I got into a heated discussion with two guys at work yesterday regarding the big banks and financial industry. Both were wanting more regulation on the banks.  They said it was the banks fault for the mess we are in due to them knowingly giving bad loans because they were greedy.  THey pretty much argued all large businesses are greedy.

I argued they wouldn't want to loan money and then the person default, that just forces them to sell the house at a loss and they make nothing off that.

I also argued that those taking the loans should be held just as, if not more responsible because many of them knowingly took loans they knew they couldn't afford.  This was also out of greed, because they wanted a larger house than they can afford.

I convinced one of them, that those taking loans should be held partially responsible, but he was still only willing to go 75-25% and the banks held the majority of the responsibility.  

Hopefully y'all that know more about this can enlighten me on how the banking industry really works, and if there should be more regulation on the banks.

Poll inbound just for the hell of it.

When I was in college, I was taught a bank's job was to evaluate risk, and then make money lending to people who were able and had demonstrated in the past they would pay loans.  If banks got greedy and lent more money than they had in capital, not only would bank examiners spot this and stop it before it brought the bank down, the probability was they'd lose money on bad loans.  They'd eventually go out of business.
So why did banks start lending so much money to bad credit risks on homes starting in the late 1990's?  Because the federal government basically said "We'll take risky loans for homes off your books, Fannie Mae and Freddy Mac will buy them, and taxpayers will burden the risk."  Well why did the government do this?  Because accusing banks of racism for not lending to the poor and those without credit wasn't working to spur lending to those individuals (who voted for Democrats) by banks.  But, shifting the risk to the taxpayers and thus removing risk from the banks did work, and banks then started offering the now infamous subprime mortgages to anyone who wanted one, regardless of their ability to pay back the loan.


 

Banks are just like any business, vote with your feet. All this Social Justice bullshit is the problem.

Big banks, and for that matter, any big business is greedy.  Fortunately, our elected representatives are not.  Politicians are the only true moral group of people in this country.

Obviously, banks/business need much more regulation.  Only when the pure hearted politicians control everything will the evil, greedy businessmen be put in their place.

When dealing with banks, you have no choice, because they are all greedy and immoral.  Fortunately, when dealing with  politicians, you need no choice, as they are all honest and pure.

Also, the Sun is made of ice.

Do we need more regulation from the source of the problem during the last financial crisis?  Yeah, I don't think so either.  Dodd-Frank was ok, and I think that is enough regulation for the next century.  Our Financial Industry is the most envied in the whole world.  Why would we want to screw that up?  OP do you work in the financial industry?

Sultry use of subtle sarcasm .  



 

One of two things need to happen:

banks need more regulation

or

banks need to be stripped of being too big to fail

As it stands now, the banks are quasi-public entities where the profits are private, but the losses are public and born out by the tax payer...because they are "too big to fail".

This creates a moral hazard by which the banks are encouraged to engage in risky behavior because they know Uncle Sam or the Fed or the American Taxpayer will bail them out when their risky bets fail.

Nope, I work in IT.

What a dork!

Why did the banks make risky home loans?  Because ACORN, SEIU, and other such groups got their Commie buddies in Congress (Barney Frank and company) to FORCE banks to give loans to people that otherwise couldn't get loans.  The banks said to government, rightly so, OK, if you want these people to have home loans then YOU take the risk.  Which is what happened.

So, why did the government go along with this?  Because ACORN, SEIU, and other Commie groups delivered the votes to keep them in power.  These Congressmen and Senators bought their votes with your and my tax dollars.

You don't remember the banks, and even bank presidents, being intimidated with protesters not only at the banks, but at their homes?

We were warned a number of times... I think it was 7 times that President Bush warned of impending problems in Fannie Mae and Freddie Mac, said these institutions needed to be reigned in, and then BAM!  What was warned of happened.  

No, it was not lack of regulation.  It was government interference in the free market, forcing banks to give risky loans.

I can think of a lot of banks that did not give shit loans out so I would have to say banks being forced NO
Banks and politicians and even citizens Greedy YES

By the way I hate fucking banks do not owe them nothing and only use them to pay a couple bills a month.

Remember when your Debt free you always have a wad of cash in your pocket  and your not a slave to them,