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Maybe the houses in question were never worth the prices they sold for pre 2007? Maybe the current prices reflect the current market? Maybe banks could simply rewrite the troubled mortgages to reflect the current prices instead of having an empty house that still has to pay taxes and be maintained. They could effectively hire the nominal owners to take care of the bank's property.
Do you think the banks learned the folly of borrowing short and lending long?
Bascially it based on Bnakigpolciy of not seekig gwoth but in this crisis just tryig to haold on to meony. That is pretty mcuhwaht everyoen from wall street to mainstreet are do. Tryig to maintian the value i money they have now. Too much risk in the markets now from instabiltiy. Its doesn't mean they are worse off at all. Most are flush with cash.
Looks like the banks are in bad shape. I have been saying the banks are in big trouble.. with more foreclosures coming in 2012, economy slowing to a crawl around the world , Europe can't pay the bills and America in deep debt this is another blow to the weak economy.
15 large banks being downgraded is just another symptom of how bad this so called recovery is. What recovery?
The problem was risky investments in subprime mortgages that were rated AAA.
With the irony being these very same agencies are still doing the rating. They should have been prosecuted along with the banks. That would have gave people faith in the markets again.
Maybe the houses in question were never worth the prices they sold for pre 2007? Maybe the current prices reflect the current market? Maybe banks could simply rewrite the troubled mortgages to reflect the current prices instead of having an empty house that still has to pay taxes and be maintained. They could effectively hire the nominal owners to take care of the bank's property.
Do you think the banks learned the folly of borrowing short and lending long?
They then would basically be bankrupt. Their liabilities would far outweigh their assets.
Maybe the government should really let's these corrupt and greedy banks become bankrupt and liquidated. It isn't like they are doing much to help the economy to full recover anyway...
The problem was risky investments in subprime mortgages that were rated AAA.
Only they weren't labeled as risky because of the AAA rating.
Subprime == junk rating, which is high risk, which means you better not invest money you can't afford to lose.
The problem was that the mortgage investments were sold in bundles, there were some AAA rated but many were subprime, still they were being touted as AAA. Some savy investors actually looked at the details or the individual loans, noticed the risk involved, and bet on their imminent failure. Some investment banks like Goldman Sachs sold these mortgage instruments to their investors while betting on their failure.
Many of these indexes are so complicated that some of the investment banks don't even know what's going on in their own companies, look at JP Morgan Chase. That was part of the problem, the rating agencies didn't even understand what they were rating but then neither did the companies they were rating, look at AIG.
Banking should go back to being boring, too much gambling, too much volatility.
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