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| |-+  Economics (Moderator: Torie)
| | |-+  Good banks bitter over bailout
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Author Topic: Good banks bitter over bailout  (Read 1401 times)
CARLHAYDEN
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« on: March 07, 2009, 12:31:24 pm »
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Suggest reading the article in the following link concerning the understandable bitterness of the responsible banks for having to bear the costs for irresponsible banks as part of the bailout.

http://www.bloomberg.com/apps/news?pid=20601109&sid=anmrn4H8hXfw&refer=exclusive
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« Reply #1 on: March 07, 2009, 12:40:49 pm »
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Very understandable. I do think these banks like Citigroup need to fail, but it needs to be done in a fashion that doesn't unravel our whole economy. Needless to say these banks that didn't make these sh**tty loans should definitely get an advantage from the government and as the article states, they are already getting a competitive advantage amongst consumers.
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jfern
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« Reply #2 on: March 07, 2009, 02:33:10 pm »
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Moral of the story, it pays to screw up if you're "too big to fail".  Of course if you don't screw up and you're not too big to fail, you get screwed. Something like 80% of small businesses fail within 5 years, but no one bails them out.
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Cuivienen
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« Reply #3 on: March 07, 2009, 03:29:59 pm »
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The actual moral of the story is not to force big banks to give subprime loans.  These banks failed because they were bullied by the federal government into practicing poor banking.

"Offered financial incentives" is not bullying. Blame is on all sides.
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jfern
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« Reply #4 on: March 07, 2009, 03:34:56 pm »
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The actual moral of the story is not to force big banks to give subprime loans.  These banks failed because they were bullied by the federal government into practicing poor banking.

"Offered financial incentives" is not bullying. Blame is on all sides.

Exactly, no one forced the banks to be stupid. Not to say that some borrowers aren't to blame too, but the banks can stop trying to blame other people.
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AHDuke99
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« Reply #5 on: March 08, 2009, 12:11:22 am »
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Fezzy's right. It was the regulations implemented by the government that started this whole mess, put into place by past Democratic presidents. They felt it was a "right" to own a home and thus forced banks to lend to unqualified people. Now we're facing an economic meltdown and the Democrats want to place MORe regulations on the industry.
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Mint
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« Reply #6 on: March 08, 2009, 12:34:48 am »
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Fezzy's right. It was the regulations implemented by the government that started this whole mess, put into place by past Democratic presidents. They felt it was a "right" to own a home and thus forced banks to lend to unqualified people. Now we're facing an economic meltdown and the Democrats want to place MORe regulations on the industry.
The banks covered under the CRA were responsible for about 1 in 4 of sub-prime loans by the federal reserve's own admission, but the bulk of it occurred outside of government supervision. By contrast private institutions comprised about twice that much. Obviously that doesn't absolve the government of blame but saying they were responsible for the bulk of these loans is silly. If anything, the government is at fault for creating a moral hazard after the last bank related fiasco (the S&L crisis).
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