Monday, Oct 22, 2007
Big Banks confess to lax lending practices
Times Online: Big banks accept blame for global credit turmoil
Are big banks only to be blame for the current global situation? "The world’s big investment banks accepted collective blame yesterday for lax lending and weak practices that triggered the present global credit market turmoil"
Posted by peter @ 11:07 AM (563 views) Add Comment
4 Comments
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1. dohousescrashinthewoods said...
Related, if slightly off-topic, I was reading the Sunday papers' "Home" sections (Times and Mail) and there was a pretty good crop of thinly-veiled bearish news nestling between the usual.
A couple of articles on new-build developers offering "special offers" that amount to a 5% price drop but don't have to be reported to the land registry, Halifax and friends. Even a warning about people thinking property can only go up!
There was also a stunning 2-page spread ad from Baratt, offering flats at 75% of the price - yep, that's 25% off. Really? Well here's the deal, apparently it's "shared ownership" with the developer. Uh-huh? Looks like a 25% drop to me. I wondered if it means that, in a couple of years, when values have plummeted, they can still tap those "key workers" for the full extra 25% (which is probably all that the flats will be worth by then).
i.e. Get them in on a pretext of social concern and then thumbscrew the full price out later to prop up company profits after the market implodes.
2. shipbuilder said...
Is this the same as the modern-day politician's version of 'accepting blame'? A token statement, then business as usual - big deal. Will they learn their lesson? It'll soom be forgotten when the next generation of gamblers are running things.
3. whiteknight said...
In other news: house buyers confess to lax borrowing practices...
4. Notaneconomicsguru said...
Response to Poster 1. Those schemes seem similar to ones I remember being offered in South Oxon during 1989 when the market had gone extremely soft if not actually into decline. As a FTB just able to get to the level of a 25% shared ownership scheme on new 2 bed flats (it may have been Barratts or someone else can't remember), instead of being tempted into buying after several years of exclusion from the market, I was extremely anxious about how I would find the remaining 25% at the end of the 'introductory' period. Rent out the 2nd bedroom the EA said. Hmmmm, not on your life I thought. So, instead I waited another 12 -18 months until prices really had fallen sharply and property was barely changing hands, by which time I had got a bigger deposit together and found myself in a very strong bargaining position. By late 1990 it was possible to find good properties to buy and to easily negotiate sales at least 25%+ below the 1988 peak. With luck, today's FTB's will be able to do the same. I think its time to be cautious and sit and wait.