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My grocery store has a huge baked goods section: cakes, buns, breads, and donuts. while the store offers them, I don't have to buy these goods. No one has ever forced me to buy them. I don't ever buy them even though sometimes I am tempted because I know they are not good for me!
banks may offer large credit lines to a customer, but the banks don't force the customers to use them.
This economy is bringing back the memories from 2004-07 when banks were pushing money down people's throats. The rest is history: it led to a financial disaster.
The "no income validation" mortgages are also back.
Banks are handing out beefed-up credit lines no one asked for
It might sound like a risky strategy at a time when millions of Americans are drowning in debt: keep raising the limit on people’s credit cards, even if they don’t ask.
But that’s exactly what big banks have been doing lately to turbocharge their profits, leaving customers with the potential to rack up even bigger monthly bills.
For years after the financial crisis, Capital One Financial Corp. resisted that step for customers who looked vulnerable to getting in over their heads. In internal conversations, Chief Executive Officer Richard Fairbank characterized the restraint as a radical theology, in part because it went beyond post-crisis requirements, according to a person with direct knowledge of the discussions.
Some countries now have more powerful regulators coupled with better regulations.
However the fact this is happening beggars the question, Have they learnt anything from the 2007 crisis.
My grocery store has a huge baked goods section: cakes, pies, buns, breads, and donuts. while the store offers them, I don't have to buy these goods. No one has ever forced me to buy them. I don't ever buy them even though sometimes tempted because I know they are not good for me!
banks may offer large credit lines to a customer, but the banks don't force the customers to use them.
And drug dealers dont force anyone to buy drugs either. Most of us learned from 2007-08 crash that when banks user predatory lending practices, millions of people will take the bait and bring down the whole country, including those who did not take the bait. Someone said it is like offering a sandwich to a hungry man. Not everyone is hungry and will refuse it, but there are lot of hungry people out there. The "personal responsibility" argument comes across awfully naive when you are in the same boat with the irresponsible folks. You will go down with them if you allow them to act irresponsibly.
Those who did not learn are not in process of removing lending regulation, or arguing for removal of regulations.
Last edited by Finn_Jarber; 01-26-2020 at 07:37 AM..
No POTUS has the authority to bail out anything. That would require Congress to act.
Bush bailed out countless banks & other corporations before Congress voted for TARP. For example AIG bailout & nationalization was done before TARP. It ended up costing $180 billion.
Last edited by Finn_Jarber; 01-26-2020 at 08:15 AM..
Some countries now have more powerful regulators coupled with better regulations.
However the fact this is happening beggars the question, Have they learnt anything from the 2007 crisis.
Banks can't FORCE people to borrow money. Just like companies can't force you to work for a certain wage. That is the fallacy of the Liberal/Progressive. They must just be helpless individuals, with neither self restraint, self discipline, nor the knowledge on how to live their lives RESPONSIBLY. Sad.
I remember receiving back in 2007 a thick envelope from Chase. Inside was a folded sheaf of forms, a pre-approved $90,000, SBA-guaranteed loan for my company, and the signature lines on the last page were hi-lighted in yellow. Given that I’d had a SBA loan ten years earlier, and remembering all the paperwork and hassles needed to secure it, this offer was the strangest damn thing I’d ever seen from a bank.
Around the same time I was receiving weekly cash-out refi offers from Countrywide Finance with what I thought were ridiculous valuations on my home.
If I’d accepted both offers and used the money to buy AAPL shares ... one can dream.
Banks can't FORCE people to borrow money. Just like companies can't force you to work for a certain wage. That is the fallacy of the Liberal/Progressive. They must just be helpless individuals, with neither self restraint, self discipline, nor the knowledge on how to live their lives RESPONSIBLY. Sad.
Banks should be able to cover any loans and have a decent ratio of deposits balanced against lending.
This is known as the Loan Deposit ratio, and many countries have put in place far more strict regulations in relation to bank deposits and reserves held balanced against loans since the 2007 banking crisis.
Lending money without having the reserves to cover most of it, and lending it to people who may default were two factors in the 2007 crisis, and are lessons that should have been learned.
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I like your analogy.
