WTF is wrong with our banking system

[phragle]

To be honest, my credit sucks.. I lived beyond my means for years (I lived in so cal, that was pretty much not a choice as an EMT) I moved to ohio and got things under control, but the damage is still there. currently I work 3 days and go to school full time. I'm frigin broke, living beyond my means is going out to dinner at anything besides the dollar menu. I am racking up student loans, my visa and mastercard have been running about 80% for almost 9 months and there is a judgement on my record for a legal battle I lost a couple years ago... and I'm getting pre-approved amex letters. hell right now I wouldn't lend myself $5.oo....

Yes I know, I am NOT proud of this fact, but I am sacraficing 3 years of intense poverty and credit load braindeath to improve this.

[clayinaustin]

To be honest, my credit sucks.. I lived beyond my means for years (I lived in so cal, that was pretty much not a choice as an EMT) I moved to ohio and got things under control, but the damage is still there. currently I work 3 days and go to school full time. I'm frigin broke, living beyond my means is going out to dinner at anything besides the dollar menu. I am racking up student loans, my visa and mastercard have been running about 80% for almost 9 months and there is a judgement on my record for a legal battle I lost a couple years ago... and I'm getting pre-approved amex letters. hell right now I wouldn't lend myself $5.oo....

You are not actually "pre-approved" for a card. You are pre-approved to APPLY for a card. It's just on the legal side of a scam. Ignore it.

[fund razor]

To be honest, my credit sucks.. I lived beyond my means for years (I lived in so cal, that was pretty much not a choice as an EMT) I moved to ohio and got things under control, but the damage is still there. currently I work 3 days and go to school full time. I'm frigin broke, living beyond my means is going out to dinner at anything besides the dollar menu. I am racking up student loans, my visa and mastercard have been running about 80% for almost 9 months and there is a judgement on my record for a legal battle I lost a couple years ago... and I'm getting pre-approved amex letters. hell right now I wouldn't lend myself $5.oo....

Yes I know, I am NOT proud of this fact, but I am sacraficing 3 years of intense poverty and credit load braindeath to improve this.
That sucks. I had planned on you as a boating buddy, but I already have the positions for broke m'frs filled. :D
Kidding... apply for the amex just in case. We will need gas money by June.

[phragle]

That sucks. I had planned on you as a boating buddy, but I already have the positions for broke m'frs filled. :D
Kidding... apply for the amex just in case. We will need gas money by June.

No worries, I understand the reponsibilites of a boating buddy, when Nick ran me out to woodtick from Jockets for the day I threw $50 bucks in his scarab, that boat ride is all of what? 2 miles each way, plus I brought a case of beer...

[fund razor]

No worries, I understand the reponsibilites of a boating buddy, when Nick ran me out to woodtick from Jockets for the day I threw $50 bucks in his scarab, that boat ride is all of what? 2 miles each way, plus I brought a case of beer...

Hello Mr. Number One Boating Buddy. :26:

[LaughingCat]

To answer your question another way. . . here's the best representation I've seen for how we got into this mess.

http://vimeo.com/3261363

Back to your credit card comments, just wait til everyone finds out how big the bank losses are on unsecured CC debt. Then find out how many BS bonds were issued by banks offering the interest from the credit card debts.

[phragle]

I posted on OSO probably close to a year ago, that we havent seen the last of the problems, because they were giving anyone with a pulse credit cards, couple with the predatory nature of the card companies with fees etc, it would blow up too. I realize the banks want to make money, but their methods bewilder me... you give a fool a credit card, charge him $100 to get it and 50~75 a year to keep it, then you set it up so that when he pays online (all done by computer so nobody has to open envelopes process checks etc) you charge him extra, and set it up so that if he doesn't pay online by like 10am the day it's due, it's late even though payed on the due date, then hit hime with $25-50 late fee, then $50 overlimit fee, because the fee and the balance get processed before his payment (which was payed ont he due date)...the guy payed ontime, yet got whacked with $150+ in fees.... so now the guy gets pissed and tells the card company to F-off, because he is barely scraping by as it is. (this happend to a couple kids in my college) wouldnt it make sense for the card companies to work with the kid, not kill him with fee's and be happy just collecting huge interest month in and month out, because you know the kid isn't going to be paying the actual balance down anytime soon, and the bank can keep loss in check with a low limit?? sounds like a cash cow, the companies could milk for a long time...so why kill the cow and eat the $500-2000 the kid is into the company for??


same thing with mortgages... why foreclose?? figure out what the guy can pay, get the max you can and let him keep paying...you would make out better with longer interest payments and fees tacked on to the end of the loan for restructuring etc.. thats money coming in instead of taking the house, taking a bath in the current devaluation, the cost of maintaining it and trying to resell it in a non existant market... why turn down income???????????

[LaughingCat]

banks are frozen scared right now. dont know what to do, so they are doing nothing.

[clayinaustin]

To answer your question another way. . . here's the best representation I've seen for how we got into this mess.

http://vimeo.com/3261363

Excellent presentation.

[LaughingCat]

Ain't greed, coupled with diminished oversight a wonderful thing. . .

[Expensive Date]

Agree that CC still could cause a problem before we come out of this but remember that CC are higher interest rates plus the charge the vendor a percentage.So the can make up losses quicker than mortgage company's

[phragle]

my question still remains..isn't it better for the banks to maintain their income as opposed to taking a hit?? I realize that in some instances the hit might be more financially viable, but I am talking overall.......

[Brian41]

Max all your cards and send them back and tell them you were just kidding its easy everybody is doing it........ Big bro will bail them out

[RollWithIt]

Phragle... your welcome to ride on my boat anytime. Come on over to Pittsburgh.. Booze or Broads is acceptable as a fee. Dont worry about the gas.

The money lenders have been greedy for years. Its finally cought up to them and they are loosing thier heads. Im all for saving the economy, but there has to be accountability with all these bailouts.

And your not the only one to overextend themself on a personal level. I did the same thing years ago in College and when I first started doing police work. Its taken years to climb out from under it and I have finally gotten ahead, dispite all my toys. It takes curage to climb out on your own and take that responsibility. You got my respect for taking this route

[LaughingCat]

Heard the new phrase. . . Jingle Mail. It's where people put the keys to their house in an envelop and mail it back to the bank.

I definitely want this economy and Wall Street to recover. But there is something nice about seeing the rats that ran this mess running for the corners. (I'm talking about the bankers and hedge fund managers, not average Joe)

[sledge]

same thing with mortgages... why foreclose?? figure out what the guy can pay, get the max you can and let him keep paying...you would make out better with longer interest payments and fees tacked on to the end of the loan for restructuring etc.. why turn down income???????????

Because the reality is that it's not all in the banks' hands. I'm no expert in this area, but the jist I get is that it's all rooted in the "Servicing" contract. A lot of mortgages are administered by cos that pretty much just process payments. But it's complicated because they're also responsible for splitting those payments when that mortgage has been sliced up. The "servicing" contract also spells out how much they get to keep for themselves. So of course greed steps in and nobody wants to give up a slice of their pie in order to keep a borrower in their house. This is where you get the stories of "I tried calling my bank buy nobody got back to me in 3 months"...there's really nobody that you can reach by phone to cut that deal. If the lender retained servicing rights, or even kept the loan in-house, those borrowers have the best chance at getting a quick modification.

Servicing is the next biggest profit center behind brokerage. In the last few weeks there was a deal where a servicing business was bought for over $1Billion. These servicing businesses "service" more than just mortgages...anything that the cash flow stream has been securitized is usually handled by a servicer.

[phragle]

that makes sense... the bank lends the money, then sells the loan for probably less than they would have gotten had the loan been paid in full, so they loose money but they have eliminated any risk.. so if Im getting it right, the bank lends 100k, sells the loan immediatly to a serviceing company for 140K, makes instant 40k profit. Now the service company collects payments and assumes all the risk. I am also guessing the service company has less reglation than the bank?? Now I am understanding why the banks would lend money to anyone, no risk and immediate payment. I need to open a bank!!!

[sledge]

Not quite like that. A servicer is just a diverter for the payments. Typically get about .25% of the payment stream. Banks make their money on fees upfront, and often they just happen to operate a servicing company under the bank holding company. Loans get split and packaged into various cash flow form. Some "mortgage backed securities" might be just the principal payments, others get just the interest. The MBS are valued accordingly. The issuer never (rarely) would sell a package at a net loss.

Everyone tied to the payment stream bears risk when the payments stop altogether; and an issuer bears substantial risk when they offer packages "with recourse".

[phragle]

?????????