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Author Topic: Too Big to Fail 2  (Read 2170 times)
BlueBee
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« on: December 19, 2011, 06:15:20 PM »

I see Bank of America stock dipped back under $5 today.  If I recall, $5 is supposedly the line in the sand between “investment grade” and “junk” (as it pertains to stocks).  The news articles are spreading fear that BofA might be under capitalized if/when Europe hits the fan.   I would also bet they are sitting on a lot of foreclosed US properties without buyers.  It’s not like the housing market, or jobs market, ever recovered.

While the stock price doesn’t really affect rather a company is going to live or die, it is an indicator of the health of a company.  This patient is starting to look pretty sick again. 

Question is, do we bail out the banks AGAIN if they run out of capital?
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kathyp
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« Reply #1 on: December 19, 2011, 07:07:14 PM »

to big to fail is a label applied by government.  capitalism doesn't have anything that can't fail...or succeed.
 of course they should not be bailed out, but you can bet that they will be, at least with capitalization loans.

unfortunately for the banks, they didn't cause this mess.  they are left with it while fannie and freddy continue to suck up money.
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #2 on: December 19, 2011, 07:59:30 PM »

Why bother to blame Fanny and Freddie?  Just because they acted irresponsibly doesn't mean the rest of the banking industry should do the same.  Actually it was only the big boys that followed the government model.  Bank of America should go down but they won't because even if congress doesn't give them money the Federal Reserve is there willing and ready to float them along.  Just as they did when congress was doing the 700 billion tarp bailout.  Only the Fed was doing it under the table to the turn of 16.4 trillion. 
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kathyp
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« Reply #3 on: December 19, 2011, 08:25:40 PM »

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Why bother to blame Fanny and Freddie?


it wasn't the government model, it was the government order.  there was no way banks would have gotten into any of those bad loans without the congress telling them they had to.  Fanni and Freddy were the guarantee to the banks that those loans would not come back to bite them.  it is true that the banks did creative things with those loans to dump them, but the fact that they had those loans to dump is all on congress.  specifically barny frank and cris dodd who pushed and pushed this crap through, and swore that all was well. 
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #4 on: December 20, 2011, 07:11:36 PM »

Fair lending laws sometimes are unfair to the taxpayers. Sad
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hankdog1
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« Reply #5 on: December 21, 2011, 01:08:29 AM »

Kathy all banks didn't participate in such lending practices.  I'm sure those are the same ones that would fill the void if we let them fail.  How can freetrade ever work if we never allow the big boys to fail?  I find it very hard to beleave that these banks didn't lobby for this bill in congress. 
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T Beek
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« Reply #6 on: December 21, 2011, 07:17:54 AM »

Exactly right hankdog1, there are many examples of 'small' banks making wise choices instead of 'cashing' in on the bonanza the BIG ones were enjoying (and insisting everyone take part in).  

And those 'small' banks that 'took the risks?  Well unlike the BIG BANKS, they did fail, and failed in droves for a couple years.  Can't remember the actual number of Bank closings we're up to now, but it was/is substantial.  

While some like to blame 'government' (that's us) and some like to blame BANKS (that's NOT us), the fact is BANKS OWN our GOVERNMENT (us), not the other way around.  We should all revisit "Senator Phil Graham" as 'one' starting point, where he began and where he is now would make a great topic for exploration on how this curren mess all began, IMO.

Unless one is tremendously wealthy, defending BIG BANKS while blaming government (us!!!) is counterproductive, misdirected and only serves the dividers of this world.  I generally don't like being forced to choose sides, but this one is clear enough.

The little bank I've used for over thirty years is still around and solvent.

thomas
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iddee
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« Reply #7 on: December 21, 2011, 08:56:12 AM »

""defending BIG BANKS while blaming government""

I was always told it takes two to tango. I don't see much innocence on either side.
As long as they can keep us divided, both can keep scamming us til we have nothing left.
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"Listen to the mustn'ts, child. Listen to the don'ts. Listen to the shouldn'ts, the impossibles, the won'ts. Listen to the never haves, then listen close to me . . . Anything can happen, child. Anything can be"

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« Reply #8 on: December 21, 2011, 02:51:08 PM »

Quote
Kathy all banks didn't participate in such lending practices.  I'm sure those are the same ones that would fill the void if we let them fail.  How can freetrade ever work if we never allow the big boys to fail?  I find it very hard to beleave that these banks didn't lobby for this bill in congress. 


they did not.  you can go back and look at the congressional hearings that were held when the banks were threatened because they were "red lining" and not lending to poor people.  there were congress members who even said that some loans would fail, but it was the right thing to do. after all, everyone deserves to be able to buy a house.
i don't believe that this was applied to every single bank.  it was applied to the bigger banks.  you'd have to go back and look at both the Community Reinvestment Act of '94 (i think) and the hearings. you can also go back and look at the original act which i believe was in '77.

 that's why the banks were told that they would be backed by Fannie and Freddy. 
whatever you think about banks, they are a business.  making loans to people who can't pay, is bad business.  because they were forced to make those loans, they came up with creative ways to dump the loans. 

while this was a disaster for all of us, it was not illegal.  even if you make the argument that it was immoral, the problem still started with the government interfering with business. 

what a lot of people don't know, and i didn't, is that many banks manage loans that they do not own.  my bank manages my loan, but they do not own my loan. 
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #9 on: December 21, 2011, 04:33:52 PM »

I agree w/ iddee, there are no innocents and that includes 'us' who slept through the con-job that was perpetrated on 'us' by people w/ 'criminal' intentions.  Does anyone really believe these people didn't know exactly what they were doing all along?

'We the People' are the Government and 'we' deserve the majority of 'blame' and exactly what we got IMO.  Its not like we weren't warned about the BANKS, starting with our first President and followed by many others.

After the 'National' Chamber of Commerce, the FINANCIAL INDUSTRY has the greatest number of lobbyists demanding time w/ our reps in DC, just 'one reason I advocate for 'bringing our elected home' (close DC up except for a couple months a year, they can cast votes on-line and out from the influence of BIG MONEY) where they should be spending time looking 'their' constituents (as opposed to their financial benefactors) in the eye.  What a concept.

Of course this doesn't mean we should not 'at least' expect/demand some accountability from our elected representatives, if not actually some jail time for the TOO BIG TOO FAIL CLAN (criminals), who BTW have learned NOTHING from the experience (they got away with it) and have changed NOTHING.  Why should they change a system that works.....for them??

thomas
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kathyp
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« Reply #10 on: December 21, 2011, 07:18:39 PM »

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After the 'National' Chamber of Commerce, the FINANCIAL INDUSTRY has the greatest number of lobbyists demanding time w/ our reps in DC

why do you think anyone hires a lobbyist? 
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #11 on: December 21, 2011, 07:28:53 PM »

It looks like Europe has the same answer to their bank problems as we have, turn on the cash troughs and let the bankers suck up as much cash as they want!  It’s a wonder our crazy economies even function at all.  Bankers seem to be charmed lot no matter where you look.

With Europe now “fixed” all our banks have to worry about is bad loans at home....

Bank of America stock is safely above the $5 mark again so we can all sleep soundly again  Smiley
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kathyp
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« Reply #12 on: December 21, 2011, 08:27:53 PM »

BTW...i'm not necessarily defending all that banks have done, but i am pointing out that it was government interference that started the problem.  the answer was more government interference. 

i would also like to ask why you think it's so bad to inject capitol into banks, yet some of you seem to favor injecting capitol into states, much of which was wasted.  seems to me that if the objection is using tax payer money to bail things out, bailing out states at the expense of the private sector, and growing government at the expense of the private sector is just as bad....maybe worse.

here's another question, to which we will never have an answer, but what it those financial gurus had been correct and allowing those banks to go under would have led to global financial collapses.  our retirements wiped out.  depression (worse than we have).  inflation. business failures....

even though i am not in favor of bailouts, at least on that one i can understand the thinking.  we'll never know if the thinking was right or wrong....except there were massive bank failures during the great depression and we know what that led to....and the financial markets were not nearly as global as they are now.
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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« Reply #13 on: December 22, 2011, 05:53:24 AM »

I would rather' waste' money by providing for 'needy' people than just handing it over to BANKS. 

The so-called 'private' sector owes plenty for the privilege of operating in a 'free society' where they can become rich beyond their wildest dreams off the backs of others. 

This is the primary issue IMO w/ the screwed up way we practice capitalism in America. 

Those running the show subscribe to the mantra; "If I make money (even off 'your' money) its mine, all mine.  If I loose money, well, that's all yours."  That's another dose of Reality.

thomas
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BlueBee
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« Reply #14 on: January 05, 2012, 07:28:27 PM »

Boy what a difference 17 days makes!  Bank of America stock has rocketed up over 25% in just 17 days.  Leaped nearly 9% today on massive volume.  Odds are there was some leaked news the insiders got today to cause such a big spike up.  Didn’t look like short covering to me.  The rest of us will probably get the real news in a day or two.  Nice how the gaming system on Wall Street is such an even playing field, isn’t it  grin 

Hope y’all got some of that 25% gain, because I didn’t. 
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« Reply #15 on: January 06, 2012, 08:34:57 AM »

unfortunately for the banks, they didn't cause this mess.  they are left with it while fannie and freddy continue to suck up money.

Uh... the banks (not all of course) started it and transfered the mortgage mess to Freddie and Fannie who guaranteed the loans. They were the originators of the loans to start with (loaning to people who didn't qualify).

60 minutes did a piece last year about the folks who were hired to "sign" the falsified mortgage documents. Unbelievable greed it was (and still continues today).

Quote
Bank of America shares rose almost 9% on Thursday to $6.31 on speculation that more mortgage refinancing help from the federal government could be on the way, but it appears now that won't be the case.

I would bet that BAC will see $5.00 again soon after their short lived $6.29 close.

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BlueBee
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« Reply #16 on: January 06, 2012, 09:21:39 AM »

So are you going to short them grin

I don’t bet against that much up volume.  I read that rumor about more help from the Feds too.  However I still don’t think we peons have heard the REAL story yet.  Wait a couple of days. 
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kathyp
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« Reply #17 on: January 06, 2012, 11:35:53 AM »

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Uh... the banks (not all of course) started it and transfered the mortgage mess to Freddie and Fannie who guaranteed the loans. They were the originators of the loans to start with (loaning to people who didn't qualify).

not they didn't.  60 min??  really?  they have been known to be wrong...or to lie....  Wink

tell me something:  why would a business (bank) loan to someone they knew couldn't pay them back?  that would not make good business sense, would it?  yet they did.  they question you need to answer is why?  you started in the middle of the problem, not the beginning.
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.....The greatest changes occur in their country without their cooperation. They are not even aware of precisely what has taken place. They suspect it; they have heard of the event by chance. More than that, they are unconcerned with the fortunes of their village, the safety of their streets, the fate of their church and its vestry. They think that such things have nothing to do with them, that they belong to a powerful stranger called “the government.” They enjoy these goods as tenants, without a sense of ownership, and never give a thought to how they might be improved.....

 Alexis de Tocqueville
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