Skip to main content

View Diary: Can a Small California City Take on Wall Street - And Survive? (298 comments)

Comment Preferences

  •  Bottom line is the banks have too much power (1+ / 0-)
    Recommended by:
    jpmassar

    over our economy in general. Now that might sound silly since they play such an important part of our economy but they have left us with few options.

    My gut tells me the banks can afford a loss of assets and still do just fine, as can the economy, despite all the doom and gloom we are hearing about this idea.

    Where ignorance is our master, there is no possibility of real peace. - Dalai Lama

    by kimoconnor on Sun Sep 15, 2013 at 09:20:12 AM PDT

    [ Parent ]

    •  That attitude is fine if you don't need banks (3+ / 0-)
      Recommended by:
      Sparhawk, VClib, Justanothernyer

      to lend people money to buy houses.  

      Lending is about evaluating risk, mitigating risk, and -- most importantly -- pricing to take into account risk.  That's the WHOLE POINT.  If you introduce big additional risk, lenders will either (1) stop lending there or (2) make borrowing there far, far more expensive.  

      That's called math.  

      And this:

      My gut tells me the banks can afford a loss of assets and still do just fine, as can the economy, despite all the doom and gloom we are hearing about this idea.
      You or I don't make the decision about how much the banks "can afford" to lose.  Banks do.  Again, if you don't want them to lend people money to buy houses in Richmond, then  that's fine -- force those loses on them.  So they leave -- who cares. But a bank that had those kinds of losses forced on them in a few areas (like a few cities) would be stupid not to either (1) put its assets elsewhere, where it is less risky and/or (2) dramatically increase the cost of borrowing in those more risky areas to mitigate against that additional risk.  
      •  Ah. We have discovered the real problem. (8+ / 0-)
        You or I don't make the decision about how much the banks "can afford" to lose.  Banks do.
        Actually, banks make decisions about how much they can afford to lose with the understanding that if they lose too much they will get bailed out.  Makes it a lot easier for them.

        Homeowners are simply trying to get just a teeny portion of that bailout principle applied to them here.

        •  That's a noble goal (4+ / 0-)
          Recommended by:
          jpmassar, Sparhawk, VClib, Justanothernyer

          to help underwater homeowners.  But it comes with a cost, and that cost will be borne not as much by the banks (who will stop lending or dramatically increase the cost of lending in Richmond) but more by people trying to buy houses (who won't be able to get mortgages or their mortgages will cost dramatically more) and by other homeowners, whose home value will drop when that happens.  

          My point is that it's foolish to thing the only ones that will be hurt here are the banks.  Foolish.  

          •  And that must change (3+ / 0-)
            Recommended by:
            jpmassar, Phoenix Woman, Egalitare

            The banks are much more responsible for the foreclosure crisis than the average homeowner.

            Yet they have the luxury of focusing on profits alone.

            All we get is a sort of blackmail.

            Where ignorance is our master, there is no possibility of real peace. - Dalai Lama

            by kimoconnor on Sun Sep 15, 2013 at 09:45:51 AM PDT

            [ Parent ]

          •  To say that mortgages aren't designed to be held (1+ / 0-)
            Recommended by:
            jpmassar

            To say that mortgages are not designed to be held by the banks that wrote them is tantamount to admitting that the mortgage market is rigged.

            It's the big banks saying that they can only make money by originating mortgages and selling them off to persons that they see as rubes  (aka the investment community).

            It's the big banks admitting that they are a monopolistic cartel, willing to collude and pressure anyone who gets in their way -- especially anyone who might reveal to their investors that the value of the property backing their investment is not what the big banks said it was.

            Visit http://theuptake.org/ for Minnesota news as it happens.

            by Phoenix Woman on Sun Sep 15, 2013 at 06:43:02 PM PDT

            [ Parent ]

      •  There has to be a better way to control (3+ / 0-)

        the banks ability to MANIPULATE the market, making tons of cash at our expense, then threaten us when we fight back.

        I am not opposed to math, I understand what you are saying, but I still think there has to be a better way to keep the disasters from happening in the first place. Especially those disasters created by the banks themselves. Why is it we are the only entities that must suffer for their crimes?

        Where ignorance is our master, there is no possibility of real peace. - Dalai Lama

        by kimoconnor on Sun Sep 15, 2013 at 09:40:18 AM PDT

        [ Parent ]

        •  Got any ideas? (5+ / 0-)

          I'm not sure I do.  

          My point here is that the losses from this plan will not just be borne by the banks.  Instead, this plan will benefit certain homeowners to the clear detriment of those trying to buy homes (who won't be able to get mortgages) and to the detriment of other homeowners (whose house values will plummet when people can't get mortgages to buy their homes).

          That's why I am saying this plan is not well thought out.  

Subscribe or Donate to support Daily Kos.

Click here for the mobile view of the site