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2008-05-22 Home Front Economy

Top banks call for relaxed writedown rules

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Posted by gorb 2008-05-22 03:28|| || Front Page|| [11129 views ] Top

#1 The writedowns required under current interpretations may be substantially in excess of any actual or reasonably probable loss on many instruments.

An Australian expression comes to mind,

She'll be right.

Which translates to, we might get lucky here.

Posted by phil_b 2008-05-22 07:30|| 2008-05-22 07:30|| Front Page Top

#2 financial companies for proposing rule changes that would reduce the impact of a crisis triggered in large part by their aggressive lending and underwriting practices.

What he said. If they don't feel the pain from their incredibly poor and illegal tactics, then they'll just do it again, and next time will be worse.

Posted by gromky 2008-05-22 08:25|| 2008-05-22 08:25|| Front Page Top

#3 Fair is fair about the downward spiral, and protecting the economy as a whole. But it works both ways. Future asset valuation must also be based on historical, not speculative value, when the market is volatile.

That is, if a building was worth $100k real value when it was built, but in the current market, it is speculatively worth $1M, the banks could only loan based on $100k collateral.

"But the market says it is worth $1M!"

"Sorry, dude. $100k is the maximum legal loan on that hog."

Posted by Anonymoose 2008-05-22 08:37|| 2008-05-22 08:37|| Front Page Top

#4 For a number of years real estate prices were rising exponentially, linked to speculative investment and fueled by ever-softer lending policies. That bubble burst. Where was the money behind all that lending (both the high risk and conventional loans) coming from? Investment funds - pension funds, trusts, rich Arabs, etc. That investment money is still out there but has been scared away from both the risky and the good mortgage market. Where is it going? Oil speculation? There are reports that about $60 per barrel of the current price is due to such 'investment'. The oil market is now acting a lot like the real estate bubble a couple of years ago.

It seems to me that relaxing writedown rules will just free up more 'investment' money to chase the 'bubble du jour' - oil.

Bubbles always burst, eventually.

Posted by Menhadden Snogum6713 2008-05-22 09:02|| 2008-05-22 09:02|| Front Page Top

#5 What the banks are calling for is reasonable. Either accept that or allow the banks to take the writedowns as tax deductions, which I assure you the IRS will not allow.

Posted by Nimble Spemble 2008-05-22 09:57|| 2008-05-22 09:57|| Front Page Top

#6 From the institutions and leaders who pushed the The Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 to get tougher on those individuals out there abusing the credit market. So all the little people get punished for the actions of a few. Now its turn around and these same groups want lesser constraints. YJCMTU. If we lived principle, we'd tell them to stick where daylight never shines. Rest assured, its about POWER.

Posted by Procopius2k 2008-05-22 11:30|| 2008-05-22 11:30|| Front Page Top

#7 They f**ked up AGAIN bigtime as they periodically do. About once per decade. Because they are not being held responsible. Put the hurt on these fools so this is stopped for a time. The Depression repercussions stopped the greedy f**ks for about 50 years. That group has now departed and the new crowd needs a thrashing because they haven't the computational power to learn from their own mistakes.

Posted by Woozle Elmeter 2700 2008-05-22 12:07|| 2008-05-22 12:07|| Front Page Top

#8 I think it was Bank Of America that first started making home loans to illegals.

I think they are getting their just rewards.
I want this to go on (for them) for a long time.
Till nobody will buy a share of their stock for $.01

Posted by bigjim-ky 2008-05-22 23:40|| 2008-05-22 23:40|| Front Page Top

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