A general question - for WISER people than me

[scoobydoo]

I watched the programme which explained very clearly the way the banks and the subsiduary companies they set up avoided the regulators. And it made it clearer for me how they borrowed money to purchase the mortgages that had been sold in the poorest areas of the USA . Now I have a few questions.

A lot of the people affected were tempted by the low introductory mortgage rates and were although on low incomes managing to pay mortgages - when the rates went up and I think they were also affected by other economic factors they defaulted and now the possessions in some areas are running at 300 per day and there are now large "no Go " areas of properties that are in fact worth nothing and they are boarded up so devaluing any properites left.

Question- surely it would be better in a emergency situation like this for the lenders ( now OUR banks) to have a longer term view and become landlords and rent the houses to these people ( where are they all living nowI ask myself!!???) so that they are getting some income back - and then slowly increase the rent over time - At the moment it appears that they could not even sell the houses. Would this not be a more humanitarian option as obviously a lot of these borrowers were sold products they no chance in hell of repaying. And Our banks purchased these debts with this knowledge - or if they did not know they should have done.In the long term they may actually re-coup some of the losses?

Also was the programme scarmongering a little by explaining all the losses which were huge - but not saying the obvious - that they may be off set by profits in other areas ? Bank charges for example!

How can the fact that banks can set up companies that are outside the regulators juristriction be legal ?

How can the FSA investigate itself for its own failings?

Are the profits / losses that will be announced by the banks include the losses made in these sectors - or are they hidden away in these seperate companies that had been set up to purchase these loans?

Why are major shareholder in Northern Rock moaning - if you have major shares in a company is it not your responsibility to know what is going on in that company?

SO MANY QUESTIONS.

[Guest]

Re: A general question - for WISER people than me

Question- surely it would be better in a emergency situation like this for the lenders ( now OUR banks) to have a longer term view and become landlords and rent the houses to these people ( where are they all living nowI ask myself!!???) so that they are getting some income back - and then slowly increase the rent over time - At the moment it appears that they could not even sell the houses. Would this not be a more humanitarian option as obviously a lot of these borrowers were sold products they no chance in hell of repaying. And Our banks purchased these debts with this knowledge - or if they did not know they should have done.In the long term they may actually re-coup some of the losses?

A humanitarian option from a money lender - are you serious?

The banks are in the business of money, not property letting. There is a school of thought that considers diversification a good thing and Henry Ford for example, considered it good business practice to own the lumber yards where he would source the wood for his wheels and he also owned rubber plantations where he sourced the rubber for his tyres, but many businesses concentrate on consolidation. If Robinsons the fruit squash people started also making indicator lenses, it would no doubt be a disaster. The banks stick to what they are good at and they really don't care about the consequences of their greed.

Also was the programme scarmongering a little by explaining all the losses which were huge - but not saying the obvious - that they may be off set by profits in other areas ? Bank charges for example!

Of course. Bank charges have been a cash-cow for the banks for decades - why else would they spend the tens of millions that the OFT case is reported to have cost trying to protect that revenue?

How can the fact that banks can set up companies that are outside the regulators juristriction be legal ?

Because we have spineless lawmakers and even more spineless regulators.

How can the FSA investigate itself for its own failings?

It cannot.

Are the profits / losses that will be announced by the banks include the losses made in these sectors - or are they hidden away in these seperate companies that had been set up to purchase these loans?

It depends on how they choose to report their figures and how they choose to instruct their accountants to allocate profit and loss based on the company structure and holdings.

Three candidates are short listed for the accountant's job. They're all equally excellent, experienced and personable, etc. So the chairman asks each the simple question "what is two and two?"

The first replies " Four"

The second replies " Statistically anything between 3.999 and 4.0111"

The third replies " Well what do you want it to be?"

Why are major shareholder in Northern Rock moaning - if you have major shares in a company is it not your responsibility to know what is going on in that company?

They were greedy, when the third accountant (above) was doing his job properly, it all looked rosy.

[scoobydoo]

Re: A general question - for WISER people than me

thats what i thought

so I am wise after all!