Despite Having A S*%!load Of Our Money, Banks Still Aren't Lending
Gripped by "catatonic fear," banks still aren't thawing credit markets, "leaving taxpayers propping up an industry that won’t lend to them." [Bloomberg] (Photo: The Joy of the Mundane)
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Suprise.....no
Government needs to stay out of the free-market
Let's lend the banks taxpayer money to lend to the taxpayer, what a brilliant move.
Shut these f***ing banks down already, new banks with actual reserves will pop-up to replace them in no time
You were expecting them to maybe do with the money what they were given the money to do with?
Y'all had more faith than I ever did.
Should have just given that money to taxpayers. "Instead of lending money to banks and credit agencies so they can give their overpayed executives 5 million dollar bonuses, while increasing customer credit card interest rates 100%, and denying people loans, we have decided to give every working American $2,000!".
Combined it with a tax-free day, and you'd see tons of spending.
Do you really think people are as credit-worthy now as they were six months ago? If unemployment is up, a big recession is underway, and consumer confidence is low, then do you think that people's credit-worthiness is up, down, or unchanged?
Assuming creditworthiness is lower, do you really expect banks to make MORE bad loans? Isn't that what caused a lot of these problems in the first place? Banks making bad loans?
Honeys, this was never about helping out homeowners or consumers. It was just Bush helping giving your money to his buddies in big business as he meant it to be. You hear he carping on how they are using it? Nope. Average Americans mean nothing to this administration. They are all loot the treasury for as much as they can get before they leave.
@Ninja007: Even Alan Greenspan knows this is false. Without governments there are no markets. The government makes the rules that allow markets to exist and to function. What we are seeing now is the result of the government neglecting its responsibilities regarding a market it created. These problems will be solved by, and future episodes prevented by, far greater government involvement. The economy doesn't take care of itself. That's just a myth. There must be rules and they must be enforced.
@savdavid:
Bush did not do this alone. The entire US Congress is responsible for this. How many times do people have to explain this to you Bush haters?
Conservatives are right again.
Don't worry, we hate congress just as much, but Bush has shown such blatant cronyism during his administration, it is hard not to point fingers at him right off the bat.
@TecmoTech: Yeah I'm no Bush fan, but this is far greater than just he could fuck up alone. No this is pretty much a complete and total failure of our government and the American people who took loans they knew they couldn't afford.
I think Kent Brockman said it best "Democracy simply doesn't work"
@coold8: Common Fucking Sense is right again. I'm as liberal as it gets and I was shouting against this from all the rafters I could find.
@Ninja007: That's the truth. Let the free markets fail, there will be others with better business practices to take their place. This IS how the free market works. Some will fail and be replaced and others will grow and prosper.
@savdavid: I don't think Freddie/Fannie are friends of anyone but Barney Frank and his closet full of goons. Stop that partisan hating and own up to the fact that both parties are royally fucking up these days.
@savdavid: Don't forget our new lord and savior Obama not only voted for, but was a vocal supporter of the bailout.
@dtmoore: Good point.
I happen to like Bush, and enjoy my unpopularity status as a result :)
Let's hope Obama doesn't keep taking our money, I sure as heck don't need more taxes or bailouts.
Can't some government entity step in and say "uh hey fellas, if you don't start using this money for what it was meant for, you won't get any more help from us...EVER"??
@Skybolt: What Greenspan called a free market was still government controlled. There are too many kickbacks from the government to call it free. Company scratches the government's back while lobbying and their product or service gets special treatment in the FDA/EPA/FCC/etc. A truly free market would work. There are just too many smokes and mirrors in ours, which is really too bad, because it creates a sense of misplaced failure.
The credit markets aren't "frozen." In fact, the credit markets are far healthier than the mainstream has made it out to be, according to independent reports. One of these, done by a large Financial Consultancy called Celent, has been reported on by news sources but largely ignored by many.
A few sources:
[www.reuters.com]
[www.cbsnews.com]
And some notable excerpts:
"Exhibit A...is a report published by the Federal Reserve Bank of Minneapolis. It evaluates these claims: bank lending and so-called commercial paper declined sharply; bank-to-bank lending evaporated; and rates rose to unprecedented levels. The surprise is that, using the Fed's own data, the authors conclude that those 'claims are myths' perpetrated by politicians and an uncritical press."
"[The Celent report] notes that household credit is very close to its all-time high, that short-term credit has become cheaper in the last year thanks to lower interest rates, and that bank lending is at or close to a record high."
I think I'd rather have the banks be cautious about who they lend to than force them to make loans to people who can't pay them back.
If by "not lending" they mean "not giving $700,000 mortgage to someone making $30,000 a year" or "refusing to give a new credit card to someone who already has $50,000 in credit card debt", then maybe the banks are right. Excessive lending is what got us into trouble anyway.
@coold8: That's like being the guy who left the barn door wide open and was right in predicting the horse wouldn't run back in. No points for being right about the remedy failing when you created problem.
(Okay, that's not fair, SOME points for being right. But I really don't think conservatives should be trying to make bragging points on this because people are just going to keep pointing at conservative policies that got us here. It's bad politics.)
@formatc: yeah, that, except:
"A truly free market would work."
Not one this big. A TRULY free market has to have transparent information -- everything from no patents, trademarks, or trade secrets to completely open financial statements, readily available information about how satisfied consumers are, etc. That's simply not ever going to happen in a market as enormous and complex as ours (and removing the IP restrictions would probably HURT the economy, even while making the market more free). A free market in a modern economy is a myth; it's simply too large and complex a system to self-correct because consumers can't get the information they need to force the market TO self-correct.
@TecmoTech: The problem is everyone likes their OWN Congresscritter while hating Congress in general. It's everyone ELSE who needs to boot their asshole out. MY guy is fine.
(*MY* guy is an idiot, but the general principle stands.)
@Skybolt: Greenspan was one of those responsible for blowing up the bubble in the first place! Without governments there are no markets? Are you kidding me? One person can't trade their goods with another person unless there is a third person named "government" there?
@Oranges w/
Cheese: There hasn't been a "Free Market" since 1912 in the US. Do you have any idea how many regulatory agencies have been setup in the USA? You've had a rather heavily regulated market, with regulations set up to stop the exact same thing they are facilitating now. They've worked really well so far, why don't you just pile on some more?
@coold8:
Bush et al a$$f%cked us all for 8 yrs straight.
Now my children, grandchildren and great-grandchildren will be paying for it by slaving for their Mandarin overlords.
@Saboth: I find it funny that setting aside $700 billion in taxpayer-produced funds that from the start was not properly documented, legitimized, or handed out, was a great idea and needed IMMEDIATE approval. Yet, Obama's plan for tax holidays and another taxpayer stimulus is "too expensive and ineffective".
Community college economics professors would perform a better job than these apes.
@Oleg Chetverikov: Myself and most people I know who have good credit aren't having any problems getting lending. They've recently raised my credit lines, and other people I know have gotten mortgages. So I think it's just people with poor or marginal credit that are having problems, and I don't have a huge problem with that.
@Saboth: $2K wouldn't do any good for people who need a mortgage or small business owners who need a credit line.
Paulson and gang f***ed up. They gave the money out without any conditions.
I'd have to say that as a consumer who bought a home within my means and that has not been laid off ... this is a good time.
I am refinancing 2 homes. I have 1 rental that was our families first home 9 years ago, and the one we live in now. We're saving $400/month on these refi's.
And FTR I never bought into the whole VAR fad ... stable predictable standard 30 year mortgages FTW!
My guy (Jon Porter) was voted out of office. The people of Southern Nevada are smarter than most I suppose.
That's true, but then again, they are getting 0 loans now, and people are getting 0 mortgage help, so I think they'd rather have the 2k!
If it turns out this is the case, screw them. Pull their corporate charters and confiscate their assets. Do it to the most egregious offender, and see how quickly the rest scramble to fall in line.
@Oranges w/ Cheese: Actually govt intervention got us into this, decreeing to the banks that they must lend to people of questionable financial stability. You can thank the last Democrat president for that one.
@Eyebrows McGee: Conservative policies would actually dictate that you dont give loans out to people who dont deserve them. Liberals think everyone should be treated equally. So if anything liberal policies of treating everyone equally and just giving out loans to everyone is what caused this mess.
@Ingram81: Interesting claim, but it fails. "Liberal" policies banned racist redlining, not lending standards. In North Carolina, the mortgage lender with the highest repayment rate was Self Help Credit Union, which did a far larger proportion of lending in the "subprime" market than other lenders did. Self Help did careful vetting of applicants and required subprime applicants to take classes on what the mortgage meant. It's a ragingly "liberal" organization, and yet they're the most stable bank in the state.
It's not "liberals" that got us in this mess -- it's unregulated stupid and unbridled greed and unchecked fraud that got us in this mess.
@tankertodd: The problem is that money is unavailable to pretty much everyone now, regardless of credit-worthiness.
@Ingram81: You're talking about the old Community Reinvestment Act, which some would like to pretend is the cause of the current problem so they can blame the liberals. I found this article which explains why that notion is incorrect.
The ability to pawn off bad loans to other market players with no consequences is what allowed bad loans to occur. That would be greed, not force.
@Eyebrows McGee: Just read this...Investors Daily And your example is a credit union...
"Q: Is Self-Help a bank?
A: Self-Help is not a bank. Self-Help is a 501 (c)(3) nonprofit community development financial institution (CDFI) that includes a credit union. Self-Help Credit Union raises market rate deposits from members to make commercial and home loans to members. Its members include nonprofit and religious organizations and other socially responsible individuals and institutions."
They are not under the same rules and regulations as an FDIC insured institution, although credit unions have a similiar entity that ensures deposits. FDIC banks were required to comply with the CRA...p.
What is redlining btw?
Assholes!