Jamesfrom818
Banned
ronito said:
I was watching the local news earlier in the week and they showed a lady that deposited a $95,000 check into her local Indymac. Too bad for her.
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Second largest bank failure in US history happened today.
- Thread starter ronito
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I was watching the local news earlier in the week and they showed a lady that deposited a $95,000 check into her local Indymac. Too bad for her.
BlueTsunami
there is joy in sucking dick
I owe my bank $85 in overdraft fees. They won't be able to get me! I'm savin' all my shit in cash, fuck this.. I'm gettin' off the grid.
domokunrox
Banned
Damnit, why couldn't it be HSBC?!?!?!!? I want them to go down.
phillipgessert
Member
I imagine their employers would be heavily impacted, though.ElectricBlue187 said:
Funky Papa
FUNK-Y-PPA-4
I still can't understand why on earth the fat cats thought that was such a great idea.sonarrat said:
Impossible greed? Stupid execs being stupid? Mix of both?
http://online.wsj.com/article/SB121581435073947103.html?mod=hpp_us_whats_news
I thought those comments were pretty irressponsible at the time too but people have the right to know what's going on with their money..
I thought those comments were pretty irressponsible at the time too but people have the right to know what's going on with their money..
ElectricBlue187
Member
I can imagine all the reporters nodding after his first question :lol
Christopher
BDE (Big Dad Energy)
Cloudy said:
Yes yes yes...
I wonder if this is why that whole FDIC review was being passed around HR the other dayto the branches...hmm maybe.
Funky Papa said:
No-doc loans are OK, because they allow you to get a mortgage if you make a lot of money under the table or otherwise are in a situation where it is very difficult to substantiate your earnings. But they should never have been used to qualify people for loans they weren't qualified for.
It's not a binary system between free markets and centrally planned economies. It's an economic spectrum.Gaborn said:
And I have to say, that I find it unlikely the central bank is the problem. The bailout is only for the depositors. Management and shareholders are probably more or less screwed.
There's an argument that the depositors are benefiting at the expense of the tax payer, as they got higher payouts while the taxpayer subsidized their risk, but that's limited by the $100 000 cap. Given how exceedingly rare bank failures are, the actual cost is likely very minimal. Even responsible people and corporations might gain from the benefit (and the regulation on the industry that accompanies it). After all, it protects them from the decisions of their potentially irresponsible or stupid business partners.
More significant distortions, with less clear benefits can be found in local subsidies and import duties for ethanol. Like, orders of magnitude more damaging.
The entire system is based on trust.Cloudy said:
Because money that is lent to people is deposited back into banks, there's a multiplier effect. Let's say somebody deposits $100 000 in a bank. GUY_1 then takes out a $90 000 loan (the bank keeps $10 000 on hand just in case it's needed by the depositor). However, GUY_1 might only need $20 000 of it right now. The rest he'll just keep in the bank until he needs it. So now the bank has lent out $90 000 and has $70 000 in the bank. They then loan $60 000 to GUY_2, who only needs $20 000 of it right now. So they've now loaned out $150 000 and have $50 000 in the vault. Guy_3 wants to buy a nice car, so he borrows a $30 000. He needs it all up front.
They've turned $100 000 of deposits into $200 000.
$180 000 in loans and $20 000 in the bank.
Essentially, people have more money than exists. The entire system is based on trust (hence why the Fed tries to instill confidence in the system). If everyone tries to take all their money out of the bank at the same time, it won't work. Even if the bank could recall every single loan with a 100% success rate. There's not enough money in existence to pay everyone at the same time.
Maxwell House
Member
Dow 10,000 here we come :lol
The dollar is royally fucked. Gold is the place to be right now.
The dollar is royally fucked. Gold is the place to be right now.
Ether_Snake
安安安安安安安安安安安安安安安
Gaborn said:
That's what I said
Gaborn said:
This is one of the least logical things i think i've ever seen written on GAF. The economy and the banking system need control to smooth things out. The central banks usually do a fairly good job of this. The market left totally free in this case would just take all the depositors money and all the houses of ALL the people with loans, distressed or not.
As has been shown the financial institutions suck at self regulation so it will be forced on them.
Expect the US to go on a fact finding mission to the EU, England, Aus, etc to see what the system is there. It's started already.
Pure Capitalism is fine if you want to have huge swings and people getting their lives totally fucked up but the society has some responsibilities. It also depends on perfect information so people can make informed choices. (This isn't happening anytime soon and 99.9999999999999999999% of people have nothing like the education ie PHDs in all of Economics, Finance and Accounting to decipher the data if they did get it.) Fool
the central bank is responsible for this only insofar as it did NOT regulate the shadiness of how banks were managing their own financial risks. there was and is zero oversight in the proliferation of dummy corporations (SPVs and SIVs) where banks pushed their risky assets off their balance sheets and out of the public eye. once these corporations then sold this risky debt to hedge funds, the whole cycle started again since the banks and likewise dummy corps literally created new assets to - you guessed it - buy more risky debt! yay!Gaborn said:
it was, is and continues to be a veritable Ponzi scheme sustained on a ferocious appetite of debt to pay off someone else. this, right here, is emblematic of unregulated free-markets. Gaborn am cry?
polyh3dron
Banned
Came in to post this. Holy shit.Kildace said:
Yeah McCain, we should let the free market sort it out. riiiiight.
This thread was made for Gaborn.
mr stroke
Member
Lord Helmet said:
correct me if I am wrong here but why would a credit union be any different than a bank? A credit union could go under just as well as a bank. There have been credit unions that have went under and have demanded all loans be collected, so why would it be safer to have your money in a CU than a bank?
ronito said:
Well the FDIC manipulates and in fact, makes the free market completely useless when choosing a bank to deposit. When you do not have to prove your responsibility to your depositors, there is no check on your greed and you are free to take much greater risk.
Note I realize the Fed and the FDIC are quite separate, just pointing out a failure of the government to let the free market work.
let's just play in a true free market world. This bank would still be in trouble because, let's face it , it got greedy and that let it get stupid. So then what? Well you would've seen a run on the bank a few weeks ago that would've killed it and left several people without money they earned. This then would cause many to foreclose on homes and default on car loans and other kinds of loans. This would cause those business to go under and the banks that took those loans would suddenly be in a bad spot. Once word got out about these banks' issues came to light, there'd be another run on those banks and then the cycle repeats and everyone will have puppies sunshine and ice cream. It's not conjecture, we like to call it 1929-1932.Gallbaro said:
I'll agree that FDIC does take away some responsibility, similar to how insurance gives you less responsibility when you drive. Now before we all jump on it and decry how if the market was free of government influence it should be noted that:
I think it's funny the PS&IC crowd will use ANY government involvement to point to and decry capitalism's failures. "B..b...but if they didn't have to pay taxes the meat packers would've TOTALLY instituted safe beef regulations."
ronito said:
No, the central bank is the reason they're going to CONTINUE to be able to make poor decisions. We SHOULDN'T in the least be bailing out anyone associated with these banks. They NEED to be knocked out of the market by their natural incompetence. In no other "unregulated" industry to do we bail out the participants who are too stupid or too incompetent to run their company. There are a handful of companies and industries we do it for (energy markets, airlines at times, etc) and I don't believe we're better off generally speaking for it in those markets.
Sorry Ether, my sarcasm meter was broken. Still, it's amazing how many people view this as a failure of CAPITALISM rather than of their own command economy philosophies.
Seanoff - it's no coincidence that we had the Great Depression shortly after the creation of the Fed
Well, that's an entirely different conversation, one I tried to have in the whole "The Fed needs to be stopped" thread. A conversation that I believe you and I would largely argee on. But this banks failure is its own. Now to clarify FDIC is insurance, not bailing out.Gaborn said:
ronito said:
True, the FDIC is at least marginally better since it has fewer government ties, but still it's an unnatural check on the banking system, People should keep better track of where there money is and in what economic climate it is, and if they fail to do so I don't have a lot of sympathy if they lose a large portion of it when their bank collapses.
Gaborn said:
I'm left of center and I agree with this post. Banks should not be centralized since their primary purpose is the creation of wealth. A giant behemoth would not adapt to market conditions well. The only thing that should be centralized is printed currency and reserves, since that ties in directly with the monetary policy of the administration.
True, I deposit in banks that if they're going under the whole nation would be in trouble. But just like I have car insurance to cover possibly irresponsible drivers, I think banks need insurance against possibly irresponsible depositors and such as the implications of not having your bank account in today's world reaches far beyond the bank and the putz.Gaborn said:
twinturbo2
butthurt Heat fan
How's that working for you? Good idea or not?Hcoregamer00 said:
(Way OT, but ElectricBlue187, where did your avatar come from?)
Admittedly true. However, you directly pay for your car insurance. Driving poorly will cause it to increase. Every taxpayer pools their money for FDIC through government taxes. Thus, the cost of investing poorly is spread across all taxpayers (while the benefits, if such risks do not materialize are not spread nearly as much).ronito said:
That's why the industry is regulated. It's a pact with the devil. In exchange for the FDIC, they have to make certain concessions, for example, what the maximum ratio of deposits to liquid assets they can have. The goal is to prevent them from obviously abusing the system by doing extremely risky things. It's not perfect, but it works relatively well.
True. But it's a spite thing for me. If you make it so that I HAVE to have insurance. Then a bank can pay their insurance, they have more money than me. Now if I didn't have to have insurance then that's another story. It's my selfish streak. If a corporation is a person then they should share the pain of being a person.Gaborn said:
ronito said:
Ultimately that does the same thing as requiring the INSANE levels of malpractice insurance for doctors does (whether they need it or not and whether they've had any sort of problem or not or are likely to), it raises costs for everyone (in this case lowering the already minimal interest on various bank accounts)
Do premiums vary depending on an assessed risk of insolvency?ronito said:
If so, I suppose I'll have to concede the point. Otherwise, it's essentially the same thing. Just replace anytime I said 'taxpayer' with 'bank-user'. It's all spreading risk across a large group.
(EDIT: I meant 'if so' not 'if not'. That would be the opposite!)
This is somewhat worrying and all, and I am mildly concerned (and kinda amused) that in 6 months we might be eating American dollars since it will be more effective than attempting to buy food with them, but reading about how the FDIC "took over" is almost inspiring, at least to someone like me that considers the US government and everything it touches just about entirely corrupt. The FDIC takeover sounds efficient, and even more importantly, competent. Maybe the rest of the gubment should take notes.
I want to see more government regulation in regards to limitations on the ridiculous lending practices that leads to this.
Bailouts are bad because it doesn't stop the root cause of the problem. This form of government intervention into 'free' market prevents it from weeding out bad businesses and business tactics. It is theft from the American people. Where's my bailout for the stocks that I had that went down?
But at the same time these financials are important part of the economy, so we have to. But I'm betting they won't put the limitations into place to stop a repeat of this, or they'll push for government ownership. Because we all know the government is fantastic at money management. Just look at the 4 trillion they've lent to themselves via the Federal Reserve in the past few years. It's a massive tax that is paid every time you fill your tank or purchase goods, rather than the IRS.
Bailouts are bad because it doesn't stop the root cause of the problem. This form of government intervention into 'free' market prevents it from weeding out bad businesses and business tactics. It is theft from the American people. Where's my bailout for the stocks that I had that went down?
But at the same time these financials are important part of the economy, so we have to. But I'm betting they won't put the limitations into place to stop a repeat of this, or they'll push for government ownership. Because we all know the government is fantastic at money management. Just look at the 4 trillion they've lent to themselves via the Federal Reserve in the past few years. It's a massive tax that is paid every time you fill your tank or purchase goods, rather than the IRS.
teh_pwn said:
Why? It's a self correcting problem, bad loans like that lead to more people defaulting on them which leads to more banks ultimately eating the cost of the loan which leads to bank failure which leads to more banks being careful about who they loan to and under what terms.
I'm with you here.
No, we don't.
True, and the latter is much, much worse than the former. As I said, it's a self correcting problem ultimately.
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