of course that will be followed with policies to encourage risky lending (paging Barney Frank)
a collapse
a chorus of "blame Bush"

happened before.

If by "more risky investing" he means "granting (more) loans to people with credit scores of under 950" then, sure, why not?

That would be more "risky" than what they're doing now, ja?

He's right. He knows the solution and doesn't want to do it. All insolvent banks should be nationalized. Period. Citi and BoA, I'm looking at you. Forcefully make them solvent and hold a new IPO. Until then the insolvent banks will do what insolvent banks do. Hoard cash or only invest in the most liquid of investments (i.e. the US treasury bond). When banks stop taking risks completely, the economy doesn't grow. No loans to start small businesses. No new jobs created.

Welcome to the start of America's lost decade.

King Something: If by "more risky investing" he means "granting (more) loans to people with credit scores of under 950" then, sure, why not?

That would be more "risky" than what they're doing now, ja?

THIS.

RockIsDead

How many posts have you made in the last 15 days?

Renowned transvestite sexologist: Citi and BoA, I'm looking at you.

Indeed... his comments would make a world of sense had he taken those steps at the beginning of the year. Your lost decade comment? Reminds me of my reinsurance times, when companies sold too much too soon and had to wait and wait and wait in a holding pattern until their books balanced.

Renowned transvestite sexologist: Citi and BoA, I'm looking at you.

By the way, in case you did not see it, an interesting NYTimes piece on Citi:

http://www.nytimes.com/2009/11/01/business/economy/01citi.html
Can Citigroup Carry Its Own Weight?
"OVER the past 80 years, the United States government has engineered not one, not two, not three, but at least four rescues of the institution now known as Citigroup. In previous instances, the bank came back from the crisis and prospered."

And I just saw this:
http://dealbook.blogs.nytimes.com/2009/11/01/cit-to-file-for-bankruptcy-soon
"Three months ago, the CIT Group barely averted what it considered to be a ruinous bankruptcy filing that would likely have put the 101-year-old lender out of business."

King Something: If by "more risky investing" he means "granting (more) loans to people with credit scores of under 950" then, sure, why not?

That would be more "risky" than what they're doing now, ja?

Isn't the Fed paying them interest to NOT do that?

At the moment banks are really afraid to do anything because of what might happen to the funds, causing this recession to be prolonged. Geithner is hoping that banks will take more risks but not go full dumbass like they did last time. There is a middle ground here. BUT, once banks do get over this shock there is nothing preventing them from going all out again, so maybe this new-found caution is a good thing and maybe banks will be responsible and maybe rainbows will start flying out of my ass.

Actual quote FTFA: "The big risk we face now is that banks are going to overcorrect and not take enough risk," he said. "We need them to take a chance again on the American economy. That's going to be important to recovery."

I'm out of work largely because many clients of my former workplace with near spotless credit and/or proven business plans haven't been able to get construction loans. The banks need to stop seeing transactions like these as "risky."

So the only people who can get loans now are those credit unworthy individuals that the government regs force the banks to loan to? You all shouldn't really be so surprised it would end up this way.

Because money creation in our economy is dependent up on debt creation. If the banks aren't willing to loan then the economy will stagnate or get worse. The banks aren't the problem so much as people and business aren't in the mood to take on debt, or can't handle any more debt.

Subby, you have so much cock jammed down your throat, it's starving your brain of oxygen.

FarkIlk01: Because money creation in our economy is dependent up on debt creation. If the banks aren't willing to loan then the economy will stagnate or get worse. The banks aren't the problem so much as people and business aren't in the mood to take on debt, or can't handle any more debt.

Its called hitting the debt wall and it sounds exactly like what it is.

SurahAhriman: King Something: If by "more risky investing" he means "granting (more) loans to people with credit scores of under 950" then, sure, why not?

That would be more "risky" than what they're doing now, ja?

Isn't the Fed paying them interest to NOT do that?

That's would be exactly wrong. If they aren't making loans, there are of no use to us and may as well just fail. So the Fed gives them cheap loans in the hopes that they will loan out money in general. Or at least more than they otherwise would.

jvl: SurahAhriman: King Something: If by "more risky investing" he means "granting (more) loans to people with credit scores of under 950" then, sure, why not?

That would be more "risky" than what they're doing now, ja?

Isn't the Fed paying them interest to NOT do that?

That's would be exactly wrong. If they aren't making loans, there are of no use to us and may as well just fail. So the Fed gives them cheap loans in the hopes that they will loan out money in general. Or at least more than they otherwise would.

I was talking about the Fed paying interest on money kept with them above minimum reserves. Do you have any idea what you're talking about?

Lawnchair: Clarence Potter: By the way, in case you did not see it, an interesting NYTimes piece on Citi:

CIT =/= Citi.

No shiat, dickweed.

Anyone who has spent any time in banking knows banks are in a constant struggle between a sales culture and a credit culture. This is just the most dramatic swing from one to the other in recent memory, and perhaps ever.

/was at WaMu when they made the swing
//everyone knew it was coming
///the last place they looked to make cuts was the divisions that brought down the bank

King Something: If by "more risky investing" he means "granting (more) loans to people with credit scores of under 950" then, sure, why not?

That would be more "risky" than what they're doing now, ja?

considering credit scores only go up to 850, I am curious how many people you want to loan money to. (new window)

/ not sure if you are being snarky or not

Clarence Potter: Renowned transvestite sexologist: Citi and BoA, I'm looking at you.

By the way, in case you did not see it, an interesting NYTimes piece on Citi:

http://www.nytimes.com/2009/11/01/business/economy/01citi.html
Can Citigroup Carry Its Own Weight?
"OVER the past 80 years, the United States government has engineered not one, not two, not three, but at least four rescues of the institution now known as Citigroup. In previous instances, the bank came back from the crisis and prospered."

And I just saw this:
http://dealbook.blogs.nytimes.com/2009/11/01/cit-to-file-for-bankruptcy-soon
"Three months ago, the CIT Group barely averted what it considered to be a ruinous bankruptcy filing that would likely have put the 101-year-old lender out of business."

I know you did the whole "no shiat, dickweed" bit above to someone else, but what exactly is your point here? They're two separate companies; there isn't even an implicit analogy in placing your links back to back. If you were meaning to make some other point, you weren't clear.

It's not like there are two standards of lending, "safe" and "risky". US banks were taking a lot risks between '05 and '08, but now the consumer banks at least have swung completely in the opposite direction. A lot of otherwise healthy businesses can't get the money to operate through rough stretches like they would normally, and that's terrible for consumer confidence and job creation. Geithner's not saying that we need to re-create the bubble, but that we need to return to the lending standards of a healthy economy. It's not going to be easy, but it needs to be done at some point.

Lawnchair: Clarence Potter: By the way, in case you did not see it, an interesting NYTimes piece on Citi:

CIT =/= Citi.

They share the first three letters :)

Banks.

/chuckle

Arkanaut: It's not like there are two standards of lending, "safe" and "risky". US banks were taking a lot risks between '05 and '08, but now the consumer banks at least have swung completely in the opposite direction. A lot of otherwise healthy businesses can't get the money to operate through rough stretches like they would normally, and that's terrible for consumer confidence and job creation. Geithner's not saying that we need to re-create the bubble, but that we need to return to the lending standards of a healthy economy. It's not going to be easy, but it needs to be done at some point.

And the odds of this actually happening are...?

/you're actually right
//it's just the universe doesn't give a shiat

/Hotlinked

Arkanaut: Geithner's not saying that we need to re-create the bubble, but that we need to return to the lending standards of a healthy economy

That sounds great until you realize how vague those terms are and the puppeteers are essentially the same guys that got it wrong frequently over the past twenty years.

/At some point, arrogance should give way to humility as we acknowledge that an economy is simply too complex to be constantly manipulated to a useful degree of accuracy.
//I said "should", not "will".

Flargan: FarkIlk01: Because money creation in our economy is dependent up on debt creation. If the banks aren't willing to loan then the economy will stagnate or get worse. The banks aren't the problem so much as people and business aren't in the mood to take on debt, or can't handle any more debt.

Its called hitting the debt wall and it sounds exactly like what it is.

pretty much this, nobody wants to make loans, because they can't make loans, everybody has already gone into survivalist mode, the actual market is stagnant and unwilling to budge because investments are still either recouping or shut down because they're money pits with no return, and the people who can invest don't want to until 2011, so the banks have little reason to invest

the people who will make the most profit right now are the ones who can make money off of bad investments and forge special relationships for future investment that the average person simply won't ever get

Geithner says that banks are playing it too safe

Well, no kidding. When CEOs had the temerity to come to DC on corporate jets, they were practically lined up and shot. Since then it's been one long waterboarding over salaries and bonuses. Would you be sticking your neck out in that environment?

AdamK: Flargan: FarkIlk01: Because money creation in our economy is dependent up on debt creation. If the banks aren't willing to loan then the economy will stagnate or get worse. The banks aren't the problem so much as people and business aren't in the mood to take on debt, or can't handle any more debt.

Its called hitting the debt wall and it sounds exactly like what it is.

pretty much this, nobody wants to make loans, because they can't make loans, everybody has already gone into survivalist mode, the actual market is stagnant and unwilling to budge because investments are still either recouping or shut down because they're money pits with no return, and the people who can invest don't want to until 2011, so the banks have little reason to invest

the people who will make the most profit right now are the ones who can make money off of bad investments and forge special relationships for future investment that the average person simply won't ever get

Plus, as I mentioned above, the Fed is paying banks interest to keep money with them instead of loaning it out.

Central planning is a biatch.

Hell, if I knew the gov would bail me out, I'd put it all on 23 black.....

FarkIlk01: Because money creation in our economy is dependent up on debt creation. If the banks aren't willing to loan then the economy will stagnate or get worse. The banks aren't the problem so much as people and business aren't in the mood to take on debt, or can't handle any more debt.

Sad, but true.

Pity Tehol Beddict isn't real, because we could really use him right now.

jjorsett: Since then it's been one long waterboarding

If only...

Flargan: FarkIlk01: Because money creation in our economy is dependent up on debt creation. If the banks aren't willing to loan then the economy will stagnate or get worse. The banks aren't the problem so much as people and business aren't in the mood to take on debt, or can't handle any more debt.

Its called hitting the debt wall and it sounds exactly like what it is.

It's complicated by the fact that we don't make much of anything anymore, except food. Our workforce is mostly occupied either rendering services or selling stuff that is made in other countries - and our "captains of industry" have mostly been replaced by speculators who "create" their wealth by shuffling other people's money around.
If we don't do something about that, there's not much point in trying to fix anything else.
I remember an editorial cartoon I saw in the early nineties. It's a classroom scene, and,on a blackboard with "Economics 101" at the top, the professor has written "Production", He is saying to the class "Today, we are going to talk about making things. Actual. Things."
In the back of the class, one young man is angrily whispering to a classmate "Things? I don't want to make "things". I want to make money!"
And the other responds "I know how we can make some money! Let's sue the school!"
Rather prophetic, in retrospect.

tenpoundsofcheese: of course that will be followed with policies to encourage risky lending (paging Barney Frank)

"I don't think it's a bad thing that the bad loans occurred," he said. "It was an effort to keep prices from falling too fast. That's a policy."

It's farking disgusting. Everybody is still pissed at the banks for their shiatty high-risk loans, yet here's our govt doing the same thing in order to "prop up" housing prices, which are unsustainable. Instead of stockholders getting screwed, the taxpayer gets the shaft. And from the mess will emerge more foreclosures. I don't know how such a buffoon like Frank can be allowed to hold his committee position, it's just beyond me.

SurahAhriman: I was talking about the Fed paying interest on money kept with them above minimum reserves. Do you have any idea what you're talking about?

Oh sorry, I didn't know you were insane. Instead I assumed you said something sensible.

Banks have investors who expect a return. The money the Fed pays them for keeping a bit extra is just enough for the banks to let the money stay overnight in the Fed vault where the Fed can re-purpose it instead of letting it stay overnight in the Bank's vault. It isn't enough to keep the investors happy.

Or in other words, you really have no idea what you are talking about.