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Current Financial Mess 22

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cjd97

cjd97

Structural
May 2, 2006
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I thought that a group of Engineers would be the perfect audiance to ask the question......Is this financial crisis being talked about on TV for real? What do you guys think?

A large part of me doesn't feel sorry for people who bit off more than they could chew with their mortgage. I also don't feel sorry for the banks who wrote the bad mortgage. I personally think we should let the banks fail, let the people lose their houses, and get back to the old times of actually sharing risk when lending/borrowing money, ie having 20% down to buy a home.

Kind of a side note, with everyone supposedly losing their homes and the banks not being able to liquedate them, where does the PMI insurance come into play? I would assume these folks are paying PMI if they are "subprime" loan canidates. Isn't PMI designed for situation such as this?

Just wondering your thoughts.
 
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The OP asked about PMI. Well, many of the loans were "piggyback" loans such as 80/20, etc... Which means you have a 80% loan and a 20% loan. That bypasses PMI, since neither loan is for over 80%, but the financing is 100% of the purchase.
 
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Hah...

The banks would be happy if they made 80/20 loans. Read that some were making 105% loans on expensive homes to cover closing costs. There were some smart people that played the game the same as the banks were... they got 105% loans on million dollar homes and then did not make a single payment. 3-6 months rent free, and then they stripped the homes and walked away, pocketing a bunch of money.

Love it.
 
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Actually, not totally true. They might have well been only 80/20 loans last year, but they're now 130% or worse. A local house was listed at $2.75M last year, and is listed today at $1.2M. This is after foreclosure by the bank, since the owner was not only upside down, but might have actually been turn a full 360º into Riemann space, from whence there is no return.

TTFN

FAQ731-376
 
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Japanese banking crisis

Bad news from Asia this afternoon as Japanese banks are the latest hit …

Origami Bank has folded
Sumitomo Bank has gone belly-up
Karaoke bank goes for a song
Bonsai Bank cuts its branches
Shares in Kamikaze Bank suspended after they nosedive
Samurai Bank soldiers on following sharp cutbacks
Ninja Bank takes a hit, but remains in the black
Furthermore, 500 staff at Karate Bank get the chop
Analysts report there is something fishy going on at Sushi Bank where it’s feared that staff may get a raw deal


 
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Dear Bank Manager,

I am writing to thank you for bouncing the check with which I endeavoured to pay my plumber last month. By my calculations some three nanoseconds must have elapsed between his presenting the check, and the arrival in my account of the funds needed to honour it. I refer, of course, to the automatic monthly deposit of my entire salary, an arrangement which, I admit, has only been in
place for eight years.

You are to be commended for seizing that brief window of opportunity, and also for debiting my account with $50 by way of penalty for the inconvenience I caused to your bank. My thankfulness springs from the manner in which this incident has caused me to re-think my errant financial ways. You have set me on the path of fiscal righteousness.

No more will our relationship be blighted by these unpleasant incidents, for I am restructuring my affairs in 2008, taking as my model the procedures, attitudes and conduct of your very bank. I can think of no greater compliment, and I know you will be excited and proud to hear it.

To this end, please be advised about the following changes:

First, I have noticed that whereas I personally attend to your telephone calls and letters, when I try to contact you I am confronted by the impersonal, ever-changing, pre-recorded, faceless entity which your bank has become. From now on I, like you, choose only to deal with a flesh and blood person.

My mortgage and loan repayments will, therefore and hereafter, no longer be automatic, but will arrive at your bank, by cheque, addressed personally and confidentially to an employee of your branch, whom you must nominate. You will be aware that it is an offence under the Postal Act for any other person to open such
an envelope.

Please find attached an Application Contact Status which I require our chosen employee to complete. I am sorry it runs to eight pages, but in order that I know as much about him or her as your bank knows about me, there is no alternative. Please note that all copies of his or her medical history must be countersigned by a Justice of the Peace, and that the mandatory details of his/her financial situation (income, debts, assets and liabilities) must be accompanied by documented proof.

In due course I will issue your employee with a PIN number which he/she must quote in all dealings with me. I regret that it cannot be shorter than 28 digits but, again, I have modelled it on the number of button presses required to access my account balance on your phone bank service. As they say, imitation is the sincerest form of flattery.

Let me level the playing field even further by introducing you to my new telephone system, which you will notice, is very much like yours. My authorised contact at your bank, the only person with whom I will
have any dealings, may call me at any time and will be answered by an automated voice.

By pressing Buttons on the phone, he/she will be guided thorough an extensive set of menus:

1. To make an appointment to see me

2. To query a missing repayment

3. To make a general complaint or inquiry

4. To transfer the call to my living room in case I am there; Extension of living room to be communicated at the time the call is received.

5. To transfer the call to my bedroom in case I am still sleeping. Extension of bedroom to be communicated at the time the call is received.

6. To transfer the call to my toilet in case I am attending to nature. Extension of toilet to be communicated at the time the call is received.

7. To transfer the call to my mobile phone in case I am not at home.

8. To leave a message on my computer. To leave a message a password to access my computer is required. Password will be communicated at a later date to the contact.

9. To return to the main menu and listen carefully to options 1 through 8. The contact will then be put on hold, pending the attention of my automated answering
service. While this may on occasion involve a lengthy wait, uplifting music will play for the duration. This month I've chosen a refrain from The Best Of Woody Guthrie:

"Oh, the banks are made of marble With a guard at every door And the vaults are filled with silver That the miners sweated for"

After twenty minutes of that, our mutual contact will probably know it by heart. On a more serious note, we come to the matter of cost.

As your bank has often pointed out, the ongoing drive for greater efficiency comes at a cost. A cost which you have always been quick to pass on to me. Let me repay your kindness by passing some costs back.

First, there is the matter of advertising material you send me. This I will read for a fee of $20 per page. Inquiries from your nominated contact will be billed at $5 per minute of my time spent in response.

Any debits to my account, as, for example, in the matter of the penalty for the dishonoured cheque, will be passed back to you.

My new phone service runs at 75 cents a minute (even Woody Guthrie doesn't come for free), so you would be well advised to keep your inquiries brief and to the point.

Regrettably, but again following your example, I must also levy an establishment fee to cover the setting up of this new arrangement.

May I wish you a happy, if ever-so-slightly less prosperous, New Year.

Your humble client

--------------------------------------------------------

Bank Name

Mother decided that 10-year-old Cathy should get something 'practical' for her birthday.

"Suppose we open a savings account for you?" mother suggested. Cathy was delighted.

"It's your account, darling," mother said as they arrived at the bank, "so you fill out the application."

Cathy was doing fine until she came to the space for 'Name of your former bank.' After a slight hesitation, she put down 'Piggy.'

Chris
SolidWorks/PDMWorks 08 3.1
AutoCAD 08
ctopher's home (updated Aug 5, 2008)
ctopher's blog
SolidWorks Legion
 
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I think we have seen a prime example of what happens when an economy moves away from wealth generation activities to "money making" activities. Without true wealth to support it, collapse happens.

Regards,
 
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When I bought my last house I put down a large deposit, paid through some firm of solicitors and moved in. The next weekend was a bank (public) holiday. My cashpoint (ATM) card was refused. So I had to live on small change for a few days. When I called the bank the following Tuesday, they told me my account had been frozen because of that big cheque, even thouogh I had loads still in there.

I told them that they'd ruined my bank holiday and would therefore need to pay for my time for that day so I could take it off later. They agreed. My HR manager backed-up my claim and I got a day's salary.

- Steve
 
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The Aussie Leader of the Opposition (Malcolm Turnbull) stated today that shareholders, particularly institutional investors such as fund managers, have been too complacent with regard to executive remuneration packages.

Mr Turnbull went on to say -
"(They) haven't stood up for the rights of shareholders in ensuring that executive salaries are properly correlated so that they coincide with the interests of those shareholders.''

The issue had been that finance sector executives, at all levels, had been rewarded for writing business, making sales and accumulating loans.

"They've been paid for that without account being taken of the consequences of those loans going bad in the future,''

It's ironic that he has mentioned institutional investors being complacent because their commissions are generally front-end loaded, so they have no real or vested interest in the performance of your funds.

While on fund managers - those guys seem to have come out unscathed even though they are paid and feted like pop stars or English footballers, shifting camp to the highest bidder. I have just looked at a capital-protected investment that I have had for seven years with one of these "superstars" and have only been assured of a "locked in" return of only 22% (spread over 7 years) - and that included the boom years! It would have been better as money in the bank.
 
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The insurance companies underwriting the "credit swaps" treated the risk management like ordinary insurance.

However, when a policy holder's house burns down, it doesn't automatically start a stampede of burning houses, all across the country.

Another thing is the new trend of simply walking away from a mortgage, & not looking back. There was a time when this was unheard of. I have reached 60 years old, and have NEVER been acquainted with (more so, even heard about, in my little blue-collar world.) anyone who has done that. Like multiple bankruptcy, and unwed motherhood, defaulting on a mortgage is now "ok" somehow.

Mortgage brokers promise folks the world, these folks want to believe in the dream ( who doesn't?)Fill out the paperwork, lie about income, whatever it takes. When you have 30 or 40 'applicants', you shop this package around to mortgage lenders, take your commission (money off the table) and move on.

The "winner" of this mortgage package,(mortgage company) after hosing the applicants with thousands of dollars worth of fees, insurance, points, and other closing costs,( which are often rolled over into the mortgage, or paid for by a second mortgage!!) bundles these, along with others together and sells them to a larger Lending institute,at a discount. ( again taking money off the table, the fees, costs, & % discount ) The more mortgage paper you can move, the bigger your bonus!!

Then Fannie or Freddie takes them on, and buys "credit swaps" ( which is insurance by another name. If you call it insurance, you have to regulate it as such ) from say, AIG.

And now these bundles of "credit swaps" have taken on, at least in the financial world, intrinsic value. Like a bushel of corn, or a barrel of west texas sweet crude. So.....they can be traded on the futures market. You can buy call & put options on them. You do not have to prove liquidity of any sort, to play in this market.

And because of the so-called "value" of this paper, they are no longer considered debt, in some arcane bizzaro accounting world.

And all of it, these trillions of dollars, & the whole capitalist system rests on old upwardly mobile joe plumber, or joe machinst, or joe aircraft mechanic making that house note. Shucks, we were expecting to be out of that house before the interest rate went up...........

Someone mentioned the "tulip mania" of the 1600's?

You know how the dutch government cleaned up the mess? They simply cancelled all contracts dealing with tulip commerce. Across the board. Man what would our lawyers do with that one!?



 
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Thruthefence,

So dont the mortgage brokers who "lied about the income" go to jail? Isnt that fraud or deception? Why are their assets stripped and paid to the injured party?

Surely the lawyers would be salivating at the prospect of all these fees?

I have lost my faith in the USA being the legal capital of the world.

 
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Man I hope this garbage about the Irish bookmakers causes many complacent adults in the US who were not going to vote to change their minds and get out and vote. To let shady bookies decide an election is just about as dumb as ... the electoral college.

David
 
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