“Increased”? Who said anything about “increased”?
Shit, arguing with you is like playing Republican poker, you get seven cards, I get five, all mine are face up and you get to draw twice.
And you still fucking lose!
Zeriel:
It is interesting that earlier in this thread, you and several others took the banks to task for having had irresponsible lending standards.
Now you are taking them to task for tightening those standards.
I think you really can only choose one.
Still no cites. The surprise never ends.
Show me a cite that demonstrates that the demand for legitimate loans was not met due to banks’ tightening standards.
Show me anything that supports your argument.
Hell, at this point in time I would probably settle for a cite to a picture of a pretty pony.
I don’t think so.
I think there’s a vast, vast gulf between “properly vet the incomes and credit ratings of prospective loan customers, while advising them on an appropriate percentage of their income to be spending on their mortgage and fees and holding their loans to that standard. Also, don’t fraudulently report client incomes to the mortgage clearing houses to get higher loans than advisable” and the current standards, which are tightening to the point where there is a lot of reported difficulty getting loans.
It’s perfectly possible to coherently say “on a scale of 1 to 10, things below 2 are too low and things above 5 are too high”, when they’ve moved from 1 to 7.
Zeriel:
I have been asking for a cite that shows the banks tightening was detrimental to legitimate loan seekers…
For quite some time now.
I really can’t accept that banks tightening resulted in this damage you claim occured unless you show me a cite.
My cite shows that demand for credit fell off a cliff and had the single biggest drop in history at the time the banks were given money.
You have argued time and again that the banks lending practices were so easy that they were predatory, so, clearly some tightening was in order (and that is what the banks reported.)
If your thesis is that the banks tightened too much, again, damaging the economy, than please show me some data, anything other than what is quite frankly an endless stream of rhetorical evasions.
Please support the argument with some facts.
Post #1836:
Post #1850:
Post #1862:
Post #1868:
That is where I came in, in post #1871. As I pointed out:
Demand for loans was down, and would have been down under all circumstances. But down by how much? As 'luc says, the punch line was when the government says:
Now, the banksters could have responded, in this environment where they had tons of money and fewer borrowers than usual, by (a) loosening their lending standards, (b) holding their lending standards constant, or (c) by tightening them up.
Even if demand was down overall, which of these three alternatives they chose would affect how much money got loaned, and by implication, what the drop in economic activity turned out to be, and how bad the recession would become.
In response to getting this buttload of money, they didn’t choose (a) or (b). They chose (c). They could have loaned more than they did; they chose to loan less, which reduced business spending more than otherwise had to happen, which reduced employment, which reduced consumer spending, you get the idea.
This is the point: they did NOT try to lend the money out. They did NOT try to do the right thing for the country.
Now in #post 1899, Scylla moves the goalposts:
Nobody’s saying it did; nobody’s saying it had to. But the banks could have loaned out more money than they actually did, and that would have increased business spending relative to what it actually was, which would have increased employment relative to what it actually was, which would have increased consumer spending relative to actual, and so forth.
And they chose not to. No matter what, they would have been loaning out less money, but they could have loaned more than they did. That is 'luc’s argument, and it happens to be true.
So feel free, anyone, to re-use this.
Hey, I’ve got an idea! Why don’t we lump loans of every sort into one big pile, and not differentiate between real estate loans and your more typical loans for business operation and expansion!
Then we can say that because there were NINJA loans, a business looking to buy some new equipment to expand operations needed to face new obstacles to borrowing money!
BUAHAHAHAHAHAHAHA!!!
Seriously, Scylla, we’re really supposed to believe you’re an astute investor??
And:
Has anyone claimed that the banks’ lending standards to businesses for investment in plant, equipment, and stuff like that was too loose in the mid-2000s?
All I’ve heard is that lending standards for real estate were too loose. Subprime residential, upscale residential, commercial real estate, you name it.
But the next time I hear someone talk about the loose standards for business loans in 2007 will be the first time.
As I said above, I don’t believe there is any reasonable way to GET facts, since there is no imaginable set of statistics that will report on credit not even applied for.
In addition, your cites on the issue of loan demand are based upon the opinion of surveyed loan officers–these are not people who are conflict-of-interest-free, and there is not any hint of an objective measurement in the survey (the title of which includes the phrase, “Opinion Survey”).
So I submit that your cite isn’t exactly a rock-solid argument-ender. It’s evidence, certainly, but subjective evidence from a source with unmeasured potential bias.
Than your argument is based on faith rather than facts.
I fail to see a significant conflict of interest. The form only asks some simple generic questions. “Is loan demand for housing up?” “Have you tightened for these loans?” The the same thing for commercial real estate, small business, big business, consumer.. etc etc.
If we were going to posit a conflict of interest wouldn’t we guess that they would deny tightening, since the government was giving them money it wanted them to loan out?
The fact that they didn’t seems to suggest that they didn’t recognize a conflict of interest. Anyway, if you wish to say that people are filling out the survey in bad faith, that’s something you need to demonstrate. You just can’t wave it off.
Maybe. But I tell you what, I don’t think you need to be a financial genius to understand the scenario and piece together what happened.
Try this:
After the biggest Financial meltdown in history, the entire country had a hangover due to the recent credit orgy. A massive run on financial and housing markets occured as people and institutions panicked or needed to meet margin calls. We had a deleveraging event of cataclysmic proportions.
Deleveraging means that entities were working very hard to unwind their debt. To do so, people were selling assets at fire sale prices because there were few if any buyers with the means or the desire to purchase.
So, the government gives money to the banks for a variety of purposes: First to prop up their balance sheets and restore confidence that they would have enough cash to meet their obligations, thus preventing a run, and also to make sure that there was money on hand to be lent out for any buyers out there. Bernanke and Paulson were beleivers that you could spend and borrow your way out of a recession.
However, we had been living in a global economy funded by excessive borrowing for the last six years and the appetite was not there. Not only was lending down. Banks were finding that almost across the board their creditors were deleveraging, paying them off (see my first cite for the quarterly drop in liabilities.)
The credit markets were a desert. Virtually nobody wanted to borrow who was remotely qualified to do so. The appetite for risk has dried up. The one exception is housing. And, here, the banks, the banks go on a mini boom as people take advantage of lower rates to refinance, or refinance out of adjustable rate mortgages.
However, the demand for consumer debt, business debt, commercial real estate debt, and enterprise debt is virtually nonexistant.
Mortgage origination companies lay off employees or shut down. Banks lay off or fire employees in their loan departments, or move them to mortgages because there is no activity to support them.
At the same time, the investors and the board of directors of virtually every bank are appalled by the state of risk management and of the losses that have occured. New eyes mover across the loan landscape and they tighten the requirements for virtually every type of loan across the board.
What exactly does this tightening mean?
Well, the criteria for what you need to get a mortgage didn’t really change that much. What did change, where they tightened was that the process got a lot longer and a lot more involved and they required a lot more documentation and review. If you got a mortgage in the last year or two you know this.
But, frankly, nobody else wanted to fucking borrow who was even remotely qualified. The government even set up small business loans with banks so that banks could loan out money and have the government as a partner to guarranty certain types of loans.
They had a very tough time finding takers.
I was there, that was what has happened. I’ve been asking for two pages for people to support their arguments, so I don’t think I’m going to go to the effort to provide any cites for what I just said unless and until somebody decides to contradict the data I’ve supplied and show that qualified borrowers could not access funds due to bank tightening.
If somebody makes that effort than we have a debate. If they don’t, then I can’t be bothered, either.
I think that’s fair.
Try this:
The bankers, collectively, looked at the huge pile of essentially free money they had just been handed. They looked at the stable, long term profit of approximately 2-3% per year (I’m guessing at this number by taking the current lending rate my credit union is advertising on secured mortgages and dividing it in half to account for overhead) on classic mortgages and business loans. Then they looked at the volatile securities market, the possible (with a bit of luck or good analysis) 8-15% profit to be had investing in securities in the short-term markets.
And then they made a capitalist decision like good like capitalists.
My scenario is pretty much equally as plausible as yours, and has pretty much exactly the same support from the hard data..
Edited to add: A CNN story from a few months ago:
http://money.cnn.com/2011/04/06/real_estate/why_you_cant_get_a_mortgage/index.htm
And to support my other contention about the numbers being hard to measure…
Here is a utube of Bill Maher visiting Occupy L. A. http://www.youtube.com/watch?v=oXNY-1bWka0"]http://www.youtube.com/watch?v=oXNY-1bWka0
Zeriel:
No. Your theory is not as good as mine. Not even close. Yours ignores the fact that demand for loans was way down. Also, yours only looks at the parts of your own cites that agree with you. It ignores the parts that don’t. Parts like:
"“For the first time in 100 years,” said Howard, “the government is discouraging you. It’s saying ‘We intend to make it more difficult for you and your kids to buy homes.’”
Which, is sort of at odds with your theory.
What is also at odds with your theory is that this article was written about and describes the environment in April of 2011.
We are actually talking about late 2008, early 2009.
So no, ignoring data, pulling data from the wrong time frame, ignoring the meaning of your own cites…
This does not make a good theory.
Here is a link to the ACTUAL 99%, Occupy Wall Street Website. http://occupywallst.org/
Big win for 99%, Occupy Wall Street in Ohio. This is a MAJOR win for collective bagaining in America.
As I said… just as much objective, numerical support as yours. When come back, bring not opinion survey.
Don’t need a cite for this one, just need a fairly large economy - like, you know, ours.
Even in a downturn like 2008, you’re still going to have hundreds of thousands of businesses needing credit for one thing or another. Maybe just a fraction of those who wanted to borrow a year or two earlier, but they’re there, in still-large absolute numbers.
Now if banks make credit tighter - charge more interest, require more security, or just make businesses jump through more hoops of paperwork between application and loan - it’s practically infinitely improbable that no businesses seeking legitimate loans will be affected.
The notion that somehow a tightening of credit didn’t deny any legitimate business a legitimate loan is just absurd on its face. And our self-proclaimed financial genius actually said this.
“Astounding,” said the gruffalo.
So, the threat here is, if we don’t behave ourselves, you’re going to shut up?
Also, I think I missed the part where you guys were talking specifically and only about 2008-2009.
Hand waving is not debate.
You attempted to use an article describing the financial environment of 2011 as a cite for the lending environment of 2009.
You ignore that your own cite contradicts you even when I quote it
You dismiss the data in the fed survey because you don’t like the name.
Are you fucking with me or are you sincerely this stupid?
As opposed to before the banks were given the money or after they paid it back?
Get a clue.