Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
This is inaccurate on many levels. Firstly the bailout money has been used to recapitalize the banks and that has a lot to do with lending, the idea of buying "bad assets" from them has not been done and is unlikely to be done at this point. Secondly, banks just don't lend based on their deposits. Most will also borrow both short term in the commercial paper markets and also long term and lend out the funds at higher rates. The bailout funds have been used to support these markets to keep banks lending.
No one is saying that banks only lend based on their deposits. But that is a larger factor than their assets. I remember one large bank (Citi, I think) that was considering transferring money from the bailout (asset side) to their deposit side of the ledger to allow them to loan more. Why not put the money on the right side to begin with?
Suspending the personal income tax helps the unemployed because it leaves money in the economy to be spent. That is good for companies which in turn is good for the unemployment rate.
Should we also suspend all government services since there won't be any money for them?
What exactly will this extra money be buying that will supposedly employ more people? Most stores are filled with products MADE IN CHINA! There never has been a shortage of employees at Wal-Mart. Is this where you think the unemployed will work?
Quote:
Originally Posted by Niners fan
The difference between the government taking over a company versus making deposits is that they government is not running the company. They are simply providing money on the deposit side. Banks could apply for it as they see fit. But the government can not run a company efficiently. Ideologies aside, most politicians simply just don't know what it is like to run a company. They never have done it and many of them have never worked for one (except maybe a law firm).
As I said the last administration already picked their winners and gave them hundreds of billions of dollars with no strings attached. All it did was allow the winning banks to buy loser banks and little else.
Quote:
Originally Posted by Niners fan
Relaxing mark-to-market rules wouldn't automatically change the loan terms for the homeowner. It would just mean the banks wouldn't necessarily have to mark down the value of a loan that a homeowner was current on.
So those that pay their bills stay the same and those that don't get their loan balances reduced? Are you serious???
Should we also suspend all government services since there won't be any money for them?
The personal income tax is only a portion of government revenue.
Quote:
Originally Posted by RedNC
So those that pay their bills stay the same and those that don't get their loan balances reduced? Are you serious???
I don't think you understand what mark-to-market is. It forces banks to value a loan based on the market value of a home if it had to be sold immediately and quickly. In reality, since most homeowners are current on their mortgages (even those what are upside down) loans should be valued based on what is owed and being paid by the homeowner.
The personal income tax is only a portion of government revenue.
Fair enough. Which portion of government services should be cut? Roads? Fire? Police? Won't those cuts cause more unemployment?
Quote:
Originally Posted by Niners fan
I don't think you understand what mark-to-market is. It forces banks to value a loan based on the market value of a home if it had to be sold immediately and quickly. In reality, since most homeowners are current on their mortgages (even those what are upside down) loans should be valued based on what is owed and being paid by the homeowner.
Notice at the end of the article that the rule were recently relaxed some.
No, I don't understand mark-to market any more than I understand derivatives, but whan you cite something with the following I have to wonder how much you understand them.
"beginning in the 1990s, mark-to-market accounting began to give rise to scandals." " As the practice of marking to market caught on in corporations and banks, some of them seem to have discovered that this was a tempting way to commit accounting fraud"
Not only that but you want a bank to put a value on something where they have more to lose than you do.
Didn't the price of oil skyrocket last summer because of futures trading using these same mark-to- market schemes?
Fair enough. Which portion of government services should be cut? Roads? Fire? Police? Won't those cuts cause more unemployment?
When it comes to cutting government spending, I love how those against tax cuts or in favor of tax increases always start with roads, fire and police. Didn't you forget schools?
I am not at all opposed to government spending on one-time projects when the economy is slow. What concerns me is initial funding of programs that are designed to last forever.
Quote:
Originally Posted by RedNC
No, I don't understand mark-to market any more than I understand derivatives, but whan you cite something with the following I have to wonder how much you understand them.
"beginning in the 1990s, mark-to-market accounting began to give rise to scandals." " As the practice of marking to market caught on in corporations and banks, some of them seem to have discovered that this was a tempting way to commit accounting fraud"
Not only that but you want a bank to put a value on something where they have more to lose than you do.
Didn't the price of oil skyrocket last summer because of futures trading using these same mark-to- market schemes?
I am not an economist by any means, but my understanding is the price of oil was driven up by a mostly combination of speculators increasing demand for the oil futures and our unwillingness to show any signs of developing our own reserves. It became a partisan issue because the Right refused to acknowledge speculators had anything to do with the price and the Left refused to admit that easing our own restrictions on drilling would have any immediate impact (or even within the next 10 years).
The mark-to-market rules force a bank, for example, to take a $300k mortgage that is being paid on time each month and count it as a $250k asset because the value of the home went down. My point is that the loan is still worth $300k as long as the loan is current.
No one is saying that banks only lend based on their deposits. But that is a larger factor than their assets. I remember one large bank (Citi, I think) that was considering transferring money from the bailout (asset side) to their deposit side of the ledger to allow them to loan more. Why not put the money on the right side to begin with?
I have no idea what you "remember", what you are saying conceptually makes little sense. How does a bank move an asset to the "deposit side" (what is that exactly!?). I also don't know why you keep mentioning assets, the bailout money was initially going to be used to purchase "toxic assets", but this was never done!
The bailout funds have been used to 1.) recapitalize the banks, 2.) support the long/short term lending markets that the banks rely on. Both of these areas have a major effect on the bank's ability to lend and have nothing to do with the asset side of their balance sheet.
In short, the bailout funds have already been used in the fashion you mention! Just not with deposits, which would not make much sense.
When it comes to cutting government spending, I love how those against tax cuts or in favor of tax increases always start with roads, fire and police. Didn't you forget schools?
I am not at all opposed to government spending on one-time projects when the economy is slow. What concerns me is initial funding of programs that are designed to last forever.
I love how those with moronic ideas always try to group those who challenge their stupidity.
What one time project would solve the current problems?
Quote:
Originally Posted by Niners fan
I am not an economist by any means, but my understanding is the price of oil was driven up by a mostly combination of speculators increasing demand for the oil futures and our unwillingness to show any signs of developing our own reserves. It became a partisan issue because the Right refused to acknowledge speculators had anything to do with the price and the Left refused to admit that easing our own restrictions on drilling would have any immediate impact (or even within the next 10 years).
Your problem seems to be that you have a preconceived outcome irregardless of facts.
There was no combination of anything. Speculators were the cause of the oil prices last summer. Had nothing to do with the so called "left or right".
Quote:
Originally Posted by Niners fan
The mark-to-market rules force a bank, for example, to take a $300k mortgage that is being paid on time each month and count it as a $250k asset because the value of the home went down. My point is that the loan is still worth $300k as long as the loan is current.
The mark-to-market rules force a bank, for example, to take a $300k mortgage that is being paid on time each month and count it as a $250k asset because the value of the home went down. My point is that the loan is still worth $300k as long as the loan is current.
Dude, I really suggest before you propose solutions, you first read about how banks actually work. What you are saying is not true at all. The loan is on the bank's balance sheet, NOT the home. The value of the loan on the bank's asset sheet does not change when the home changes in value.
Do you think if the home goes up to $400k, that they now have $100k more in assets? Not at all, because the loan is the asset!
The mark-to-market issue is not about mortgages that the banks have kept on their balance sheet! Its about exotic hard to price assets that they have on their sheets (e.g., exotic mortgage securities).
Easing mark-to-market accounting is not going to fool anybody, it will just create zombies.
I love how those with moronic ideas always try to group those who challenge their stupidity.
What one time project would solve the current problems?
I'm not grouping you at all. I just think it's funny that the choices are always more taxes or cuts to police, fire and roads (and schools). The President said it was vital that we get money into the hands of the people ASAP. His plan was a change in the tax withholding tables that took a couple of months to implement. Ok, maybe that will help. I am just saying it would have been more efficient and more effective, by his own logic, to just suspend or slash income taxes across the board for a period of time.
Quote:
Originally Posted by RedNC
Your problem seems to be that you have a preconceived outcome irregardless of facts.
There was no combination of anything. Speculators were the cause of the oil prices last summer. Had nothing to do with the so called "left or right".
Maybe you're right. There is no way to prove that drilling or preparing to drill our own resources would have helped or not because we didn't do it. Even if it didn't help the prices last summer it would help down the road. Everyone knows oil prices are going to go up again in the future (and then back down too). I would agree that there needs to be stronger regulations with regards to speculation in oil.
Quote:
Originally Posted by RedNC
What's it worth if it isn't current?
I don't know how they count an mortgage if it is not current. I suspect they value it at the value of the home. But why value all mortgages that way?
Dude, I really suggest before you propose solutions, you first read about how banks actually work. What you are saying is not true at all. The loan is on the bank's balance sheet, NOT the home. The value of the loan on the bank's asset sheet does not change when the home changes in value.
Do you think if the home goes up to $400k, that they now have $100k more in assets? Not at all, because the loan is the asset!
The mark-to-market issue is not about mortgages that the banks have kept on their balance sheet! Its about exotic hard to price assets that they have on their sheets (e.g., exotic mortgage securities).
Easing mark-to-market accounting is not going to fool anybody, it will just create zombies.
I am not sure we are even talking about the same thing. Either that or one of us has a mistaken view of how mark-to-market works.
"By letting banks use internal models instead of market prices and allowing them to take into account the cash flow of securities, FASB’s change could boost bank industry earnings by 20 percent, Willens said. Companies weighed down by mortgage- backed securities, such as New York-based Citigroup, could cut their losses by 50 percent to 70 percent, said Richard Dietrich, an accounting professor at Ohio State University in Columbus."
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
