Bonneville America Forums Forums Off Topic Discussion Forums Lounge whars happening to banks

Just got in and on the news is that the Lehman bank is in big trouble.Now I dont know much about much . But this is not good another bank is in trouble again !! they cant all be helped ( can they ). What is happening with the banks ??? Seems as they ani't as safe as i have always thought. Reckon we got hard times ahead. I for one shall keep my belt tight.

It's happening over here to.The big and small banks.I tried refinancing the house a while back.I gave up on it for now.Dad passed away recently so after all the others take there part(s)I may get a little something which should help somewhat.The good old tax man has got to take his chunk of it.IT seems wrong dad was taxed on the money he worked his a$$ off for and now I am getting taxed again on it.Seems like a double tax to me and it is in no way millions of $$$$.Hope everyone fairs well with this bs in the end.

It's a complex issue, but it boils down to stupid lending practices. During the housing boom, banks were giving loans that they never ever should have (over inflating property values, giving loans to unqualified borrowers, etc..).

Recently, Alan Greenspan (former chairman of the federal reserve) said he predicts more financial institutions to fail and that he doesn't see the housing market stabilizing until sometime in 2009.
Source: Greenspan: Economy in 'once-in-a-century' crisis

Cheers,
Brad

Won't mention the lending institution , but I know of a Delta mechanic and his wife that have a gross income of 125 K and got a no money down interest only loan for a 700 K house on Lake Spivey . They are struggling to make just the interest payment alone . They cannot even afford to run the A/C . Stupid stupid stupid . Them AND the dingbat that wrote the loan . THAT'S what's wrong with Fannie and Freddie .

Oh , by the way , on a positive note , there's a local bank here in Jackson , Ga . that has a ZERO % default rate . Why ? They make people - get this - submit a financial statement . They also run a credit check in conjunction with the tumerity to tell borrowers to LIVE WITHIN THEIR MEANS . What a concept . Approved / Denied . Makes ya wanna invest in THAT lending institution , now doesn't it ?

Here is a little song I wrote
You might want to sing it note for note
Don't worry be happy
In every life we have some trouble
When you worry you make it double
Don't worry, be happy......

People who buy homes with no money down are really just renting. They have no equity.
HOW WASHINGTON FAILED TO REIN IN FANNIE & FREDDIE: Basically, it was bought off. "Blessed with the advantages of a government agency and a private company at the same time, Fannie Mae and Freddie Mac used their windfall profits to co-opt the politicians who were supposed to control them. . . . Fannie Mae, and to a lesser extent Freddie Mac, became enmeshed in the fabric of political Washington. They were places former government officials went to get wealthy -- and to wait for new federal appointments. At Fannie Mae, chief executives had clauses written into their contracts spelling out the severance benefits they would receive if they left for a government post. The companies also donated generously to the campaigns of favored politicians."

Plus this:

And when they couldn't massage, they intimidated. In 2003, Richard H. Baker (R-La.), chairman of the House Financial Services subcommittee with oversight over Fannie Mae and Freddie Mac, got information from OFHEO on the salaries paid to executives at both companies. Fannie Mae threatened to sue Baker if he released it, he recalled. Fearing the expense of a court battle, he kept the data secret for a year. Baker, who left office in February, said he had never received a comparable threat from another company in 21 years in Congress. "The political arrogance exhibited in their heyday, there has never been before or since a private entity that exerted that kind of political power," he said.

As rocks start being turned over, we'll hear more stories like this or I miss my guess.

UPDATE: Reader C.J. Burch writes: "I'm looking at the article. Does it mention which politicos took the cash?" That rock won't be turned over until after the election, if they have anything to say about it. But here's a place to start. Also here. Plus, the ubiquity of Jamie Gorelick, who seems to be on the scene for many Washington debacles.

ANOTHER UPDATE: A deafening silence from Obama.


Read this.

Since Mac didn't actually provide any links in the above, Here is a link to the article he cut-n-pasted from the "Instapundent.com" web site. That article appears to be an excerpt from a more in-depth article here. The Bill they are referring to was H.R. 3703; [106th] Housing Finance Regulatory Improvement Act, introduced Feb. 29th 2000, which sought to, among other things, consolidate and improve the regulation of the housing-related Government-sponsored enterprises. It died in the House.

Cheers,
Brad

I wouldn't put too much creedance in what Greenspan says, either. He said the same thing the year before stating that the housing market would stabilize this year.

Unfortunately our economy is built on 3 pillars - Finance, Property and Retail! Our manufacturing base (and some telephony and IT services) has gone to China and India a long time ago.

In sort - if we have a problem with one pillar the economy will experience a short-term blip. With 2 pillars suffering we are in a recession and with all 3 in difficulty we are in decline - with significant consequences. Basicly we have Property in freefall, Finance following close behind (inter-related) and this leads (understadably) to a lack in consumer confidence consequently nobody spends money (as you stated) - resulting in retail taking a hammering!



My tip - if you have any savings make sure the finacial institution is sound and don't have all your eggs in one basket - and do it as soon as possible!

Once you have done that go for a nice ride on your Trumpet!

It boils down to several things. 1. banks being greedy (for the closing cost money), and writing any and every type of loan they could (assuming the economy would always be going up). 2. home owners living beyond their means and assuming the economy would always be going up.

We had more than 50 quarters of positive growth. Everything runs in cycles including our economy.

By the end of this year I should have everything paid off and will be completely dept free.

Tom

So Lehman going bankrupt.. Does that mean the CEO has to give back the 22 milion dollar bonus he got last year?

I think unions are to blame for all this

Oh GOD!!! PLEASE Jackson, DON'T get our Iowan congressional candidate around here started up all over again, WILL YA DUDE?!!!!

(BTW...I sure hope we don't start hearin' about people jumpin' out o' windows like back in '29!...I COULD have MY CAR parked UNDER that window, ya know!!!)

If you loan money to people you know won't be able to pay it back guess what's gonna happen?

Part of the problem was caused by government. They required banks to give home loans to a certain percentage of minorities... weather they could afford it or not; they had to meet quota. This is for the free market to take care of... not forced by government and now the poop has hit the fan.

I decided I'm going to stuff all my cash in my king size mattress.

Bad loans were the last hiding place of investors eager to prevail in the short term against a dying economy. Given the barren manufacturing landscape and the billions upon billions of dollars squandered in Iraq and Afghanistan, I believe the US government no longer commands the mechanisms necessary to recovery. Prepare for the worst...

Jack

Matt, if you stuff dollars in there they will be worth the same as feathers in a few years. I suggest Euros.

The banks deserve exactly what they are getting. It all needs to fail. A good depression once a century is a good learning tool. The politicians would call Fred and Fanny on a regular basis asking them to take on more bad debt to hide the real state of the economy. If you keep them spending you keep the consumer stats up for another election cycle.

The problem is that the people responsible for all this
aren't going to take the beating they deserve. IMHO
Uncle Charlie

Looks like the fed's gonna bail out AGI now..or us...the taxpayer..This stuff Ain't good....

That could be because AIG is large enough to be underwriting Govt. accounts ?

I kinda wondered why AIG began writing in the individual auto exposures market a year or so ago. Musta been a cash thing?

As the first home foreclosure stories started to come in, I was definately sympathetic, as, like many, I'm payin for my home with a loan. THEN, I started to really listen to the details. Most, if not all, of the stories went something like this...
I bought a house for 100k. In two years, it was worth 150K, so I got a home equity loan for 50K. Just a little while later, the market really boomed, and the bank gave me another home equity loan for another 100k. "All of a sudden, POW!, the market sank, the bank wants all the money back that I blew, Boo Hoooooooo, poor little me, it's so unfair." Dumb bunnies, the bank gambles and the owner gambles but the house of cards just came tumbling down.
Although I haven't seen one yet, I do feel sorry for the regular family who just wants to own a family home and gets caught in this mess. But I have no sympathy for the high rollers who were just in the "real estate gambling game", and who now I will have to bail out with my taxes. Rant over.

exactly right, people don't wanna be responsible for their own actions; they want government to be responsible for their actions. Unfortunately the government is doing a fine job at doing just that.

I'd rather our government do it than rely on the Dubai Sovereign fund or another foreign entity, we've already sold off too much of America.

Power and greed. The fact that top and middle management is pressured into making a profit or specific margin no matter what, trickles down to every aspect of our daily economic lives and goes beyond the Banking industry. And the poor ****** that have to do the dirty work so they can have and keep the american dream alive for themselves are US, Joe American.The difference is the banking industry is so huge that it effects everything.The next time you buy a steak at a store or some chicken, think about what went on before it was put on the shelf, what short cuts or ways to save or make more money were put into play. This goes for something as simple as a common nail. The last time I bought a box of nails(major box store) they were all bent slightly so if you hit hard wood they would bend. Its nothing new, its been coming for a while, its just that it has grown to our financial institutions which is what keeps the wheel turning. Power and Greed.

Wait a minute here! Didn't I see Michael Douglas say sort'a this same thing in a particular movie back about twenty years or so???


LOOK folks...Almost EVERYBODY was guilty of, as they say, "gaming the system" here. But some of us were just lucky enough to be a little older(and maybe wiser), and didn't HAVE TO fall for some of this stuff like some of the younger folks just starting out and/or who already have younger kids for whom they were trying to put an overpriced roof over their heads.

But what REALLY burns me up is, the two presidents of Fanni and Freddi are probably gonna get sacked, where each will get a 14 million dollar "golden parachute" plan on the way out. "Oh please, please, Mr. governmant man, don't let me go!...No, Oh no, not the 14 million dollar parachute for being incompentant!... Oh, OH, it's gonna be so humiliating to take all that money.....Oh nooooooo....!"

Well Rich, don't forget one simple "fact"...and that is..."evidently" all those "Super Geniuses" within that "Ol' Boy Network" of "Super Geniuses" who all seem to rotate within all the different corporate penthouses of all the different industries within this country, "MUST BE" worth all that money that they receive for their "valuable services"..."RIGHT"?!

At least all the "super genius" board members who continually hire their sorry a$$es must think so anyway, huh?!

(though I'm startin' to think that all those "super genius" board member would probably get better results from their CEOs if they'd just go ahead and hire THIS "Super Genius" right HERE....)

It has everything to do with the Community Reinvestment Act.

google news about it and learn the truth.

It's all about the Mayan calendar ending in December 2012. Inevitable global economic collapse, $500.00 a Bbl oil, and the end of affordable gasoline will bring about accelerated and irreversible inflation, then widespread panic, then worldwide famine and disease, then population redistribution, then World War III, and finally the end of civilization as we know it.

But on the bright side, we get a chance to see the new Thunderbird coming out next year before it'll all happen, so it isn't nearly as bad as it seems when you first look at it.

I grew up in a constuction family. Building trends were life. When I got out of service in 1972, I went to work with the family. At that time if you had a claw hammer, you could get hired as a carpenter, because they couldnt build houses fast enough for the baby boomers. My father who was one heck of a Hammerslinger,but only had a fith grade education pointed out to me that there would be a penalty and the end of the century when the baby boomers started selling there houses and found that there are more houses than people to by them. Supply and demand. Home values that were going so strong are falling and will continue to fall until the balance is made in the market place. Along with the lack of living wage jobs,and fuel costs so high home buyers are failng to meet their payments. Along with everyone else the home buyer gambled against time and ranout of it. Bail-out ? The real bail out that is needed is a way for people to make their payments, and as I see it that means jobs, lots of them and at good pay. What kind of jobs, lots of them and at good pay. It is the working person that buys the motorcycles, boats, cars, food, homes, doll blankets and life in general. It is the unemployed working person that is loosing his home, and he shouldnt and I dont think he would if he had a decent job. I know it shouldnt be this simple after all a man with a fith grade education pointed this all out, but he also understood the economy. At 19 he left home, that was 1933, the worst year of the Great Depression