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eric pebble

Why Banks Gave Home Loans To People Who They Knew Couldn’T Repay?

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It's because Ray Boulger said it's ok and he makes loads of money from doing and it doesn't matter if they can't pay because you will always end up with an asset worth more than the loan value even at 100%+ cos house prices only ever go up innit.

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...because is wasn't their money...because they made money from money that wasn't theirs...they knew they could always get the money back because their secured property always goes up, growth and inflation will see to that....and anyway they were too big to fail. ;)

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err.. because they knew that they could always sell the debt to RBS and do a runner with their bonuses?

You get my vote for best answer.

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Because bankers realised that as mortgages became paid up and more and more houses would be mortgage free - their income from mortgages would plunge as not enough new houses were being built to replace them. Therefore they needed to double houses prices to retain their mortgage interest income or do something that would get them lots of bonuses quickly.

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Because bankers realised that as mortgages became paid up and more and more houses would be mortgage free - their income from mortgages would plunge as not enough new houses were being built to replace them. Therefore they needed to double houses prices to retain their mortgage interest income or do something that would get them lots of bonuses quickly.

yes, it was a panic, to get as much securitised and bonused as possible...course that wasnt your point, which is much more fun.

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You get my vote for best answer.

Yes, there was a conspiracy, if you like. (You may prefer, cartel.) Bonuses were/are earned on writing business on the day - not on the basis of loans actually performing any time soon. (Which they patently never did and never will.) So, reckless = bonus. Trebles all round.

Eric's term, 'Liar Loans' , is a bit harsh though.

Gordon Brown always preferred the phrase. 'light touch regulation'.

Same thing, but it just sounds nicer than the way Eric puts it. :)

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As it seems all western nations did this madness together is it really far fetched to believe it was part of a masterplan to rob nations of their individual sovereignty and bring them instead under an umbrella global economic dictatorship? Why have we all been able to see it and the IMF / World Bank did nothing to alert governments to the dangers of deregulation that were plain to see? They MUST have seen it and just stood by waiting for their moment to come in and take over nations. I think we'd be extremely naive to think that they are making this up day by day rather than working to a plan. Welcome to the new world order.

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Because if house prices are rising sufficiently quickly and the market is high volume, the borrower's ability to pay back the mortgage debt from their work becomes irrelevant from the bank's point of view

It is one of the many distortions caused by the real estate market

Edited by Stars

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Why banks gave home loans LIAR LOANS to people who they knew couldn’t repay?

Something called G R E E D perhaps.... :rolleyes:

http://www.prisonplanet.com/why-did-banks-give-home-loans-to-people-who-they-knew-couldnt-pay.html

It's because Ray Boulger said it's ok and he makes loads of money from doing and it doesn't matter if they can't pay because you will always end up with an asset worth more than the loan value even at 100%+ cos house prices only ever go up innit.

err.. because they knew that they could always sell the debt to RBS and do a runner with their bonuses?

First, bank directors robbed bank shareholders. If you just say "bankers" you miss this essential point. Shareholders (including our pension funds) lost virtually everything.

Bank directors were being paid mainly on annual bonuses, and had a very short-term interest, greed, yes. However, in the real world, and in modern capitalist societies, when interest rates are too low, and regulation non-existent, to blame lenders and borrowers for lending and borrowing too much is akin to throwing a ball and blaming a dog for chasing it.

It was both a failure of corporate governance inside the banks and their main institutional shareholders (pension funds);

And mainly the USA and UK monetary authorities. Mainly Alan Greenspan and Gordon Brown.

_____________________________________________________________________________

Edit to add:

The real "bankers", the shareholders, lost virtually everything. Lloyds, 10 years:

lloyds10years.png

source: yahoo finance

.

Edited by Tired of Waiting

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Because every piece of legislation and regulation devised to prevent them had been intentionally removed.

+ 1

And in the UK Brown also fiddled with the inflation index in Dec 2003 (CPI V RPI) to prevent the BoE from increasing the base rate in 2004 - a pre election year.

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Because if house prices are rising sufficiently quickly and the market is high volume, the borrower's ability to pay back the mortgage debt from their work becomes irrelevant from the bank's point of view

It is one of the many distortions caused by the real estate market

...bankers should lend on projected cash flow....not bet on speculative asset appreciation ....they can do that at the bookies.... :rolleyes:

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Because if house prices are rising sufficiently quickly and the market is high volume, the borrower's ability to pay back the mortgage debt from their work becomes irrelevant from the bank's point of view

It is one of the many distortions caused by the real estate market

But they must have know that the rises were unsustainable, i can't believe that bankers really believed they had worked out a way to end boom and bust.

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...bankers should lend on projected cash flow....not bet on speculative asset appreciation ....they can do that at the bookies.... :rolleyes:

Bankers will tend to do what they can to stay in business

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But they must have know that the rises were unsustainable, i can't believe that bankers really believed they had worked out a way to end boom and bust.

I dare say they were split on the matter (like most groups at the time)

Meanwhile, the bank has to react to market demands

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But they must have know that the rises were unsustainable, i can't believe that bankers really believed they had worked out a way to end boom and bust.

they knew it would end.

They also knew that when the shit hit the fan they could stare down the politicians into giving them all the money they wanted from tax payers.

Pension funds wanted "risk free" investments

Banks securitised mortgages and called them risk free

pensions didn't ask questions because they were getting what they wanted

banks, governments and pension funds leaned on the lenders to lend more,

so they told people they could lie about their income and nobody would check.

Everybody was lying, everybody knew they were lying, and no one cared because they all knew that the taxpayer would pick up the tab.

Take the power of bail out away from government dammit, then the banks would all have gone bankruptand we would have cheaper houses again.

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As someone who has worked in the City for 30 years I can tell you that every single post on here so far is correct.

There are a great many very clever people in the City. Very few ever really make the big money. Most spunk it away. Of those that do, most clear out and disappear from where they came. The clogs to clogs in 3 generations. The ones who chose to stay become involved in the City "fatherhood".

It is a great place if you are "a chosen one", otherwise you are just factory fodder. Ever wonder why the flatlands of Essex (Pylonia) is so populated? Yup, they're the drones coming into Liverpool St or Fenchurch St and Moorgate. The smarter money comes into London Bridge.

Since 1986 and Big Bang, the "old boy network" completely changed. In the old days, there was always controlled greed, the club would never allow the short term "pleb" into the game - ever, under any circumstances. Then post '86, the old boys lost control, the spivs took over. Look what has happened. Neither was a good or fair system but the former didn't blow up in over 300 years.

In places like Lloyd's (of London) noone ever made it on to the Committee unless a homosexual or a Mason. But that market blew up after '86 because it was a Ponzi scheme to cover for asbestosis claims.

Nothing lasts forever. Nothing. The City will tick over for another generation but they don't control the country as once they did. Look at our politicans. The PM's father a very successful stock broker and hugely popular "shit" has taught his son some basics but Cameron is not City. Nor is Osborne, the son of a wall paper magnate. Nothing wrong with either but they are not City. The Cons MP's are by and large first generation, not terribly bright, rather weak, easily influences and impressionable stooges.

Sadly we will have much more of the same until one day the people of this country wake up and say "no more". This Country needs to look at itself in the mirror and decide where we want to go. What exactly do we stand for and what is our purpose? Are we a true trading nation? If so, let's be one again.

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well said PRE.

People seem to think there was some big conspiracy by the powers that be. NO, just individual interests resulting in a long term harm to the majority.

Borrowers wanted to borrow more than was good for them, because otherwise much of the 'wealth' they could see out there would pass them by

Individual bankers in lending departments had lending targets to meet, or they would have risked their careers

Bankers in sub-prime securitisation departments had targets to meet, or they would have risked their careers

Chief Executive of most banks had to keep generating growth, or they would have been taken over by their competitors

Regulators didn't want to regulate effectively because their political masters would have criticised them and they would have risked their careers

Politicians didn't want to allow regulators to curtail lending because they benefited from the credit boom in terms of feelgood factors and increased chances of winning elections

Media didn't want to criticise because they would have lost advertising revenue, plus many of the owners benefited from easy credit for the masses for their income (i.e. sky/fox)

It's a circle. All are guilty.

Ultimately, I blame the politicians and the masses. No spine for the first to do what was right, even if it cost them votes. No brains for the second, to realise what at dreadful future they were creating for themselves and their children.

You will only stop this happening again if you educate the population. And even then, half of the voters will be less than half the average intelligence.

Interestingly, as posted somewhere else, the only way of reducing risk in terms of leaders is to have independently wealthy individuals who are not scared of losing their 'job'. I.e. A Monarch, or an individual so wealthy they will do what is right without fear of the next election. Cameron is almost there, but not quite rich enough.

Edited by wherebee

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As someone who has worked in the City for 30 years I can tell you that every single post on here so far is correct.

There are a great many very clever people in the City. Very few ever really make the big money. Most spunk it away. Of those that do, most clear out and disappear from where they came. The clogs to clogs in 3 generations. The ones who chose to stay become involved in the City "fatherhood".

It is a great place if you are "a chosen one", otherwise you are just factory fodder. Ever wonder why the flatlands of Essex (Pylonia) is so populated? Yup, they're the drones coming into Liverpool St or Fenchurch St and Moorgate. The smarter money comes into London Bridge.

Since 1986 and Big Bang, the "old boy network" completely changed. In the old days, there was always controlled greed, the club would never allow the short term "pleb" into the game - ever, under any circumstances. Then post '86, the old boys lost control, the spivs took over. Look what has happened. Neither was a good or fair system but the former didn't blow up in over 300 years.

In places like Lloyd's (of London) noone ever made it on to the Committee unless a homosexual or a Mason. But that market blew up after '86 because it was a Ponzi scheme to cover for asbestosis claims.

Nothing lasts forever. Nothing. The City will tick over for another generation but they don't control the country as once they did. Look at our politicans. The PM's father a very successful stock broker and hugely popular "shit" has taught his son some basics but Cameron is not City. Nor is Osborne, the son of a wall paper magnate. Nothing wrong with either but they are not City. The Cons MP's are by and large first generation, not terribly bright, rather weak, easily influences and impressionable stooges.

Sadly we will have much more of the same until one day the people of this country wake up and say "no more". This Country needs to look at itself in the mirror and decide where we want to go. What exactly do we stand for and what is our purpose? Are we a true trading nation? If so, let's be one again.

nice post...when I worked "in the smoke", Westminster, you would still see the Gents in their Bowler Hats, the saying was "My Word is my Bond" and this really meant something.

today, the phrase "my Word is your Problem" would seem more apt.

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  • 261 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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