MAMEWorld Forums - The Loony Bin - Re: Ugh, how did I get on the side of defending a bank?

> Your example of banks trying to bundle and get rid of bad debt... ignores where that
> bad debt came from. Free markets would not have encouraged the banks to loan to
> people who were at high risk to default on their loans... but government intervention
> REQUIRED banks to loan money to high risk borrowers. Your example is just another
> where government intervention in the free market created the mess.

Whoa whoa whoa whoa WHOOOOOAAAAA.....The banks are by no means innocent here, and FREELY gave away shitty credit lines. There was a huge market for sub prime lending in all financial sectors, and everyone wanted a piece of the action. The big banks knew there was a pool of little guys who would take on the big risk assets if things got a little scary. Problem was things got scary to quickly, with too waaay to many people playing the same game. Remember, these are the same banks who lowered minimums and raised maximums on credit lines to encourage borrowers to spend more. Banks are dirty evil things, out for profits. That is it.

Now I'm not sticking up for the government by any means, but it was the private sector that caused this. The government hasn't done much good in resolving the issue, but I'm not sure there is anything they can do.

> As far as the credit card rate one... its a 'reasonable' example of abuse and lots of
> people got caught up in those... of their own accord. Nobody made them borrow money
> on a card... nobody made them accept a card with such terms of service wherein any
> late payment would jack up the rate to ridiculous levels. In this case, the
> government stepped in to save unwary borrowers from their own bad decisions...
> arguably the 'right' thing to do, but a slippery slope to let the government 'know
> best' for you.

Agreed, people did this to themselves, and it is a slippery slope. As mentioned above though, this was the INTENT by creditors. Lock in customers with enticing minimum, large maximums, ans secure them as customers for life. Everyone had a hand in making it happen, but it happened exactly as orchestrated by the banks.

> Better would be for people to learn to 1. Avoid credit card card debt 2. Read their
> terms of service. 3. Pay their bills on time to avoid the penalty clauses and 4.
> Don't borrow more money than you can realistically pay back. But, now you don't have
> to... the government will protect you from yourself... and so Americans are free to
> run up their cards to levels they'll never be able to pay back... but at a 'fair'
> rate as enforced by the government. What we need now is more regulation to limit your
> credit so you don't run it up so high?
>
> At the end of it all, the consumer doesn't HAVE to take out a mortgage they can't
> afford, they don't HAVE to run up credit card debt they can't afford... but now our
> government will educate you you to be a smarter consumer enable your bad decisions by
> requiring banks to deal with your stupidity.
>
> Look what you made me do... now I'm on the bank's side. That's just wrong.

I'm agreeing with most of that. Seriously, I think people are retarded. The government had to do something though, because telling the nation "You fucked yourself" wasn't a viable option. Left unchecked it would have tanked our economy in months instead of the years its taking now.

>
> ETA: In thinking about the government interventions in these cases, a better use of
> government would have been to do a better job of educating the consumer, perhaps
> by...
> 1. Requiring a meaningful consumer education course in high school.
> 2. Require the consumer to obtain a certification before allowing them to borrow
> money for the first time. Require it again when they borrow large amounts for the
> first time (mortgage). While it is still an intrusive government intervention, it
> would create a better educated borrowing consumer without altering the free markets,
> backing bad loans, bailing out failing banks from bad loans, and rock an economy to
> its core.
>
> A penny saved is a penny earned.

I agree here too, but this is a day late (or a decade...) and a dollar short (or a trillion...). Economy is hanging by a thread. Banks orchestrated the "cause", consumers carried out the effect. There might not be any saving it either.