4 ms·

It's literally one of the main jobs of the bank to make sure that it can get back the money that it lends! A family borrowing too much is their problem, banks

by blub 8y ago

It's literally one of the main jobs of the bank to make sure that it can get back the money that it lends! A family borrowing too much is their problem, banks not doing their jobs is a national problem which should not be rewarded by bailouts, but by jail time and bankruptcies.

avar 8y ago
Whether the bank can get its money back and whether you can pay for the mortgage are different things. It's not credit card debt, even if you go bankrupt the bank can still collect the debt by evicting you. So it's not the same as loaning someone money for consumables. Banks price foreclosure and delinquency rates into their interest rates. In 2007/2008 this didn't work because the banks themselves were over-leveraged. But it doesn't change the fundamental aspect of this that a bank can be quite happy to give you a loan you don't have a high chance of paying back. If they charge you high enough interest rates it's free money for them.
- perfunctory 8y ago
  > a bank can be quite happy to give you a loan you don't have a high chance of paying back This is only true under assumption that house prices won't decline.
  - pas 8y ago
    Or if they can offload the risk. As they did.
  - expressquest 8y ago
    They sell the loan much earlier, so they do not care as long as all check boxes can be checked.
richardknop 8y ago
It doesn't change the argument that it's not just the banks that are responsible. People who took these loans also share the responsibility. I don't like the knee jerk reaction of assuming it's not those peoples' fault at least partially. There are many fiscally responsible people who didn't take out those loans and instead were renting the whole time and saving diligently, planning for their financial future. Nobody cares about these responsible people apparently.
- askmike 8y ago
  > Nobody cares about these responsible people apparently. That's because they aren't. It's not their responsibility to figure out their own credit risk in relation to other loans that are packaged up in CDSes by banks and given triple A ratings by rating firms and sold on the market. It started with the banker that sold a mortgage while knowing the people couldn't afford it, and continued with other firms packaging it up all nice and shiny until the whole financial system collapsed. There is no way consumers (normal every day people) are responsible for this mess.
  - richardknop 8y ago
    It is their responsibility to be fiscally responsible and plan their spending in a way to have sound finances. Taking out a mortgage with near zero deposit with monthly repayment that takes 3/4 of your family income is irresponsible and I disagree with stripping such people of any responsibility. Just because it's easy to get a loan doesn't mean consumer is not responsible for judging feasibility of the loan. What if interest rates go up and my monthly repayment goes up by 10-15%? What if I lose my job tomorrow and it will take me 6 months to find a new role? These and similar are common sense questions a consumer should ask himself/herself before taking out a loan. I am not going to put 100% of the blame on the bankers. You don't need a degree in economics to be able to ask these simple common sense questions and make a judgement on whether it's a good idea to take out that loan.
    - askmike 8y ago
      > You don't need a degree in economics to be able to ask these simple common sense questions and make a judgement on whether it's a good idea to take out that loan. That's personal responsibility, different from being responsible for the global economy. A dangerous game based on credit and loans was being played by banks and financial firms, but the people getting a mortgage where the poker chips not the poker players. I'm not from the US, the crisis in 2008 hit my hometown (in Europe) hard. Do you expect me to (partly) blame US homeowners for this?
  - matwood 8y ago
iamzozo 8y ago
Actually, the banks packed those loans and sold it. They got the money. They got the bonuses and money after contracts. More contract, more money. They were no longer interested if the client can pay or not...

by blub 8y ago

avar 8y ago

Whether the bank can get its money back and whether you can pay for the mortgage are different things. It's not credit card debt, even if you go bankrupt the bank can still collect the debt by evicting you. So it's not the same as loaning someone money for consumables. Banks price foreclosure and delinquency rates into their interest rates. In 2007/2008 this didn't work because the banks themselves were over-leveraged. But it doesn't change the fundamental aspect of this that a bank can be quite happy to give you a loan you don't have a high chance of paying back. If they charge you high enough interest rates it's free money for them.

perfunctory 8y ago
> a bank can be quite happy to give you a loan you don't have a high chance of paying back This is only true under assumption that house prices won't decline.
- pas 8y ago
  Or if they can offload the risk. As they did.
- expressquest 8y ago
  They sell the loan much earlier, so they do not care as long as all check boxes can be checked.

richardknop 8y ago

It doesn't change the argument that it's not just the banks that are responsible. People who took these loans also share the responsibility. I don't like the knee jerk reaction of assuming it's not those peoples' fault at least partially. There are many fiscally responsible people who didn't take out those loans and instead were renting the whole time and saving diligently, planning for their financial future. Nobody cares about these responsible people apparently.

askmike 8y ago
> Nobody cares about these responsible people apparently. That's because they aren't. It's not their responsibility to figure out their own credit risk in relation to other loans that are packaged up in CDSes by banks and given triple A ratings by rating firms and sold on the market. It started with the banker that sold a mortgage while knowing the people couldn't afford it, and continued with other firms packaging it up all nice and shiny until the whole financial system collapsed. There is no way consumers (normal every day people) are responsible for this mess.
- richardknop 8y ago
  It is their responsibility to be fiscally responsible and plan their spending in a way to have sound finances. Taking out a mortgage with near zero deposit with monthly repayment that takes 3/4 of your family income is irresponsible and I disagree with stripping such people of any responsibility. Just because it's easy to get a loan doesn't mean consumer is not responsible for judging feasibility of the loan. What if interest rates go up and my monthly repayment goes up by 10-15%? What if I lose my job tomorrow and it will take me 6 months to find a new role? These and similar are common sense questions a consumer should ask himself/herself before taking out a loan. I am not going to put 100% of the blame on the bankers. You don't need a degree in economics to be able to ask these simple common sense questions and make a judgement on whether it's a good idea to take out that loan.
  - askmike 8y ago
    > You don't need a degree in economics to be able to ask these simple common sense questions and make a judgement on whether it's a good idea to take out that loan. That's personal responsibility, different from being responsible for the global economy. A dangerous game based on credit and loans was being played by banks and financial firms, but the people getting a mortgage where the poker chips not the poker players. I'm not from the US, the crisis in 2008 hit my hometown (in Europe) hard. Do you expect me to (partly) blame US homeowners for this?
- matwood 8y ago

iamzozo 8y ago

Actually, the banks packed those loans and sold it. They got the money. They got the bonuses and money after contracts. More contract, more money. They were no longer interested if the client can pay or not...