A Quote by Carl Webb
Banks get in trouble for one reason: They make bad loans.
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When you say "bank," a bank is a building, a set of computers and chairs and things. The bankers are the people running these banks. They're the chief officers, and they push the loans because they don't care if they go bad. For one thing, they may package these bad loans and sell them off to gullible institutional investors.
If there were not derivatives, there would be no bank loans at all today, because people want to get fixed-rate 30-year loans, but banks don't want to keep 30-year loans on their books.
Don't reward bad behavior. It is one of the first rules of parenting. During the financial cataclysm of 2008, we said it differently. When we bailed out banks that had created their own misfortune, we called it a 'moral hazard,' because the bailout absolved the bank's bad acts and created an incentive for it to make the same bad loans again.
If banks anticipate government will come to the rescue should the credit market go badly awry, they may make loans that would otherwise be imprudent, e.g. subprime loans with little prospect of repayment.
Under Bill Clinton's HUD Secretary Andrew Cuomo, Community Reinvestment Act regulators gave banks higher ratings for home loans made in 'credit-deprived' areas. Banks were effectively rewarded for throwing out sound underwriting standards and writing loans to those who were at high risk of defaulting.
Normally, banks record profits on loans only as they are repaid, whether they securitize the loans or hold them on their books.
I'm all in favor of banks that play their part in community endeavors, private individuals looking for loans, people who want to start up a little business, and that's what banks are for.
Instead of abandoning competition and giving banks protected monopolies once again, the public would be better served by making it easier to close banks when they get into trouble. Instead of making banking boring, let us make it a normal industry, susceptible to destruction in the face of creativity.
Deflation can be particularly dangerous when a financial system is shaky, with household and corporate balance sheets in poor shape and banks undercapitalized and heavily burdened with bad loans.
In the real world, banks hang onto their money for fear of making bad loans, no matter how many bailouts or stimulus packages Washington passes.
If I'm a bank, and I'm making risky loans, I have an incentive, if I can, to make those loans using other people's money: in other words, to make highly leveraged loans.
Critics, often for good reason, are concerned that the Fed is wielding its vast powers in the interests of the banks and not in the interests of the people. After the financial crisis, Americans have perceived that the banks have been bailed out, but a significant proportion of the population is still in serious economic trouble.
Both in the US and throughout the world, there needs to be a growing presence of public development banks. These banks would make loans based on social welfare criteria - including advancing a full-employment, climate-stabilization agenda - as opposed to scouring the globe for the largest profit opportunities regardless of social costs.... Public development banks have always played a central role in supporting the successful economic development paths in the East Asian economies.
Our approach to banking is very different from the traditional banks or even some of the new banks. We do not necessarily go out and write single-cheque, large-ticket loans.
The Democrats, because they believe in socialism, redistribution, forced the banks and financial institutions to make the risky loans.
Central banks are choosing to increase their gold holdings as a percentage of total reserves. They obviously think there is a reason to do that. It doesn't make sense to back up one currency with a hoard of other paper currencies. There needs to be a real anchor there. I think that central banks are well behind the curve. If you look at the percentage of above-ground gold controlled by central banks, it's historically low. Hence the fact that central banks are trying to increase their holdings. They've got a long way to go to get where they need to be.
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