End of the Credit Crises
If I hadn’t read this, I wouldn’t have believed it. Manipulation at it’s best?
[quote] You see where this is going. Under banking regulations, Bank needs $1 in the vault for every $10 that Bank lends out. If Bank’s $500,000 mortgage is worth $100,000, that translates to $4,000,000 that Bank can no longer lend out. [/quote]
I don’t think these numbers are right. If he is refering to FRB, then he is mistaken in thinking that mortgages are allowed as reserves for banking accounts. Anyways, it cannot be good for banks to lose $200,000 it a `partial default’, but it may be better than more foreclosures.
The numbers may not be, but I’m guessing it’s close. The government manipulates like you can’t believe. It makes sense that the government will make money on the deal, help the banks and confindence in the markets all at the same time.
Crime of the Century part 1 thru five.
He says that banks need $1 in the vault to lend out $10. But a mortgage is not money in the vault. So banks lose none of their lending capabilities if a mortgage loses it value. And this has nothing to do with governments ‘pimping’ the numbers. The real reason banks don’t lend out anymore is that they don’t expect to make any profits that way, just losses.