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Originally Posted by Rudeboyelvis
This was Bernake's excuse for taking the bailout cash and giving it to the banks to loan - and it is complete horsesh!t. What they are really saying is they don't have the cash to loan at higher rates to less than stellar credit risks (the people they have been preying on for decades) because the risk now hits home - They need the coffers filled back up to go after the moderate credit risks which is their bread and butter but they don't want to assume the risk with their money -
If you have decent credit, they are still climbing over each other to loan you money. I just bought a new truck and financed from a local bank 4.25%apr for 72 months. A local bank, not some dealer financed scheme... and for what it's worth, the banks I inquired at and did not use are STILL calling my house to see if I want their money.
The bailout now loads the vaults back up - with your cash - so it can be loaned back to you.
So you get to borrow your own money and pay them interest to do it, and if the loans default, no biggie we just go back to the money tree and get more to loan... Friggin' Brilliant. These criminals never cease to amaze
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Rudeboy, im sorry, but this isnt really the case. Many banks dont have much money to lend...AT ALL regardless of risk. Notice I said "many" banks as opposed to "all" banks.
The bank that you got your loan from is probably a good healthy small to medium size bank. Thats great. They are getting fed funds at a rate that is effectively zero and lending it to you for 72 at 4.25. Decent spread. Thats what they were supposed to do. Most likely, they have a healthy amount of deposits and don't have a lot of mortgages on their books. This isnt the type of bank going to the TARP window.
There are many banks that didnt make risky subprime loans commercial or residential and are STILL IN TROUBLE. Such is the peril of borrowing short and lending long. Securitization was the name of the game until last summer. Many millions of dollars of loans were made to GOOD clients that are still paying on time but can't get sold. Those loans are clogging the balance sheets and banks cant get those loans off of the books to get more money to lend.
There is some liquidity coming back into the markets and consumer loans are easier to get now than they were a month ago. This is not true for mortgages. There is still absolutely no execution for triple AAA rated jumbo mortgage backs. In plain english? Even if you have perfect credit and qualifications, you have to pay a huge premium to get financed unless it can be purchased by a fannie/freddie or FHA/VA.