Things have come to a pretty pass when you get this sort of analysis in The Telegraph of all places:
America’s real estate turmoil has been caused largely by greedy lenders
extending loans to borrowers with bad credit-ratings – the so-called
"sub-prime" market.
Yes, we expect such drivel at the Grniad or the Indy, but here? Lending money to people, which you then lose, is being greedy? Sheesh. It’s an expansion of credit to the poor, a good thing, not a bad one.
In
Americans mostly thought the Savings and Loan institutions a great idea until this:
“The Savings and Loan crisis of the 1980s was a wave of savings and loan association failures in the United States in which over 1,000 savings and loan institutions failed in ‘the largest and costliest venture in public misfeasance, malfeasance and larceny of all time.’ The ultimate cost of the crisis is estimated to have totaled around USD$150 billion, about $125 billion of which was consequently and directly subsidized by the U.S. government, which contributed to the large budget deficits of the early 1990s.”
http://en.wikipedia.org/wiki/Savings_and_Loan_crisis
Successive US administrations and Congress seem to have an almost unrivalled talent for disastrous regulation of financial markets from the perspective of effectively protecting and promoting American interests at reasonable compliance cost. We can but cheer them on.
We owed the growth of the Euro-Dollar markets to (well-intended) regulations of the Kennedy-Johnson administrations to limit the rate of interest paid on financial deposits in America owned offshore.
The Sarbanes-Oxley Act of 2002 was intended to protect American investors from the ravages of corporate fraud scandals but it has done wonders for promoting London over New York as the prospective leading global capital market:
http://www.itbusinessedge.com/item/?ci=20670
“In a recent Wall Street Journal op-ed, Senator Chuck Schumer and New York Mayor Mike Bloomberg made a bipartisan plea for the future of their city’s financial sector. ‘Unless we improve our corporate climate, we risk allowing New York to lose its pre-eminence in the global financial-services sector.’ Schumer and Bloomberg’s angst centers on the latest supposed impact of the 2002 Sarbanes-Oxley reforms: the shift of capital from New York to London.”
http://www.tnr.com/doc.mhtml?i=w061113&s=risen111706
” . . London is rapidly emerging as a center of financial innovation. London-based hedge funds are snapping up property in Mayfair, and London has also outgrown New York to become the world’s center of over-the-counter derivatives. It is even showing signs of catching up with the U.S. in bond trading and securitization. While New York remains the financial center to beat, London has momentum. . .”
http://nymag.com/guides/london/29440/
Being charitable, perhaps they mean “greedy” in the technical sense, i.e. financial decisions like this are regulated by greed (for profits) and fear (of losses) if people’s greed starts to outweigh their fear, then the lenders of course make sub-optimal decisions.
If banks refuse to lend to poor, i.e. riskier, people, then they would be pilloried for “fianncial exclusion” or something, but really that just means that fear outweighs greed (rightly or wrongly).
I think it’s fair enough – if those lenders hadn’t been so greedy – that is to say, taken a disproportionate risk to the wealth that they were going to make back, they wouldn’t be in this pickle.
This site gives a clear descriptive information and here is a similar site for more information log on to it.
Bad Credit
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