Perfect Storm

[Affrayer]

Originally Posted by Finny

Lets explain this for you.. so you can undertand how Interest rates work for loans.

Oh my, you just seem so determined to continue to embarrass yourself. The problem wasn't with the interest rates on loans but the interest rates on what the S&Ls paid out...

The only person who does not get this is you. This is not my fault because I have been explain to you the cause and effect process. Be it with Interest Rates.

Wow...you're saying the reason the banks are losing so much money in the subprime mess is because the banks loaned money to a great many individuals who couldn't afford to pay it back. And this makes sense to you? Why would the banks make so many extremely high risk loans? What market force compelled them to do so? Go on, we all know what you're going to say...the market force that compelled the banks to make such insane loans was an insane interest rate handed out by the FED!

[Finny]

Originally Posted by Affrayer

Oh my, you just seem so determined to continue to embarrass yourself. The problem wasn't with the interest rates on loans but the interest rates on what the S&Ls paid out...

Actually it was. If you pay out more for Savings then you earn in long term loans.. it does not balance the sheets. It becomes losses.

Originally Posted by Affrayer

Wow...you're saying the reason the banks are losing so much money in the subprime mess is because the banks loaned money to a great many individuals who couldn't afford to pay it back. And this makes sense to you? Why would the banks make so many extremely high risk loans? What market force compelled them to do so? Go on, we all know what you're going to say...the market force that compelled the banks to make such insane loans was an insane interest rate handed out by the FED!

Yep, Banks loaned too much money to people who did not qualify. Banks loaned and the housing prices dropped. Banks took the risks to make more money. Risk= Big Profits. Lower interest rates by the FED increased the ability to give these loans. With out major risk.

You want to raise interest rates as you argued from the begining. As I said if we do that, the interest rates on those loans go up. Meaning all those who should not have qualified for a loan will default on the loans anyway.

[Affrayer]

Originally Posted by Finny

Actually it was.

I've never seen anyone so desperate to embarrass themselves.

If you pay out....

Banks do not "pay out" on the loans they make. They receive payments. If you are trying to prove that it was the loans the S&L made that caused the S&L Debacle then why are you talking about what the banks paid out?

How embarrassing for you.

Banks loaned too much money to people who did not qualify.

When it comes to the subprime market whose fault is that? Did someone force the banks to make such loans? Could market forces, as in the guise of super low interest rates by the FED, have caused them to attempt to compete in the market place by making improper loans? Why the answer is yes...

You want to raise interest rates as you argued from the begining.

I've not argued anything of the sort. You're again lying.

My my you sure are good at embarrassing yourself...

[Finny]

Originally Posted by Affrayer

I've never seen anyone so desperate to embarrass themselves.

I am not desperate, I know the facts. I worked in Finacials uptil last year. I decided to get my Masters in Economics and Poli Sci. So please.. save some face here.. and get back into reality of Banking and S&Ls.

Originally Posted by Affrayer

Banks do not "pay out" on the loans they make. They receive payments. If you are trying to prove that it was the loans the S&L made that caused the S&L Debacle then why are you talking about what the banks paid out?

How embarrassing for you.

Here is your lesson for today: Banking 101.

Banks pay out interest to those who SAVE (Savings account or CDs).

My bank Wachovia pays me .45% every month to keep my money with them. Which equals 5% of Interest a year.
Now if Interest rates go up I get a bit more to match the current interest rates increased by the FED.

Now another thing Banks do is loan. But Banks can only loan at a 9xs what they have on hand. So they need those to people who save to save with them.

If people default on Loans, thats a lack of Income, Banks can't pay the Interest to those who have Savings account.

This happen in the S&L scandal.

Originally Posted by Affrayer

When it comes to the subprime market whose fault is that? Did someone force the banks to make such loans? Could market forces, as in the guise of super low interest rates by the FED, have caused them to attempt to compete in the market place by making improper loans? Why the answer is yes...

The Subprime is the risky part of loans. Subprime means you have very low credit scores. Banks had already loaned enough out to prime people in the market. So to make money Banks had to take a risky move and offer loans to the Subprime people. This is 101 stuff here. Doesn't take a Rocket Scientist to get this.

Of course thats whats happen. But what happened was the Banks went ape**** and loaned too much to those idiots who can't pay their bills. Thus the crisis. Banks got caught up in it. Now are suffering. As they should.

Originally Posted by Affrayer

I've not argued anything of the sort. You're again lying.

My my you sure are good at embarrassing yourself...

Originally Posted by Affrayer

So let's raise interest rates to make the dollar stronger and starve off inflation? Can't because it will kill the economy and break the banking system...

Interesting you say you don't argue for it. But whats that I see.. You saying we should.. But playing the Anti-Big Business card.

Originally Posted by Affrayer

Wow...it's like you invent things as you go along...try reading THIS from CATO.

The CATO article argued against your position of raising Interest Rates. I agrued against it. I told you it was a bad Idea. But you still don't get it. You are all over the place on how things work. I tried to explain it but you don't get it.

Btw.. I never lie, I am a facts and numbers person.

[Affrayer]

Originally Posted by Finny

I am not desperate....

What a convincing argument.

I decided to get my Masters in Economics and Poli Sci.

Too bad our higher education institutions do not give refunds...

Here is your lesson for today: Banking 101

I can't wait...I'm so excited.

Banks pay out interest to those who SAVE (Savings account or CDs).

So you are completely abandoning your claim that interest rates set on loans was what caused the S&L Debacle. Well it's about time...but that means you think the St Garn act of 1982 was what caused the S&L Debacle and not what happened under Carter. My work here is done.

But Banks can only loan at a 9xs what they have on hand.

But under Reagan the S&Ls were allowed to play fast and loose with "Good Will." This allowed them to manipulate the level of assets they had on hand with accounting gimmicks which meant they could loan even more out.

If people default on Loans....

Which had nothing to do with what happened under Carter.

Subprime means you have very low credit scores.

Well that's half of what it means...

Banks had already loaned enough out to prime people in the market.

Hahahahahahahaha....you made that up. Here's an explanation on your level.

Originally Posted by Source

In short, this is what happened: the 2000 dot com bust led to a mild recession which subsequently led the Federal Reserve to cut rates low enough. These actions triggered borrowing and cheap money to fuel asset inflation and housing prices eventually heated up. After many years of this, the usual complacency and desire to keep the bubble going caused folks in the lending industry to resort to exotic loans and riskier practices. Credit got looser, enticing less qualified people to become heavily leveraged homeowners.

A little closer to the truth:

Originally Posted by Source

The subprime mess is a failure of the free market. A flat failure on all sides. Buyers. Sellers. Financial institutions. And government, which should have been watching but wasn't.
....
One of the fastest-growing Bush-era scandals is the way regulators ignored early warnings. As early as 2000, highly placed officials told Fed Chairman Alan Greenspan too many banks were selling loans to people who couldn't afford them. What happened? You bet: nothing.

But this doesn't begin to explain how regulatory changes under Bush and the republicans made this all possible. For that you need to understand the affects of the changes in 2005 to Community Reinvestment Act (CRA). and other changes to laws such as bankruptcy. So between regulatory changes made that paved the way for the subprime mess and the refusal of the Bush administration to pay attention, we have the true cause of what happened.

Interesting you say you don't argue for it. But whats that I see.

Feel free to quote where I argued for it and if you can't admit you lied.

Btw.. I never lie, I am a facts and numbers person.

Hahahahahahaha....sure thing....

[Finny]

Originally Posted by Affrayer

So you are completely abandoning your claim that interest rates set on loans was what caused the S&L Debacle. Well it's about time...but that means you think the St Garn act of 1982 was what caused the S&L Debacle and not what happened under Carter. My work here is done.

Actually its quiet the same. You again fail to connect the dots and understand how complicated the S&L system is and was at that time. Banks and Savings & Loans are the same thing. Just a different in name.

When a Bank or S&L loans money out at a Fixed Rate (its locked, Can't Change unless defaulted on), but Savings Accounts (which is the other part of banking) changes with Interest Rates. Say if on Monday the FED lowers the Interest rate by 250 bases points (.25%) The rates offered by the Bank on Savings accounts would go down to match the cut. But those Fixed Rates on Loans would not change. So thats extra money to the banks as profitable income.

In the late 70's under Carter, interest rates soared. So the fixed loans given out prior to hikes in Interest rates didn't bring extra income. It actually cost S&Ls money because they had to match the rate increase by the FED for their Savings Accounts.

I've explained this many times to you. But you still don't get it.

Originally Posted by Affrayer

But this doesn't begin to explain how regulatory changes under Bush and the republicans made this all possible. For that you need to understand the affects of the changes in 2005 to Community Reinvestment Act (CRA). and other changes to laws such as bankruptcy. So between regulatory changes made that paved the way for the subprime mess and the refusal of the Bush administration to pay attention, we have the true cause of what happened.

I know exactly how this happen. Been there and saw it happen. I don't need a person with anti-Bush agenda telling me what did or didn't happen. But I'd rather see you post more conspiracy theory bs.. and stick with that as thats about as much as you know.

Originally Posted by Affrayer

Feel free to quote where I argued for it and if you can't admit you lied.



Hahahahahahaha....sure thing....

I showed you. You brush it aside when it doesn't fit you're truth. Thats typical of those who don't know what the hell they are talking about. It would be best if you go to your local Community College take a few classes in Economics or hell just watch CNBC for a bit, I really don't care, just as long as you educate yourself on these matters.

You have an agenda here and its not talking about what is the cause of the problem, but wanting more control over the market. As you made perfectly clear with your anti-free market quote. If you understood the situation you would know that not raising interest rates and neither lowing them is going to help. You need to thin out the herd. Survival of the fittest mentality. As the weak always drag you down.

Oh look 63,000 more people out of job this week. Yea!!! More Defaults on Loans. So much for the stimulus plan, it'll be fun paying taxes on my own "rebate".

[Affrayer]

Originally Posted by Finny

Banks and Savings & Loans are the same thing. Just a different in name.

At the time banks and S&Ls were not anywhere near the same thing. Your suggesting that they were is absurd.

When a Bank or S&L loans money out at a Fixed Rate (its locked, Can't Change unless defaulted on), but Savings Accounts (which is the other part of banking) changes with Interest Rates.

Your understanding of how the Savings and Loan industry worked is sophomoric at best. S&Ls make money by loaning it out. They incur "expense" by creating savings account. They do not go broke by not creating further savings accounts.

In the late 70's under Carter, interest rates soared. So the fixed loans given out prior to hikes in Interest rates didn't bring extra income. It actually cost S&Ls money because they had to match the rate increase by the FED for their Savings Accounts.

Nope, the S&Ls could have just sat back and not created further savings accounts while continuing to made money on existing mortgage loans. This is not why they went broke.

I've explained this many times to you.

And I've explained why you're wrong to you many times...

I know exactly how this happen.

Hahahahahahaha....boy can you tell a joke.

At this point I see no reason to continue. I've disproven everything you've said and all you do is repeat it again and again...you're just wrong but you don't seem to get that repeating yourself over and over again doesn't make you right. The higher interest rates caused by Volker fighting inflation caused S&Ls to lose money but it was the St Garn act of 1982 that set the stage for them to be wiped out.

I showed you. You brush it aside when it doesn't fit you're truth.

Hahahahahaha....truth...it should burn your tongue.

Oh look 63,000 more people out of job this week.

Yes, the perfect storm...caused by people like you who think "supply side economics" works or that republicans are anything but criminals. Well it's time to pay the piper...

[Affrayer]

What is a perfect storm? A perfect storm is any event where an unusual conglomeration of several factors occur before it germinates and once that happens the affects exceed normal expectations.

Originally Posted by Perfect Storm of debt puts Floridians in bankruptcy

Mortgage woes, higher gas prices and a "perfect storm" of other financial troubles have caused personal bankruptcies to spike in Central Florida so far this year, according to the latest court records.

Nearly 1,300 personal-bankruptcy cases were filed in Orlando during the first three months of 2007, nearly twice as many as during the first quarter of last year, figures from U.S. Bankruptcy Court for the Middle District of Florida show.

And that may be just a hint of what is to come, bankruptcy lawyers say. From bankruptcy trustees and lawyers to clerks and credit counselors, everyone tied to the process is seeing more cash-strapped people coming through the door on their way to insolvency.

"Some people are just drowning in everything, whether it's debt, job loss, divorce or some health issue," George Janas, a credit counselor and managing partner of Orlando-based Consumer Debt Counselors, said Tuesday.

"They've been living so close to the edge financially -- when something big hits, it's enough to put them behind," he said. "And they can't catch up again."

Personal bankruptcies did plummet across the country after the new law took effect. In the Orlando portion of the Middle District of Florida, for example, the first-quarter caseload fell from 3,644 in 2004 and 3,300 in 2005 to just 658 last year.

But this year's first-quarter filings, while down 60 percent from 2005, to 1,298 cases, are up 97 percent from a year ago.

"There has been a perceptible increase in filings by people who are trying to prevent foreclosure," said Jonathan Alper, a bankruptcy lawyer in Lake Mary. "I don't think we've begun to see the full effect of that."

The housing boom also lured some people into buying a second home as an investment, sometimes with the aid of creative financing such as "teaser rate" or interest-only mortgages they can no longer afford, Alper said. If they qualify to file a Chapter 7 personal bankruptcy, he noted, it leads to the liquidation of their assets, including the second home, but lets them protect their primary residence.

Skyrocketing property-insurance premiums and property taxes, along with rising gas prices and that old standard, credit-card debt, are also taking their toll.

"There are a lot of things that are just out of people's control," said Anne-Marie Bowen, an Orlando lawyer and president of the Central Florida Bankruptcy Law Association. "Most people try to avoid bankruptcy at all costs, but at some point they need to realize they have to do something about their unsecured debt so they can keep a roof over their heads."

To discribe Bush's management of the economy think of a sinking boat where the crew throw everything over board and it is still sinking. All the tricks have been played. Print truck loads of money, super low interest rates, lying speeches about the health of the economy, gut our manufacturing base with insane trade policies, and an energy policy written by Enron. Now the storm is coming and we have nothing left to throw at it but ourselves...for all the good that will do.

[Finny]

Originally Posted by Affrayer

At the time banks and S&Ls were not anywhere near the same thing. Your suggesting that they were is absurd.

The only difference between Banks and S&Ls at the time was that S&Ls could not provide Checking Accounts.

Originally Posted by Affrayer

Your understanding of how the Savings and Loan industry worked is sophomoric at best. S&Ls make money by loaning it out. They incur "expense" by creating savings account. They do not go broke by not creating further savings accounts.

I never said that S&L didn't make their money through loans. Banks make money through loans as well. What I said was that when Banks and S&Ls over extend (loan too much) they run the risk of losing income due to risky business practices.

Ever hear of the Gold Smith Tale?

Part Two

Originally Posted by Affrayer

Nope, the S&Ls could have just sat back and not created further savings accounts while continuing to made money on existing mortgage loans. This is not why they went broke.

Wrong, This would not have worked. As people were defaulting on their loans, it would have mean huge loses for the S&Ls and they still had to pay interest on saving accounts already on the S&Ls books. They still would have collasped.

They needed more people saving in the S&Ls industry to provide capital (see Golds Smith Tale)..

Originally Posted by Affrayer

At this point I see no reason to continue. I've disproven everything you've said and all you do is repeat it again and again...you're just wrong but you don't seem to get that repeating yourself over and over again doesn't make you right. The higher interest rates caused by Volker fighting inflation caused S&Ls to lose money but it was the St Garn act of 1982 that set the stage for them to be wiped out.

Again you fail to realize that S&Ls were losing Billions of Dollars (at the tune 100 Billion by 1980) and at that time they were already screwed. They couldn't cover their loses and were going belly up in 1980.

In 1977, the Community Reinvestment Act (CRA) of 1977 was passed. Which forced just as the 2005 was on Banks and S&Ls. The samething you were bitching about with Bush.

Originally Posted by Affrayer

Yes, the perfect storm...caused by people like you who think "supply side economics" works or that republicans are anything but criminals. Well it's time to pay the piper...

Ah yes, the truth will set you free. Finally, you stop hiding your agendas.

LOL, so close but so far away. I actually believe in Supply and Demand Economics. As its up to the Consumer not Governments to stimulate the economy. That its the only way to be free from "supernatural hands" of those behind the close doors, who decide policy.

Supply Side failed. It failed horribly. But it does not mean that lower taxes is a bad thing.

[Affrayer]

Originally Posted by Finny

The only difference between Banks and S&Ls at the time was that S&Ls could not provide Checking Accounts.

You just say the silliest things. How about the S&Ls were regulated by FHLBB and the Federal Reserves Banks weren't? How about at the time they couldn't make business and consumer loans? And their investments were limited to only residential property. The list is long and you have again embarrassed yourself...

Personally I'm tired of wading through your BS and ignorance.

Originally Posted by Source

Abstract- Misguided regulatory policies enacted to help the thrift industry in the early 1980s only served to exacerbate the financial troubles of savings and loans associations (S&L) later in the decade. In particular, the policy of forbearance, implemented to allow thrifts time to adjust to deregulatory moves, proved to be very damaging to the long-run viability of S&Ls. This policy had a highly destabilizing impact on thrifts since it encouraged S&L institutions to ignore traditional capital requirements, a move which encouraged excessively risky asset diversification. The application of regulatory accounting principles (RAP) and the liberal interpretation of GAAP accounting methods also played key roles in heightening the savings and loans crisis, mainly because they encouraged financial waste and regulatory complacency.

Every one of those regulatory changes highlights the difference between S&Ls and Federal Reserve Banks.

If I were you, I would ask for a refund on your education...you got taken.