U.S. banks in better shape than previously thought.

[JLM]

The following is copied from this mornings National Post.................................
For the last eight weeks, nearly 200 federal examiners have labored inside some of America's biggest banks to determine how those institutions would hold up if the recession deepened.

What they are discovering may come as a relief to both the financial industry and the public: The banking industry, broadly speaking, seems to be in better shape than many people think, officials involved in the examinations say.

YOU HAVE to wonder if there's not an ulterior motive to "the news".

 

[Albertabound]

first put the fear into every one, create the crisis, then ease everyones mind and resolve the crisis. They got their bail out money from the tax payer...problem solved.

 

[Albertabound]

They've robbed you again.

 

[justfred]

We should take into consideration that when the bank in the US takes a write down of an asset, where does it come from. It has to come from current earnings, or retained earnings. While a consumer or home owner is taking the hit on the mortgage meltdown, where do you think the banks are getting it from? A house is financed for 100% of the $400,000 purchase price, for example, and it is now worth only say, $100,000. Yes the home owner takes a hit, but it is the bank that is going to take the $300,000 hit from their balance sheet. That money is gone and it is hard to make $300,000 back, with today's interest rates on deposit and, albeit, little amount is that is being paid on deposits. Yes the banks were a part of the problem, but who told them to lend to every one with a pulse? I think it was the federal government, who are in reality, each and every American. They elected the government. A lot of people got richer from the sale of their homes, a lot re-financed their homes for a life style, a lot of them were counting on the inflated housing prices to give them equity. The ball has many facets and there are as many tales about why these people are in trouble with their mortgages. One is that they often over buy a house, thinking they can afford the house as they get to deduct the interest paid on their mortgages. Talk about a false economy that can create.
In that the government (the people) made the problem then they should pay for it.

 

[ironsides]

Very well said, but you said the people should pay for it, the people are paying for it.

 

[Cannuck]

Yes the banks were a part of the problem, but who told them to lend to every one with a pulse? I think it was the federal government, who are in reality, each and every American.

Technically it was the courts who, thanks to ACORN and their slimy lawyer forced the banks to lend the money.

 

[SirJosephPorter]

JLM, if this is true, that is good news indeed. Above all we need to avoid another depression. If banks are in a halfway decent shape, that will go a long ways towards avoiding a depression.

Anyway, stock markets seem to have recovered nicely, so let us hope the worst is behind us

Yes the home owner takes a hit, but it is the bank that is going to take the $300,000 hit from their balance sheet. That money is gone and it is hard to make $300,000 back, with today's interest rates on deposit and, albeit, little amount is that is being paid on deposits.

Justfred, I think part of the problem also is accounting. I am not sure of the details here, but I think banks are required to show that 300,000 $ drop in the value of the house as a current loss, rather than wait out the lifetime of the mortgage (assuming the buyer still is paying the mortgage and hasn’t defaulted).

That makes the current balance sheet look much worse than it actually is. There is a technical term for this type of accounting; I don’t know what it is. Obama was thinking of changing the accounting method to make it more fair, I don’t know if it is still in the pipeline.

 

[SirJosephPorter]

Yes the banks were a part of the problem, but who told them to lend to every one with a pulse? I think it was the federal government, who are in reality, each and every American.

Justfred, indeed it was the federal government. Bush did not come across a regulation he liked, there was a massive deregulation under Bush (and the Republicans).

Banks could do pretty much what they wished, and it was only a matter of time before somebody would come up with a Ponzi swindle like the sub prime mortgage.

Canadian banks are much more heavily regulated, and they did not get into sub prime market. That was in contrast with many other countries. British banks, Irish banks were involved heavily in sub prime fiasco. That is why Canadian banks are still making healthy profits, while many other banks are close to bankruptcy.

Recently there has been a rift between Obama and the European counties. Obama wants more bail out, while European countries want more regulations. I support the European approach.

 

[GreenFish66]

Oh course banks are better off then they thought ..The crisis is over.All the greedy abusers who started this economic crisis(bush,oil,insurance campanies,banks..World leaders) have all got or are getting the $$$ they gambled away back..With interest and insurance...Now their doing it all over again while trying to tame the bull.. at low blow out prices...Welcome to the new global economy ..Locals are welcome to buy in ..If you have the money and proper insurence plan..

 

[JLM]

I guess it's time we realized "news" is more than just a medium, it's an industry itself and of course all the competitors are trying to manufacture the best product, or at least the one that sells best.

 

[JLM]

"Anyway, stock markets seem to have recovered nicely, so let us hope the worst is behind us" - Not by a long shot, Sir Joe, although lately they are showing a nice trend in the right direction. TSX was above 15,000 and dropped to under 8,000 and now are back above 9,000, which to me indicates they've recovered about 15%.

 

[ironsides]

Technically it was the courts who, thanks to ACORN and their slimy lawyer forced the banks to lend the money.

May as well say it like it was, the goverment and courts forced the banks to lend money to people who had no means to repay it. I am thankful that the days of banks lending 105% to purchase a home are over.

 

[SirJosephPorter]

"Anyway, stock markets seem to have recovered nicely, so let us hope the worst is behind us" - Not by a long shot, Sir Joe, although lately they are showing a nice trend in the right direction. TSX was above 15,000 and dropped to under 8,000 and now are back above 9,000, which to me indicates they've recovered about 15%.

I know that, JLM, but it is the trend that is important. After all, you can hardly expect the market to move from 8000 to 15000 overnight. But it seems to be moving in the right direction. Let us hope the worst is behind us. But we are probably looking at several years before it reaches 15000 again.

 

[JLM]

I know that, JLM, but it is the trend that is important. After all, you can hardly expect the market to move from 8000 to 15000 overnight. But it seems to be moving in the right direction. Let us hope the worst is behind us. But we are probably looking at several years before it reaches 15000 again.

You are right there, but I'm still holding my breath as to whether this is a sustained trend, we should probably wait six more months before concluding anything. STockmarket after the 1929 crash didn't get back to status quo until 1955. Hope that isn't the case this time- I could be dead.

 

[JLM]

May as well say it like it was, the goverment and courts forced the banks to lend money to people who had no means to repay it. I am thankful that the days of banks lending 105% to purchase a home are over.

Yep, anyone involved in any way with sub prime mortgages and these "Einsteins" still expert to collect performance bonuses. In reality they should ALL be in jail.

 

[SirJosephPorter]

You are right there, but I'm still holding my breath as to whether this is a sustained trend, we should probably wait six more months before concluding anything. STockmarket after the 1929 crash didn't get back to status quo until 1955. Hope that isn't the case this time- I could be dead.

JLM, that is why I said 'let us hope the worst is behind us', i didn't say 'I think the worst is behind us'.

And you are right, in the 30s the stock market went through six rallies and six crashes, before settling down.

 

[normbc9]

Another miraculous recovery of the US banks after they skillfully staged the biggest heist in US history. All under our nose and all nice and legal too. I wonder what the Second Act of this Tragedy will play out like?

 

[JLM]

Another miraculous recovery of the US banks after they skillfully staged the biggest heist in US history. All under our nose and all nice and legal too. I wonder what the Second Act of this Tragedy will play out like?

You have to look on the cheerful side- it doesn't matter how bad things get, some S.O.B. is making money from the situation..............:lol::lol: