Comments on: The Federal Reserve and a Recession http://www.choicefinance.net/blog/2008/02/04/the-federal-reserve-and-a-recession/ mortgage info for the D.C. metro area | guidelines, updates, news, loan officer insight & approval, rates, terms, fees.. Thu, 31 Dec 2009 15:59:01 -0500 http://wordpress.org/?v=2.8.1 hourly 1 By: The Fed ..more on what the Federal Reserve does | Mortgage Blog http://www.choicefinance.net/blog/2008/02/04/the-federal-reserve-and-a-recession/comment-page-1/#comment-479 The Fed ..more on what the Federal Reserve does | Mortgage Blog Fri, 22 Feb 2008 17:18:04 +0000 http://www.choicefinance.net/blog/2008/02/04/the-federal-reserve-and-a-recession/#comment-479 [...] Who is the Federal Reserve? | The Federal Reserve & a recession [...] [...] Who is the Federal Reserve? | The Federal Reserve & a recession [...]

]]> By: loan officer http://www.choicefinance.net/blog/2008/02/04/the-federal-reserve-and-a-recession/comment-page-1/#comment-305 loan officer Mon, 04 Feb 2008 21:27:06 +0000 http://www.choicefinance.net/blog/2008/02/04/the-federal-reserve-and-a-recession/#comment-305 It wasn't the availability of cheap credit, it was caused by banks ignoring the credit risks of the loans they made. The same thing happened which caused the Great Depression, banks allowed people to leverage their stock purchases. The same thing happened in the S&L crisis only it was the S&Ls lending long term when their deposits were short term and then warehousing their loans. The same thing happened in international finance about 25 years ago. The same thing happened with the REITs. How many examples do we need? The Government has a role in regulating banks. The Government should not bail out banks. There should be a risk assessment made on every new financing innovation and it should be available to the public. It should be included in the bank's financial statements. But it won't matter because the public is a pathetically uneducated and apathetic herd who will put their hard earned dollars into any half assed investment scheme that promises high investment returns and then will complain about it when they go broke. Wall Street is not holding a gun to their head to invest, Wall Street is just an unusually successful carny barker. Bernake is trying to convince the banks to satisfy the need for safe credit worthy mortgage loans. Banks are doing what they always do when things get bad, they stop all lending. Available fixed rate credit at this point will greatly speed up the recovery of the housing market. Do your really think the Fed is opening its vault and pouring out cash? That is not how it works, besides cash represents only a very small percentage of assets in this country. It wasn’t the availability of cheap credit, it was caused by banks ignoring the credit risks of the loans they made. The same thing happened which caused the Great Depression, banks allowed people to leverage their stock purchases. The same thing happened in the S&L crisis only it was the S&Ls lending long term when their deposits were short term and then warehousing their loans. The same thing happened in international finance about 25 years ago. The same thing happened with the REITs.

How many examples do we need?

The Government has a role in regulating banks. The Government should not bail out banks. There should be a risk assessment made on every new financing innovation and it should be available to the public. It should be included in the bank’s financial statements.

But it won’t matter because the public is a pathetically uneducated and apathetic herd who will put their hard earned dollars into any half assed investment scheme that promises high investment returns and then will complain about it when they go broke. Wall Street is not holding a gun to their head to invest, Wall Street is just an unusually successful carny barker.

Bernake is trying to convince the banks to satisfy the need for safe credit worthy mortgage loans. Banks are doing what they always do when things get bad, they stop all lending. Available fixed rate credit at this point will greatly speed up the recovery of the housing market.

Do your really think the Fed is opening its vault and pouring out cash? That is not how it works, besides cash represents only a very small percentage of assets in this country.

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