maestro of finance

http://www.twintierfinancial.com

3 Comments

    • ON: Tue Apr 8th 11:32 AM
      Commented on:
      Explaining the Mortgage Meltdown
      You said: The problem here begins with the lenders' internal risk management and oversight/underwriting... combined with thee various loan programs offered.

      ***
      The problem with this is that this is NOT where it actually began. You hinted at it but completely overlooked it. Another reader mentioned Congress, which is half correct. However, none of these loans could be made under a free market banking system with such impunity.

      The Federal Reserve dictates the short-term interest rates and also sets the standard for lending practices of member banks. Since banks are "insured" against loss, there is a loosening of lending guidelines - hence the fractional reserve system.

      It's easy to blame the member banks because they have no alternative. If you're a bank, you come under certain rules and regulations. Of course, smaller banks don't take the risks of larger banks. For example, local credit unions or banks that do business only in a handful of counties in one particular State won't take on the same types of risky loans that a larger bank like Countrywide will.

      Sometimes I think that some of the big shots in the banking and financial business believe that they are "too big to fail"...and maybe they are. With more regulation comes more alleged protection - for depositors AND the institution itself; protection from responsibility.

      Get rid of the gyrating, arbitrary interest rates set by the Fed, and most of your reckless lending policies will be solved. Reckless banks will go out of business, but they'll still be rated appropriately by independent rating agencies.

      It sounds harsh, but we are living the alternative. Does anybody really enjoy this?
      View article »
    • ON: Sat Apr 5th 11:57 AM
      Commented on:
      "Reluctant Banks" Let Defaulted Borrowers Stay in Homes
      The mortgage brokers aren't to blame...well not completely. I'm sure there were more than a few dishonest brokers in the bunch, but the Federal Reserve encourages such behavior by discouraging savings through fractional reserve banking and inflating or manipulating the money supply.
      View article »
    • ON: Sat Apr 5th 11:37 AM
      Commented on:
      Is the SEC Really to Blame for Bear Stearns?
      Check your premises. You are assuming that the SEC is necessary to regulate leverage in the financial industry. However, it is the Federal Reserve System that forces the issue through the policy of fractional reserve banking and in turn influences other financial firms to follow suit regardless of whether they are in the banking business or not.

      The SEC merely controls the flow of information, or is supposed to. The leverage is not bad, it is the idea that they can leverage as much as they want with no consequences. There is a Government body that stands ready to bail not only them out, but investors as well, be it the SIPC or FDIC.
      View article »
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