A Quote by Lawrence Kudlow
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.
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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.
What people don't realize is that China papered over its last two credit bubbles, those in 1999 and 2004. The banks were never bailed out - they just exchanged their bad loans for questionable bonds from quasi-state organizations.
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.
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.
Nine of 10 whites in Chicago borrow from top-drawer banks and mortgage companies, which the industry calls prime lenders. They lend to people with A credit ratings, making loans at competitive rates.
Normally, banks record profits on loans only as they are repaid, whether they securitize the loans or hold them on their books.
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.
Even in the days of the tightest credit in 2008, HELOCs [ home equity line of credit ] and home equity loans were being made.
Banks were once places to hold money and were very careful in lending to finance families as they built a future - bought homes, bought cars, took out student loans.
Like many other banks and finance companies, Green Tree used a process called securitization to resell its home loans to outside investors. Green Tree grouped thousands of these small loans into a pool worth hundreds of millions of dollars.
A consolidation makes sense only if you can lower your overall interest rate. Many people consolidate by taking out a home equity line loan or home equity line of credit (HELOC), refinancing a mortgage, or taking out a personal loan. They then use this cheaper debt to pay off more expensive debt, most frequently credit card loans, but also auto loans, private student loans, or other debt.
Both HUD and the Department of Justice began bringing lawsuits against mortgage bankers when a higher percentage of minority applicants than white applicants were turned down for mortgage loans. A substantial majority of both black and white mortgage loan applicants had their loans approved but a statistical difference was enough to get a bank sued.
If all the bank loans were paid, no one could have a bank deposit, and there would not be a dollar of coin or currency in circulation. This is a staggering thought. We are completely dependent on the commercial banks. Someone has to borrow every dollar we have in circulation, cash, or credit. If the banks create ample synthetic money we are prosperous; if not, we starve. We are absolutely without a permanent money system. When one gets a complete grasp of the picture, the tragic absurdity of our hopeless situation is almost incredible - but there it is.
The financial collapse of 2008 got its start with predatory mortgages, that weren’t sold by community banks and credit unions, they were sold by fly by night mortgage brokers who had almost zero federal oversight and then the big banks looked over, saw the profit potential and they wanted it bad. So they jumped in and sold millions of these terrible mortgages while the bank regulators just looked the other way.
Before the 1970s, banks were banks. They did what banks were supposed to do in a state capitalist economy: they took unused funds from your bank account, for example, and transferred them to some potentially useful purpose like helping a family buy a home or send a kid to college.
People with banking experience haven't all flocked to the biggest banks; community banks and regional banks, along with smaller trading houses and credit unions, have some very talented people.
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