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Subprime Mortgage 2: Bankers Boogaloo

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smegballs
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PostPosted: 20:26 - 03 Apr 2013    Post subject: Subprime Mortgage 2: Bankers Boogaloo Reply with quote
Obama administration pushes banks to make home loans to people with weaker credit

Brick Wall
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oldpink
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PostPosted: 20:35 - 03 Apr 2013    Post subject: Reply with quote
America is Trillions in debt already
so another couple of billion on top of that is hardly going to be noticed
until we (the tax payers) have to stump up when it all turns to shit again Thumbs Up
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Last edited by oldpink on 19:44 - 04 Apr 2013; edited 1 time in total
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mr jamez
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PostPosted: 21:29 - 03 Apr 2013    Post subject: Reply with quote
"Housing officials are urging the Justice Department to provide assurances to banks that they will not face legal or financial recriminations if they make loans to riskier borrowers who meet government standards but later default."

So when we see bailout round two, are people going to question exactly what the financial sector and governments have been doing for the past six years? I've got a niggling feeling its along the lines of taking us all for suckers Smile
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daemonoid
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PostPosted: 22:19 - 03 Apr 2013    Post subject: Reply with quote
You know that the sub prime mortgages weren't the real cause of the financial crisis?

It was the fact that those sub prime mortgages were wrapped up as prime investments. The markets were essentially defrauded.

If this time the loans are not disguised they will not turn into a worthless commodity as they will find a true market value.
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mr jamez
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PostPosted: 18:47 - 04 Apr 2013    Post subject: Reply with quote
daemonoid wrote:

If this time the loans are not disguised they will not turn into a worthless commodity as they will find a true market value.


Has the ability for them to do it been removed?

What will happen if they go to court? Judges are dismissing cases such as LIBOR and silver manipulation from of court on 'technicalities'. The corruption is absolute.
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ThoughtContro...
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PostPosted: 18:49 - 04 Apr 2013    Post subject: Reply with quote
mr jamez wrote:
Judges are dismissing cases such as LIBOR and silver manipulation from of court on 'technicalities'. The corruption is absolute.


Did you expect anything else?
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smegballs
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PostPosted: 19:05 - 04 Apr 2013    Post subject: Reply with quote
daemonoid wrote:
You know that the sub prime mortgages weren't the real cause of the financial crisis?

It was the fact that those sub prime mortgages were wrapped up as prime investments. The markets were essentially defrauded.

If this time the loans are not disguised they will not turn into a worthless commodity as they will find a true market value.


My understanding is that banks wrapped up packages of sub-prime loans, and sold them off as secure credit to other banks, who they labelled them a bit higher and got their bit of mark-up.... Round and round until eventually people realised that instead of buying a bucket of gold, they were buying buckets of shit.
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ThoughtContro...
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PostPosted: 19:17 - 04 Apr 2013    Post subject: Reply with quote
smegballs wrote:
My understanding is that banks wrapped up packages of sub-prime loans, and sold them off as secure credit to other banks, who they labelled them a bit higher and got their bit of mark-up.... Round and round until eventually people realised that instead of buying a bucket of gold, they were buying buckets of shit.


A bit like the re-insurance swindle that made a large number of Lloyds "names" go bang a long while back.
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Polarbear
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PostPosted: 15:43 - 06 Apr 2013    Post subject: Reply with quote
daemonoid wrote:
You know that the sub prime mortgages weren't the real cause of the financial crisis?

It was the fact that those sub prime mortgages were wrapped up as prime investments. The markets were essentially defrauded.

If this time the loans are not disguised they will not turn into a worthless commodity as they will find a true market value.


Oh FFS, the whole game is fraudulent.

It means jack shit. The US will never ever pay back what it owes. Neither will any other country. Did Venezuela ever? Did Argentina?

Fuck financial assholes
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Rogerborg
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PostPosted: 18:10 - 06 Apr 2013    Post subject: Reply with quote
I've still never figured out why it's a problem if people default. Banks just invent the money anyway in order to buy property that they graciously allow us to live in, it's not like It's A Wonderful Life. We default, they still own a house that they never really paid for to begin with.

Did I just go a bit Freemental there? I think I may have.
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Pigeon
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PostPosted: 20:29 - 06 Apr 2013    Post subject: Reply with quote
Rogerborg wrote:
I've still never figured out why it's a problem if people default. Banks just invent the money anyway in order to buy property that they graciously allow us to live in, it's not like It's A Wonderful Life. We default, they still own a house that they never really paid for to begin with.


I think it's to do with the destruction of capital and it's impact on shareholders. EDIT: that came out sarky, wasn't meant to be.

eg The bank creates £1,000,000 in loans by depositing £100,000 in real cash at the BoE.

If 20% of the loans go bad, they still have the houses. Except they've probably used these as collateral for many other loans. If they flood the market with house sales the price drops as supply increases (I know this is obvious). Now it only takes 10% fall in asset price to wipe out their cash, meaning they can't generate new loans, they can't put up anything as collateral for new loans and they are bust. The shareholders take a massive hit, possibly 100%.
Shareholders could be anyone from rich investors, to funds, to people with ISA's, 401k's etc
The bank goes bust, or gets bought out. Everyone at the top loses their prestige (if not their money) and they never work in this area again (in theory).
But importantly, real capital is destroyed if people default on a large enough scale.

We have our own subprime. We had 110% mortgages. We have a huge number of interest only mortgages. And we now have the FLS (tax payer subsized lending) and particularly the New Buy and Help to Buy scheme. You put up 5%, the taxpayer guarantees 20%
Yes it helps people get on the property ladder. But really, it just helps banks, bigcap property builders and governments.
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Rogerborg
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PostPosted: 10:47 - 07 Apr 2013    Post subject: Reply with quote
Indeed, however I (and also some people who might actually know what they're on about) reckon that the BOE would never, ever refuse permission for a bank to invent money, precisely because of the consequences if they did so.

At some point a bank is going to call their bluff and then it'll get very interesting.
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fatpies
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PostPosted: 14:23 - 07 Apr 2013    Post subject: Reply with quote
senoir.dude wrote:

eg The bank creates £1,000,000 in loans by depositing £100,000 in real cash at the BoE.


Er the UK operates a zero reserve system, the USA operates a 10% reserve system.

The UK system also has a tendency to make reserves out of thin air based on loans they make too.



Anyway its all about debt, not the way you think it is, just that every penny you have in your pocket or virtually via the bank (which doesn't actually exist btw) has debt and interest attached to it.

Create more money/credit = more interest creamed off.

Destroy credit/money = less interest creamed off.

A number of blokes have attempted to create debt free money. A bloke from Austria who failed art school. A number of blokes in the middle east did too since strict Islam doesn't allow ususry and modern money is ursury!

They all wound up dead.
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mr jamez
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PostPosted: 20:58 - 07 Apr 2013    Post subject: Reply with quote
fatpies wrote:


A number of blokes have attempted to create debt free money.


I think Guernsey print debt free money? I remember being shocked at how cheap fuel was when I was working on the island about 5 years ago.

ThoughtControl wrote:


Did you expect anything else?


I expect this Mr. Green

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Pigeon
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PostPosted: 23:04 - 07 Apr 2013    Post subject: Reply with quote
fatpies wrote:
senoir.dude wrote:

eg The bank creates £1,000,000 in loans by depositing £100,000 in real cash at the BoE.


Er the UK operates a zero reserve system, the USA operates a 10% reserve system.

The UK system also has a tendency to make reserves out of thin air based on loans they make too.


I thought under Basel 3 we all had to run 10%. But I'm wrong again, it's 8.5% and it's been delayed twice and now won't fully come into effect (if at all) until 2019!

Unlimited hypothecation, 0% reserve, light touch regulation and tax payer backing. No wonder The City is laughing it's arse off all the way to the...
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fatpies
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PostPosted: 08:29 - 08 Apr 2013    Post subject: Reply with quote
senoir.dude wrote:


I thought under Basel 3 we all had to run 10%. But I'm wrong again, it's 8.5% and it's been delayed twice and now won't fully come into effect (if at all) until 2019!

Unlimited hypothecation, 0% reserve, light touch regulation and tax payer backing. No wonder The City is laughing it's arse off all the way to the...



UK isn't part of Basel III, we have a voluntary self regulatory scheme with no penalties if they ignore it. Rolling Eyes
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