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As someone who does a lot of consulting, I'm amazed at the number of businesses that are in good shape, enjoying positive cash flow, paying their bills and CANNOT GET A LOAN.
Because I do a lot with small- and mid-sized banks, I asked several of the more successful bankers the reason for this at a recent conference. Mind you, these aren't the Wall Street guys. Rather, these are the guys down the street whose bread and butter is lending local businesses money. To a person, they all said:
"Dodd Frank." And then I heard all kinds of expletives from a rather even-tempered bunch. Their take? Because of the regulatory strictures being placed even on banks that have been conservative and played by the rules (The large majority of them), the underwriting has gotten incredibly difficult. While things were likely too loose before DF, a fact freely acknowledged by the bankers I know, the pendulum seems to swung too far the other way. But they would also add that the people who made the bad loans and ran their banks like casinos are now almost all out of business, while the ones who followed sound practices are still around. A classic case of the Law of Unintended Consequences in action.
Do you agree? After all, lending capital is essential to growth. How do you feel about legislation that, to many bankers, has completely hamstrung their ability to lend money at all?
While things were likely too loose before... the pendulum seems to swung too far the other way.
Do you agree?
'tis the way of the world and always shall be.
Quote:
Originally Posted by Schopenauer
Opinion is like a pendulum and obeys the same law. If it goes past the centre of gravity on one side, it must go a like distance on the other; and it is only after a certain time that it finds the true point at which it can remain at rest.
Quote:
Originally Posted by Jung
The pendulum of the mind alternates between sense and nonsense, not between right and wrong.
The pendulum will swing back. It was unreasonable not to impose regulations on the financial services industry after the 2008 debacle. Hell, we almost lost our whole financial services sector due to incredibly bad decisions made by major financial institutions. Of course, Dodd/Frank could be a better law. I attribute its failings to the bitter partisanship between democrats and republicans. Its part and parcel of the problem that the President and the GOP in Congress can't seem to work together because no one believes in compromise anymore.
The banks will end up going back to making loans simply because of the profit factor. They'll curse and moan, but will eventually get around to finding ways to comply with the law. Meanwhile the endless bickering and inability of our two political parties to compromise on anything will continue to drag this country down. I'm fed up with it. I'm fed up with people who think "compromise" is a dirty word. You could eliminate the entire Congress in this country and I believe it would be an improvement.
The pendulum will swing back. It was unreasonable not to impose regulations on the financial services industry after the 2008 debacle. Hell, we almost lost our whole financial services sector due to incredibly bad decisions made by major financial institutions. Of course, Dodd/Frank could be a better law. I attribute its failings to the bitter partisanship between democrats and republicans. Its part and parcel of the problem that the President and the GOP in Congress can't seem to work together because no one believes in compromise anymore.
The banks will end up going back to making loans simply because of the profit factor. They'll curse and moan, but will eventually get around to finding ways to comply with the law. Meanwhile the endless bickering and inability of our two political parties to compromise on anything will continue to drag this country down. I'm fed up with it. I'm fed up with people who think "compromise" is a dirty word. You could eliminate the entire Congress in this country and I believe it would be an improvement.
Sorry Mark, I fail to agree with you as much as I would like to. I can't see giving away 50% of something that would be harmful to the country just to get 50% of benefits to the country. Of course nothing in a compromise is ever 50-50. Compromise Is a bad word. IMO
The banks have been "Dumb Down" so much these past several years just trying to stay in business. My bank of 50 years has outsourced their credit dept, their real estate dept. and I am not sure of what else. After 40 years of having floor plans, home equity loans, auto loans, personal signature loans with the same bank, my wife and I wanted to build a new retirement house and the bank charged me $99.00 for what they called a "merged credit report" from the three Credit Reporting Agency's. Dumb, dumb, dumb, my bank didn't have a clue who we were and I had paid them thousands of dollars in interest over the years.
Our Social Security didn't get a C.O.L.A. raise but the congress all took their raises last year to my knowledge. I am afraid our society has been dumb down too much to begin reforming congress and eliminating the crooks from the honest ones if there is any still left.
As someone who does a lot of consulting, I'm amazed at the number of businesses that are in good shape, enjoying positive cash flow, paying their bills and CANNOT GET A LOAN.
Because I do a lot with small- and mid-sized banks, I asked several of the more successful bankers the reason for this at a recent conference. Mind you, these aren't the Wall Street guys. Rather, these are the guys down the street whose bread and butter is lending local businesses money. To a person, they all said:
"Dodd Frank." And then I heard all kinds of expletives from a rather even-tempered bunch. Their take? Because of the regulatory strictures being placed even on banks that have been conservative and played by the rules (The large majority of them), the underwriting has gotten incredibly difficult. While things were likely too loose before DF, a fact freely acknowledged by the bankers I know, the pendulum seems to swung too far the other way. But they would also add that the people who made the bad loans and ran their banks like casinos are now almost all out of business, while the ones who followed sound practices are still around. A classic case of the Law of Unintended Consequences in action.
Do you agree? After all, lending capital is essential to growth. How do you feel about legislation that, to many bankers, has completely hamstrung their ability to lend money at all?
Hi cpg53223--
I can tell you the same thing. I got my degree in economics and took many classes related to finance and banking along the way, and had several friends in the finance program; we're all on the same page. And yes, it usually was followed by several expletive-laden rants about the guys in Washington.
The two biggest problems with Dodd-Frank are Dodd and Frank.
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