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Will There Ever Be Honest Banks Again?  
User currently offlineCometII From United States of America, joined Dec 1999, 302 posts, RR: 0
Posted (1 year 9 months 1 week 5 days ago) and read 1805 times:

Were there ever any?

In terms of the complex banking and financial activities of the "modern" economy (I use modern in quotations because given what we have seen in the USA, Asia, and now Europe in the last 10-15 years, one can hardly use modern as a synonym or definition for "better" or "improved"), I know next to nothing.

What I do know is that this banking crisis that started in 2008 (and really it began in the mid 1990s, first all over Asia, then in 1999-2002 in South America, then of course in 2008 in North America mainly the USA, and today Europe), just never seems to end. Every couple of months, a new country is embroiled.

Needless to point out, that absolutely no one has been made responsible or even charged with malfeasance. I guess the evidence of "the world economy has been on fire for almost a decade", is not sufficient legally.   

But there is also no evidence that banks have actually even changed their behavior (the only thing that has made them more cautious is just self-preservation, but there is nothing to suggest that come the next "bubble" of financial or asset innovations, they won't put everyone's savings yet again at risk by criminal behavior).

So, what to make of the global banking industry? Is it ever going to be an honest business?

41 replies: All unread, showing first 25:
 
User currently offlineBraniff747SP From United States of America, joined Oct 2008, 3018 posts, RR: 1
Reply 1, posted (1 year 9 months 1 week 5 days ago) and read 1793 times:

Quoting CometII (Thread starter):

Were there ever any?

I'd argue that there are honest banks and always have been.

Saying that banks are inherently dishonest is a rather large and overbearing statement to make. Like in many industries, there have been banks which have acted dishonestly or have otherwise valued the bottom line above all else.

Remember, the majority of banks aren't the ones that are in the news for having gambled away a couple of billion or something of the sort; there are many shyster banks, but there are many others which are simple businesses which are of no large importance anyway.



The 747 will always be the TRUE queen of the skies!
User currently onlinejetblueguy22 From United States of America, joined Nov 2007, 2850 posts, RR: 4
Reply 2, posted (1 year 9 months 1 week 4 days 23 hours ago) and read 1779 times:
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HEAD MODERATOR

Quoting CometII (Thread starter):
So, what to make of the global banking industry? Is it ever going to be an honest business?

I'm not so sure it is a dishonest business. Many banks have remained under fire since 2008 in the US, but they aren't all that way. The problem is when a trend starts and somebody starts to make money every one wants to hop on the train. The government has to find a way to make sure the shady practices of banks like Citi never happen again, and if they do, they alone are responsible. The leadership has to determine if their investments are too risky to take on. Lately it seems like banks are far more cautious when conducting business. Though it is still pretty simple to get a loan if you have decent credit.
Pat



All of the opinions stated above are mine and do not represent Airliners.net or my employer unless otherwise stated.
User currently offlineBMI727 From United States of America, joined Feb 2009, 15845 posts, RR: 27
Reply 3, posted (1 year 9 months 1 week 4 days 23 hours ago) and read 1777 times:

Quoting CometII (Thread starter):
In terms of the complex banking and financial activities of the "modern" economy (I use modern in quotations because given what we have seen in the USA, Asia, and now Europe in the last 10-15 years, one can hardly use modern as a synonym or definition for "better" or "improved"), I know next to nothing.

That's your problem. There is really not much dishonesty as much as there is a lack of understanding among the public about what the banks are selling you and what they are selling each other.

Quoting CometII (Thread starter):
Needless to point out, that absolutely no one has been made responsible or even charged with malfeasance.

Who specifically should be punished?

Quoting CometII (Thread starter):
the only thing that has made them more cautious is just self-preservation

Self preservation is practically the only reason why anyone in a capitalist economy would be cautious.

Quoting CometII (Thread starter):
they won't put everyone's savings yet again at risk by criminal behavior)

What specifically did banks do that was illegal?



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineImperialEagle From United States of America, joined Jan 2006, 2630 posts, RR: 21
Reply 4, posted (1 year 9 months 1 week 4 days 23 hours ago) and read 1776 times:

Quoting CometII (Thread starter):
Were there ever any?

like "honest" politicians. I have a Southern Baptist friend who is convinced none of 'em got to be where they are by 'livin at the foot of the cross.

Better to buy as much gold at melt value as you can. NEVER trust the government! Never!



"If everything seems under control, you're just not going fast enough!"
User currently offlineStarAC17 From Canada, joined Aug 2003, 3411 posts, RR: 9
Reply 5, posted (1 year 9 months 1 week 4 days 23 hours ago) and read 1769 times:

Quoting BMI727 (Reply 3):
What specifically did banks do that was illegal?

Sadly nothing but a lot of the things done were once illegal and things that should be made illegal.

The Glass-Steagall (repealed) act for example stated that commercial and investment banking should be separate businesses and when this law was removed banks began to sell mortgages (a commercial product) in the much higher risk investment market. Had the same housing crash happened there would have been problems with commercial banks taking some losses and perhaps a few bank failures (the FDIC would have taken away the panic) but it wouldn't have spread to every sector of the economy.

Also something has to be done about hedge funds where you can sell a security and then take out insurance on it making it a double win for the seller when it fails. I admit its a vague description but how is that legal and its very akin to insider trading which is illegal.



Engineers Rule The World!!!!!
User currently offlineBMI727 From United States of America, joined Feb 2009, 15845 posts, RR: 27
Reply 6, posted (1 year 9 months 1 week 4 days 23 hours ago) and read 1760 times:

Quoting StarAC17 (Reply 5):
nothing

Exactly.

Quoting StarAC17 (Reply 5):
when this law was removed banks began to sell mortgages (a commercial product) in the much higher risk investment market.

There's nothing fundamentally wrong with the securitization of mortgages. It is already done with other types of debt, after all. The flaw was largely in the belief that real estate was a completely safe investment and houses would never drop in value.

Then that led to other fallacies like buying houses people couldn't necessarily afford since the buyers would never totally pay for it but just sell at a profit or refinance later, exacerbated by the cultural significance placed on home ownership. People who had houses took out HELOCs because pundits told them that if they didn't they were leaving money on the table.

Banks were all too happy to lend the money: the market was only going to go up and therefore worrying about the ability of a homeowner to pay was not an issue. Going underwater wasn't a thought and even if it was they wouldn't care since the banks originating the loans would just package them up and sell them off to a market that was in a feeding frenzy. And the buyers of such securities only considered the positives of the market without questioning the stability of the underlying loans and as a result got left holding the bag in many cases when buyers defaulted.

Again I should emphasize that the securitization of debt is not the major problem, bad debt is. When mortgages default, somebody gets hurt.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlinekingairta From United States of America, joined Feb 2009, 458 posts, RR: 0
Reply 7, posted (1 year 9 months 1 week 4 days 22 hours ago) and read 1756 times:

On a global scale I don't know. On a local scale I'd have to say credit unions are. Because the customers are the owners.

User currently offlineStarAC17 From Canada, joined Aug 2003, 3411 posts, RR: 9
Reply 8, posted (1 year 9 months 1 week 4 days 22 hours ago) and read 1744 times:

Quoting BMI727 (Reply 6):
Again I should emphasize that the securitization of debt is not the major problem, bad debt is. When mortgages default, somebody gets hurt.

It isn't but it should be somewhat regulated to prevent a disaster of one sector of the economy crashing (real-estate) to affect everything else which is exactly what happened in 2008.

These mortgage backed securities went bust and even though they were insured when everyone makes a claim an insurance company can't cover all of them and fails or in the case of AIG gets bailed out. Banks freak out and refuse to lend money at all and corporations such as GE can't finance their day to day operations and the economy stops. Reckless banks should be getting hurt but now they are too big to fail and no one in congress wants to regulate their size so they know they can take dumb risks and the taxpayer picks up the tab. Perhaps this happens again and the American public flips off the banks but I doubt it.

Putting up walls in different areas of the financial services industry is akin to having watertight doors in a ship. When one area's hull breaches then it is limited to spread everywhere else.



Engineers Rule The World!!!!!
User currently offlineBMI727 From United States of America, joined Feb 2009, 15845 posts, RR: 27
Reply 9, posted (1 year 9 months 1 week 4 days 22 hours ago) and read 1737 times:

Quoting StarAC17 (Reply 8):
It isn't but it should be somewhat regulated to prevent a disaster of one sector of the economy crashing (real-estate) to affect everything else which is exactly what happened in 2008.

But you're not going to stop that. Any sector going bad is going to have a huge ripple effect, especially with respect to banks who by definition are involved in all sorts of different businesses.

Quoting StarAC17 (Reply 8):
Perhaps this happens again and the American public flips off the banks but I doubt it.

That's exactly what should happen and banks need to be put on notice. Any future bailouts will be private ones.

Quoting StarAC17 (Reply 8):
Putting up walls in different areas of the financial services industry is akin to having watertight doors in a ship. When one area's hull breaches then it is limited to spread everywhere else.

Doing that will weigh down the system and also prevent money from flowing freely from one segment to another. There's going to be risk involved, just make sure the banks know it's their necks that are being stuck out on their investments.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineRomeoBravo From , joined Dec 1969, posts, RR:
Reply 10, posted (1 year 9 months 1 week 4 days 17 hours ago) and read 1695 times:

Quoting StarAC17 (Reply 5):
The Glass-Steagall (repealed) act for example stated that commercial and investment banking should be separate businesses and when this law was removed banks began to sell mortgages (a commercial product) in the much higher risk investment market. Had the same housing crash happened there would have been problems with commercial banks taking some losses and perhaps a few bank failures (the FDIC would have taken away the panic) but it wouldn't have spread to every sector of the economy.

Glass-Steagall is a complete red herring. There is nothing about the removal of that act that meant people became alien to the risk/reward tradeoff.

The problem is not commercial banks it is central banks manipulating the money supply and interest rates. Commercial banks are now just proxies to central banks who have been implementing utterly reckless policies over the last decade and continue to do so.

The model of a bank used to be banks attracted depositors via the promise of interest rates, and lend out this money to the investments they deem best at a slightly higher interest rate - the bank profiting from the interest rate cut, but they were always restrained by the amount of money they could raise in deposits. The whole dynamics of what keeps banks stable is lost when banks get newly created cheap money from the central bank. Savers are no longer incentivised to save, banks are no longer interested in money only going to the best (sustainable) investments because the supply of money is so high. What happens, people don't save because there's no point, it makes much more sense to take on debt because it's cheap... not hard to make the connection to a housing bubble.

Now you could argue the banks were still reckless and they should have seen some investments would never pay off. However they were only given the means to be reckless by the central banks.


User currently offlineCometII From United States of America, joined Dec 1999, 302 posts, RR: 0
Reply 11, posted (1 year 9 months 1 week 4 days 13 hours ago) and read 1643 times:

Quoting BMI727 (Reply 3):
That's your problem. There is really not much dishonesty as much as there is a lack of understanding among the public about what the banks are selling you and what they are selling each other.

You are right, but you are also unrealistic. Do you honestly expect people to learn about finance to the level of a person that has gone to college for it (because that is truly the only way to know about modern banking and investing).

The same for healthcare. The same for automobiles, and the same for nutrition.

That is the problem. I am all for individual responsibility, but this is not 1900. I often read how some nostalgic folk complain how today people are not like our ancestors, who "were their own investors/doctors/and food growers". What they forget is that in 1900 or before, banking, nutrition, health, etc, were not even 1/100th the specialized areas they are today. So when some say "our great-grandparents did not have Social Security, had no doctors, and didn't have nutrition labels in their food, they took care of all that themselves, AND they built their own homes", they forget that's probably why life expectancy back then was 50 and buildings were not exactly 'safe' from disaster!! And for the most part, their investment tips amounted to "the mattress will nicely do".

This is 2013 and everything is ultra-specialized now, to expect people that have to work two jobs to keep up with everyone else to be financial analysts, modern doctors, expert nutritionists, engineers, construction workers, and auto-repair men (with the computerized cars of today), is simply not realistic.

So if that is so, then I guess things like 2008 will happen more often, as those that know take advantage of those that do not.

[Edited 2013-03-22 06:36:11]

User currently offlineGSPflyer From United States of America, joined Jul 2010, 369 posts, RR: 0
Reply 12, posted (1 year 9 months 1 week 4 days 12 hours ago) and read 1609 times:

I use a local bank (That has 4 branches, I can tell you where every branch is), because I don't want one of the major banks holding on to my money.

User currently offlineBMI727 From United States of America, joined Feb 2009, 15845 posts, RR: 27
Reply 13, posted (1 year 9 months 1 week 4 days 11 hours ago) and read 1584 times:

Quoting CometII (Reply 11):
You are right, but you are also unrealistic.

There's nothing unrealistic about making the effort to understand where your money is going, what your money will be doing and what you will be signing.

Quoting CometII (Reply 11):
Do you honestly expect people to learn about finance to the level of a person that has gone to college for it (because that is truly the only way to know about modern banking and investing).

You don't have to. I only took one economics class when I was a junior in high school yet I understand what went wrong in 2008.

When people say that 1) you have to own a house to have really made it in America, 2) said house would be an asset that will not go down in value so there's no need to fear going in debt to buy it 3) you can afford a house because the people trying to sell you a house say you can and 4) you don't to worry too much about the terms of the loan since it won't last long anyway and you'll just refinance it should raise red flags with potential home buyers.

And not to mention that the people at the banks buying securitized debt as fast as it could be made were professionals. Professionals who sat around telling each other that they were right and congratulating themselves on how smart they were without asking questions about their assumptions and predictions, but professionals none the less.

Quoting CometII (Reply 11):
were their own investors/doctors/and food growers

People don't need to do that. But I'll bet that you've gone for a second opinion or checked WebMD. And I bet you've read nutrition labels too.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineFlyPNS1 From United States of America, joined Nov 1999, 6733 posts, RR: 24
Reply 14, posted (1 year 9 months 1 week 4 days 8 hours ago) and read 1556 times:

Quoting BMI727 (Reply 13):
Professionals who sat around telling each other that they were right and congratulating themselves on how smart they were without asking questions about their assumptions and predictions, but professionals none the less.

Then they weren't professionals. If you never question your assumptions and predictions, you are not a professional.


User currently offlineRedd From Poland, joined Jan 2013, 114 posts, RR: 0
Reply 15, posted (1 year 9 months 1 week 4 days 7 hours ago) and read 1543 times:

Quoting Braniff747SP (Reply 1):
Saying that banks are inherently dishonest is a rather large and overbearing statement to make.

No it's not. The entire crisis that we have now is only the cause of greedy, dishonest, non-regulated lending. 50/50 regulation/lobby.... The crisis was created because loans were given to people that could never pay them back. There was, and there still is not any regulation to prevent this. Banks took every chance they had within the legal limit to lend, sell that debt, have it irrationally rated as triple A (AAA) and now billions of people around that world are paying the price.

And if you want to blame people for taking loans they could not pay back, give a dog a bone and he'll bite. Working class people are not lawyers and fine print is tricky. It's easy to entice people with the prospect of property ownership, regulation needs to be there to decide if people can afford it or not.


User currently offlineLMP737 From , joined Dec 1969, posts, RR:
Reply 16, posted (1 year 9 months 1 week 4 days 7 hours ago) and read 1543 times:

Quoting GSPflyer (Reply 12):
I use a local bank (That has 4 branches, I can tell you where every branch is), because I don't want one of the major banks holding on to my money.

I bank at a credit union for similiar reasons.


User currently offlineGeezer From United States of America, joined Aug 2010, 1479 posts, RR: 2
Reply 17, posted (1 year 9 months 1 week 4 days 7 hours ago) and read 1534 times:

I wonder if there are any bank executives who read this forum ? If there are, I'm guessing that the OP may be getting an angry letter in the mail; the way this thread is titled, anyone in the banking business would doubtless make the case that the OP is stating that ALL banks are dishonest. Often times when someone says something to that effect, someone else gets a lawyer, files a lawsuit, and off to court you go ! But don't worry; I'm dubious about a few banks myself; my favorite bank to despise is B.O.A. ( Notice I didn't mention any names ) They acted like real pricks when I dared to complain about my CC interest rate becoming hiked up to a ridiculous rate; guess who bailed me out of that mess? ( They've already been mentioned in this thread, BTW ) And they probably aren't a whole lot different from B.O.A., but they did talk much nicer to me, and I learned a very valuable lesson from them: "people who buy things with a credit card are shooting themselves in their own foot, with their own gun." So here's a question for you.......why do banks offer customers "credit cards", and then offer other customers "debit cards", when in reality, it's ALL the same little plastic card ? Why do they do that ? Does that mean that they are "crooks" ? Before you jump all over me, please be advised that I'm fully aware of the fact that some people have credit accounts, while some people have debit accounts; ( thanks to now being married to a retired lending officer, personal assistant to the President, and secretary to the Board of Directors of a very large Chicago Bank.) But that does't change the fact that the little plastic card I carry with me every place I go is a "credit card" to some businesses, and a "debit card" to others. ( it's always a choice I get to make.)

There already are, and always have been honest banks; anyone who thinks that ALL banks are dis-honest, doesn't know much about banking. ( That's not necessarily the same thing as saying that "all bankers are honest, BTW ); (we all know the answer to that); What you need to understand is, all businesses that deal with money always use lots of "numbers"; (note that I put little thingies around the word numbers.) Numbers tend to get many people all mixed up; companies know that; (that's why they always use lots of numbers in the first place) Once they get you mixed up, they can get you to do things that are to THEIR advantage, and to YOUR disadvantage, all without telling a single "fib". ( oh no, I did it again! ) Numbers are nice though, because unlike words, they ALWAYS mean the exact same thing; ( 2+2=4, 4x4=16, and so on )
But always remember the old proverb; "figures don't lie, but liars can sure figure"; that's kinda how it is with the business you SHOULD be asking about.......

Maybe you should be asking the same question about the life insurance companies.

Ninety nine people out of a hundred know absolutely nothing about how life insurance really "works"; ( other than what the person trying to sell it to them tells them. )

When most people decide that they want to buy something, especially something that is going to cost them hundreds, even thousands of dollars every year for as long as they live, they want to think they are getting a "good deal"; the problem is, people have no idea ( other than what the life insurance company tells them ), what a "good deal" consists of.

I can think of no other "business" or "industry" where all of the "players" in it have been telling it's customers all sorts of ridiculous things, much of which is complete nonsense, for over 200 years now, and are still in business. There are as many reasons for this as there are life insurance companies that are IN business.

Here's a question for you; is there anyone reading this who is paying for life insurance ? If there is, don't take my word for anything, but ask yourself a question; "is my life insurance a "good deal" ? If you think it IS a "good deal", ask yourself another question; "how am I going to know a "good dea" from a "bad deal" when I have absolutely no understanding of how this product is priced" ? What I mean by that is, if you bought a new Ford from Joe Blow Ford and paid $ 30,000 for it, and two days later your next door neighbor bought the exact same new Ford from Schlumky Ford and paid $ 20,000 for their Ford, you would probably think you got a "bad deal"; in this case, it's easy to differentiate "good" from "not so good"; with life insurance, it's almost impossible to do that. Because almost no one has any idea how life insurance is "priced"; and there isn't a life insurance company "out there" that is going to tell you !

But it gets even worse; how many know "who" regulates the life insurance industry ? We all know the securities industry is "supposedly" regulated by the S.E.C. ( a federal "commission" ), but exactly WHO keeps the life insurance companies "in line" ? In case you're wondering, let me know and I'll start a new thread and explain it.

So I'm just wondering........why aren't we seeing any new threads asking, " Will There Ever Be Honest Life Insurance Companies" ? You'll notice I didn't add "again"...........there probably haven't been "any" yet, to my knowledge, but it would be way beyond the scope of this reply to explain why I say that.

When you ask a question in public which infers that everyone IN that business is dishonest, many people who are IN that business are going to have their feathers ruffled, and are probably going to become upset, and possibly even "pissed off" !
( But then again, everyone knows, better "off" than "on"...................

Charley



Stupidity: Doing the same thing over and over and over again and expecting a different result; Albert Einstein
User currently offlineBMI727 From United States of America, joined Feb 2009, 15845 posts, RR: 27
Reply 18, posted (1 year 9 months 1 week 4 days 6 hours ago) and read 1511 times:

Quoting Redd (Reply 15):
The crisis was created because loans were given to people that could never pay them back.

And people took the money.

The crisis actually was created because everyone, from home buyers to bank executives, only listened to what they wanted to hear. Normal people believed that owning a home is what successful, happy Americans do, that they could afford it because some mortgage broker said they could, and furthermore that a house was an asset that didn't have a chance of depreciating. Banks believed that the loans would never be a problem for them since they were going to sell them anyway, and traders believed that the market would never go bad and the risk of large numbers of defaults was minuscule. AIG believed the same and, by extension, that insuring such loans was free money.

Quoting Redd (Reply 15):
There was, and there still is not any regulation to prevent this.

There doesn't need to be. Banks need to know that their existence is on the line. Self preservation is stronger and better than the strongest and best regulation.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineflipdewaf From United Kingdom, joined Jul 2006, 1578 posts, RR: 0
Reply 19, posted (1 year 9 months 1 week 4 days 6 hours ago) and read 1504 times:
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Quoting BMI727 (Reply 3):
What specifically did banks do that was illegal?

I believe they didn't give the required duty of care and responsibility to both their savers and borrowers to assess the credit agencies assessment of the combination effect of packaged liabilities.

Quoting BMI727 (Reply 18):
everyone, from home buyers to bank executives, only listened to what they wanted to hear

That's The main issue, lots of people did things wrong, lots of people benefited and lots were left broke after, who was in each group is unfortunately down to more luck than judgement.

Quoting BMI727 (Reply 18):
There doesn't need to be. Banks need to know that their existence is on the line. Self preservation is stronger and better than the strongest and best regulation

Unfortunately citizens who have done nothing wrong could lose substantial savings if they go under and this is deemed immoral.

If anyone knew the answer they would probably ironically be very rich.

Fred


User currently offlineRedd From Poland, joined Jan 2013, 114 posts, RR: 0
Reply 20, posted (1 year 9 months 1 week 4 days 6 hours ago) and read 1499 times:

There doesn't need to be. Banks need to know that their existence is on the line. Self preservation is stronger and better than the strongest and best regulation.[/quote]

Ha, really? Jeweeeeeeeeeeeeezzzzzzzzzzzz man. Come live a week in Sweden, capitalism might not be your number one priority anymore....... It's so hard to explain this to the north Americans I once was a part of......


User currently offlineBMI727 From United States of America, joined Feb 2009, 15845 posts, RR: 27
Reply 21, posted (1 year 9 months 1 week 4 days 6 hours ago) and read 1493 times:

Quoting flipdewaf (Reply 19):
I believe they didn't give the required duty of care and responsibility to both their savers and borrowers to assess the credit agencies assessment of the combination effect of packaged liabilities.

That's a matter of being being bad at their jobs than being a scam.

Quoting flipdewaf (Reply 19):
That's The main issue, lots of people did things wrong, lots of people benefited and lots were left broke after, who was in each group is unfortunately down to more luck than judgement.

No, it's a matter of judgement. You can believe that there is a market bubble and make a killing by jumping at the right time. Getting in at the bottom of the market and getting out at the top isn't just luck.

Quoting flipdewaf (Reply 19):
Unfortunately citizens who have done nothing wrong could lose substantial savings if they go under and this is deemed immoral.

Hence the existence of the FDIC.

Quoting Redd (Reply 20):
Come live a week in Sweden, capitalism might not be your number one priority anymore.......

I'm pretty sure it would be. I want the highest ceiling, not the highest floor.



Why do Aerospace Engineering students have to turn things in on time?
User currently offlineRomeoBravo From , joined Dec 1969, posts, RR:
Reply 22, posted (1 year 9 months 1 week 4 days 5 hours ago) and read 1484 times:

Quoting Redd (Reply 15):
No it's not. The entire crisis that we have now is only the cause of greedy, dishonest, non-regulated lending.

That was a symptom and not the cause. The cause was expansionary monetary policy that attempted to suppress the dotcom bubble.

See the big dip below.

There's should have been a recession in the early 2000s but it was averted by creating an artificial boom with cheap money, of course you can never avert a recession with such practise, you only delay it. This cheap money went into the housing market creating a self-perpetuating bubble which borrowers and lenders both fell for and when that bubble burst the whole pack of cards came tumbling down.

With sound money banks would never have had the resources to lend to people who could never repay in the first place.



User currently offlineRomeoBravo From , joined Dec 1969, posts, RR:
Reply 23, posted (1 year 9 months 1 week 4 days 5 hours ago) and read 1478 times:

Quoting flipdewaf (Reply 19):
Unfortunately citizens who have done nothing wrong could lose substantial savings if they go under and this is deemed immoral.

They shouldn't have put their money in the bank then. The reason you get paid interest (or you should do) on your savings is because they're being lent out and there's no guarantee you're getting them back. If it was risk free why would interest be paid?

Quoting BMI727 (Reply 21):
Hence the existence of the FDIC.

Which is a moral hazard that should not exist.

[Edited 2013-03-22 15:06:22]

User currently offlineflipdewaf From United Kingdom, joined Jul 2006, 1578 posts, RR: 0
Reply 24, posted (1 year 9 months 1 week 4 days 4 hours ago) and read 1462 times:
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Quoting RomeoBravo (Reply 23):

fortunately most people don't think in the same way as romeo and want to live in an efficient well functioning society where realism takes the place of idealism with laws protecting average citizens being shafted by those wishing to take the moral low ground. I find it hard to believe that you advocate anarchy but that's how it often seems.

Quoting BMI727 (Reply 21):
That's a matter of being being bad at their jobs than being a scam.

No, there was law breaking going on. Misleading people, both knowingly and through negligence about the risks being taken. The investors had rights to know of the uses of their money.

Fred


25 RomeoBravo : I do want to live in an efficiency and functioning society and that's exactly why i propose a very small state - when people take responsibility for
26 Ken777 : You're not going to find a small state in the US or UK. Maybe moving somewhere like Aruba will give you the life you want. When you have hundreds of
27 RomeoBravo : The UK was actually responsible for what is considered the freest state today up until very recently. Hong Kong, no land, no resources, all of the we
28 flipdewaf : then why didn't you get out? By your logic you should be responsible for your choices to remain in the UK and part f the society that was performing
29 RomeoBravo : I am doing what i want and i've been very successfully doing it, no sour grapes here. Though i have been considering a move to Australia because the
30 rfields5421 : The death of 'honest banks' in the United States came in the 70s when banks were allowed to offer investment services such as Money Market accounts a
31 Quokkas : It may be different where you live at present but here in Australia any person who receives a regular payment or income from State or Federal agencie
32 RomeoBravo : That's alright, just withdraw it when you get paid. Most of my money is in gold now anyway, in a safe, in my house. You'd be mad to keep your savings
33 ltbewr : There is a dire need for international housecleaning of banking to make it work right, to prevent financial panics, to end their parts in criminal ent
34 PPVRA : What incentive does a bank have to hand out money to people who will never be able to pay it back? It's a money losing proposition. Not exactly condu
35 BMI727 : Why would anyone sit around and let all their money collect 2%? Especially when you're talking about the 1970's when that wouldn't even come close to
36 rfields5421 : No I don't. But that was when the honest local "bank" died. It just took 20 to 30 years for the slow death to occur in many cases. As traditional loc
37 flipdewaf : or they were lied to about the risk assessments done on the investments. Fred
38 ltbewr : A critical problem was conflict of interest of the ratings companies as to debt papers (like Moody's), who knew if they did 'honest' assessments, the
39 Flighty : Not a huge problem as long as you know their ratings are totally inadequate and corrupt. But, people did not know that. Sounds like a trifle. But it
40 Braniff747SP : Greedy, dishonest, non-regulated lending was not done by *all* banks, for one; but that has nothing to do with the question at hand. Banks are not in
41 PPVRA : And that's where Fannie and Freddie come in. There is no difference between these two paragraphs. When a bank makes a loan to a business so that they
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