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Subscribe to RSSHaving a hard time getting credit? So is everyone else, from homebuyers to businesses. After the rogue lending wave of the past decade, bankers have gotten very choosy about extending credit.
That’s going to be a hot topic at a meeting of Federal Reserve officials who are gathering in Jackson Hole, Wyo., for their annual thinkfest. This year, they’ve got a lot on their plate.
The dismal housing market, for one. Despite the Fed’s moves to slash interest rates to the bone and shell out over a $1 trillion to buy shaky mortgage bonds, home sales have fallen through the floor. It’s not that mortgages are too expensive; the average rate on a 30-year fixed loan fell to 4.36 percent this week, the best deal for home buyers since Freddie Mac began tracking rates in 1971.
The problem is that the Fed’s rate-slashing hasn’t prodded skittish lenders to take on more risk. With home prices still falling in many parts of the country, lenders are looking at continued losses from all the bad mortgages they wrote during the housing boom. The latest numbers on mortgage delinquencies from the Mortgage Bankers Assn won’t do much to calm lenders’ nerves.
The number of homeowners falling behind on their mortgage payments seems to be topping out, but roughly one in ten mortgage holders face foreclosure. Forecasters at Capital Economics figure that means as many as four million households may lose their homes; that's on top of the nearly three million homes that have already been lost.
So what’s a central banker to do? Unfortunately, the folks at the Fed have few options. They can buy more bonds, pushing long-term rates even lower. But that will hurt consumers, who are already getting paid next to nothing on their savings accounts.
One idea Fed Chairman Bernanke & Co. are looking at: stop paying banks interest to keep their money in the Fed’s vaults. With bankers so skittish, paying them not to lend may be doing more harm than good. The Fed could even charge banks interest to stash their cash, giving them more incentive to start lending it again.
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what do they think... they should have never gave out the loans in the first place.. were was their heads up their a-- , and we bail them out and now we cannt get the credit.... what a shame on them
Not necessarily true. My mortgage is low and my house is till worth more than I owe, if I lose it, it will be because I lost my job. Car is already gone but I can't rent for less than I pay for my house and I can make the payments on unemployment.
Now the credit cards, bankruptcy, here I come. And no, it was not big screen tv's. It is medical debt.
I'm sorry to say it's time to let these banks eat the bad loans they made,the fed should not but any more bad paper and if these banks lose money oh well they did it to them selves,we can't just keep proping up banks and lowering interest rates and loaning to the big boys at near zero intrest when they won't loan to smaller banks at favorable rates to help spurr the economy.letem crash. all this money would be best used by loaning direct to the small businesses and bypassing the banks, the fed is a private enity so they could if they wanted,no congressional approval needed as long as any profits after taxs and principal was payed to treasury.
It's a chicken and egg thing. Which came first, stupid borrowers that were only too happy to borrow more than they could pay back or stupid bankers that would lend to anyone that could fog a mirror? Now the pendulum is at the opposite end of the arc.
I SAY LET THE BIG BANKS GO UNDER. PERIOD. BANKS LIKE CITIBANK, BANK OF AMERICA, AMERICAN EXPRESS, A.I.G., SHOULD HAVE BEEN HISTORY TWO YEARS AGO IN 2008!!!!
All the loans can be transfered to smaller banks at lower interest rates because the original contract(s) with banks that went under are VOID!!!!!!!!!!!!!?????????? Hello STUPID CONGRESS!!!!!????
If we had just let the big banks go under, we as a nation would not be in this mess. US GOVERNMENT NEEDS TO STAY OUT OF PRIVATE BUSINESS SECTOR!!! US GOVERNMENT DOES NOT KNOW IT'S ASS FROM A HOLE IN THE GROUND!!!!!
All home mortgages should be privatized like they once where back in the 80's. All loans at Freddy and Fannie should given to the private sector community banks and FREDDY MAC & FANNIE MAE SHOULD BE OBLITERATED!!!!!!! NO MORE GOVERNMENT HOME MORTGAGE COMPANIES!!! THE DUMB, STUPID, IGNORANT, IDIOT, LOW-LIFE, SCUM OF THE EARTH, ORGANIZED CRIME, GANGSTER, POLITICIANS IN WASHINGTON.
WL-1188611 I wish Americans understood how money worked and who is really to blame for this economic mess we find ourselves in. Plain & simple, it was greed by the companies that sold these mortgage backed securities to U.S. pension funds, after strong arming Standard & Poors, and Moodies to give them the investment grade credit rating they needed for what was in essence "junk paper." To make matters worse they (Wall Street) hedged their risk by purchasing insurance in case the home owners defaulted from AIG (this is whats known as a derivative) for as little as one hundred million dollars they could purchase a policy that paid billions in case of default...and they knew they would default because they were the ones setting the U/W criteria. So a small group of all ready extremely rich people got even richer while bankrupting the world economies and sticking the American tax payer for the bill. All I have to say is O-U-C-H!
I SAY LET THE BIG BANKS GO UNDER. PERIOD. BANKS LIKE CITIBANK, BANK OF AMERICA, AMERICAN EXPRESS, A.I.G., SHOULD HAVE BEEN HISTORY TWO YEARS AGO IN 2008!!!!
All the loans can be transferred to smaller banks at lower interest rates because the original contract(s) with banks that went under are VOID!!!!!!!!!!!!!?????????? Hello STUPID CONGRESS!!!!!????
If we had just let the big banks go under, we as a nation would not be in this mess. US GOVERNMENT NEEDS TO STAY OUT OF PRIVATE BUSINESS SECTOR!!! US GOVERNMENT DOES NOT KNOW IT'S ASS FROM A HOLE IN THE GROUND!!!!!
All home mortgages should be privatized like they once where back in the 80's. All loans at Freddy and Fannie should given to the private sector community banks and FREDDY MAC & FANNIE MAE SHOULD BE OBLITERATED!!!!!!! NO MORE GOVERNMENT HOME MORTGAGE COMPANIES!!! THE DUMB, STUPID, IGNORANT, IDIOT, LOW-LIFE, SCUM OF THE EARTH, ORGANIZED CRIME, GANGSTER, POLITICIANS IN WASHINGTON.
Mr. Ben Bernanke has already stated publicly he "will let it rain money" before he allows the banking system to fail. So, where is YOUR billion?
A little anger management needed there WL. Be careful what you say the feds might come knocking.
I don't think you want to see banks like BoA go the way of the Dodo Bird since any saving you had will be gone. FICA is broke unless the Fed's start printing money and pay you worthless dollars. And your mortgage does not go away it just shifts to somewhere else. Smaller banks do not want your worthless mortgage.
It was the Fed's, primarily the Democrats, that wanted the everyone to enjoy the American Dream of being a home owner. They went to the "Big" banks and wanted them to make more loans to the poor even though in the long run they couldn't pay the mortgage. The banks now do not want to lend money on long term debt like a mortgage since they pay virtually nothing in interest. They will only loan money when they see they will get repaid with some interest in a short period of time.
Why would the banks want to tie their money up in a worthless house for thirty years? They won't. The interest rates have got to start going up if you expect banks or anyone to think about loaning out money. Why should I borrow if I knew that money will be cheap for a long time? If rates started to go up I might think about borrowing before they went up more. Right now it's sit and wait thanks to the Fed. They played the game for years. If you want to improve the economy you lower rates and visa versa. But now you have an extended period of time with extremely low interest rates, maybe its time to raise rates and make things start to happen because keeping them where they are now is not getting us anywhere.
for your information, it was republican congress and president during market boom in until 2006, so get history book first and read it then come back with right answer
The central-banking monetarist system is just a big inflated paper nothing, anyhow. Just one pin-prick of truth about it would deflate the entire false premise of the system and return it to earth in a flat, paper, meaningless evaporation of wasted ink.
Until we return to a system of money and credit controlled by each of the sovereign states of the Union and to Congress, which alone in the Constitution is authorized to print and coin money, and return the system to the full faith and credit of a gold-based or tangible-wealth-based system, then we will always be forced to contend with this insane devaluation of our economic lives by offshore banks governed by greedy, selfish, overcontrolling corporate interests.
The Federal Reserve Bank is not federal, it is not a reserve, and it is not a bank.
The Federal Reserve Bank is a privately owned cartel held by corporations owned secretly and predominantly by offshore, foreign banks, which form no productive outcome or tangible goods except to make money (which is called inflation, and which lies at the root of all devaluation of your personal economic stores of value).
So, how are you and your family liking all this globalization stuff so far?
You want to fix the problem? It's easy. Just reinstate all of the financial safeguards which Congress enacted during the Great Depression and which have been dismanteld, beginning in the early 1980's. Reinstate the Glass-Stegall act (keep banks out of the investment business and investment firms out of the banking business). Prohibit derivatives, hedge funds, SWAPs, CMO's, etc. Do not let any bank have a branch outside the state of its home office (to end these monster "too big to fail" banks). Multi-state branching has been a curse, if there ever was one. Create strict lending standards for home ownership (don't let someone making $75,000 a year obtain a mortgage on a $400,000 house). Enact criminal penalties on lenders who knowingly accept false information from applicants. Require down payments of at least 20%. There's plenty more that could be done, but this is enough for starters.
The banks should have been seized by the govt. Just like they did with GM.
It used to be that banks were interested in helping people and the community and took a stake in the community and businesses it served. When tough time were around they would work with people to keep homes or autos.They cared about the future of people and treated them like people.
Now it's all about profit and ripping people off because the Banks have been allowed to take over most small banks (more deregulation). Run into to some rough times them tough @!$%#. The banks say have a good time being homeless even though it really would be in the banks best interest to help the owner stay in the house.
Now the banks know they can screw up and the tax payer will bail them out. They can still take massive risk without being accountable
Anyone remember there used to be a cap on interest rates i think around 12.8%. At the time that was considered high. Now people would love that rate on a credit card. Just another example of deregulation. We all know who loves to deregulate don't we.
If this is what free enterprise and capitalism is becoming then you supporters can have your corporate fascism.
In some ways, our situation is truly pathetic. We had a Great Depression, once; and now we undid all the legislation that was put into place to keep if from happening again. Lend what money to who, and even why. There is no money. We have a bunch of unpaid for homes, unpaid for cars, unpaid for college loans, trillions in dervivates, so we do what? Ahh, create more paper, then sell the paper, and print more paper to cover the paper, so we can get rid of the worthless paper. Years of Grade school econ 000, are over.
I love how everyone blames it on the poor getting mortgages. When if you look at the numbers more homes from the rich are being forclosed on because the rich just walk away as a bad investment. Not because they can't repay it they just don't want to lose money on the deal. Tell me the real monster here. The fmaily of 4 who want a house to raise their kids in and do what they can to make ends meat. Or the rich person who bought a 2nd, 3rd, or even 4rth home to flip, rent, invest in etc. and just stops paying it because he can?
Actually we do not blame the poor for obtaining morgages. The absurdity of what occurred in this country before 2007 is that banks started to loan money for riskier mortages since much of the less risky debtor pool had already become saturated. Then corporations finished shipping all the jobs to India and China held by all the people who had taken the loans.
The corporations are as guilty as the banks, because the end result is that the banks now own most of the real estate they foreclosed on. The banks should be thanking and paying lavish bonuses to all the bean-counting CPAs and CFOs in America's companies for destroying American jobs, sending them offshore, and giving them the opening to seize all of America's real estate.
Such an elegantly simple plan for total ownership of America. Now, when the banks fail like dominoes, the Chinese will buy all our banks, and they will then end up owning everything. Everything.
Yes - it is time to bring back the Great Depression Safeguards AND how stupid is the Federal Reserve to give the Banks interest on money stored with Federal Reserve - maybe they should charge the banks for keeping their money there. I bet the banks would loan out the money then. Better terms baby, better terms.
10 yrs ago I lost my home, new car and job. Medical debt and it keeps on keeping on. I can't see the forest for the trees. What credit rating I used to have one. I'm approaching my retirement years gee I wonder how cat food tastes.
The issue with credit is the millions who lived way beyond their means, then went bankrupt. I know several....heck a guy in our town built a 300K home, had 2 40K SUV's, you name it....filed, and didn't reorganize, walked away from his house, kept the cars, wrote off ALL the debt in credit cards etc, and 6 months later...he buys land in the most exclusive area where we live, is in the process of building yet another 300K house and has 2 tractors.
So, what is wrong with this picture? File, get rid of the debt and start over. I believe EVERYONE who is in debt should PAY that debt. Not us, not the govt, but those who get into it.
Now....I know medical bills are an issue...my mother had cancer, I am an only child, I paid her bills for 5 months while she was going through chemo and radiation. I fell behind on my own cc bills and mortgage...took a while and a HUGE hit to my credit, but I got it all paid off and the bank worked with us on the mortgage. Was it worth it? Yes....she just got her 10 year clear.
You did the right thing and you got a blessing. You get to go through life knowing that you are honest. As a businessman I have dug out of a couple of holes and I think that your credit history should be as far back as you go. Why shouldn't your credit history be just like your criminal history?
Many great ideas and thoughts. Government should stay out of free enterprise. If a bank rolls the dice and loses, it should pay the consequences. I've gone to Atlantic City, Las Vegas and the Bahamas and gambled slightly and lost at times. I was disappointed when they did not give me my money back, but I didn't expect anyone to.
Banks made millions if not billions on selling worthless derivative securities; an asset leveraged several times its value. So why should they be rescued if they took a "calculated" risk and lost. We keep hearing about the "brain drain" concern pertaining to major banks and investment firms. If none of these people perceived the risk, are they really that bright to begin with?
Fortunately, I work for a well run, well capitalized and respected commercial bank, generating consistent profits. Why then should we not garner additional market share at no cost due to the failure and ineptness of some of our competitors. That is how a free market economy works, and our government has distorted it beyond recognition.
In the old days, a 20% down payment was needed. When my wife and I bought our first house, it took us a long time to save 20%, but we worked hard, sacrificed, and did it. It took over three years because we bought during the beginning of the housing stupidity. We were told time and time again that we would never find what we were looking for, but we did. And we did it with a standard 30 year mortgage with 20% down. Was it a huge palace with brand new construction, no. But it was in the neighborhood we wanted, the amenities we needed. We did not live next to the proverbial Jonses and did not need to keep up with anyone. Each had our own car too but had only one payment which was done by design.
Greed on the part of individuals and banks got us into this mess. It took several years of this abuse to cause today's problems. It will take just as long if not longer to fix it. But don't worry, we have short memories and will surely begin to inflate some other commodity (or perceived commodity) to several times its value, then cry when someone comes out of the ether and the whole thing collapses. Not sure what it will be, but with our "new economy" maybe a "virtual" asset will be created; something intangible with no perceived value until someone who we think is brighter tells us it is. Wait an d see, it will happen!
You sound like the type of old style bankers I knew early in my business career, before 1980 and the onset of interstate commercial banking. In those years, banks were risk-averse, and their role was to preserve capital and make safe, prudent credit decisions that were intended (and indeed compelled by the Community Reinvestment Act) to benefit their local communities.
Today's banks are risk-seeking in order to gather the highest profits they possibly can, are given to short-term trading, and channel their gaudy profits to select CEOs, CFOs and political candidates that can support their interests.
The banking system will not remain as it is. In ten years we will not recognize our currency, our forms of banks, the ownership of the banks, their national affiliations, and their confiscatory habits.
The genius banks are looking for are people that know how to leverage congress out of a few billion. They have earned their bonuses.
I drive a large truck. It has a large tailgate. Across the tailgate, for the last eighteen months, I have sported a sign that says, "Mr. President, It's about jobs stupid." The whole problem is jobs and no spinning, no diverting the nation's attention with bank bailouts or oil prices, foreclosures or banks going belly up will change the dynamic that we need good paying manufacturing jobs. As long as Mitch McConnell and Congress, as well as The White House keep giving preference to companies offshoring jobs, as long as Obama keeps trying to give citizenship to lawbreakers and amnasty to illegal employers, we are screwed.