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And, whoever said subprime mortgages weren't the biggest problem fails to realize that by 2008, Fannie Mae and Freddie Mac, alone, were holding over $1 Trillion in such debt. Throw in the rest, and it's a big ing deal.
Wall Street became "creative" because they were looking for ways to reduce their risk. They relied on Fannie Mae's and Freddie Mac's huge position in sub-prime mortgages as indicating more security than actually existed. The MBS and CDS's were developed with the understanding that Goverment back loans were pretty safe. After all, Government back mortgages used to be a pretty good risk. Yes, it was a mistake but, it wasn't criminal. What was criminal is how Fannie Mae and Freddie Mac were allowed to hide the fiasco that was the subprime market, pump them up as good credit risks and then feign disbelief when the house of cards fell.
And boo- ing-hoo that you can't stop yourself from responding to my posts and thinking I give a about your idiotic characterizations of a person you've only known through this medium. It's no wonder you hold the view you do, you're obviously only informed by what you can find on the internet.
And, whoever said subprime mortgages weren't the biggest problem fails to realize that by 2008, Fannie Mae and Freddie Mac, alone, were holding over $1 Trillion in such debt. Throw in the rest, and it's a big ing deal.
"Fannie Mae and Freddie Mac, alone, were holding over $1 Trillion in such debt"
They didn't write the mortgages, they bought them in good faith from the retail lenders that wrote them and then committed fraud by selling them as solid mortgages. F&F tried, perhaps is still trying to have the lenders buy them back.
Where did you learn this? Its unbelievably wrong. MBS and CDS
You're a funny guy, Yoni. You pretty much value this forum when it suits the argument you want to make and otherwise you try to act like you don't. In the climate thread you lamented how we weren't using this medium well because I wouldn't hold your hand to the answer that was right there and in other threads you try to act like the medium is worthless and you're sooooooooooooo above it.And boo- ing-hoo that you can't stop yourself from responding to my posts and thinking I give a about your idiotic characterizations of a person you've only known through this medium. It's no wonder you hold the view you do, you're obviously only informed by what you can find on the internet.
As for not being able to stop myself from responding, thats fairly laughable. I don't read the majority of your posts and I'm not sure why you think that mean responding to you a few times somehow represents an inability to tune you out other than your very odd sense sense of self importance. You might have a case when I respond to more than a small fraction of your posts or even bother to read the majority of your ellipse ridden threads.
Its pretty funny that you try to smack down "the view" I hold by acting as though you're more informed on the subject than I am. Its very clear by your absolute ignorance on the subject of MBS and CDS this is not the case.
In any event, Yoni, I want you to remember that I never set some arbitrary bar for you to meet with your posting. YOU did that. You decided your posting sucked (one of the more rational decisions you've ever made) and then you subsequently failed to reach the bar you tried to raise for yourself. You failed, Yoni. You failed, yourself. That is what makes you weak.
Oh my - 1 trillion in sub prime debt.
That really ing compares to the 63 trillion of outstanding CDS debt, doesn't it Yoni?
Banks have always charged fees for keeping your money. In years past
10 cents a check, you paid when they were printed. Then they had
fees for two bucks a month to maintain an account even if you didn't
write a check.
It is only in recent years that these no fee, no charge for checks, accounts
have come about. And you cant still get them if you maintain a certain
balance in your account or savings account. Otherwise you can do like
most people used to do. Live out of their hip pocket and go around every
pay day and make a payment on your bills.
I have to ask do you know that the CDS market on MBS was far FAR FAR larger than the actual face value of all of the MBS's.
Edit: oops! this was already covered.
Also, if banks believed that these were so safe (being that they were government backed), why did they buy CDS's on them???
Lastly MBS and CDS were developed in the late late 70's to mid 80s
Last edited by Drachen; 10-13-2011 at 03:14 PM.
Of course they were worth more. When I have AA in the hole, I bet the ing house. Well, if I could bet against myself losing when I had cards I'd make WAY more money. Its a surefire bet when you're allowed to write the securities that are going to fail.
Pot kettle, look in mirror, et all
Wall st made very risky bets because the higher the risk, the higher the payoff.
then Wall St made bets on the bets, etc, etc. The total casino was estimated to reach over $50T.
Yoni defending the Wall St criminals as a funny as Yoni defending dubya's war-for-oil
Oh, they're scared. I cashed out my accounts the other day and the manager asked me what bank I was going to. We talked a little and he said a lot of people are leaving BofA every day. He had the 'damn, not another one' when I was cashing out look/at ude also.
Or just support a bank that doesn't charge you to use your money like many other banks do not do.
Critics of Occupy Wall Street stated the protest lacked focus, and Occupy Wall Street has replied, reports The Street. The motion has spawned “Bank Transfer Day,” where customers can put action at the rear of their words against the banking ins ution by moving their money. Occupy Wall Street introduces Bank Transfer Day. Even if specific action on Nov 5th is symbolically important, one should still have have a plan well in advance. It is often a good idea to overlap the old and new accounts for a few days, to allow everything to clear out of the old while you begin using the new. This is especially true if there are automatic things which post to the old account — many of those may not hit on exactly the same, predictable calendar day each month, plus the initiator may need some time to set up for the new account.
Not all banks are evil; not all credit unions are blameless. It would seem that the better path to take would be to remove money from the large, culpable ins utions. Even if specific action on Nov 5th is symbolically important, one should still have have a plan well in advance. It is often a good idea to overlap the old and new accounts for a few days, to allow everything to clear out of the old while you begin using the new. This is especially true if there are automatic things which post to the old account — many of those may not hit on exactly the same, predictable calendar day each month, plus the initiator may need some time to set up for the new account.
BofA has other massive concerns to worry about aside from a few thousand people closing their bank accounts on a Saturday.Oh, they're scared. I cashed out my accounts the other day and the manager asked me what bank I was going to. We talked a little and he said a lot of people are leaving BofA every day. He had the 'damn, not another one' when I was cashing out look/at ude also.
Their stock shares have been in a virtual freefall since January.
Last edited by Blake; 10-14-2011 at 09:43 AM.
Krugman, right on target once again, trashes the Alice-in-Wonderland rabbit-hole economics of Repugs.
Rabbit-Hole Economics
By PAUL KRUGMAN
Reading the transcript of Tuesday’s Republican debate on the economy is, for anyone who has actually been following economic events these past few years, like falling down a rabbit hole. Suddenly, you find yourself in a fantasy world where nothing looks or behaves the way it does in real life.
And since economic policy has to deal with the world we live in, not the fantasy world of the G.O.P.’s imagination, the prospect that one of these people may well be our next president is, frankly, terrifying.
In the real world, recent events were a devastating refutation of the free-market orthodoxy that has ruled American politics these past three decades. Above all, the long crusade against financial regulation, the successful effort to unravel the prudential rules established after the Great Depression on the grounds that they were unnecessary, ended up demonstrating — at immense cost to the nation — that those rules were necessary, after all.
But down the rabbit hole, none of that happened. We didn’t find ourselves in a crisis because of runaway private lenders like Countrywide Financial. We didn’t find ourselves in a crisis because Wall Street pretended that slicing, dicing and rearranging bad loans could somehow create AAA assets — and private rating agencies played along. We didn’t find ourselves in a crisis because “shadow banks” like Lehman Brothers exploited gaps in financial regulation to create bank-type threats to the financial system without being subject to bank-type limits on risk-taking.
No, in the universe of the Republican Party we found ourselves in a crisis because Representative Barney Frank forced helpless bankers to lend money to the undeserving poor.
O.K., I’m exaggerating a bit — but not much. Mr. Frank’s name did come up repeatedly as a villain in the crisis, and not just in the context of the Dodd-Frank financial reform bill, which Republicans want to repeal. You have to marvel at his alleged influence given the fact that he’s a Democrat and the vast bulk of the bad loans now afflicting our economy were made while George W. Bush was president and Republicans controlled the House with an iron grip. But he’s their preferred villain all the same.
The demonization of Mr. Frank aside, it’s now obviously orthodoxy on the Republican side that government caused the whole problem. So what you need to know is that this orthodoxy has hardened even as the supposed evidence for government as a major villain in the crisis has been discredited. The fact is that government rules didn’t force banks to make bad loans, and that government-sponsored lenders, while they behaved badly in many ways, accounted for few of the truly high-risk loans that fueled the housing bubble.
But that’s history. What do the Republicans want to do now? In particular, what do they want to do about unemployment?
Well, they want to fire Ben Bernanke, the chairman of the Federal Reserve — not for doing too little, which is a case one can make, but for doing too much. So they’re obviously not proposing any job-creation action via monetary policy.
Incidentally, during Tuesday’s debate, Mitt Romney named Harvard’s N. Gregory Mankiw as one of his advisers. How many Republicans know that Mr. Mankiw at least used to advocate — correctly, in my view — deliberate inflation by the Fed to solve our economic woes?
So, no monetary relief. What else? Well, the Cheshire Cat-like Rick Perry — he seems to be fading out, bit by bit, until only the hair remains — claimed, implausibly, that he could create 1.2 million jobs in the energy sector. Mr. Romney, meanwhile, called for permanent tax cuts — basically, let’s replay the Bush years! And Herman Cain? Oh, never mind.
By the way, has anyone else noticed the disappearance of budget deficits as a major concern for Republicans once they start talking about tax cuts for corporations and the wealthy?
It’s all pretty funny. But it’s also, as I said, terrifying.
The Great Recession should have been a huge wake-up call. Nothing like this was supposed to be possible in the modern world. Everyone, and I mean everyone, should be engaged in serious soul-searching, asking how much of what he or she thought was true actually isn’t.
But the G.O.P. has responded to the crisis not by rethinking its dogma but by adopting an even cruder version of that dogma, becoming a caricature of itself. During the debate, the hosts played a clip of Ronald Reagan calling for increased revenue; today, no politician hoping to get anywhere in Reagan’s party would dare say such a thing.
It’s a terrible thing when an individual loses his or her grip on reality. But it’s much worse when the same thing happens to a whole political party, one that already has the power to block anything the president proposes — and which may soon control the whole government.
http://www.nytimes.com/2011/10/14/op...gewanted=print
The Banks Falter
As the first of the major banks to report its earnings each quarter, JPMorgan Chase is a barometer of conditions in the financial industry. The mercury is falling.
JPMorgan reported on Thursday that its third-quarter revenue had dropped by 11 percent from the second quarter; its profit fell by 4 percent from a year earlier. And since JPMorgan is arguably one of the nation’s healthier banks, results for firms like Bank of America, Citigroup, Goldman Sachs and Morgan Stanley are likely to be considerably worse.
These declines are worrisome in the sense that they reflect the weakness of the broader economy. Joblessness, damaged credit and falling home values have left people unable to borrow or to repay debt and businesses reluctant to hire and invest. But the results also reflect how the banks built profits abusing their customers.
Long overdue federal restrictions on hidden overdraft charges and excessive debit card fees have begun to take a bite out of bank profits, and that should be happening. But the banks and their investors tend to see any rules and regulations that slow revenue growth as undue and overly burdensome, and they are pushing back. The question is whether lawmakers and regulators will stand up for the new fee restrictions and other rules as banks resist.
Banks, habituated to gouging their customers, are already trying to recoup lost revenue with dubious new charges, like Bank of America’s $5 monthly fee for using a debit card. The move has infuriated customers and led President Obama to rightly warn against mistreatment of customers in the pursuit of profit. But Bank of America has yet to relent — a stubbornness that may be from of a belief that aggrieved customers won’t do better elsewhere. On Thursday, five Democratic congressmen led by Peter Welch of Vermont asked the Justice Department to investigate whether the big banks were engaging in “price signaling,” a form of collusion in the setting of prices.
The big banks are also resisting proposed regulations on capital levels, derivatives and investing practices. If successfully implemented, the new rules will help to curb the kind of reckless trading and irresponsible lending that caused the crash and recession. That will slow revenue growth, but it is the price of a more stable system.
The banks also have gotten themselves into a legal mess for which they have no one to blame but themselves. JPMorgan had to set aside another $1 billion last quarter to prepare for legal claims from investors who want to recoup their loss from mortgage bonds backed by bad loans.
The banks face legal challenges from federal and state governments over foreclosure abuses and other mortgage-related issues. In all, analysts say mortgage problems could cost JPMorgan up to $9 billion. Bank of America, the most exposed of the big banks to mortgage-related litigation, is potentially on the hook for far more.
Investors, meanwhile, are pricing banks’ stocks below the banks’ book value — a sign that they don’t believe the banks are worth what the banks say they are. The questions generally involve whether banks are properly valuing their loans and investments and the extent of their exposure to shaky European debt. Banks could fix this with increased and detailed disclosure. Government officials and regulators could compel that disclosure. The general failure on this front feeds the air of skepticism.
One of the lessons from the financial crash is that there is no subs ute for transparency. In the new earnings season, investors are still in the dark.
http://www.nytimes.com/2011/10/14/op...gewanted=print
=======
btw, banks (eg, the VISA cartel) make about 75% margin on ATM/CC payment transactions. I'd love to be in any business that makes 75% by turning on a computer network. What other $T activity makes 75% on a low-tech commodity like electronic payments? Why 75%? They screw you because they can. And scream bloody murder if the govt tries reduce (not elimnate) the screwing, and go screw you someplace else.
Without income from automated electronic money shifting, $38B/year from bank overdrafts, and Shylockingly usurious CC rates, all the big banks would be bankrupt (and much smaller).
Pretty funny how Yonivore tucked tail and ran from this show.
Online Banking Keeps Customers on Hook for Fees
Customers frustrated by banks’ controversial new fees are finding out what industry insiders have known for years: it is not so easy to disentangle your life from your bank.
The Internet banking services that have been sold to customers as conveniences, like online bill paying, serve as powerful tethers that keep them from jumping to another ins ution.
Tedd Speck, a 49-year-old market researcher in Kent, Conn., was furious about Bank of America’s planned $5 monthly fee for debit card use.
But he is staying put after being overwhelmed by the inconvenience of moving dozens of online bill paying arrangements to another bank.
“I’m really annoyed,” he said, “but someone at Bank of America made that calculation and they made it right.”
Former bankers and market researchers say that it’s no accident. The steady expansion of online bill paying, they say, has emboldened Bank of America, as well as rivals like Wells Fargo, JPMorgan Chase and SunTrust, to turn to new fees on customer accounts as other sources of revenue dry up. The fees have caused an uproar among consumers and drawn sharp criticism from politicians, including President Obama.
“The technology locks you in and they’re keenly aware of it,” said Robert Smith, who was chief executive of Security Pacific when it was bought by Bank of America in 1992. “It’s very hard for consumers to just ditch that.”
For years, banks have openly sought to attach as many loans and services as they can to a customer, like credit cards, mortgages and mobile phone banking.
What they haven’t mentioned are marketing studies like the one commissioned by Fiserv, which develops online bill paying systems, showing that using the Internet to pay bills, do automatic deductions and send electronic checks reduced customer turnover for banks by up to 95 percent in some cases.
With 44 million households having used the Internet to pay a bill in the past 30 days — up from 32 million five years ago and projected to reach 55 million by 2016 — it’s a shift that has major ramifications for compe ion.
There’s even evidence that fewer consumers are switching banks, with 7 percent of them estimated to be moving their primary account to a different ins ution in 2011, down from 12 percent last year, according to surveys by Javelin Strategy and Research.
Emmett Higdon, a consultant who managed Citibank’s online bill payment product from 2004 to 2007, said that “for the consumer, it’s a double-edged sword.” While customers value the convenience, inside the industry “it was known that it would be a powerful retention tool. That’s why online bill paying went free in the first place. Inertia is powerful in the banking industry.”
Bank of America today has 29 million account holders banking online and 15 million using the service to pay bills, but company officials say there is no connection between the stickiness of Internet bill paying and the decision to impose the $5 monthly debit card fee.
“People like online bill pay, it’s convenient and safe,” said Anne Pace, a spokeswoman for the company. “The lower attrition rate that came along with it was simply a result of offering a valuable service.”
The fee, she said, “allows us to continue offering the benefits that customers have come to expect from our debit card,” like fraud protection, overdraft prevention and a wide-reaching A.T.M. network.
Asked if the bank calculated how many online-bill-pay customers a new fee could drive away, Ms. Pace said, “We did extensive research on how they would react to a new fee and whether it was fair.”
The new fee will not apply to customers with a Bank of America mortgage or those who have an account balance of $20,000 or more.
Members of Congress have taken notice of the fee uproar — and the ties that bind customers to their banks.
“The difficulty of moving accounts is deliberate and unnecessary,” said Representative Brad Miller, who introduced a bill this month that would make it easier for customers to switch.
“If you decide another bank is better, you should be able to change, just like you’d take your business from Wal-Mart to Target,” said Mr. Miller, a Democrat from North Carolina who is a member of the House Financial Services Committee.
Mr. Miller’s bill reflects a rising anger centered on Bank of America’s proposed debit card fee, which the bank plans to impose in 2012, and similar charges under consideration by other financial ins utions.
On Thursday, Democratic lawmakers asked the Justice Department to investigate whether the banks had colluded in setting the fees.
The Occupy Wall Street protesters in Lower Manhattan have also jumped on the debit card fee as one more example of corporate greed. And activists are calling on account holders to switch to nonprofit credit unions en masse on Nov. 5, which they have named Bank Transfer Day; a Facebook page devoted to the effort has drawn more than 38,000 supporters.
As a result, the question of whether consumers will indeed vote with their feet is being closely watched by the banking industry, consumer advocates and legislators. The banks don’t release detailed data on customer defections.
“There’s a certain amount of pain you can inflict on customers without losing them and the banks are all doing careful calculations about what customers are willing to pay for,” said Mark Schwanhausser, a senior analyst with Javelin. Just as airline passengers swallowed fees to check bags, he predicts, many consumers will stay put.
To be sure, holding on to customers is the goal of every business. The distinction in this case, critics say, is that a product that was marketed to customers as a convenience is now being used against them. “If they were only offering a service, that’s one thing,” said Ed Mierzwinski, consumer program director of U.S. Pirg, a nonprofit consumer advocacy group. But banks, he said, consciously make it harder to switch “in order to make their customers sticky.”
Customer satisfaction, rather than the annoyance factor, is what makes consumers reluctant to switch, according to the banks and the companies that develop Internet banking technology.
“I disagree with the notion that the consumer is a victim in all of this,” said Eric Leiserson, senior research analyst with Fiserv, which counts Bank of America among its customers. “These services were developed to bring convenience to consumers. It’s a win for all.”
Studies commissioned by Fiserv using data from SunTrust and Wachovia in 2007 and 2008 emphasize how online banking and e-bills reduce customer turnover while substantially raising profits per customer.
“For many consumer banks, actively lowering customer attrition rates is one of the most important strategic imperatives for the bank as a whole,” one survey concluded.
But while keeping customers happy is critical, just as important is keeping them captive.
“The name of the game is to find the levers that increase customer loyalty and retention at a reasonable cost,” said Kirk Gripenstraw, an expert on customer analytics who worked on the Fiserv studies.
The 2008 study showed that customers who made five or more payments online a month were 95 percent less likely “to churn,” while consumers who didn’t bank online were 43 percent more likely to leave.
Like Mr. Speck, Adam Zaharchuk of Gilbert, Ariz., is upset about the fee, but he also concedes he’s too tied in to leave Bank of America. “They’re nickeling and diming the little guys out there,” he said. “But it’s very convenient.”
http://www.nytimes.com/2011/10/16/bu...gewanted=print
So B_D, the only thing that this article proved to me is that people are whiny lazy es. They absolutely deserve to be charged $5 a month (or more) as a lazy moron tax.
It's hard to stay serious when someone conflates the national debt with the amount of toxic debt.
$63 Trillion.
You obviously have no idea how big the derivatives market was at the height of the financial crisis. I find your smugness quite funny in this case because of how wrong you are. I'm not even the only one who pointed it out in this thread.It's hard to stay serious when someone conflates the national debt with the amount of toxic debt.
$63 Trillion.
Want some links?
Yoni's ideological blindness doesn't need no links, except the ones that align with his ideology.
Sure, throw me some knowledge, Manny.
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