Failed Bank Information

[big bend gyrene]

Bman, I'll challenge anyone to look at the success of the businesses I've helped run. They've all been well in the black. I believe that speaks to the actual implementation of levelheadedness and logic. Granted, on that count sounds like you're not doing so shabby yourself (assuming you didn't get leveraged to the hilt for that new office)!

[bman]

You know where I stand... I'm just enjoying the show

[Chalk]

No more caffeine for BBG

Government can not be so bad - FDIC is taking over the banks - who is in charge of the FDIC?

OMG it is a conspiracy

[big bend gyrene]

No more caffeine for BBG

I wasn't the one up to 2am... I just stayed up long enough to see the Gators slaughter completed.
And going for a long Sunday run, so no more campaign commercials for at least the next couple of hours.

[MudDucker]

And if you don't appreciate the truth in the history leading up to the failure, Quixote, let me know as I've got some slightly boggy acreage I've been trying to sell that would be great for future development.

Lay it on Big Bend Gyrene, but I have little confidence that the liberals will listen. Liberals think the gooberment is the answer. The gooberment is the problem, small business men risking their butts and creating jobs has always been the answer.

[Dubble Trubble]

I ain't puttin' a dog in this fight except to say BBG is right about the Dems forcing banks to loan bux to minorities that could never pay the loans. I have some bankers knowledge of that one. HOWEVER, I will also say their was greed involved at the bank level too!

I am also going to say one of this countries biggest enemies is not a democrat or a republican, but an ever growing apathetic and lazy population.


Ok, thats it

Dubble

[red_yakker]

I really don't want to get into the whole lib vs cons debate, but I do feel that this point needs to be made. At the end of last year, I was considering building a new home. I knew that I could get a better deal buying a home, but I didn't want to have to move far from my parents' farm because I work it part-time.

Depending on the weather, I make 30-35 thousand a year, 30% of which comes all at once at the end of the Summer. Capital City Bank was prepared to give me a loan to build ($95,000, which doesn't build much of house apparently). My payments would have been just under $800.00 a month. I make around $2,000 a month before taxes. How the heck did they expect me to be able to put 40% of my monthly salary towards a home loan? Needless to say, I did not end up building.

If I had signed that loan agreement, I would have considered it MY fault if I had gotten foreclosed on. I'm not saying the bank would have been completely blameless. I'm not saying that the government is completely blameless. I'm just saying that when people start playing the blame-game, they often overlook all the stupid mortgagees who agreed to pay back money that they couldn't afford.

BTW, I did end up getting the loan from CCB, but it was for a mobile home that they had forclosed on. My house payments are barely more than my truck payments now.

[rocket]

Any that were very builder/developer friendly took bigger hits than those that had more balanced portfolios.

WAY too many people who had full time jobs as lawyers/realtors/businessmen decided they also wanted to play builder/developer as well. If the banks would have used more discrepancy over who and why the lent money to, then less notes would have failed.
Don't get me wrong, I agree alot of builders/developers thought they were invincible, and thought they wouldn't get caught when the music stopped. And that's their own dumb azz fault for over extending themselves. But for just about every one of those, there's a lawyer/realtor/businessman who did the same thing.
I equate it to a builder/developer dabbling in the medical field, just because the money's good. It's absurd.
Either way, banking is screwed for a long time...at least for those who borrow money in their business.

[dolphinatic]

Any that were very builder/developer friendly took bigger hits than those that had more balanced portfolios.

WAY too many people who had full time jobs as lawyers/realtors/businessmen decided they also wanted to play builder/developer as well. If the banks would have used more discrepancy over who and why the lent money to, then less notes would have failed.
Don't get me wrong, I agree alot of builders/developers thought they were invincible, and thought they wouldn't get caught when the music stopped. And that's their own dumb azz fault for over extending themselves. But for just about every one of those, there's a lawyer/realtor/businessman who did the same thing.
I equate it to a builder/developer dabbling in the medical field, just because the money's good. It's absurd.
Either way, banking is screwed for a long time...at least for those who borrow money in their business.

Great....get a realtor and a builder together, and look what you get That's worse than mixing a skin care doctor's hubby with a detailer

[big bend gyrene]

Actually, Tom, I would fully trust you to do our microdermabrasion! It's just detailing skin with a super fine diamond tip abrasive wheel.

If memory serves, 3 folks have now complained about how stupid banks have been to offer them too big of loans. With less than 30 days before the most important election in my lifetime, I've got to say that we all need to understand WHY. Trust me (as well as the older folks on this board), prior to the 70s the crazy lending didn't happen. Quite to the contrary, folks complained that only the rich could get loans, and that they didn't need them. It was the opposite problem.

So for anyone who wants to understand WHY the banks make crazy loans today, I'm going to summarize enough pieces of the puzzle that I expect most will be able to follow:

* Carter started the ball rolling with his 1977 Community Redevelopment Act. Quoting Wikepdia, the law was designed "to encourage commercial banks and savings associations to meet the needs of borrowers in all segments of their communities, including low and moderate-income neighborhoods". And for those who remember Carter, his early socialist steps worked about as well as Obama's have.

* Then Clinton starting playing with the Community Redevelopment Act. In 1993, and I'm quoting Wiki again, President Bill Clinton asked regulators to reform the CRA in order to reduce cost and compliance burden. Robert Rubin, the Assistant to the President for Economic Policy, under President Clinton, explained that this was in line with President Clinton's strategy to "deal with the problems of the inner city and distressed rural communities". So the socialist bubble got more air pumped in while most of us sat silent, fat, dumb, and happy.

* Then in 1999, Clinton REALLY started playing with the banking system, repealing the Glass Steagal Act that had been in place since 1933, and replacing it with the "Gramm-Leach-Bliley Act", with two key changes being that smaller banks would be reviewed less frequently (Small Bank Regulatory Relief) and more importantly that commercial banks and investment banks could consolidate. Banks immediately began trading and underwriting mortgage backed securities and all of the toxic loans that are coming home to roost today. The act passed after a $200 million lobbying effort by Democrat lobbyists to pass the act in opposition to the Congressional Research Service’s own report. Quoting Clinton upon signing the "Gramm-Leach-Bliley Act", it "establishes the principles that, as we expand the powers of banks, we will expand the reach of the Community Reinvestment Act".

* Another consequence of the Gramm-Leach-Bliley Act was that it, and Im quoting wiki again, "put pressure on Fannie Mae and to expand mortgage loans to low and moderate income borrowers by increasing the ratios of their loan portfolios in distressed inner city areas designated in the CRA of 1977. Because of the increased ratio requirements, institutions in the primary mortgage market pressed Fannie Mae to ease credit requirements on the mortgages it was willing to purchase, enabling them to make loans to subprime borrowers".

* And if you wonder who was running Fannie Mae, at the time and milking millions off the subprime loans... yep, Clinton cronies. During Clinton's Presidency Fannie Mae began hiring Democratic operatives as CEO’s and upper management. At the same time, Fannie Mae began making huge contributors to congress, spending millions to influence votes. While some republicans received financial contributions from the two institutions, the vast majority of the money went to democrats. Top recipients of those campaign contributions were Barney Frank and Chris Dodd, the very chairmen of committes that should have been providing oversite of Fanny Mae. With time-tested lending practices out the window, Fanny Mae and it's cousin institution Freddie Mac ended up controlling a whopping 90% of the secondary market for mortgages.

* Fast forward to 2005, and the Bush administration actually voiced concern that lending under the CRA had grown far too loose. Again, quoting wiki, "a contingent of Democratic Congressmen issued a letter protesting these changes, saying they undercut the ability of the CRA to "meet the needs of low and moderate-income persons and communities". The changes were also opposed by "community organizations" concerned that it would weaken the CRA.

* Even as the bubble burst in 2008, Barney Frank was saying thins like, "No problem here!" as related to Fanny Mae, and then once he could lie no more, he went as far as to say that the burst bubble was worth it as it had helped the poor. Yeah... right... now that we have lost 13 million jobs and have a record 42 million using food stamps ...

Well, folks, like Margaret Thatcher once said, "The trouble with socialism is that eventually you run out of other people's money". And in some respects that's what happened even before we had Obama come in and triple down on the failure. Quixote talks about the bad loans not having been a contributing problem to the burst bubble of 2008, but that's an insane arguement you should expect to hear from the left defending their bad habits. Look at the default rates on loans today across the country and in states with the highest illegal immigration rates. The default rates are at record levels.

The saddest part of all of this is that I was a Democrat until I opened my eyes to what was happening. There's not a democrat involved with this fiasco who is poor, and quite to the contrary, the games they have played with the system have made them and their friends extremely rich. Their claims to care for the poor sure are questionable in my mind when instead it seems as if they've used the poor as pawns to do their own selfish wealth-building.

Don't know if anyone will have read all this, but if one person learned some history that helps them see that we don't repeat it in November it was worth it to me.

[Jumptrout51]

I read the whole thing.
In November I am voting for "CHANGE".

[yardman32317]

Excellent read, thanks for posting.

[FHC]

great read thanks a lot

[Quixote]

I still want BBG to show me the chart that shows how many illegals and welfare people had their beach properties foreclosed on. would also like to see the chart on how any gov. program caused the failure of Wakulla bank(seeing as how that was the original subject, not what bbg has turned it into)

[KyTrkyHntr]

wait for it................... wait for it......................................