What are "the bankers" supposed to have done, anyway?

Nodin

ejmaztec wrote: »

I think that you've got this the wrong way round. When the ordinary individual approached the lenders, they had to match the criteria laid down by the lenders, or they didn't get the loan.

With the big developers, the banks just threw money at them, crossed their fingers, and hoped for the best.

...and allowed a disproportionately large amount of cash to go to the property market, thus endangering all the eggs by over-reliance on one basket.

dloob

The banks forced people into their branches at gun point and forced them to borrow 100% mortgages :pac:

deadhead13

dloob wrote: »

The banks forced people into their branches at gun point and forced them to borrow 100% mortgages :pac:

NAMA's purposed 90 billion euro bank bailout is not as a result of individuals defaulting on their mortgages.

dresden8

FishFood wrote: »

Lets face it people, we are all to blame, but god forbid the 'average' person takes any responsibility for it. God no, better to blame the Banker who forced the offer letter down your throat to sign while stealing your soul, oh wait....you signed it!

We were all making money, all was fine, but now none of us are and if it makes people feel better to blame the Banks, fine. But im fairly sick of getting in a taxi and having the driver lecture me on the filthy bankers...talk about hypocritical...

This is a lie. The people who propogate it are liars.

We weren't all making money off property. We didn't all take out 100% mortgages. Some of us did it right and we are getting fncked over to save FF's developers mates.

Even though this is to "bail out the banks" the real effect is to shelter developers and their political lap-dogs from the consequences of their actions, not ours.

Rest assured developers will not have to rely on the mercy of the Simon Community when NAMA have "vigorously" collected their debts.

Total bullsht.

ejmaztec

Nodin wrote: »

...and allowed a disproportionately large amount of cash to go to the property market, thus endangering all the eggs by over-reliance on one basket.

Too fupping true.:(

tech77

Biggins wrote: »

You'd be so lucky!
Where do you think part of the old/new levy's/taxes from your wages is going?

I think what he was going for was
"i'm blameless" rather than "i'm not getting fcuked over for this".

Everyone gets fcuked over.
Blame varies from person to person though.

Biggins

tech77 wrote: »

I think what he was going for was
"i'm blameless" rather than "i'm not getting fcuked over for this".

Sadly true.

tech77 wrote: »

Everyone gets fcuked over.

...unless your a politician! :mad:

See top link in signature!

bakkiesbotha

My understanding of banking is as follows: A bank borrows money from A, and then lends that money to B. B pays back the bank more than than the bank has to pay back A, and the bank's profit is the difference. An old lady's deposit in a bank account is a loan to the bank, just as much as an overnight reverse repo on the money markets.

So, at a fundamental level, it is the same as any other business. Banks acquire inventory (loans) and sell them on at a higher price.

Recently there was a boom in inventory and demand for loans, so the banks did more business, taking in loans and selling them on. Again, fundamentally no different from a business supplying, say, car seats.

Then the demand dried up and the banks ended up sitting on a pile of worthless inventory. Again, something that can and does happen to any other business at the end of a boom.

Services end up with more staff than they can use and have to let them go, taking losses in the process. Producers and providers and shops end up with warehouses full of stuff that nobody wants. And banks end up with a lot of loans on their books that they end up taking losses on, just like all the other businesses.

So, my question was really what reason Joe Public had for expecting bankers to be somehow immune from this business cycle?

Wertz

hobochris wrote: »

There primary goal is to make money not make sure some idiot doesn't borrow to much from them.

But it's in their best interests that said idiot doesn't borrow too much from them, lest they can't get it back...in order for them to make money, they should be lending responsibly...performance bonus culture means that individuals were being rewarded on "sales" figures...the incentive to be responsible at an individual/branch level is undermined.
What we needed was proper regulation, but we didn't get it because this country is too small and everyone in the financial sector just scratch each other's backs, regulator included.

Bankers haven't broken any law as such...the trouble is that there were no "laws" to protect from this thing happening.

tech77

Long Onion wrote: »

What the bankers did was stop banking. They moved from the traditional model of banking based on taking deposits from x and lending it to y for a higher interest rate. Instead they began to use the money markets to fund their borrowings. In 2007 HBOS borrowed more money from the money markets than the entire Italian Government!

Unlimited money being available removed the brake that should have been there under the traditional model. The regulator failed to regulate this and the government failed to make sure the regulator did his job. We re-elected the government who made ever increasing tax breaks available to the developers and increased the output of the construction industry when they should have been slowing it by removing incentives.

We then as consumers, failed to exercise constraint and borrowed up to our oxsters, often overstating income to buy that dream shoe box. We also sought out the bank shares with the best dividends and wanted our bank to make as much money as the next one.

It's a ridiculous mess in which we nearly all have a hand act or part. Don't forget that the Unions didn't dissuade banks from increasing profit margins as it suited them to be able to use this as leverage in the partnership talks.

Remember that it's not just the loans to developers that baffle the principles of economics - as far as i'm aware, Elan has never made a profit yet it continues to have massive borrowings. Setanta collapsed with massive debts - who lends such vast sums to entities who don't generate profits? - Go figure.

Dunno a lot about economics tbh but not a bad summary i'd say.

Ishmael

hobochris wrote: »

There primary goal is to make money not make sure some idiot doesn't borrow to much from them.

That doesn't make sense. The bank should assess the likelyhood that anyone they give a loan to will be able repay the loan. For example, a bank is not going to loan a homeless, unemployed person money as the it is very unlikely that they will get the money back. If the bank has loaned somebody too much money, then they obviously haven't assessed that person's ability to repay correctly. But thats probably me being a little pedantic about how you phrased that line.

Anyway, The main culprits are the people who were buying up more property than they needed to make profit from it. This is where the false demand was originating from. Developers were developing to meet demand and banks were lending to help developers develop. I'm not saying that the banks and developers are exempt from blame, i'm sure they could have loaned on stricter terms and the developers could have developed less. There was not a whole lot of restraint shown by these profiteers and it is their greed that has caused this, or made it a lot worse than it really should be.

themont85

dresden8 wrote: »

This is a lie. The people who propogate it are liars.

We weren't all making money off property. We didn't all take out 100% mortgages. Some of us did it right and we are getting fncked over to save FF's developers mates.

Even though this is to "bail out the banks" the real effect is to shelter developers and their political lap-dogs from the consequences of their actions, not ours.

Rest assured developers will not have to rely on the mercy of the Simon Community when NAMA have "vigorously" collected their debts.

Total bullsht.

How do you know what NAMA will do with the developers who default?

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

Blazer

themont85 wrote: »

How do you know what NAMA will do with the developers who default?

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

well that's the plan anyway...so where's this money?

Snakeblood

Sc@recrow wrote: »

well that's the plan anyway...so where's this money?

To be scrupulously fair to Nama, it hasn't actually started yet, so we have yet to see what effect it will have on the economy\banking.

I'd bet the 1 cent I have left that it'll spin uncontrolled through the economy like a wrecking ball, destroying everything in its path though.

mobius42

themont85 wrote: »

How do you know what NAMA will do with the developers who default?

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

And to accomplish that they're giving the banks €90 billion, in the hope that by next year the banks will have started lending money again. They're robbing Peter to pay Paul in the hopes that Paul will lend Peter some money back in a year or so.

dresden8

themont85 wrote: »

How do you know what NAMA will do with the developers who default?

We're not all gullible fools. Some of us have worked out how things work around here.

themont85 wrote: »

The setting up of NAMA isn't to 'bail out the banks', its to get money moving around the economy.

Yeah.

I would imagine in 5 years time or so when even the likes of you have to admit NAMA is a total and absolute failure, there will be a change in government policy where it will make "economic sense" to "work with" the developers and throw loads of money at them to "ensure a return" and avoid national bankrupcy.

Once more around the merry go round.

Biggins

Sc@recrow wrote: »

well that's the plan anyway...so where's this money?

Yep - a LOT of people are asking that - and it ain't happening!

thomond2006

"Sensible debate in After Hours" shocker

:eek::eek::eek:

Blazer

thomond2006 wrote: »

"Sensible debate in After Hours" shocker

I know..it's absolutely shocking..
I'm actually going to post a thread in Ranting and Raving entitled " wtf with sensible posts in AH??".

gillo_100

People have commented that Mr Joe Public shouldn't have taken 100% loans and should be taking some responsibilty for borrowing so much and buying thier new luxry cars etc.

What you are forgeting is Mr Joe public is a plumber, is a car sales man, is a hair dresser. Mr Joe public is not someone given responsiblity of the country or who knows all the details of global econmics. So when Joe see his friends buying a big house, He goes to his banks ask they're advice, after all it is thier buisness so they should know better, they say sure go ahead its no problem. So Joe takes his big loan.

Its true Joe helped get us into this problem but is it really Joe's fault that during his apprenticship he was out sick the day they covered economics.

While banks are businesses they still have responsibilties. Would you be happy with your doctor if he prescibed you a medicine without telling you about the side effects.

bakkiesbotha

When Joe Public goes into a bank looking for a mortgage, he is going in there trying to present his own situation as favourably as possible, and hoping that the bank will lend him money.

He doesn't go in, lay all his cards on the table, and ask the person to advise him whether or not he can afford to buy a house.

He also doesn't go in expecting some guy working in a bank to be able to predict the future.

The person he is talking to is a mortgage salesperson for God's sake. Would you expect any other type of salesperson to advise you not to buy something from them?

Snakeblood

bakkiesbotha wrote: »

When Joe Public goes into a bank looking for a mortgage, he is going in there trying to present his own situation as favourably as possible, and hoping that the bank will lend him money.

He doesn't go in, lay all his cards on the table, and ask the person to advise him whether or not he can afford to buy a house.

He also doesn't go in expecting some guy working in a bank to be able to predict the future.

The person he is talking to is a mortgage salesperson for God's sake. Would you expect any other type of salesperson to advise you not to buy something from them?

I would if they were lending someone else's money.

kumate_champ07

heres how i understand it. for the bank to make more money they need to get more customers or invest their money(ie the customers money)

to get more money they need to give out more money so that they make profits with the interest gained from customers paying back loans. they gave out alot of money that people had a hard time paying back if **** hit the fan. **** hit the fan.

A bank only needs to have 10% of the money that people have deposited in it. the other 90% is just numbers in a big banking system network. They use those numbers to buy shares in other numbers hoping to make extra numbers.

The bank is like a huge gambling machine. We pay their depts, they keep their gains. The governments protect them because without them society right now would run into chaos

kumate_champ07

gillo_100 wrote: »

People have commented that Mr Joe Public shouldn't have taken 100% loans and should be taking some responsibilty for borrowing so much and buying thier new luxry cars etc.

What you are forgeting is Mr Joe public is a plumber, is a car sales man, is a hair dresser. Mr Joe public is not someone given responsiblity of the country or who knows all the details of global econmics. So when Joe see his friends buying a big house, He goes to his banks ask they're advice, after all it is thier buisness so they should know better, they say sure go ahead its no problem. So Joe takes his big loan.

Its true Joe helped get us into this problem but is it really Joe's fault that during his apprenticship he was out sick the day they covered economics.

While banks are businesses they still have responsibilties. Would you be happy with your doctor if he prescibed you a medicine without telling you about the side effects.

Joe the plumber sounds very familiar

dresden8

bakkiesbotha wrote: »

When Joe Public goes into a bank looking for a mortgage, he is going in there trying to present his own situation as favourably as possible, and hoping that the bank will lend him money.

He doesn't go in, lay all his cards on the table, and ask the person to advise him whether or not he can afford to buy a house.

He also doesn't go in expecting some guy working in a bank to be able to predict the future.

The person he is talking to is a mortgage salesperson for God's sake. Would you expect any other type of salesperson to advise you not to buy something from them?

Joe public is nothing to do with NAMA.

NAMA is there to protect developers.

While Joe Public is having his house re-possessed, Tarquin developer will be sitting pretty in his 10,000 sq. foot mansion because after all, it's not in "our" interest to bankrupt him and flood the property market.

Just look at today's Supreme Court decision. This will be cemented next week.

NAMA will not take over retail mortgages, it is specifically designed to shelter developers.

Get that through your skull and we can have a conversation.

stovelid

bakkiesbotha wrote: »

Not sure why the man in the street is so incensed by this, but this is all that I am actually aware of.

Jesus Christ.

ejmaztec

:eek:

gillo_100 wrote: »

What you are forgeting is Mr Joe public is a plumber, is a car sales man, is a hair dresser.

He must have worked himself into a frenzy by now. Is he still alive?

Sea Sharp

All we can do i hope that all the money being printed abroad will let us inflate our way outta this mess.

A 300,000k mortgage won't be as bad when a pint of Carlsberg costs E15 and everybody's wages has gone up by a similar proportion.

Think about it

The sooner inflation kicks in the sooner we can begin to clean up this mess of an economy.

stovelid

GaNjaHaN wrote: »

A 300,000k mortgage won't be as bad when a pint of Carlsberg costs E15 and everybody's wages has gone up by a similar proportion.
.

You pay interest on your pints of Carlsberg?

Where do you drink?

dresden8

GaNjaHaN wrote: »

All we can do i hope that all the money being printed abroad will let us inflate our way outta this mess.

A 300,000k mortgage won't be as bad when a pint of Carlsberg costs E15 and everybody's wages has gone up by a similar proportion.

Think about it

The sooner inflation kicks in the sooner we can begin to clean up this mess of an economy.

Inflation will kick in as soon as we start to deflate. That 300k mortgage will turn into a 360k mortgage with no effort on your part and with lower earnings to cover the difference. That is how a worldwide recovery will fnck us over.

Not to mention any oil price rises.

Enjoy the recession, the recovery will destroy you.