we have running the country. Only stupid (or the venal rich) people would vote for that. And, we do need those warning signs. As folks do the things you listed (and much more) every day. We even have a stupid person voting in this poll. But only one so far. :D

[C5 Snowboarder]

It is obvious that there are many stupid people out there. Look at who we have running the country. Only stupid (or the venal rich) people would vote for that. And, we do need those warning signs. As folks do the things you listed (and much more) every day. :D

Just for grins think about placing the opposite labels on those products -- we could weed out the people that should not breed and reduce our population of stupid people. Survival of the smart people..Darwin where are you? :banana: :banana:

[cloudguy]

Nice straw man argument you got goin' there. You sure you don't have any credit-card debt?

[saab2000]

I am saying that predatory lending has killed our economy.


http://www.lectlaw.com/files/ban02.htm


The problems that plague the US economy are FAR deeper than just predatory lending.

- Education, or lack thereof
- Out of control federal spending
- Requirement for nearly instant return on investment in most businesses
- Lack of accountability across the nation at all levels, from individuals to the top of large corporations to goverment, etc. Nobody is held accountable for anything anymore.
- Did I mention lack of education? And a total lack of interest in education across the nation?
- Out of control spending on health and health related issues.

[coopdog]

the least blame goes to the poor bastaard who got a loan that he hoped to renegotiate in 2 years when it went up but now he cant.

That's the most asinine comment I've heard all day. I left the banking industry about four months ago. While there, I saw day in and day out customers doing anything they could from lying to crying to get a loan. I'll never forget one day my client's granddaughter was denied a loan. When she got the news, she marched into the office and went on a 10 minute, screaming at the top of her lung, tirade about how she was going to sue this person and that person.

It's the borrowers fault first and foremost.

[coopdog]

Give me a friggin' break. Its been known for more than 100 years that capitalism in its purest (unregulated) form is a failed system. Think of child labor exploitation, monopolies, etc., etc. The fact is that human greed (which is the basis of capitalism) will always lead to instabilities that leave most of the population in bad shape. This is why regulation of capitalist enterprises by the government is essential. In this case, the system was not regulated and now many people are really bad off. Its not that people are stupid. Its that human nature (GREED) in the form of unregulated capitalism is susceptible to catastrophe.


Actually, capitalism is based on everyone acting in there own self interest, but nice try.

The system not regulated? Are you serious? Banking must be the most regulated industry in America. I guess you've never applied for a mortgage.

Do you honestly think most of America is in bad shape? By what measure? Compared to whom? Give me a break...

In fact, I think this is a perfect example of the government NOT being able to protect the individual.

[C5 Snowboarder]

The problems that plague the US economy are FAR deeper than just predatory lending.

- Education, or lack thereof
.

AGREED +100

But is it any surprise -- High school here lets its students out somewhere around 1:30 to 2:30 PM. I wonder what time students in Europe, India, China or Japan are let out each day? No wonder we are placing higher than 30th place worldwide in science.

[ti_boi]

By Patrick Rucker - Analysis

WASHINGTON (Reuters) - Sliding home values are eroding the equity U.S. households can tap for cash at the same time banks have grown reluctant to lend, threatening the consumer spending the economy needs to dodge recession.

In the third quarter of last year, homeowners refinancing mortgages withdrew $20 billion less in real estate wealth than in the prior quarter, and since housing prices have continued to tumble, the outlook for cash-outs has continued to dim.

Lenders have also grown more cautious doling out cash through home equity lines of credit since those loans were failing at their highest rate in ten years during the third quarter.

If the housing market remains soft this year, as most economists expect, consumers will have less home equity to convert into cash, which could lead to an economically damaging pullback in spending.

Homeowners wealth "is not going to add anything (to consumer spending) in the coming year and probably did not add anything last year," said Nomura Securities International economist David Resler.

With consumers already struggling with high energy costs and a softening jobs market, the drying up of home equity could come as the last straw.

EASY LOANS NO MORE

Two clues to weaker home wealth extraction are found in the availability and performance of home equity lines of credit and cash-out refinanced mortgages that rely on a borrower's home as collateral.

The $60 billion extracted through mortgage refinancing in the third quarter was the smallest since $43 billion was withdrawn in the first three months of 2005, according to mortgage finance company Freddie Mac, which tracks cash-out refinancing data.

Meanwhile, more and more loans that let homeowners take an advance on their real estate wealth are going bad.

Delinquency rates for home equity lines of credit climbed through the first three quarters of last year to stand at their highest level in 10 years at the end of September, according to data from the American Bankers Association.

Dean Baker, a director at the Center for Economic and Policy Research in Washington, says evaporating home wealth helps explain an increase in credit card debt.

The Federal Reserve said last week that credit card debt rose at an 11.3 percent annual rate in November. From 2003 to 2005, that debt had been rising at a rate between 2 percent and 4 percent.

"Millions of homeowners are losing the ability to borrow against their home," Baker wrote last week. "Millions of households will soon have little choice but to sharply curtail their consumption."

IMPACT UNCLEAR

Under a ongoing research project he launched with then-Fed Chairman Alan Greenspan, economist James Kennedy found that spending on consumer goods and home improvements by homeowners financed by equity extraction were down about $94 billion during the first nine months of 2007 compared to the same period a year earlier, about a 25 percent fall.

Still, economists hold different views on how much rising real estate wealth boosts spending or how badly the economy is hurt when consumers hold back from cashing out their home wealth.

Homeowner cash-outs peaked during the height of the housing boom that ended in 2005 but consumer spending largely held steady after it did, said Citigroup economist Steven Wieting.

"There would have been a massive economic boom if that money had been spent," he said. "The effect is more incremental and occurs on the right hand of the decimal point."

Funds from cash-outs do not always go to consumption. Proceeds can go to pay down debt, or to invest.

Besides homeowner cash-outs, overall spending is also heavily influenced by income growth, interest rates and non-housing wealth, Deutsche Bank said in a recent research note.

"Rising energy prices may have been the more important negative factor in slowing consumer spending growth to this point, but we expect the effect from home prices to become more visible over the year ahead," Deutsche Bank economists said.

While real estate wealth cannot be counted on to boost consumer spending this year, Nomura's Resler said recession is not a foregone conclusion.

"There is nothing inevitable in economics and recession is at the top of that list," he said.

[rounder]

The problems that plague the US economy are FAR deeper than just predatory lending.

- Education, or lack thereof
- Out of control federal spending
- Requirement for nearly instant return on investment in most businesses
- Lack of accountability across the nation at all levels, from individuals to the top of large corporations to goverment, etc. Nobody is held accountable for anything anymore.
- Did I mention lack of education? And a total lack of interest in education across the nation?
- Out of control spending on health and health related issues.

I agree with saab. Banking is not the big cause of the problems. The problems have more to do with lack of accountability and sense of personal responsibility all the way from government (they spend all of their time trying to get reelected) down to the individual (highly developed sense of entitlement). Meanwhile, education today seems based on pursuit of the lowest common denominator. My wife works at the local high school and tells me the students need to use their calculators to figure 2 squared because they were never required to learn math tables. I am not going to say she is wrong when I watch an mba girl need a calculator to complete her time sheet for number of hours worked during the week (8+8+8+8+8).

[1centaur]

Unregulated capitalism has probably never been tried for any significant period, so it's hard to say it was proven to be a failure 100 years ago, but I will agree that human nature will spoil/tar any economic system. Take communism for example. It is inherently incompatible with human nature, which means that communism becomes a lot for the few and little for the many. Hey, sounds familiar. I'll take maximum, but not unlimited, freedom. Thanks.

[ti_boi]

Jan. 14 (Bloomberg) -- U.S. Representative Barney Frank said Democratic lawmakers will announce a $100 billion economic stimulus package offering tax relief and aiming to spur consumer spending in the wake of the subprime mortgage crisis.

``What it has to do, obviously, is get money into the economy quickly,'' Frank, the Massachusetts Democrat who leads the House Financial Services Committee, said today in an interview from Boston with Bloomberg Television.

The package will feature tax cuts for those ``who are somewhat stressed,'' include middle-class and working-class Americans, Frank said in the interview. It will also offer relief to local and state governments and call for increasing the length and amount of unemployment pay, he said.

President George W. Bush and congressional Democrats are considering ways to stimulate an economy that economists at Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley say may be heading toward a recession. A Labor Department report this month showed the U.S. unemployment rate jumped to 5 percent in December from 4.7 percent a month earlier.

Without a stimulus package, ``I am certain that we will either have a recession or something that will feel very much like one to a lot of Americans,'' Frank said.

U.S. House Speaker Nancy Pelosi discussed economic stimulus with Federal Reserve Chairman Ben Bernanke today and said after their meeting that any legislative package should be coordinated with Fed to stabilize the economy. Bush may announce his plan Jan. 28 during his State of the Union address.

[cloudguy]

Actually, capitalism is based on everyone acting in there own self interest, but nice try.

Yes, and in most cases, someone decides its in their best interest to make as much money as possible, regardless of how it affects everyone else (e.g., children working 14-hour days in their factory). Isn't that how capitalism works in some Asian countries?

The system not regulated? Are you serious? Banking must be the most regulated industry in America. I guess you've never applied for a mortgage.

Oh, then I guess the problem is that all of this regulation is what lead to the banking industry having to write off such record losses. I knew it was the government's fault.

Do you honestly think most of America is in bad shape? By what measure? Compared to whom? Give me a break...

Don't remember saying that.

[QUOTE=coopdog]In fact, I think this is a perfect example of the government NOT being able to protect the individual.[/QUOTE

Oh yeah, its so hard to prevent the mortgage industry from making loans its clear the borrower won't be able to repay. Yeah, this problem was so complicated that no one could see it coming (except for Goldman Sachs). Can anyone see it from this time series?

http://www.speculativebubble.com/images/homevalues1.gif

[coopdog]

[QUOTE=cloudguy]Yes, and in most cases, someone decides its in their best interest to make as much money as possible, regardless of how it affects everyone else (e.g., children working 14-hour days in their factory). Isn't that how capitalism works in some Asian countries?



So does this 'someone' just print money? How does he get it? Steal it? I'll tell you. Let's call this person Mr.A. Mr. A risks his time and capital to produce something that did not exist and offers it to Mr.B for one dollar. Mr.B has a dollar and decides he would like to have what Mr.A has made more than he would like to keep his dollar. They exchange. Both are happy. Otherwise, they would not do it. That's capitalism.

The child labor thing is a non-starter. It's presumed they are forced to work against their will (i.e. their own self interest). That is not capitalism.

Maybe you should study a little more. Then you'd realize that the computer your tapping on, the chair your sitting in, mommy and daddy's house your living in, all was produced by <aghast!!!!> a capitalist society.

[ti_boi]

[QUOTE=cloudguy]Yes, and in most cases, someone decides its in their best interest to make as much money as possible, regardless of how it affects everyone else (e.g., children working 14-hour days in their factory). Isn't that how capitalism works in some Asian countries?



So does this 'someone' just print money? How does he get it? Steal it? I'll tell you. Let's call this person Mr.A. Mr. A risks his time and capital to produce something that did not exist and offers it to Mr.B for one dollar. Mr.B has a dollar and decides he would like to have what Mr.A has made more than he would like to keep his dollar. They exchange. Both are happy. Otherwise, they would not do it. That's capitalism.

The child labor thing is a non-starter. It's presumed they are forced to work against their will (i.e. their own self interest). That is not capitalism.

Maybe you should study a little more. Then you'd realize that the computer your tapping on, the chair your sitting in, mommy and daddy's house your living in, all was produced by a <aghast!!!!> a capitalist society.

I admire capitalism and entrepreneurial innovation....but spend any time at all in the business world and you will understand how merciless and random the whole affair can be. The fact that most management will sell you out for a dollar and donut means nothing to me....but the whole fiasco that is outlined here is a lesson in karma for the bankers....btw....rumor has it that citi has not even begun to announce their losses....they are far wider and deeper than they have already disclosed....

where did you go coop once you left banking if you do not mind sayin?

[KeithS]

Since when is the government's job to protect us from ourselves. I think instant gratification is the problem. It's cultural. All conflicts resovled in an hour, unless you have TIVO and then it's just 48 minutes.

Remember saving to buy a house? I am guilty and lucky at the same time. We didn't get greedy, we live in a house we can afford, we are saving for retirement, I can buy a lot of expensive bike stuff. I have credit card debt.

This is a great thread. Citi is blowing up tomorrow, GMAC RFC (really big sub-prime lender) used to have 9 floors in the next building from my office. Consolidated to other facilities in town. Laid off over half of work force in '07 other half going away soon. Liar loans are gone, people will have to be able to prove they can repay their mortgages. Closing the barn door after the horses are gone.

[Grant McLean]

I think instant gratification is the problem.

But instant Grantification is always the solution!

:banana:

-g

[coopdog]

[QUOTE=coopdog]
....but spend any time at all in the business world and you will understand how merciless and random the whole affair can be. The fact that most management will sell you out for a dollar and donut means nothing to me....

where did you go coop once you left banking if you do not mind sayin?

Merciless, maybe. Random, I don't know. Management selling you out, I'm in complete agreement and was one of the very reasons I left banking. Again, capitalism at work. I decided I was not getting enough dollars (and respect- an intangible benefit) in return for my labor in the job that was required of me... So I went to the next best thing (you're going to love this) REAL ESTATE. I kid you not.

Things are going well around here. My limited perspective is media has blown the sub-prime thing way out of proportion. Yes, the banks are getting hammered. They took a risk (again, capitalism) and are paying for stupid mistakes (and fraudulent borrowers). But as someone already mentioned, there is a lot more to the economy than sub-prime. I think the media is going to tell us just how awful the economy is (which it's really not) and how pathetic our lives are this year. It is an election year after all...

[ti_boi]

[QUOTE=ti_boi]

Merciless, maybe. Random, I don't know. Management selling you out, I'm in complete agreement and was one of the very reasons I left banking. Again, capitalism at work. I decided I was not getting enough dollars (and respect- an intangible benefit) in return for my labor in the job that was required of me... So I went to the next best thing (you're going to love this) REAL ESTATE. I kid you not.

Things are going well around here. My limited perspective is media has blown the sub-prime thing way out of proportion. Yes, the banks are getting hammered. They took a risk (again, capitalism) and are paying for stupid mistakes (and fraudulent borrowers). But as someone already mentioned, there is a lot more to the economy than sub-prime. I think the media is going to tell us just how awful the economy is (which it's really not) and how pathetic our lives are this year. It is an election year after all...


Good for you Coop....my take on the whole deal is simply that it all depends on where you are sitting...if you go into 2008 in good financial shape...have cash flow and a plan...as well as a decent job....you are fine.

But, if you are tapped out and experience a cash crunch....you are scr*wed...you cannot rely on flipping your house....not enough qualified buyers....you may or may not be able to jump right into another high paying job as many industries are contracting.....severely.


So, in fact, I think the media is simply calling it as they see it. Things are getting very interesting. And by interesting I mean 'terrifying'.

[cloudguy]

Maybe you should study a little more. Then you'd realize that the computer your tapping on, the chair your sitting in, mommy and daddy's house your living in, all was produced by <aghast!!!!> a capitalist society.

Look, all I'm askin for is a little regulation...not trying to turn us into a communist state. I thought that the relative calm in our economy over the
past 30-40 years was due in part to the actions of the Fed (i.e., regulation). Maybe we should just get rid of that too. Indeed, it seems to have failed us
in this case.

By the way, athough I'm not an economist, I do have a PhD in Earth Science, and fortunately my wife and I live in our own home.

How is your life as an a**hole working out for you?

[ti_boi]

Look, all I'm askin for is a little regulation...not trying to turn us into a communist state. I thought that the relative calm in our economy over the
past 30-40 years was due in part to the actions of the Fed (i.e., regulation). Maybe we should just get rid of that too. Indeed, it seems to have failed us
in this case.

By the way, athough I'm not an economist, I do have a PhD in Earth Science, and fortunately my wife and I live in our own home.





Cloudguy.....seems like with a PhD You have studied quite a bit....congrats...that is a great accomplishment.....as someone who lived through 2 bubbles ....Tech and now housing.......I am also shocked out how 'hands off' the government was as they encouraged us to spend, spend, spend, took away whatever safety net the 'old' bankruptcy laws had....and allowed the banks to practice their own brand of usury...

What I find so fascinating is the heavy toll the banks and their employees are now taking for the actions that they practiced....but it is now not a subprime issue...now it is flooding the mainstream and I maintain that we are witnessing a catastrophic shift in the American economy that will play out over not just a series of months.....but years.

[93legendti]

Look, all I'm askin for is a little regulation...not trying to turn us into a communist state...


The most important laws that have affected the banking industry in the United States are listed below.

National Bank Act of 1864 (Chapter 106, 13 STAT. 99).
Established a national banking system and the chartering of national banks.

Federal Reserve Act of 1913 (P.L. 63-43, 38 STAT. 251, 12 USC 221).
Established the Federal Reserve System as the central banking system of the U.S.

To Amend the National Banking Laws and the Federal Reserve Act (P.L. 69-639, 44 STAT. 1224).
Also known as The McFadden Act of 1927. Prohibited interstate banking.

Banking Act of 1933 (P.L. 73-66, 48 STAT. 162).
Also known as the Glass-Steagall Act. Established the FDIC as a temporary agency. Separated commercial banking from investment banking, establishing them as separate lines of commerce.

Banking Act of 1935 (P.L. 74-305, 49 STAT. 684).
Established the FDIC as a permanent agency of the government.

Federal Deposit Insurance Act of 1950 (P.L. 81-797, 64 STAT. 873).
Revised and consolidated earlier FDIC legislation into one Act. Embodied the basic authority for the operation of the FDIC.

Bank Holding Company Act of 1956 (P.L. 84-511, 70 STAT. 133).


International Banking Act of 1978 (P.L. 95-369, 92 STAT. 607).


Financial Institutions Regulatory and Interest Rate Control Act of 1978 (P.L. 95-630, 92 STAT. 3641).

Depository Institutions Deregulation and Monetary Control Act of 1980 (P.L. 96-221, 94 STAT. 132).

Depository Institutions Act of 1982 (P.L. 97-320, 96 STAT. 1469).

Competitive Equality Banking Act of 1987 (P.L. 100-86, 101 STAT. 552).

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (P.L. 101-73, 103 STAT. 183).

FIRREA also abolished the Federal Home Loan Bank Board. Two new agencies, the Federal Housing Finance Board (FHFB) and the Office of Thrift Supervision (OTS), were created to replace it.


Crime Control Act of 1990 (P.L. 101-647, 104 STAT. 4789).


Federal Deposit Insurance Corporation Improvement Act of 1991 (P.L. 102-242, 105 STAT. 2236).

Housing and Community Development Act of 1992 (P.L. 102-550, 106 STAT. 3672).

RTC Completion Act (P.L. 103-204, 107 STAT. 2369).

Riegle Community Development and Regulatory Improvement Act of 1994 (P.L. 103-325, 108 STAT. 2160).


Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (P.L. 103-328, 108 STAT. 2338).


Economic Growth and Regulatory Paperwork Reduction Act of 1996 (P.L. 104-208, 110 STAT. 3009).


Gramm-Leach-Bliley Act of 1999 (P.L. 106-102, 113 STAT 1338)

International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001* (P.L. 107-56)


Sarbanes-Oxley Act of 2002 (P.L. 107-204)*

Fair and Accurate Credit Transactions Act of 2003* (P.L. 108-159)

* - Descriptions taken from "Major Statutes Affecting Financial Institutions and Markets", Congressional Research Service. July 7, 2004.

http://www.fdic.gov/regulations/laws/important/index.html

[ti_boi]

The most important laws that have affected the banking industry in the United States are listed below.

National Bank Act of 1864 (Chapter 106, 13 STAT. 99).
Established a national banking system and the chartering of national banks.

Federal Reserve Act of 1913 (P.L. 63-43, 38 STAT. 251, 12 USC 221).
Established the Federal Reserve System as the central banking system of the U.S.

To Amend the National Banking Laws and the Federal Reserve Act (P.L. 69-639, 44 STAT. 1224).
Also known as The McFadden Act of 1927. Prohibited interstate banking.

Banking Act of 1933 (P.L. 73-66, 48 STAT. 162).
Also known as the Glass-Steagall Act. Established the FDIC as a temporary agency. Separated commercial banking from investment banking, establishing them as separate lines of commerce.

Banking Act of 1935 (P.L. 74-305, 49 STAT. 684).
Established the FDIC as a permanent agency of the government.

Federal Deposit Insurance Act of 1950 (P.L. 81-797, 64 STAT. 873).
Revised and consolidated earlier FDIC legislation into one Act. Embodied the basic authority for the operation of the FDIC.

Bank Holding Company Act of 1956 (P.L. 84-511, 70 STAT. 133).


International Banking Act of 1978 (P.L. 95-369, 92 STAT. 607).


Financial Institutions Regulatory and Interest Rate Control Act of 1978 (P.L. 95-630, 92 STAT. 3641).

Depository Institutions Deregulation and Monetary Control Act of 1980 (P.L. 96-221, 94 STAT. 132).

Depository Institutions Act of 1982 (P.L. 97-320, 96 STAT. 1469).

Competitive Equality Banking Act of 1987 (P.L. 100-86, 101 STAT. 552).

Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (P.L. 101-73, 103 STAT. 183).

FIRREA also abolished the Federal Home Loan Bank Board. Two new agencies, the Federal Housing Finance Board (FHFB) and the Office of Thrift Supervision (OTS), were created to replace it.


Crime Control Act of 1990 (P.L. 101-647, 104 STAT. 4789).


Federal Deposit Insurance Corporation Improvement Act of 1991 (P.L. 102-242, 105 STAT. 2236).

Housing and Community Development Act of 1992 (P.L. 102-550, 106 STAT. 3672).

RTC Completion Act (P.L. 103-204, 107 STAT. 2369).

Riegle Community Development and Regulatory Improvement Act of 1994 (P.L. 103-325, 108 STAT. 2160).


Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994 (P.L. 103-328, 108 STAT. 2338).


Economic Growth and Regulatory Paperwork Reduction Act of 1996 (P.L. 104-208, 110 STAT. 3009).


Gramm-Leach-Bliley Act of 1999 (P.L. 106-102, 113 STAT 1338)

International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001* (P.L. 107-56)


Sarbanes-Oxley Act of 2002 (P.L. 107-204)*

Fair and Accurate Credit Transactions Act of 2003* (P.L. 108-159)

* - Descriptions taken from "Major Statutes Affecting Financial Institutions and Markets", Congressional Research Service. July 7, 2004.

http://www.fdic.gov/regulations/laws/important/index.html


Careful...you missed one....


An agreement between the Clinton administration and congressional Republicans, reached during all-night negotiations which concluded in the early hours of October 22, sets the stage for passage of the most sweeping banking deregulation bill in American history, lifting virtually all restraints on the operation of the giant monopolies which dominate the financial system.

The proposed Financial Services Modernization Act of 1999 would do away with restrictions on the integration of banking, insurance and stock trading imposed by the Glass-Steagall Act of 1933, one of the central pillars of Roosevelt's New Deal. Under the old law, banks, brokerages and insurance companies were effectively barred from entering each others' industries, and investment banking and commercial banking were separated.

The certain result of repeal of Glass-Steagall will be a wave of mergers surpassing even the colossal combinations of the past several years. The Wall Street Journal wrote, "With the stroke of the president's pen, investment firms like Merrill Lynch & Co. and banks like Bank of America Corp., are expected to be on the prowl for acquisitions." The financial press predicted that the most likely mergers would come from big banks acquiring insurance companies, with John Hancock, Prudential and The Hartford all expected to be targeted.

Kenneth Guenther, executive vice president of Independent Community Bankers of America, an association of small rural banks which opposed the bill, warned, "This is going to begin a wave of major mergers and acquisitions in the financial-services industry. We're moving to an oligopolistic situation."

One such merger was already carried out well before the passage of the legislation, the $72 billion deal which brought together Citibank, the biggest New York bank, and Travelers Group Inc., the huge insurance and financial services conglomerate, which owns Salomon Smith Barney, a major brokerage. That merger was negotiated despite the fact that the merged company, Citigroup, was in violation of the Glass-Steagall Act, because billionaire Travelers boss Sanford Weill and Citibank CEO John Reed were confident of bipartisan support for repeal of the 60-year-old law.

[93legendti]

State of Michigan Banking, Finance, Mortgage Rules and Regs (OFIS):


• Emergency Closing Act

• Banking Code of 1999

• Analysis for the Banking Code of 1999

• Cross Reference
Banking Code of 1999 to Banking Code of 1969

• Historical Background for the Banking Code of 1999

• BIDCO Act

• Savings and Loan Act

• Savings Bank Act

• Electronic Funds Transfer Act

• Anti-Redlining Act



Consumer Finance
• Consumer Mortgage Protection Act
2002 PA 660, MCL 445.1631 to 445.1645, effective December 23, 2002

• Consumer Financial Services Act

• Credit Card Arrangements Act

• Credit Reform Act

• Deferred Presentment Service Transactions Act

• First Mortgage Loan Act
Also known as Mortgage Brokers, Lenders and Servicers Licensing Act

• Mortgage and Home Improvement Lending Practices Act
1977 PA 135

• Money Transmission Services Act

• Motor Vehicle Sales Finance Act

• MVSF Doc Prep Fee Adjustment

• Regulatory Loan Act

• Regulatory Loan Act/Adjusted Loan Processing Fee

• Secondary Mortgage Loan Act

• Secondary Mortgage Loan Act: Attorney General Opinion 6920

• Secondary Mortgage Loan Act: Attorney General Opinion 6926



Credit Union
• Emergency Closing Act (CU)

• Credit Union Act (1925 PA 285)

• Credit Union Act (2003 PA 215)

• Credit Union Multiple-Party Account Act

• Beneficiary Accounts Act Credit Union Regulation

• Electronic Funds Transfer Act
http://www.michigan.gov/dleg/0,1607,7-154-10555_13167_13168---,00.html

[ti_boi]

And...........

Threat to financial stability

The proposed deregulation will increase the degree of monopolization in finance and worsen the position of consumers in relation to creditors. Even more significant is its impact on the overall stability of US and world capitalism. The bill ties the banking system and the insurance industry even more directly to the volatile US stock market, virtually guaranteeing that any significant plunge on Wall Street will have an immediate and catastrophic impact throughout the US financial system.

The Glass-Steagall Act of 1933, which the deregulation bill would repeal, was not adopted to protect consumers, although one of its most celebrated provisions was the establishment of the Federal Deposit Insurance Corporation, which guarantees bank deposits of up to $100,000. The law was enacted during the first 100 days of the Roosevelt administration to rescue a banking system which had collapsed, wiping out the life savings of millions of working people, and threatening to bring the profit system to a complete standstill.

As a recent history of that era notes: "The more than five thousand bank failures between the Crash and the New Deal's rescue operation in March 1933 wiped out some $7 billion in depositors' money. Accelerating foreclosures on defaulted home mortgages—150,000 homeowners lost their property in 1930, 200,000 in 1931, 250,000 in 1932—stripped millions of people of both shelter and life savings at a single stroke and menaced the balance sheets of thousands of surviving banks" (David Kennedy, Freedom from Fear, Oxford University Press, 1999, pp. 162-63).

The separation of banking and the stock exchange was ordered in response to revelations of the gross corruption and manipulation of the market by giant banking houses, above all the House of Morgan, which organized huge corporate mergers for its own profit and awarded preferential access to share issues to favored politicians and businessmen. Such insider trading played a major role in the speculative boom which preceded the 1929 crash.

Over the past 20 years the restrictions imposed by Glass-Steagall have been gradually relaxed under pressure from the banks, which sought more profitable outlets for their capital, especially in the booming stock market, and which complained that foreign competitors suffered no such limitations to their financial operations. In 1990 the Federal Reserve Board first permitted a bank (J.P. Morgan) to sell stock through a subsidiary, although stock market operations were limited to 10 percent of the company's total revenue. In 1996 this ceiling was lifted to 25 percent. Now it will be abolished.

The Wall Street Journal celebrated the agreement to end such restrictions with an editorial declaring that the banks had been unfairly scapegoated for the Great Depression. The headline of one Journal article detailing the impact of the proposed law declared, "Finally, 1929 Begins to Fade."

This comment underscores the greatest irony in the banking deregulation bill. Legislation first adopted to save American capitalism from the consequences of the 1929 Wall Street Crash is being abolished just at the point where the conditions are emerging for an even greater speculative financial collapse. The enormous volatility in the stock exchange in recent months has been accompanied by repeated warnings that stocks are grossly overvalued, with some computer and Internet stocks selling at prices 100 times earnings or even greater.

And there is a much more recent experience than 1929 to serve as a cautionary tale. A financial deregulation bill was passed in the early 1980s under the Reagan administration, lifting many restrictions on the activities of savings and loan associations, which had previously been limited primarily to the home-loan market. The result was an orgy of speculation, profiteering and outright plundering of assets, culminating in collapse and the biggest financial bailout in US history, costing the federal government more than $500 billion. The repetition of such events in the much larger banking and securities markets would be beyond the scope of any federal bailout.

SOURCE: http://www.wsws.org/articles/1999/nov1999/bank-n01.shtml

[93legendti]

http://www.fdic.gov/regulations/resources/bankers/index.html

Predatory Lending Resources
--------------------------------------------------------------------------------

The FDIC addresses the problem of predatory lending by taking supervisory action, by encouraging and assisting banks to serve all sectors of their community, and by providing consumers with information to help make informed financial decisions. The following guidance and information should be consulted for additional details about matters discussed in the FDIC's January 22, 2007, Supervisory Policy on Predatory Lending.


Supervision Information
Community Reinvestment/Community Affairs Information
Consumer Information



Supervision
Interagency Guidance on Nontraditional Mortgage Product Risks, and Addendum to Credit Risk Management Guidance for Home Equity Lending FIL-89-2006 , October 5, 2006.
Home Equity Lending Credit Risk Management Guidance FIL-45-2005 , May 24, 2005.
Payday Lending Programs Revised Examination Guidance FIL-14-2005 , March 1, 2005.
Overdraft Protection Programs Joint Agency Guidance FIL-11-2005 , February 18, 2005.
Unfair or Deceptive Acts or Practices Under Section 5 of the Federal Trade Commission Act
FIL-26-2004 , March 11, 2004.
>Unfair or Deceptive Acts or Practices: Applicability of the Federal Trade Commission Act
FIL-57-2002 , May 30, 2002.
Expanded Guidance for Evaluationg Subprime Lending Programs FIL-9-2001 , January 31, 2001.
Uniform Retail Credit Classification and Account Management Policy FIL-40-2000 , June 29, 2000.
Mortgage Loan Prequalifications FIL-35-96 (revised), July 3, 1996.
Credit Practices Rule/Regulation AA, 12 C.F.R. § 227 .
Fair Debt Collection Practices Act, 15 U.S.C. § 1692 et seq.
FTC Rule on Preservation of Consumer Claims and Defenses, 16 C.F.R. § 433 .
Interagency Fair Lending Examination Procedures - PDF 289kb (PDF Help), August 19, 2004.

Community Reinvestment/Community Affairs
Community Reinvestment Act Statute (12 U.S.C. Part 30), Regulation , (12 C.F.R. Part 345)
and Tools .
CRA Interagency Questions and Answers
FDIC Community Affairs Program

Consumer Information
FDIC Consumer Resources
FDIC Consumer News
FDIC Consumer Response Center

Hours of Operation: 7:00 a.m. to 7:00 p.m. Eastern Time M - F 7:00 am to 7:00 pm Eastern Time M-F
Toll Free Number: 1- 877-275-3342 (1-877-275-ASK-FDIC)
Mailing Address:
Federal Deposit Insurance Corporation
Consumer Response Center
2345 Grand Avenue, Suite 100
Kansas City, MO 64108-2638
Email Address: consumeralerts@fdic.gov
To File Complaint: FDIC's Electronic Customer Assistance Form


FDIC Consumer Affairs Program
Money Smart - financial education program information.
Money Smart computer-based instruction (English or Spanish).

[ti_boi]

http://www.fdic.gov/regulations/resources/bankers/index.html

Predatory Lending Resources
--------------------------------------------------------------------------------

The FDIC addresses the problem of predatory lending by taking supervisory action, by encouraging and assisting banks to serve all sectors of their community, and by providing consumers with information to help make informed financial decisions. The following guidance and information should be consulted for additional details about matters discussed in the FDIC's January 22, 2007, Supervisory Policy on Predatory Lending.


Supervision Information
Community Reinvestment/Community Affairs Information
Consumer Information



Supervision
Interagency Guidance on Nontraditional Mortgage Product Risks, and Addendum to Credit Risk Management Guidance for Home Equity Lending FIL-89-2006 , October 5, 2006.
Home Equity Lending Credit Risk Management Guidance FIL-45-2005 , May 24, 2005.
Payday Lending Programs Revised Examination Guidance FIL-14-2005 , March 1, 2005.
Overdraft Protection Programs Joint Agency Guidance FIL-11-2005 , February 18, 2005.
Unfair or Deceptive Acts or Practices Under Section 5 of the Federal Trade Commission Act
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Band aid on a bullet wound.

[97CSI]

AGREED +100

But is it any surprise -- High school here lets its students out somewhere around 1:30 to 2:30 PM. I wonder what time students in Europe, India, China or Japan are let out each day? No wonder we are placing higher than 30th place worldwide in science.Even worse then that. Our school district has a policy of not failing anyone. You are promoted regardless of your grades. And, you can't get below a 50. Do zero work and your grade is a 50. And, failing is a 60. Doesn't matter how little work or effort is put in by the student, can't fail and is promoted to the next grade. It is all about money. Holding a student back costs additional money in the terms of classroom space and teachers needed. So is a no-no. 75% of my students only care about doing enough work to get that 60. The other 25% are split between those who want a good grade and those who don't care what their grade is. Our district is the worst around in this area of the state, but others are not far behind. Retirement, wherefore art thou.

[1centaur]

From ti_boy:"virtually guaranteeing that any significant plunge on Wall Street will have an immediate and catastrophic impact throughout the US financial system.

The Glass-Steagall Act of 1933, which the deregulation bill would repeal, was not adopted to protect consumers,"

The hyperbolic fallacy of that piece as related to stock market moves has since been undermined by reality. Glass-Steagal was indeed an anachronism designed to fight the last war, not the next one. Today's series of write-downs is just a sign of lax lending standards and the emergence of mis-rated structured products, not the beginning of catastrophe for our financial system. Look at write-downs vs. the Tier 1 capital bases of those writing down. Look at the ability to raise capital quickly. Lax credit standards occur at the end of EVERY credit cycle without being a portent of doom. That's why it's called a cycle (wow, almost back on to Serotta). Regulators react to what happened, perhaps more than they need to because capitalists would not want to repeat these mistakes anyway, and we move on.

[JohnS]

Isn't the reason that so many people got overextended on their mortgages that they considered their house an "investment" that would never go down in value? Real estate is just like Wall Street-cyclical. Unless you're in the business, a house is a place to live-not an investment!

[Tom]

I agree with JohnS.

[coopdog]

Look, all I'm askin for is a little regulation...not trying to turn us into a communist state. I thought that the relative calm in our economy over the
past 30-40 years was due in part to the actions of the Fed (i.e., regulation). Maybe we should just get rid of that too. Indeed, it seems to have failed us
in this case.

By the way, athough I'm not an economist, I do have a PhD in Earth Science, and fortunately my wife and I live in our own home.

How is your life as an a**hole working out for you?

Okay, the daddy comment was a little over the top. My apologies. I just get a little worked up over things like this.

As for regulation, like I mentioned in an earlier post, I left my job at a very large bank about 4 months ago. While there, I couldn't turn around without tripping over a government regulator or auditor. They set up offices right next to mine and were there 8 hours a day 2 to 3 months out of the year. And this was nowhere near our corporate headquarters.

I think the regulation exacerbated the problem. When a borrower sees HUD this and Truth In Lending that 400 times before they get their loan I think they develop a false sense of security.

[coopdog]

[QUOTE=coopdog]


Good for you Coop....my take on the whole deal is simply that it all depends on where you are sitting...

Well, yeah, I agree. But the nightly news suggests to me that there are far more people harmed than I think really are (in sub-prime that is). What about all the people who might be able to buy a house now because prices are coming back to reality?

The vast, vast majority of borrowers I saw come through had no business putting themselves in that much debt and knew exactly what they were doing.

This too shall pass. My advice- buy all the stock you can get your hands on, especially financial stocks. Sell em in about 10 years.

The best explanation of sub-prime I've heard. I love British humor. http://www.youtube.com/watch?v=SJ_qK4g6ntM