5 ms·

I don't have a ton of first hand knowledge on the risk appetite of banks or the effect of banking regulation. But I assert that Matt Levine is very knowledgeabl

I don't have a ton of first hand knowledge on the risk appetite of banks or the effect of banking regulation. But I assert that Matt Levine is very knowledgeable about these things and he disagrees with you. His points are that multiple 10 figure fines, higher capital requirements, and a general culture shift have actually made banks less profitable and less risky, as was intended. EG: https://www.bloomberg.com/view/articles/2015-02-20/capital-rules-aren-t-the-only-reason-banking-is-boring https://www.bloomberg.com/view/articles/2015-02-20/capital-r... https://www.bloomberg.com/view/articles/2016-09-07/boring-banks-and-silly-cds https://www.bloomberg.com/view/articles/2016-09-07/boring-ba... https://www.bloomberg.com/view/articles/2017-11-16/deregulation-and-proxy-recounts https://www.bloomberg.com/view/articles/2017-11-16/deregulat... https://www.bloomberg.com/view/articles/2017-11-20/utilities-analysts-and-fines https://www.bloomberg.com/view/articles/2017-11-20/utilities...

bduerst 9y ago
Rather than link dump his blog (which I read) can you quote the specific sections? His weekly opinion posts cover a large variety of non-related topics and nobody knows which one you're referencing. There also isn't anything there about the subprime auto loans, which even the esteemed Matt Levine acknowledges are an issue: https://www.bloomberg.com/view/articles/2017-04-19/fraud-satisfaction-and-bubbles https://www.bloomberg.com/view/articles/2017-04-19/fraud-sat... > Here's a story about subprime car loans that actually doesn't lean on the this-is-2008-all-over-again analogy; that was just me being cranky. That said though, it sounds like 2008 all over again!
- JumpCrisscross 9y ago
  > the lack of any major financial reform has left commercial banks open to continue making risky investments >>> Here's a story about subprime car loans Are the subprime auto loans being issued by commercial banks?
  - bduerst 9y ago
    They are both separate examples of the problems persisting. 2008 financial crises was more than just the Glass Steagall reform. Read my comment above.
- yellowstuff 9y ago
  As I said I don't have a ton of first hand knowledge. The subprime auto loan story sounds bad, but I'm not in a great position to assess how bad it is, and the bank analysts I know don't seem that worked up about it. It could both be true that banks are systematically making bad subprime auto loans that will end poorly, and that banks are better capitalized, safer and more boring overall than they were pre-crisis.
rrcaptain 9y ago
Until you start throwing executives in prison, nothing will change long term. 10 figure fines are nothing compared to how much many Americans lost in the housing market crash. Consider how many people got foreclosed upon improperly. The loss of quality of life (and actual life) due to Wall Street greed is unmeasurable, but surely more than 10 figures.
- Ntrails 9y ago
  I acknowledge that I'm in the minority but I find it really hard to understand the idea that "The secured loan you took out and can no longer afford to pay? They're going to take the collateral" isn't the whole fucking point of a mortgage. This idea that the banks foreclosing is somehow a sign of greed boggles my mind. Now, sure there is a bunch of consumer protection around to help 'honest Joe' out when times are tough - but it isn't going to magically stop a crunch point coming where either you keep paying off the loan or you lose the house.
  - rrcaptain 9y ago
    It's rather that banks foreclosed on houses that weren't in default for long enough to warrant forclosure. And that they skipped due process and didn't actually make sure they were properly forclosing. There's the famous John Oliver sketch regarding a bank that tried to forclose on a house that didn't even have a mortgage. And then when the people tried to collect their legal fees, the bank wouldn't pay, leading them to foreclose on the bank. In addition, many of the mortgages that were issued should never have been done so. They deliberately and knowingly issued mortgages that they knew were far more risky than they actually were.
    - Ntrails 9y ago
      105% mortgages were given out on homes that hadn't finished being built with no money down. The lending was idiotic - but so was the borrowing. There's a distinct implication that banks are entirely responsible for managing credit risk from repayment risk. That's explicitly false _and the whole point of backing the loan with assets_. Take away the right to foreclose and the banks will simply stop lending to basically everyone except those who can trivially afford the repayments. I'd be surprised if the rate of genuinely illegal foreclosures was > 5%, maybe I'm wrong on that. In essence though I can't help but wonder when people will take responsibility for what they borrowed.

bduerst 9y ago

Rather than link dump his blog (which I read) can you quote the specific sections? His weekly opinion posts cover a large variety of non-related topics and nobody knows which one you're referencing. There also isn't anything there about the subprime auto loans, which even the esteemed Matt Levine acknowledges are an issue: https://www.bloomberg.com/view/articles/2017-04-19/fraud-satisfaction-and-bubbles https://www.bloomberg.com/view/articles/2017-04-19/fraud-sat... > Here's a story about subprime car loans that actually doesn't lean on the this-is-2008-all-over-again analogy; that was just me being cranky. That said though, it sounds like 2008 all over again!

JumpCrisscross 9y ago
> the lack of any major financial reform has left commercial banks open to continue making risky investments >>> Here's a story about subprime car loans Are the subprime auto loans being issued by commercial banks?
- bduerst 9y ago
  They are both separate examples of the problems persisting. 2008 financial crises was more than just the Glass Steagall reform. Read my comment above.
yellowstuff 9y ago
As I said I don't have a ton of first hand knowledge. The subprime auto loan story sounds bad, but I'm not in a great position to assess how bad it is, and the bank analysts I know don't seem that worked up about it. It could both be true that banks are systematically making bad subprime auto loans that will end poorly, and that banks are better capitalized, safer and more boring overall than they were pre-crisis.

rrcaptain 9y ago

Until you start throwing executives in prison, nothing will change long term. 10 figure fines are nothing compared to how much many Americans lost in the housing market crash. Consider how many people got foreclosed upon improperly. The loss of quality of life (and actual life) due to Wall Street greed is unmeasurable, but surely more than 10 figures.

Ntrails 9y ago
I acknowledge that I'm in the minority but I find it really hard to understand the idea that "The secured loan you took out and can no longer afford to pay? They're going to take the collateral" isn't the whole fucking point of a mortgage. This idea that the banks foreclosing is somehow a sign of greed boggles my mind. Now, sure there is a bunch of consumer protection around to help 'honest Joe' out when times are tough - but it isn't going to magically stop a crunch point coming where either you keep paying off the loan or you lose the house.
- rrcaptain 9y ago
  It's rather that banks foreclosed on houses that weren't in default for long enough to warrant forclosure. And that they skipped due process and didn't actually make sure they were properly forclosing. There's the famous John Oliver sketch regarding a bank that tried to forclose on a house that didn't even have a mortgage. And then when the people tried to collect their legal fees, the bank wouldn't pay, leading them to foreclose on the bank. In addition, many of the mortgages that were issued should never have been done so. They deliberately and knowingly issued mortgages that they knew were far more risky than they actually were.
  - Ntrails 9y ago
    105% mortgages were given out on homes that hadn't finished being built with no money down. The lending was idiotic - but so was the borrowing. There's a distinct implication that banks are entirely responsible for managing credit risk from repayment risk. That's explicitly false _and the whole point of backing the loan with assets_. Take away the right to foreclose and the banks will simply stop lending to basically everyone except those who can trivially afford the repayments. I'd be surprised if the rate of genuinely illegal foreclosures was > 5%, maybe I'm wrong on that. In essence though I can't help but wonder when people will take responsibility for what they borrowed.