Politics

[DSully1995]

The problem with regulation is are you then responsible for any failures of the industry? Nearly no one foresaw the economic crisis since it had never happened before, id rather the banks learn the lesson that they must be more conservative with their loans, than try to make a sinking ship float, profits and losses.

 

[enrico514]

Really, please elaborate. If you don't actually have the ability to argue it, and are just going off of what you overheard in some conversation between bankers that you know, then you are simply talking about something that you have no understanding of.While they may not agree with the implementation of Dodd Frank, retail fees and the current oversight of regulatory compliances, the reality is that if they work for a major bank they owe their job to stimulus and tarp. Plain and simple. I urge you to prove me wrong on that.




Interesting question. If you listen to the clip (btw, that speech is cutoff to focus on the beginning of it in order to vilify him. That same speech he talks in depth about the importance of not letting speculation get out of hand) he is talking about home values, not banks issuing mortgages without regard to whether a person could pay for it or not. At that time, before the mortgage collapse, we needed people to continue buying houses. We needed demand to rise as well as interest rates. His point wasn't so much with deregulation, but rather incentivizing home building and purchase. He wasn't, nor were really any politicians, suggesting that banks should start making bets their asses couldn't cash. Again, while i'm not in residential mortgages, I am a banker. We saw this coming but it was like watching a car crash in slow motion.



Again... that sounds good in theory, but it's not reality. Our entire economic system depends on companies being able to borrow on lines of credit, utilize lease lines, run their business on operating lines of credit securitized by profit. Without the cost of funds available through the large depositories of major banks, small lenders could not offer rates less than what companies could create in revenue on their own. For instance, most companies borrow money not because they don't have it, but rather because they are looking at the time value of money. The old adage of, "a dollar today is worth more than a dollar tomorrow". So instead of using their own money, they make the bet that they can create more long term profit by borrowing money to grow their business. This is simply not possible without the low cost of funds that major banks with billions of dollars of depositories provide. Why would a company borrow a $1MM to purchase equipment at a 14% rate (just tossing that rate out there) if they don't think that investment will create 14% more profit? Even if the purchase was absolutely necessary to the survival of their company, the prudent thing to do at that point would be to use cash on hand for the purchase. That is why major banks are "too big too fail", because if companies suddenly had to choose between extremely high rates (caused by high cost of funds) or using cash, growth would die and companies that needed lines of credit to survive would simply fail. Thus taking our economy behind the woodshed and beating it with bricks until it stopped breathing.

"Too big to fail" should not be a concept that even exists!

 

[woolybug25]

The problem with regulation is are you then responsible for any failures of the industry? Nearly no one foresaw the economic crisis since it had never happened before, id rather the banks learn the lesson that they must be more conservative with their loans, than try to make a sinking ship float, profits and losses.

Again. We did see it coming, but banks had to look out for their stockholders as well as the bankers looking out for their checking account balances. The "cost of failure" was and will never be more than what the economic cost of letting major banks default. Letting major banks fail wouldn't be "teaching them a lesson", it would only cripple small-mid size banks by taking away their ability to lend. Furthermore, it would guarantee that all of the companies dependent on low cost of funds (and in turn, low rates on their lines) would fail. Meanwhile, the major players in the industry would simply parachute out of the situation free and clear. This "lesson" wouldn't have been even noticed by anyone that was at fault. It would only punish the innocent.

Fellas... if we are going to have a conversation about bank bailouts, can we please bring up some original thoughts on the matter?

 

[woolybug25]

"Too big to fail" should not be a concept that even exists!

Then low rates cant exist.

Then companies growing their businesses through debt financing shouldn't exist.

Then small companies shouldn't be able to borrow to grow their business at all.

Then "free checking" shouldn't exist

Then mortgages under 10% interest rates should never exists.


Please read one of my posts if these comments don't make sense. Or you can just make another comment completely out of context.

 

[RallySonsOfND]

Then low rates cant exist.

Then companies growing their businesses through debt financing shouldn't exist.

Then small companies shouldn't be able to borrow to grow their business at all.

Then "free checking" shouldn't exist

Then mortgages under 10% interest rates should never exists.


Please read one of my posts if these comments don't make sense. Or you can just make another comment completely out of context.

Competition will get us all of those things.

 

[DSully1995]

Again. We did see it coming, but banks had to look out for their stockholders as well as the bankers looking out for their checking account balances. The "cost of failure" was and will never be more than what the economic cost of letting major banks default. Letting major banks fail wouldn't be "teaching them a lesson", it would only cripple small-mid size banks by taking away their ability to lend. Furthermore, it would guarantee that all of the companies dependent on low cost of funds (and in turn, low rates on their lines) would fail. Meanwhile, the major players in the industry would simply parachute out of the situation free and clear. This "lesson" wouldn't have been even noticed by anyone that was at fault. It would only punish the innocent.

Fellas... if we are going to have a conversation about bank bailouts, can we please bring up some original thoughts on the matter?

So... your rich now arent you? (supposing on the idea that if you saw it comming itd be an easy bet against and would make many times your money. And who is we?

How? Couldnt the fed source the money to them directly?

PRobably true, if the lesson ever needed to occur, i have no problem climbing a chainlink fence, but an electric fence i dont dare touch...

 

[enrico514]

Again. We did see it coming, but banks had to look out for their stockholders as well as the bankers looking out for their checking account balances. The "cost of failure" was and will never be more than what the economic cost of letting major banks default. Letting major banks fail wouldn't be "teaching them a lesson", it would only cripple small-mid size banks by taking away their ability to lend. Furthermore, it would guarantee that all of the companies dependent on low cost of funds (and in turn, low rates on their lines) would fail. Meanwhile, the major players in the industry would simply parachute out of the situation free and clear. This "lesson" wouldn't have been even noticed by anyone that was at fault. It would only punish the innocent.

Fellas... if we are going to have a conversation about bank bailouts, can we please bring up some original thoughts on the matter?

See this is the part that bankers do not get...

If (and this is a big if) the cost of a bank failing would be so disastrous that it would cripple an economy... should't we never let them reach such a position? And if they did reach that size... should we not address this issue before it becomes a problem? Should we not aim to have a system where a bank can fail without it being a problem, without the taxpayer having to come and rescue it!

 

[woolybug25]

Competition will get us all of those things.

How in the hell is "competition" going to provide the billions of dollars provided at low cost necessary for every small to mid size company to lend? I don't know how many times I have to say this. The reason our banking system can lend through small to mid size banks is because they themselves borrow those funds off the depositories of major banks. Those large sums of depositories allow major banks to have a low cost of funds.

So... your rich now arent you? (supposing on the idea that if you saw it comming itd be an easy bet against and would make many times your money. And who is we?

How? Couldnt the fed source the money to them directly?

PRobably true, if the lesson ever needed to occur, i have no problem climbing a chainlink fence, but an electric fence i dont dare touch...

lol. Have you read a single word I have written, or just perused to find something you could comment on? If the things I have brought to the conversation are above your knowledge base, then simply don't comment on them. I don't even know what you are trying to say with the Feds sourcing money. That comment doesn't even make logical sense.

Seriously... are you two reading what I write at all?

 

[enrico514]

Then low rates cant exist.

Then companies growing their businesses through debt financing shouldn't exist.

Then small companies shouldn't be able to borrow to grow their business at all.

Then "free checking" shouldn't exist

Then mortgages under 10% interest rates should never exists.


Please read one of my posts if these comments don't make sense. Or you can just make another comment completely out of context.

Bullshit! Look at a breakdown of the assets of US banks over the last 30 years... even the last 10 years. They have have never been so concentrated! Mortgages under 10% have existed when concentration was lower.

 

[woolybug25]

Bullshit! Look at a breakdown of the assets of US banks over the last 30 years... even the last 10 years. They have have never been so concentrated! Mortgages under 10% have existed when concentration was lower.

You said that "there should be no too big to fail" and now you are bringing up the concentration of bank portfolios. They aren't even the same topic. Seriously. What in the f*ck are you talking about? Do you even know?

If you removed the top ten banks in this country, please explain to me (distinctly, not in the abstract way you currently have) how any of those comments is wrong.

See this is the part that bankers do not get...

If (and this is a big if) the cost of a bank failing would be so disastrous that it would cripple an economy... should't we never let them reach such a position? And if they did reach that size... should we not address this issue before it becomes a problem? Should we not aim to have a system where a bank can fail without it being a problem, without the taxpayer having to come and rescue it!

How do you think companies have grown over the last 100 years? Would you prefer that we simply hold back all of that economic growth because one to two times a century we have to stabilize the system? Isn't that against the whole free market system in the first place? To be clear, you are advocating that we tell private business that they cannot grow past a certain size, and if they do, we will tear them apart. Regardless if they can maintain that size without creating any uncompetitive market or monopoly of any kind. Just simply stall the biggest driver of our economic system for no other reason that maybe... one day.... we have to help them.

That's brilliant.

 

[DSully1995]

lol. Have you read a single word I have written, or just perused to find something you could comment on? If the things I have brought to the conversation are above your knowledge base, then simply don't comment on them. I don't even know what you are trying to say with the Feds sourcing money. That comment doesn't even make logical sense.

Seriously... are you two reading what I write at all?

Alright genius how does opening fair competition not allow small and medium size banks to loan? And honestly you have no idea how this would really play out, nobody does, so im open to argument, but dont act like you KNOW what will happen.
Does the fed not loan money to banks to begin the process?

 

[DSully1995]

You said that "there should be no too big to fail" and now you are bringing up the concentration of bank portfolios. They aren't even the same topic. Seriously. What in the f*ck are you talking about? Do you even know?

If you removed the top ten banks in this country, please explain to me (distinctly, not in the abstract way you currently have) how any of those comments is wrong.

Ill give this a go, you remove the top 10 banks (if theyre all in bad business) , you immediately have millions of customers looking for new banks, well run banks from other places set up shop, or small banks expand, no one needs one particular bank

 

[woolybug25]

Alright genius how does opening fair competition not allow small and medium size banks to loan? And honestly you have no idea how this would really play out, nobody does, so im open to argument, but dont act like you KNOW what will happen.
Does the fed not loan money to banks to begin the process?

No, banks don't get money from the fed in order to lend. They use depositories. IE... the money in your bank account. They back that off of federal money, but they aren't using imaginary fed money to loan to business. The reason large banks can loan at low cost of funds (and give money to smaller banks to lend) is because they have a large amount of depositories, major infrastructure and syndication ability.

Ill give this a go, you remove the top 10 banks (if theyre all in bad business) , you immediately have millions of customers looking for new banks, well run banks from other places set up shop, or small banks expand, no one needs one particular bank

Then you would still have a large amount of small to mid size banks. While they all would be slightly bigger, none would have the economy of scale to create the current lending capacity of today's market.

Again... I can keep going if you like, but I am just repeating the same things over and over again. If you don't get it, cool, but can you please quit asking me the same question? Big banks create the markets low cost of funds. That is the intricatal point of our lending landscape, plain and simple. If you don't like it, then banks can simply lend money at a significantly higher cost of funds. This isn't magic-world... there is no magical way of doing it differently.

Btw... give the "genius" type comments a break. I'm not the one that is talking about something they admitingly have no background knowledge of. The condescending attitude is insulting.

 

[DSully1995]

So:

1. Loans are from the deposits of the customers

2. But those deposits could not be changed over into a multitude of small-medium or large (foreign) banks

3. Your right, I dont understand, but Im not forcing you to respond, and its not worth the time if you wont have a discussion I guess

 

[enrico514]

You said that "there should be no too big to fail" and now you are bringing up the concentration of bank portfolios. They aren't even the same topic. Seriously. What in the f*ck are you talking about? Do you even know?

If you removed the top ten banks in this country, please explain to me (distinctly, not in the abstract way you currently have) how any of those comments is wrong.



How do you think companies have grown over the last 100 years? Would you prefer that we simply hold back all of that economic growth because one to two times a century we have to stabilize the system? Isn't that against the whole free market system in the first place? To be clear, you are advocating that we tell private business that they cannot grow past a certain size, and if they do, we will tear them apart. Regardless if they can maintain that size without creating any uncompetitive market or monopoly of any kind. Just simply stall the biggest driver of our economic system for no other reason that maybe... one day.... we have to help them.

That's brilliant.

So you had to settle for commercial banking when you couldn't get into investment banking (don't be a jerk if you don't want to be treated like one!)... but you still need to chill out a bit and start listening to others instead of repeating the same things over and over without looking at the situation with a critical eye. I hate to break it to you but banks are not holy!

I never brought up the concentration of their portfolios but rather their assets. I don't have time to educate you but would be happy to direct you in the right direction.

As for your second point... if you look at the success that has been the US economy over the last century you would clearly realize that it was mostly the result of creative destruction. Business (including banks!) fail and usually, the the "fittest" survives. The US has gone though many (more than one or two!) financial sector crisis in the last 100 years. They have just never handled one so poorly as they did the most recent one!

 

[woolybug25]

So:

1. Loans are from the deposits of the customers

2. But those deposits could not be changed over into a multitude of small-medium or large (foreign) banks

3. Your right, I dont understand, but Im not forcing you to respond, and its not worth the time if you wont have a discussion I guess

1) yes
2) they could, but at a much higher cost of funds. Which means they would in turn have to lend at a much higher interest rate.
3) I think all of the posts have been making me testy. No hard feelings, my man.

So you had to settle for commercial banking when you couldn't get into investment banking but you still need to chill out a bit and start listening to others instead of repeating the same things over and over without looking at the situation with a critical eye. I hate to break it to you but banks are not holy!

I never brought up the concentration of their portfolios but rather their assets. I don't have time to educate you but would be happy to direct you in the right direction.

As for your second point... if you look at the success that has been the US economy over the last century you would clearly realize that it was mostly the result of creative destruction.
Business (including banks!) fail and usually, the the "fittest" survives. The US has gone though many (more than one or two!) financial sector crisis in the last 100 years. They have just never handled one so poorly as they did the most recent one!

I have no desire to be an investment banker and it most likely would be a demotion for me. You don't know the first thing about me, so chill with the personal insults.

Secondly, your other comments don't jive with your previous statements. Simply read your previous post and you clearly talk about the concentration of mortgages in bank portfolios. I have no idea how you can logically deny that.

Secondly, the "fittest" did survive. So maybe you are the one that isn't understanding the topic at hand.

 

[BobD]

I'm not smart enough to know why, but I believe we would be a lot worse off today as a country if we had let those large auto manufacturers, huge banks and AIG go belly up. I don't like the idea of companies being considered to big to fail, but I don't think we need to watch huge companies die if they can be saved and returned to profitability somehow. Didn't the majority of the companies already repay the loans?

As a country are we not better off investing in or loaning to American businesses before we send aid to other countries?

 

[RallySonsOfND]

I'm not smart enough to know why, but I believe we would be a lot worse off today as a country if we had let those large auto manufacturers, huge banks and AIG go belly up. I don't like the idea of companies being considered to big to fail, but I don't think we need to watch huge companies die if they can be saved and returned to profitability somehow. Didn't the majority of the companies already repay the loans?

As a country are we not better off investing in or loaning to American businesses before we send aid to other countries?

All that does is send a message to those big firms that it doesn't matter what they do, make a profit at all cost (forget about stability or good business practices) the government will bail ya out!

 

[enrico514]

1) yes
2) they could, but at a much higher cost of funds. Which means they would in turn have to lend at a much higher interest rate.
3) I think all of the posts have been making me testy. No hard feelings, my man.



I have no desire to be an investment banker and it most likely would be a demotion for me. You don't know the first thing about me, so chill with the personal insults.

Secondly, your other comments don't jive with your previous statements. Simply read your previous post and you clearly talk about the concentration of mortgages in bank portfolios. I have no idea how you can logically deny that.

Secondly, the "fittest" did survive. So maybe you are the one that isn't understanding the topic at hand.

1. You took the first "personal" shot... I replied!

2. I never once mentioned mortgages.

3. The fittest that had to be saved from the dead... I love that concept!

 

[woolybug25]

1. You took the first "personal" shot... I replied!

I didn't insult you, but then you told me that I am was mad because I wasn't an investment banker (which doesn't make sense, but I digress)

2. I never once mentioned mortgages.

Then how is one suppose to take the following comment:

"Bullshit! Look at a breakdown of the assets of US banks over the last 30 years... even the last 10 years. They have have never been so concentrated! Mortgages under 10% have existed when concentration was lower."

3. The fittest that had to be saved from the dead... I love that concept!

No, it was worth it to the American economy to save them. Hence, they were so strong that when in their time of need, they were able to get preferential treatment.


But please... give me another comment backed neither by fact nor logic. Please tell me how I am wrong with no actual facts to back yourself up with. Oh... and please... insult me again when you have nothing else left.

What do you do for a living?

 

[enrico514]

I didn't insult you, but then you told me that I am was mad because I wasn't an investment banker (which doesn't make sense, but I digress)



Then how is one suppose to take the following comment:

"Bullshit! Look at a breakdown of the assets of US banks over the last 30 years... even the last 10 years. They have have never been so concentrated! Mortgages under 10% have existed when concentration was lower."




No, it was worth it to the American economy to save them. Hence, they were so strong that when in their time of need, they were able to get preferential treatment.


But please... give me another comment backed neither by fact nor logic. Please tell me how I am wrong with no actual facts to back yourself up with. Oh... and please... insult me again when you have nothing else left.

What do you do for a living?

Mortgages... I was replying to your post... maybe we lost some context in the back and forth. But contrary to what you stated, mortgages under 10% have existed when TBTF banks were much smaller (relatively).

I guess I just don't agree that they were strong (the money I made shorting them would agree with my thesis), on how preferential treatment (as you call it) was handled and how the resulting cost was/is distributed. I do agree that the system had to be maintained/protected. But it also should have been cleaned and brought back on more solid footings even if that meant a little more short term pain. Unfortunately, it seems to me that most of the practices that caused the problem (for the financials) are still in place and that we are only setting ourselves up to make the same mistake in the near future.

I work in the financial industry.

 

[Ndaccountant]

Obama not sure he'd allow a son to play football - Yahoo! News

Love the last comment. What does a college kid have to fall back on? Oh, how about that free education.

 

[chicago51]

Obama not sure he'd allow a son to play football - Yahoo! News

Love the last comment. What does a college kid have to fall back on? Oh, how about that free education.

Yea sometimes people who don't play football don't understand what makes the game great. I hope the NFL becomes safer because they are thinking about making football illegal for youth. I think that is mistake because the youth level is were players if taught right can learn the basics like how to tackle safely.

 

[Black Irish]

We might as well make soccer the new national pastime; it'll fit right in with the European, socialist-lite direction our country headed in anyway.

 

[IrishJayhawk]

Yea sometimes people who don't play football don't understand what makes the game great. I hope the NFL becomes safer because they are thinking about making football illegal for youth. I think that is mistake because the youth level is were players if taught right can learn the basics like how to tackle safely.

I played football. I love it. I love watching it. It's an amazing game. My wife is an athletic trainer. I'm pretty sure that I wouldn't have my son play football.

 

[woolybug25]

Obama not sure he'd allow a son to play football - Yahoo! News

Love the last comment. What does a college kid have to fall back on? Oh, how about that free education.

Serious question. What part of what the President said do you disagree with? I read two articles on this interview and don't see how any rational person could disagree with what he said. He never once mentioned that the govt would have any part in changing the game, he just said that the game will have to eventually make changes for the safety of it's players. He even mentioned that he worries less about the NFL than college because they collectively represent themselves and are grown men get paid handsomely for their risk.

The reality is that after what we now know about concussions and how much easier they are to get, I wouldn't let my son play football until at least high school as well. There is an insane amount of data out there proving that concussions are extremely dangerous, especially for growing kids. The damage is also not something you know about until it's too late. Ask Dave Duerson, Junior Seau or Jim Mcmahon.

As far as the "what do they have to fall back on", how is a kid going to fall back on an education if he can't function because of CTE?

I get that some of you dislike the Prez because of his politics, but if you disagree with something he said, then you aren't paying attention to the current data out there on concussions.

 

[Polish Leppy 22]

I don't think the American auto industry thought it was a failure.

Because GM is now part of one big welfare program and everyone's happy. The UAW is happy with their contracts, GM has no fear of failure while obama is in DC, and obama in turn gets to tell people he "saved" them.

 

[chicago51]

Because GM is now part of one big welfare program and everyone's happy. The UAW is happy with their contracts, GM has no fear of failure while obama is in DC, and obama in turn gets to tell people he "saved" them.

Gm repaid the government for the bailout and are standing on their own 2 feet. They are number one in the word again. Don't act like the government still supporting them.

What I can't understand how people can dismiss the human cost for this or any other issue. These are people's lives we are talking about. It amazes me how we don't give a crap for our fellow man.

The bailout was paid back in full. All these people are now paying taxes instead of standing in unemployment. Everyone complains about spending. In the long run the bailout of GM actually saved the government money.

 

[enrico514]

Gm repaid the government for the bailout and are standing on their own 2 feet. They are number one in the word again. Don't act like the government still supporting them.

What I can't understand how people can dismiss the human cost for this or any other issue. These are people's lives we are talking about. It amazes me how we don't give a crap for our fellow man.

The bailout was paid back in full. All these people are now paying taxes instead of standing in unemployment. Everyone complains about spending. In the long run the bailout of GM actually saved the government money.

Last time I checked the UST break even price on GM shares was around 54$. 200 of the roughly 500 million shares owned by the US government were bought back by GM last December at a price of 27.50$ (+/- 50% loss). The remainder of the shares should be divested in the next 12-18 months. Let's just hope their market price rebounds significantly! About 70$ per remaining share is now required to break even.

 

[phgreek]

Last time I checked the UST break even price on GM shares was around 54$. 200 of the roughly 500 million shares owned by the US government were bought back by GM last December at a price of 27.50$ (+/- 50% loss). The remainder of the shares should be divested in the next 12-18 months. Let's just hope their market price rebounds significantly! About 70$ per remaining share is now required to break even.

if true, this is not really a payback in the spirit of Iacoca. I don't like companies becoming so bloated we need to bail them out...but I understand the political motivation to do so... I guess. The pat that pisses me off is, the political motivation is the "human cost" Chicago mentions...but what of the human cost for how this deal was really paid back. Because no one can see a guy or family impacted by the fed allowing this, its ok.

Well its not ok...I realize this administration has everyone convinved they can just print more money, and all the human costs are dealt with...however as we all know, that makes existing money worth less...constantly spreading everyone's human cost is WHAT (stupid isn't the right answer.... technically)?