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  #21  
Old 02-07-2014, 05:57 PM
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Originally Posted by Zap View Post

But banks were responsible for granting loans that they knew the borrower couldn't afford.

Nothing wrong with making loans to people who can't afford them. But then, who forced the banks to do so? Subprime loans were necessary to fill quotas imposed by the ECOA.


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Banks were responsible for raping the taxpayer when they decided they were too big to fail, against the will of the people.

Pretty sure it isn't rape when the people consented. That is, their democratically elected representatives decided for them. Gotta love democracy!

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Banks were responsible for initially getting the Clinton administration to do away with Glass-Stegal, which kept them in check.
Poor, helpless Clinton. He was held at gunpoint.

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Are you not going hold the banks accountable for anything?
Takes two to tango, and the banks had no power whatsoever to impose their will unilaterally on the people. Only the government has that power.
 
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  #22  
Old 02-07-2014, 06:44 PM
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You're not painting an accurate picture, John.

I'm not saying the people who took loans they couldn't afford are blameless. Far from it.
You get a loan, you make damned sure you are able to pay it according to the terms you agree to. But to dismiss the bank's responsibility to do their best to ensure that the borrower can pay is also wrong. When a borrower defaults, the bank takes possession of the home, when they never put up anything of value against it. They create a journal entry on the person's account and conjure up fiat dollars out of thin air. That's a problem that seems to be missed here. The bank has a vested interest in having the borrower default. They get a real asset for free.

Not a big fan of democracy here, but you really can't say that the people consented with a straight face. Polls at the time showed that the people overwhelmingly rejected the idea of bailing out the banks, but the politicians who were supposed to be serving the public actually served the banks instead. I'm sure it's just coincidence that those same banks made huge "political contributions" to those same politicians. What took place wasn't democracy, it was crony capitalism at best, fascism at worst.

If you thought I was trying to say Clinton was helpless, you misinterpreted my post. He and those involved at the political level are all just as much to blame for the removal of banking restrictions as the bankers who pushed to get it done. And that goes to my overall point... It would be unjust to simply put the blame for this on the people. Politicians and big business (especially bankers) share blame.

Another point I didn't even mention about the banks is that when this all blew up, they royally screwed everyone.
I know. You're saying to yourself "You're kidding. Say it isn't so.".
They knew the mortgages were toxic debt that would never be repaid.
What did they do? They repackaged those bad mortgages into groups and sold them as "securities" with a great credit rating on them, even when they knew they were bad investments. And, at the same time they were selling these toxic assets to their clients, they were betting against these same toxic assets behind the scenes. Kinda hard to blame anyone but the banks for that. Nobody else even knew about it until after the whole mess blew up.
 
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  #23  
Old 02-07-2014, 06:57 PM
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True they've been pushing "the american dream" for a long time - with regulations to encourage more lending for first time home buyers. BUT - MANY of those subprime loans to people who couldn't balance a checkbook could have easily and legally been denied by the banks. The borrowers were stupid. The lenders were greedy. And the gov't fouls things up as it always does.
Those people could only be denied loans if the bank was willing to expose itself to federal lawsuits for lending discrimination. Once a lending policy, no matter how fiscally sound or reasonable, is shown to have a "disparate impact", the feds jump in with both feet.
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Disparate Impact

A theory of liability that prohibits an employer from using a facially neutral employment practice that has an unjustified adverse impact on members of a protected class. A facially neutral employment practice is one that does not appear to be discriminatory on its face; rather it is one that is discriminatory in its application or effect.
Source: http://legal-dictionary.thefreedicti...sparate+Impact

Of course, once the unqualified borrowers default on their loans, the banks can then be demonized for predatory lending.
 
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  #24  
Old 02-07-2014, 07:50 PM
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Blaming the government because of equal opportunity lending regulations is ridiculous. Yes, the gov't said "you can't deny people a loan because of race, color or creed". They encouraged banks to lower some requirements for credit approval - accepting proof that the borrower had paid their bills on time instead of requiring a certain credit score for example.

But this is what the banks did - and this was not required nor encouraged by gov't - they offered "teaser" rates to less qualified applicants, didn't explain ARMs, then swooped in and foreclosed on these a couple of years later when the interest rates went up and nobody could afford the mortgage. It may not fit the textbook definition, but I call that predatory lending. How could you defend this practice or blame it on gov't?
 
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  #25  
Old 02-07-2014, 09:08 PM
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The bank has a vested interest in having the borrower default. They get a real asset for free.
And the casino has a vested interest in your loss. So what? You want a loan, you agree to the loan, then have a problem with abiding by the terms of the contract? Poor, victimized former homeowners.

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Not a big fan of democracy here, but you really can't say that the people consented with a straight face. Polls at the time showed that the people overwhelmingly rejected the idea of bailing out the banks
LOL. Polls at the time? Really. Polls indicate majority opposition to Obamacare but the left didn't care now did it? Moral mandate.

Gotta love the leftist dance. When they want to impose their morality on people, it is a moral mandate or the will of the people. But when the right tries to impose their morality on people, the left screams "individual liberty." Choose one.

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What took place wasn't democracy, it was crony capitalism at best, fascism at worst.

You think there is some inherent contradiction between democracy and crony capitalism or fascism?

The question that is on my mind: Bail out the banks, bad. Bail out GM, good?
 
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  #26  
Old 02-07-2014, 09:13 PM
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Of course, once the unqualified borrowers default on their loans, the banks can then be demonized for predatory lending.
Exactly, that's what really gets me. When the banks were operating according to color-blind standards, they got accused of racism. So they were forced to lend subprime and they get accused of predatory lending. Catch 22.
 
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  #27  
Old 02-08-2014, 08:38 AM
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And the casino has a vested interest in your loss. So what? You want a loan, you agree to the loan, then have a problem with abiding by the terms of the contract? Poor, victimized former homeowners.
Are my posts not showing up in this thread or are you just not reading and comprehending them?

Let's make this perfectly clear.

Under capitalism, a home owner loses their home when they default on their mortgage.
Under capitalism, a bank has the power to decide who they will lend to and who they will reject.
Under capitalism, when banks make bad bets that go south, they declare bankruptcy and their creditors (depositors) lose their wealth.
Under capitalism, when a car company is mismanaged to the point where they can no longer function, they declare bankruptcy and get sold or close down.
Under capitalism, the government doesn't tell banks who they can or can not lend to and the government must rely only on the virtues of capitalism for a vibrant economy.
Under capitalism, a private central bank doesn't get to create currency out of thin air and manipulate interest rates as they do.
And under capitalism, all parties involved (government, business and individuals) all take responsibility for their own actions and suffer the consequences thereof.

Now... If you can demonstrate where those rules favour anyone, including "Poor, victimized former homeowners", please feel free to do that.


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Originally Posted by John Scott View Post
LOL. Polls at the time? Really. Polls indicate majority opposition to Obamacare but the left didn't care now did it? Moral mandate.
Yeah. Polls at the time were strongly in favour of letting the banks fail.
Democracy AND capitalism dictated that should have happened.
Bringing Obamacare into this discussion doesn't change that, but since you did...
If democracy and capitalism were to rule the day, here, then nobody would be forced to buy private health insurance from any company and the majority of citizens who clearly didn't want Obamacare would be happily living their lives without it right now.
Not sure how that invalidates my previous points on capitalism, but whatever.


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Originally Posted by John Scott View Post
Gotta love the leftist dance. When they want to impose their morality on people, it is a moral mandate or the will of the people. But when the right tries to impose their morality on people, the left screams "individual liberty." Choose one.
Maybe the answer is for nobody to impose their will on anybody.
I'd rather not choose either of your faulty situations.

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Originally Posted by John Scott View Post
You think there is some inherent contradiction between democracy and crony capitalism or fascism?

The question that is on my mind: Bail out the banks, bad. Bail out GM, good?
Nope. Bail out nobody. See above.
Let the banks and GM fend for themselves and work through the consequences of the path they take.
 
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  #28  
Old 02-08-2014, 10:49 AM
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I love watching you and John slug it out. Been a long time since you two had a spirited discussion.
 
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  #29  
Old 02-08-2014, 10:55 AM
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I love watching you and John slug it out. Been a long time since you two had a spirited discussion.
Funny thing is...

It looks to me like we agree on more points than we disagree on.
 
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  #30  
Old 02-08-2014, 11:11 AM
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Still agreeing with Zap.

And still scratching my head as to why John is defending the banks. I mean, if there were banks that didn't take advantage of the situation to make big bucks, then stick us with the bill when their risky (and unethical) practices backfired, this would be a very different conversation.

But this "too big to fail" is BS - banks, GM, anyone. "too big to fail" literally means "private profits, public losses" and that's definitely not capitalism.
 
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  #31  
Old 02-08-2014, 12:12 PM
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Still agreeing with Zap.

And still scratching my head as to why John is defending the banks. I mean, if there were banks that didn't take advantage of the situation to make big bucks, then stick us with the bill when their risky (and unethical) practices backfired, this would be a very different conversation.

But this "too big to fail" is BS - banks, GM, anyone. "too big to fail" literally means "private profits, public losses" and that's definitely not capitalism.
This would be a very different conversation if the federal government had not meddled in the home lending market for social engineering purposes in the first place.

The banks' refusal of loans to unqualified borrowers would have been in violation of the Community Reinvestment Act which would have subjected the banks to lawsuits and punitive action from the federal government. While their practices were indeed risky, they were government-mandated risky practices.
 
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  #32  
Old 02-08-2014, 12:45 PM
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The banks' refusal of loans to unqualified borrowers would have been in violation of the Community Reinvestment Act which would have subjected the banks to lawsuits and punitive action from the federal government. While their practices were indeed risky, they were government-mandated risky practices.
That doesn't tell the whole story, does it?

The government didn't mandate that the banks slice and dice bad mortgages, repackage them as "mortgage backed securities" and get credit rating agencies to stamp them as credit worthy, grade A investments, and then turn around and knowingly sell those bad mortgages as credit worthy investments to their clients.
The government also didn't force the banks to bet against those investments at the same time they were hyping them up to clients in order to sell them.
The government didn't mandate that the banks invest in risky derivatives with loans on top of highly risky, rehypothecated assets belonging to others.
The government didn't mandate that the banks leverage debt that was multiples times the value of the original asset borrowed upon.

In actuality, very few of the risky practices engaged in by the banks was actually mandated by the government. Most of it occurred due to plain old fashioned greedy banksters.
 
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  #33  
Old 02-08-2014, 02:10 PM
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The banks' refusal of loans to unqualified borrowers would have been in violation of the Community Reinvestment Act which would have subjected the banks to lawsuits and punitive action from the federal government. While their practices were indeed risky, they were government-mandated risky practices.
where did the gov't say "offer teaser rates to get people to sign"

where did the gov't say "give bank employees bonuses based on the number of loans signed without regard to the quality of those loans"

where did the gov't say "use robo-signed docs to repo all those homes"

It sickens me to think of all the people whose lives were destroyed by this. Granted, the borrowers should have done their homework and understood what they were signing up for. But many of these borrowers were people who had never been given any sort of credit in their entire lives. It's understandable that they got excited about being able to buy a home. Sad, and un-defendable, but understandable. And then there's everyone else who was hurt by the fallout from the whole fiaso - people who didn't invest in risky investments, people who didn't sign on for mortgages they wouldn't be able to afford - people like me who didn't get a raise for years but watched the prices of everything go up thanks to the currency inflation used to pay for this mess (and bail out banking institutions in other countries as well).

Add in all the sleight-of-hand going on with mortgage securities and derivatives.

This is pure greed. It was a feeding frenzy. And I can't prove this, but the banks acted like they KNEW that if the highly risky business they were doing with securities and derivatives backfired, they would get bailed out by taxpayers (backroom deals with elected congressmen perhaps?)

Don't get me wrong. I'm not absolving the gov't. They share in the blame. I don't see anyone here defending much of what the gov does (since they usually screw it up one way or another) but I am truly puzzled by those who appear to be defending big banks.
 
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  #34  
Old 02-08-2014, 05:04 PM
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It is interesting to watch the leftist spin his narrative. The thread most used is victimism. The poor, helpless people, forced by greedy banksters to sign up for loans they knew they couldn't afford, then forced to default on those loans and make hard working, financially responsible taxpayers foot the bill.

Muh narrative.
 
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  #35  
Old 02-08-2014, 05:14 PM
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Enough with the left slams - this has nothing to do with left or right (and I am neither - they both want to give too much power to fed gov't, just in different ways)

And if you're just going to continue ignoring the many valid points already brought up here and continue to defend the banks, I give up. I just don't understand how you could feel the way you do though, unless you have a vested interest in big banks.
 
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  #36  
Old 02-08-2014, 05:22 PM
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And if you're just going to continue ignoring the many valid points already brought up here and continue to defend the banks, I give up. I just don't understand how you could feel the way you do though, unless you have a vested interest in big banks.

What valid points? I see your narrative. And it's nothing more than a childish narrative when one group in the fantasy is Pure Evil, and the other group is a levitating, halo-having bunch of Martyred Saints.

Should I be interested in your narrative? People with narratives are not seeking the truth. See Zap. They have their "values" and they need to spin a narrative that, to their mind, justifies imposing those values on others.
 
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  #37  
Old 02-08-2014, 05:32 PM
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People with narratives are not seeking the truth.
Yup.

I agreed that the gov't played their role.

You refuse to concede that the banks did some dirty business that was not in any way required or even encouraged by the gov't.

Where's the narrative?
 
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  #38  
Old 02-08-2014, 05:43 PM
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Yup.

I agreed that the gov't played their role.
The gov't? How about the people? Your poor, helpless greedy people who signed up for loans they couldn't afford and then defaulted on them and forced the responsible people in society to clean up after them?
 
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  #39  
Old 02-08-2014, 05:51 PM
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The gov't? How about the people? Your poor, helpless greedy people who signed up for loans they couldn't afford and then defaulted on them and forced the responsible people in society to clean up after them?
Yup.

I agreed that the people who signed loans they couldn't afford were at fault and un-defendable (although I sympathize with some of them, I would NOT say they were not at fault). However, these people did not force others to pay for their mistakes - the banks did that.
 
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  #40  
Old 02-08-2014, 05:57 PM
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these people did not force others to pay for their mistakes - the banks did that.
No, only the government has that power. Without the government forcing the productive members of society to pay for the irresponsible behavior of the unproductive, the banks would have taken the hit.
 
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