Berkeley CSUA MOTD:Entry 47548
Berkeley CSUA MOTD
2021/12/06 [General] UID:1000 Activity:popular

2007/8/6-9 [Finance/Banking] UID:47548 Activity:nil
8/6     The Loan Comes Due
        \_ I laugh long and heartily at everyone affected by this.
           In other news, HRC proposes $1B in federal aid.
           Personal responsibility? What's that?
2021/12/06 [General] UID:1000 Activity:popular

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2013/8/29-11/7 [Finance/Banking] UID:54734 Activity:nil
8/29    Applying for a home loan now. The loan officer keeps asking why
        I wrote large amounts of check, and what they're for, and fax
        her proof to support what I said. She said loan regulations have
        tightened a lot to prevent money laundry. What is the max amount
        of money I can transfer these days without triggering annoying
        audits? I am not a terrorist.
2013/7/31-9/16 [Reference/RealEstate, Finance/Investment] UID:54720 Activity:nil
7[31    Suppose you have a few hundred thousand dollars in the bank earning
        minimum interest rate and you're not sure whether you're going to
        buy a house in 1-5 years. Should one put that money in a more
        risky place like Vanguard ETFs and index funds, given that the
        horizon is only 1-5 years?
        \_ I have a very similar problem, in that I have a bunch of cash
2013/5/13-7/3 [Finance/Banking] UID:54676 Activity:nil
5/13    Does FDIC ever matter? How likely is it that your deposit of
        over $250k going to be screwed over in a major US bank?
        \_ Was Washington Mutual a major bank?
        \_ Was Washington Mutual a major US bank?
        \_ Hahahahahahahahahahaha. Good one.
        \- As with nuclear weapons, this insurance produces much of its value
2013/3/9-4/16 [Finance/Banking] UID:54621 Activity:nil
3/9     In a 15/30 year loan, the amount of payment stays the same but
        the payment on interest decreases while the principal increases.
        Suppose I decide to pay off a huge chunk of principal, will
        the amount of interest I need to pay decrease drastically, or
        do banks still want to take out a huge chunk of interest rate?
        \_ You don't actually have separate "interest" and "principal"; you
2011/11/27-2012/1/10 [Finance/Banking] UID:54243 Activity:nil
11/27   Whoa, since when did FDIC coverage go up to $250,000? That's cool.
        So is this coverage per customer per bank, per account per bank,
        total per person, etc?
        \_ I believe that it is per customer per bank. Not 100% sure though.
           \_ Yes, and you can get even more with joint accounts, etc.:
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Only two months ago, it seemed as if almost any company could borrow money at low interest rates. What had seemed like a contained problem, involving home loans to people with poor credit, has suddenly mushroomed into a rout that threatens to make life difficult for everyone who needs to borrow money. Home buyers are likely to pay more for mortgages, and some with less-than-pristine credit or an inability to come up with a down payment may find they no longer can borrow at all. A German bank had to be rescued by other banks last week, because it had speculated in securities backed by American mortgages. One of the biggest mortgage lenders in the United States collapsed, and another said it would drastically scale back its lending because it cannot find investors willing to finance the loans it makes. The volume of new high-yield bonds also known as junk bonds fell by 89 percent in July. The market for loans to highly leveraged companies has almost dried up. Standard & Poors counts $35 billion in corporate loans that have been delayed or canceled, including loans to finance the leveraged buyout of Chrysler. The Chrysler deal will go through, because banks had promised to lend the money if others would not take the loans. But from now on there are likely to be fewer corporate takeovers, and those that do take place are likely to be at lower prices. The magnitude of risk was significantly underappreciated. Hedge funds, which had been major buyers of complicated securities that financed leveraged loans and mortgages, have also pulled back. Mr Bruner is the co-author of a book on the Panic of 1907, to be published next month, and he sees similarities between then and now. It was a time marked by the rise of new financial institutions and new financial instruments, he said. It marked the end of a period of extraordinary growth, from 1895 to 1907. The credit market has changed drastically in recent years, as banks grew far less important and credit rating agencies like Standard & Poors and Moodys became the essential players in the new financial architecture. Many loans, whether mortgages or loans to corporations, were financed by selling securities. It was the credit agency ratings that determined if those securities could be sold, and deals were structured to meet the criteria set by the agencies. The agencies figured that even very risky loans were unlikely to cause big losses, and so most of the securities backed by loans to poor credit risks could get AAA ratings the highest available as long as those securities had first claim on loan payments. Investors bought the securities thinking they were completely safe, and some did so with borrowed money. Now, however, there is fear even about those securities. The rating agencies are changing their criteria for the loans, and many investors no longer trust the ratings. The markets are very panicked and illiquid, said Mike Perry, the chief executive of IndyMac Bank, the ninth largest mortgage lender in the first half of this year, as he announced plans last week to curtail lending sharply. It is very difficult, he said, to find buyers even for the AAA securities. This is what we would characterize as the first correction of the modern neo-credit market, said Mr Malvey of Lehman Brothers. Weve never had a correction with these types of institutions and these types of instruments. It now seems likely that the rating agencies, and investors, were lured into a false sense of security by the lack of defaults. With the value of homes, and companies, rising, it was usually possible for a borrower in trouble to refinance the debt or, at worst, sell the home or business. Now, there is less confidence that rising prices will bail out lenders, and there is doubt not only about the quality of old loans but also about important parts of the new financial system. The markets seem to be expressing concern about the performance and the stability of hedge funds and, to a lesser extent, private equity funds, said Mr Bruner. The credit squeeze is coming at a time when the American economy seems to be growing, despite problems in the housing market, and the world economy is strong. The underlying economy is very healthy, said Henry Paulson, the Treasury secretary, as he visited China last week. In fact, it is during good economic times that credit standards are most likely to be so lax that bad loans are made. Financial panics dont happen during depressions, said James Grant, the editor of Grants Interest Rate Observer. Not all panics lead to economic downturns, of course, and if this one continues pressure will grow on the Fed and other central banks to lower the short-term interest rates they control and thus stimulate the economy. But central banks do not always determine what happens in credit markets. The Fed tightened in 2005 and 2006, but creative financing on Wall Street blunted the impact, said Robert Barbera, the chief economist of ITG, a research firm. The collapse of that option in the last 90 days means the entirety of that tightening is arriving now, and there is a violent tightening going on. The insurance companies and pension funds that are the traditional buyers of bonds always have money coming in, from interest payments and bond maturities, as well as from new business, and they will have to put it to work. The history is that lenders move in great caravans between two extreme points, which we can call stringency and accommodation, said Mr Grant, recalling how hard it was for companies to get loans as recently as 2002. Lenders will move back to accommodation one day, he said, but for now it appears that risky borrowers,whether of the corporate or individual variety, will discover that its much more difficult to find someone to lend money to them. 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DERRY, NH - Democratic presidential front-runner Hillary Rodham Clinton on Tuesday called for penalties against mortgage brokers who engage in predatory lending and a $1 billion federal fund to help homeowners avoid foreclosure. The New York senator has been critical of subprime mortgages, loans given to people with blemished credit histories or low incomes. Weak home prices and rising interest rates have made it increasingly difficult for borrowers to keep up with their payments; "Today we have a clear choice: We can look at the statistics, wring our hands and continue to do nothing, or we can do what America has done in times of difficulty, acknowledge we have a real challenge and confront it head-on with real solutions," Clinton said. "I think we need to act now with smart, practical solutions to strengthen our housing and mortgage markets." The New York senator's proposal includes a $1 billion federal fund to help homeowners avoid foreclosure, an end to prepayment penalties and more affordable housing options. Two other mortgage lenders said they are not accepting new applications. Falling home prices and a spike in payment defaults have scared investors away from investments backed by home loans. "It's a combination now, of economic conditions that are not working for the majority of Americans, and unsavory practices that are undermining the dream of home ownership," Clinton said. When Congress returns from its summer recess, Clinton said she will introduce legislation targeting "fly-by-night mortgage lenders" who make "really seductive offers." If President Bush and his Republican allies fail to act, Clinton promised she would as president. "They believe in letting everyone fend for him or herself. They believe in what the president calls an ownership society, which is really you're on-your-own. some go up and some go down and the strings are pulled by other people," Clinton said, repeating a familiar theme from her campaign speech. Clinton also proposed banning contracts that trap borrowers in "unworkable" mortgage scenarios in which nothing is budgeted for taxes and insurance. This year, there have been more than 900,000 foreclosure filings. In New Hampshire, there were 150 foreclosure filings last year; In March, Clinton called on a crackdown on predatory lending practices in the subprime market. "I think the subprime market, that was like the canary in the mine. It was telling us loudly and clearly, there are problems here," she said. Rival John Edwards also has proposed cracking down on predatory lenders in a market he compared in June to "the wild West."