[HN Gopher] Owe your banker PS1k you are at his mercy; owe him P...
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Owe your banker PS1k you are at his mercy; owe him PS1m the
position is reversed (2019)
Author : squircle
Score : 130 points
Date : 2024-10-10 12:08 UTC (10 hours ago)
(HTM) web link (quoteinvestigator.com)
(TXT) w3m dump (quoteinvestigator.com)
| Rygian wrote:
| Related, on a broader level: "Kill one man, and you are a
| murderer. Kill millions of men, and you are a conqueror. Kill
| them all, and you are a god. Thoughts of a Biologist" (Jean
| Rostand)
|
| http://evene.lefigaro.fr/citation/tue-homme-assassin-tue-mil...
| vidarh wrote:
| Variants of that is older than Rostand [1]
|
| > To sate the lust of power; more horrid still, The foulest
| stain and scandal of our nature Became its boast -- One Murder
| made a Villain, Millions a Hero. -- Princes were privileg'd To
| kill, and numbers sanctified the crime. Ah! why will Kings
| forget that they are Men?
|
| -- Beilby Porteus (1759)
|
| [1] https://quoteinvestigator.com/2010/05/21/death-statistic/
| xk_id wrote:
| > numbers sanctify the crime
|
| That's a gorgeous quote! Something Lord Henry in "The picture
| of Dorian Gray" would say.
| tuyiown wrote:
| My middle school was named after Jean Rostand, and we never
| heard that quote somehow, this is hilarious.
| mncharity wrote:
| A variant I fuzzily recall (regards South Asia banditry?),
| which retains the TFA's power shift, is something vaguely like
| "kill one and they will hang you, kill a hundred and they will
| negotiate with you".
| s_dev wrote:
| You get this quote in Civ VI if you research banking. They
| attribute it to Getty as well.
|
| https://civilization.fandom.com/wiki/Banking_(Civ6)
| ricardo81 wrote:
| First place I'd heard the quote. Something I learned via Civ,
| an interesting idea no matter who it is attributed to.
| BuyMyBitcoins wrote:
| I've always appreciated Civ's quotes. I still quote the ones
| from IV.
| bryanlarsen wrote:
| Perhaps true in 1945, but these days $1M is petty change to a
| bank. There are lots of people out there with $1M mortgages out
| there who are definitely at the mercy of their bank.
|
| PS1 in 1945 is ~$25M today and even that value doesn't seem high
| enough for the quote to apply. I wonder where the cutover is?
| $100M? $1B?
| lesuorac wrote:
| Probably whatever is less than your actual assets.
|
| You owe the bank $100 and have $0 to your name then they're
| just out. Although I guess they didn't lose sleep until it was
| a bunch of people's mortgages so probably ~250k.
| cmptrnerd6 wrote:
| It probably depends on the bank somewhat. My local community
| Bank in a small rural town won't have many, if any, million
| dollar home mortgages, maybe some of the farm or business loans
| are that large.
|
| Also I hope you meant PS1M is ~$25 M today and not PS1 :D
| TheCoelacanth wrote:
| I don't think local community banks typically hold onto a lot
| of mortgages. They would originate the loans and then sell
| them to someone else.
| CPLX wrote:
| Worth noting that banks are, on average, a LOT bigger than they
| used to be.
|
| The popular conception of a bank, even when I was a kid, was a
| place that was based in your town and had maybe a few branches
| and took in people's deposits and wrote mortgages and business
| loans.
| generic92034 wrote:
| Depending on where you live small local banks still exist.
| Although some merging processes are definitely happening, in
| my area.
| geodel wrote:
| Yes they do exists as you say. However in last 30 years or
| so 90% of small banks are merged into _Too big to fail
| banks_.
| kjs3 wrote:
| In the US, small local banks are everywhere. There's an
| entire ecosystem that matches capital to start a bank with
| experienced management teams that run the bank (not just
| anyone can be an executive at an OCC chartered bank). There
| are SaaS providers that do the heavy IT lifting. And, of
| course, specialist lawyers. They open a local bank, build
| it to a certain size, and (usually) one of the regional or
| super regional banks comes and picks them up. Lather,
| rinse, repeat. Not unlike what you see in SV with startups.
| generic92034 wrote:
| The situation in Germany with the "Sparkasse" and
| "Volksbank" is a bit different. They have a special legal
| form, preventing takeovers from other banks. But the
| local Volksbanken (or Sparkassen, I guess) can merge with
| each other. If that process in the end also leads to a
| "too big to fail" status at some point in time, I cannot
| predict, but I doubt it.
| CPLX wrote:
| Sure, but over 50% of the assets held by banks in the US
| are held by five banks.
|
| That's about double the percentage in 2000. Things have
| changed a lot and the trend continues.
| NeoTar wrote:
| Apparently in the UK, the largest four banks control 75%
| of all current accounts (en-us: checking account ).
| Admittedly a smaller market, but even more centralised.
| kjs3 wrote:
| "Big banks have most of the money" and "Big Banks have
| gotten bigger" has absolutely nothing to do with "Are
| there small banks". I was talking to some folks I know in
| this world this week about a small bank they're starting,
| so it's not 2000 we're stuck in. I get "Big Banks are
| Bad" is the horse you want to beat, tho long dead, but
| there's plenty of room in this thread to shoehorn your
| pet gripe where it would be at least remotely on-topic.
| CPLX wrote:
| My point is pretty easy to follow.
|
| The quote, that is the title of this comment thread
| (we're discussing a specific thing here, the quote in
| question, mind you, not which banks are good and bad) was
| a whole lot more applicable in the past than it is today.
|
| Yes, sure there are small banks. But if you walk around
| any major city or drive around any major residential
| area, nearly all the banks you see (and in reality,
| nearly all the banks people actually bank at) will not be
| a match for the main point this quote is making.
|
| That's because the banks that nearly all of us interact
| with now, are so large, and so politically connected and
| interwoven with our core financial structures, that it's
| actually impossible for almost anyone living to have a
| bank at their mercy due to the amount of money they owe
| the bank.
|
| So the quote, once widely understandable and applicable,
| is slowly starting to make less sense to the average
| reader.
|
| Which is kind of interesting.
| kjs3 wrote:
| Just in my suburb of a major city, within, say 5 miles of
| me, physical banks that aren't the top 5: a bunch of
| small banks (Southstate, Cadence, MemberFirst,
| FirstCitizen, OZK, Unity National, Southern First, First
| Horizon, City National, Hyperion), at least 6 credit
| unions (usually considered 'small banks': Delta
| Community, Navy Federal, Emory, Associated, American
| Postal, Peach State), banks that are 'small but something
| else' (BestBank (bought by First Citizen I think),
| associated with Kroger, Woodforest National associated
| with Walmart) and 4 regionals (Truist, Synovus, Regions,
| Ameris (which is a rollup of 4 or so small local banks
| around here)).
|
| How _do_ they stay in business I wonder since noone sees
| them and noone banks there? What was your point again?
| bryanrasmussen wrote:
| In a Man in Full in the scene where the bankers are grilling
| the guy who owes them money, they are worried because he owes
| them so much they have a problem - of course they do their best
| not to let on that such is the case and he evidently doesn't
| pick up on it either. I'm not sure the amount he owed in the
| book, published in 1998, but I believe it was 600 million
| dollars.
| bryanrasmussen wrote:
| evidently a user named wasteduniverse is shadow-banned or
| something, I saw his question but it was marked dead and I
| couldn't reply. Looking at his comments page all his other
| comments were also grayed out and dead.
|
| I don't know what he did but since his question seems
| unproblematic enough I'll answer here - I didn't finish all
| the book, my Tom Wolfe phase was done, it seemed ok but not
| as cool as I thought Bonfire of the Vanities was, I remember
| some snide reviews of it at the time all about how Wolfe was
| still trying to be his idea of a great writer which was
| hopelessly out of date (opinion of reviewers).
|
| My understanding it the Netflix adaptation has gotten a lot
| of complaints.
| HPsquared wrote:
| Banks are bigger now, I assume.
| mjlee wrote:
| There's a big difference between secured and unsecured loans,
| subprime lending crises aside.
| figassis wrote:
| I think the quote applies in relative terms of the bank's size.
| When Elon bought Twitter, and then he started saying there were
| so many bots, I remember people saying how much the finance
| department at his creditor was sweating. That to me is Musk
| owning the bankers, and yet, $45B is likely not close to how
| much that bank as in deposits.
|
| edit: which I actually just read, was multiple large banks,
| which is now a great strategy to not being owned by debtors. I
| assume a single large bank would be sweating a lot more.
| jeanlucas wrote:
| Yeah, I mean, look at Elon Musk's buy of Twitter. Morgan
| Stanley and others secured about US$6bi? That's more on them
| than on Elon
|
| PS: I am aware that Elon's shares on other companies were used
| as collateral, but yet...
| pjc50 wrote:
| https://en.wikipedia.org/wiki/Silicon_Valley_Bank hit $15bn of
| unrealized losses and exploded. It was destroyed by the
| collective action of its depositors in a classic bank run.
|
| https://en.wikipedia.org/wiki/Se%C3%A1n_Quinn is another
| example; he managed to persuade the bank, via accomplices, to
| lend him EUR451 million to buy its own shares in a sort of
| circular pyramid scheme to inflate its value.
| actionfromafar wrote:
| The trick is to keep the circle extremely wide. Then, it's
| called an Economy and Healthy Inflation. :) An ecosystem if
| you will.
| NeoTar wrote:
| It is said that Julius Caesar borrowed so much money to become
| elected pontifex maximus that he essentially forced his creditors
| to support his political ambitions in the hope of seeing some
| payment on the debts.
|
| So, essentially, 'twas ever so.
| EGreg wrote:
| Indeed. Shill your own bag. Saw it with Bitcoin too. And every
| company VCs invest in and the public invests in through wall
| street.
|
| "Too big to fail".
| moffkalast wrote:
| That man really had the gaul to do anything.
| duxup wrote:
| I suspect even just loaning powerful people money at that time
| was effectively being on them / a political act in the first
| place. Less so that it built up over time and surprised anyone.
| elmomle wrote:
| This is true to some extent, but his debtors had a strong
| interest in Julius Caesar's continued success--which means
| that even if his later actions were ones that the debtors
| would not have supported originally, their wagons had been
| hitched to his and they had a very strong incentive to
| support him.
| notahacker wrote:
| And for a slight twist on the same theme, MMM Ponzi schemer
| Sergei Mavrodi, who had no political ambition whatsoever, ran
| for the State Duma (which granted him immunity from
| prosecution: the only issue he turned up to vote on) after his
| scheme collapsed and was voted in by thousands of people whose
| only hope of seeing the savings he'd conned them out of again
| rested on trusting his promises to sort everything out
| mongol wrote:
| I wonder if Pontifex Maximus is the oldest title still in use.
| tourmalinetaco wrote:
| Depending on your viewpoint and what "counts", king is
| probably the oldest in a loose non-specific way. Though this
| did lead me down a rabbit hope where I found an interesting
| bit of trivia. The Akkadian word for king, "sar", is
| suspiciously close to the Slavic word for monarch, "tsar". I
| can't find any concrete evidence of a connection, but hey,
| it's fun to ponder whether it's coincidental or not.
| arethuza wrote:
| Isn't "tsar" derived from "Caesar" which was originally
| just someone's name?
| bee_rider wrote:
| I thought tsar was derived from Caesar? (Or is that just a
| folk etymology?)
| arrosenberg wrote:
| There is no connection. Tsar and Kaiser are both derived
| from the name Caesar, which became a royal title (along
| with Augustus) in the 300s under Diocletian.
| jihadjihad wrote:
| Doesn't seem related--looks like sar is Semitic in origin
| [0] while tsar comes to the language by way of Caesar [1].
|
| 0: https://en.wiktionary.org/wiki/%C5%A1arrum#Akkadian
|
| 1: https://en.wiktionary.org/wiki/tsar#Etymology
| mlfreeman wrote:
| I see people pointing out the "Caesar -> tsar" link (and
| I've heard that myself too), but I have to wonder if
| Akkadian "sar" somehow became "Caesar".
| saalweachter wrote:
| I believe "Caesar" derives from the word "caesaries",
| which means "hair/curls/beard-hairs".
|
| Romans at the time were using three names, the given name
| (Gaius), the family/clan name (Julius) and the cognomen
| (Caesar), which was originally a nickname that became
| hereditary to identify a particular branch of a family.
|
| So, the emperor of Russia was called the tsar because
| Gaius Julius or one of his ancestors was nicknamed
| "Curly" or maybe "Beardy".
| bee_rider wrote:
| All the statues I've seen of him make his hair look not
| so curly, and they don't show him having a beard. This
| open up the possibility that many royal titles are
| ultimately named after some Italian guy's magnificent
| chest hair (which would be hard to capture in a statue).
| saalweachter wrote:
| I'm with you all the way, but I'm _pretty sure_ cognomen
| had transitioned from nicknames to hereditary by Gaius
| Julius Caesar 's time. Also, clean-shaven was a
| relatively new fashion in Rome -- Cicero, one of Caesar's
| political enemies and of the previous generation, had a
| speech complaining about how women these days liked
| pretty clean-shaven younger men, and not the robust full-
| bearded old patricians, like they should.
| bee_rider wrote:
| Hopefully nobody wrote down the true source of his
| nickname so I can plausibly continue believing...
| Suppafly wrote:
| Another less popular theory is that it's from caesus
| which means to cut, which would be interesting because
| the cesarean section, also known as a C-section, was
| named after Caesar so it'd be a bit of circular
| definition.
|
| >because Gaius Julius or one of his ancestors
|
| Sextus Julius Caesar is the first Julii Caesares
| according to wikipedia. I just love that the term for all
| of them is Julii Caesares.
| BJones12 wrote:
| Etymonline [0] says 'tsar' comes from Caesar, which comes
| from the name Caius Julius Caesar. "sar" would therefore be
| unrelated.
|
| [0] https://www.etymonline.com/word/Caesar
| JumpCrisscross wrote:
| > _wonder if Pontifex Maximus is the oldest title still in
| use_
|
| The titles Kaiser and Czar literally derive from Caesar.
| Meanwhile, we still maintain consuls in diplomatic relations
| between countries who often have Senate houses filled with
| Senators.
| bee_rider wrote:
| I guess if Caesar was borrowing from the Pontifex Maximus,
| that title must pre-date those based on his name.
| tempodox wrote:
| Caesar was the _name_ of Gaius Iulius, not his title. That
| came later. Pontifex maximus was an honorific title before
| Caesar 's name became one.
| toyg wrote:
| Technically, the current _Pontifex Maximus_ is (or at least
| claims to be) the official inheritor of the original title
| (which is very likely to pre-date the creation of the
| surname Caesar in the Julia family).
|
| That's not the case for "senator", which turned into a
| generic word and it's not directly connected to the Senate
| of the Roman Republic.
| felipelemos wrote:
| Pharaoh predates it for some thousand years.
| mitthrowaway2 wrote:
| Where is that title still being used?
| slater wrote:
| Probably the same places 'Pontifex Maximus' is still in
| use.
| Ifkaluva wrote:
| "Pontifex Maximus" was originally the high priest of
| Jupiter in Rome, dating all the way back to the Roman
| monarchy and before the Roman republic. "Pontifex
| Maximus" is currently the official title of the pope (in
| a sense, still the highest priest in Rome). I don't think
| anybody still has the title "Pharaoh".
| nvader wrote:
| I would suggest Emperor of Japan, which started (according to
| legend) in 660 BC.
|
| I don't know if that has been continuous, though.
| pie420 wrote:
| aCoRdInG 2 lEgEnD
|
| ok here's a legend, the president of the USA has been a
| title in use since 500,000 B.C.
| dragonmost wrote:
| One of them is believable at face value. Your comment
| doesn't add to the conversation without disproving
| parent's point.
| xyst wrote:
| Too indebted to fail
| jonathanyc wrote:
| While studying anthropology I briefly heard about the theory
| that in monarchies the support of the nobility should be
| conceived of as an investment. It really stuck with me.
| leshow wrote:
| Ask the Greeks how that turned out.
| DrNosferatu wrote:
| That was a smokescreen to bailout (a second time) indebted
| French and German banks:
|
| https://www.corpwatch.org/article/eurozone-profiteers-how-ge...
|
| Also, economist Mark Blyth has written extensively about this.
| TacticalCoder wrote:
| > That was a smokescreen ...
|
| Yes and no. Yes it was a bail out of others.
|
| But Greece was 175% in debt. That's not the fault of the
| banks who lent money to Greece. FWIW it's widely documented
| too that, from the start, Greece cheated to get in the EU /
| Eurozone, with the help of one of the big four accounting
| firm, by completely cooking its book to hide how bad the
| economical situation of Greece was.
|
| So, yup, sure, "evil bankers". But somehow the greek
| _government_ managed to reach a debt of 175% of its GDP. That
| 's not the fault of capitalism / finance: that's the fault of
| government overspending.
| DrNosferatu wrote:
| Sure, there was this service to embellish the books
| provided by Goldman Sachs.
|
| But moving on from moral arguments, the crux is that only
| some 5% of the bailout money actually stayed in Greece [1].
|
| Furthermore, it takes two to tango: the banks did not
| diversify their debt portfolio [2], they lent because they
| wanted to, and, knew Greek debt implied higher risk. After
| all, that's why these loans commanded a higher interest
| compared to other sovereign debt.
|
| [1] https://amp.dw.com/en/most-of-greek-bailout-money-went-
| to-ba...
|
| [2] https://econreview.studentorg.berkeley.edu/a-tale-of-
| two-cou...
| VyseofArcadia wrote:
| Is the usage of "your banker" vs "the bank" a difference between
| British English and American English or a difference between
| 1940s English and modern English?
| jon-wood wrote:
| I think it's a period thing rather than a country one. People
| are likely to say they owe "the bank" over here in the UK as
| well. Back in the 40s though your bank manager had a lot more
| leeway in the debts they'd underwrite, and presumably had more
| personal investment in any loans that were defaulted on because
| they'd personally signed off on them.
| Ekaros wrote:
| There used to be much more personal relationships. So it was
| possible you had a banker a person you worked in with in the
| bank. Especially with a big bank. So certainly for them losing
| million might mean losing job, even if the bank itself was big
| enough to manage.
| lmm wrote:
| > Especially with a big bank.
|
| No, especially as a big _client_ , if anything more so at a
| small bank than a big one.
| pm215 wrote:
| As a British English speaker I would say "the bank". I think
| it's not so much a difference between 1940s English and modern
| English as between 1940s banking practices and today's
| (especially for the more well-to-do customer) -- it implies
| that you have a personal relationship with an individual person
| at the bank who knows you and manages your money for you, and
| that just isn't the way banks work these days, except perhaps
| for the mega-rich.
| vidarh wrote:
| Even today you "just" need qualify for slightly premium
| accounts - top ~2% or so will qualify at some banks - to get
| a named contact person at the bank you can contact, but of
| course at that level they still have far too many accounts
| per person to actively manage anything.
| Ekaros wrote:
| For my local European bank the barrier doesn't even seem to
| be that high only 150 kEUR loans or 50 kEUR investments.
| Then again we are not that rich country. Not that the
| services will be any different at that level, but hey you
| have named person!
| pm215 wrote:
| Mmm, I don't think that would be a sufficiently personal
| contact for anybody to seriously refer to that person as
| "my banker".
| vidarh wrote:
| I mostly agree, with the exception that I think the users
| of those accounts are split between people signing up for
| the limited extra features, and people signing up because
| it makes them feel important, and I suspect at least a
| subset of the latter would love to refer to them as
| "their banker". It's probably not a very large subset,
| though. And yes, it's pretentious.
| dartos wrote:
| I've never had a banker, so I just say "the bank"
| eesmith wrote:
| When my US high school US history teacher told us that
| expression in the 1980s, he used the "bank" variant, not
| "banker". He was also from the US.
| DrNosferatu wrote:
| Too big to fail, too big to bail!
| HPsquared wrote:
| Couldn't the causality be reversed here? If you're powerful,
| people are compelled to lend to you. See the situation with
| government bonds.
|
| So many "paradoxes" make perfect sense if you flip the causality.
| happyopossum wrote:
| > people are compelled to lend to you. See the situation with
| government bonds.
|
| Uhh, where are people compelled to buy bonds? People buy bonds
| when they think they're a good investment vehicle - not out of
| obligation.
| staticvoidstar wrote:
| I think OP means internal compulsion, not external
| compulsion. If I have tons of money why wouldn't I want to
| try to "buy" influence.
| crazygringo wrote:
| Government bonds aren't buying influence with anyone
| though.
|
| Campaign contributions, sure.
|
| But the idea that there is any kind of compulsion for
| citizens to buy government bonds seems false. I don't know,
| maybe in some dictatorships or something, but certainly not
| in western democracies.
| staticvoidstar wrote:
| I'm not thinking of normal people, I'm thinking of people
| that own companies that have more money than several
| countries' GDP
| philwelch wrote:
| https://en.wikipedia.org/wiki/Social_Security_Trust_Fund
| HPsquared wrote:
| For example it's implicit in the capital requirements for
| banks under Basel III.
| dstroot wrote:
| If you owe the bank a million, the bank owns you. If you owe the
| bank a billion, you own the bank.
| _spduchamp wrote:
| I've heard about a situation here in Toronto where a family had a
| double mortgage on their overvalued mansion. The bank would never
| get their money back on a power of sale, so instead of calling in
| loans, they just extended them more credit, and connected them
| with an investment manager to help them manage the money the bank
| was throwing at them.
|
| Wouldn't be nice to fail upward like that?
| duxup wrote:
| It happened to a lot of every day people during the mortgage
| crisis in the US.
|
| Bank would foreclose, let the family stay there until the house
| sold again, and some even PAID people to take care of the
| property / not damage it on the way out.
|
| My neighbors refinanced at a terrible time, they quit paying,
| foreclosure happened, then they actually worked out a new
| mortgage with the bank to stay.
| jordanb wrote:
| This is called "extend and pretend." It's what's happening now
| with office loans.
|
| Conversely during the GFC the Obama administration put a plan
| together to allow people to get their loan terms adjusted
| (write down). The plan was very long, bureaucratic, and
| difficult to follow. Nearly everyone who attempted to use the
| scheme failed to successfully complete it and receive the write
| down.
|
| When asked about this, an administration official explained
| that the plan was never designed to give homeowners relief.
| Instead the purpose was to dangle a carrot in front of their
| nose to get them to struggle and sacrifice to continue to make
| full payments as long as possible so that the banks didn't have
| to take losses as quickly.
| arghwhat wrote:
| _citation needed_
| Mathnerd314 wrote:
| "Bailout: How Washington Abandoned Main Street While
| Rescuing Wall Street", Neil Barofsky, page 157
|
| Note though that he is only quoting "off the record"
| conversations with Treasury Secretary Tim Geithner
| miketery wrote:
| reality is stranger than fiction. yes citation needed. but
| this seems banal compared to what things go down.
| jordanb wrote:
| You can google "Home Affordable Modification Program" and
| "foam the runway" [for the banks]. But here's one of many
| articles:
|
| https://prospect.org/economy/needless-default/
|
| "The cynical view is that HAMP worked exactly to the
| Treasury's liking. Both Senator Elizabeth Warren and former
| Special Inspector General for TARP Neil Barofsky revealed
| that then-Secretary Geithner told them HAMP's purpose was
| to "foam the runway" for the banks. In other words, it
| allowed banks to spread out eventual foreclosures and
| absorb them more slowly. Homeowners are the foam being
| steamrolled by a jumbo jet in that analogy, squeezed for as
| many payments as they can manage before losing their
| homes."
| throw_pm23 wrote:
| That's the problem with these "citation needed" remarks,
| those who say it never come back after they received the
| high quality citations.
| arghwhat wrote:
| Even if I didn't return, that's irrelevant - you are not
| engaging in a 1-1 discussion. You are posting on an open
| discussion for the entire internet to see. Most threads
| aren't back-and-forth between single individuals, but
| rather a chain of unique authors.
|
| I specified it because the comment very clearly lacked a
| citation due to touching controversial political
| subjects, and any future reader benefits from such
| citation if added.
|
| I could have made a lengthy complaint and specified
| concerns about not attaching supporting references - such
| as unclear attribution that can obscure possible
| underlying political agendas - but that itself would add
| nothing not covered by: citation needed. With a citation,
| people can judge for themselves.
| ta1243 wrote:
| My understanding in the US is you can simply walk away from a
| house in negative equity and not lose anything?
|
| In the UK, if you owe 200k, the bank takes over your house,
| sells it for say 150k and has 20k of costs you still owe them
| 70k, and you have to go bankrupt and spend the next decade in
| financial misery
| sddsdd wrote:
| This is called a non-recourse loan and the exact rules depend
| on the state. 12 states are non-recourse, including CA and
| TX.
|
| Credit standards and interest rates will be different on non-
| recourse loans, and cancelled debt typically has to be
| reported as income and taxed.
| actionfromafar wrote:
| Ha! That explains those weird videos of houses in
| neighbourhoods which looks like a neutron bomb or the
| Rapture. Cars left, coffe cups on the tables, sometimes
| facilities still working, TV on. Nobody there.
| newfocogi wrote:
| Could you share some links? I'm not familiar with this.
| happyopossum wrote:
| > 12 states are non-recourse, including CA and TX.
|
| This wording makes it sound like mortgages are required to
| be non-recourse loans in the 12 states, but that's not the
| case. 12 states _allow_ non-recourse loans, however they
| are not common for mortgages, with many lenders not even
| offering them.
| dmoy wrote:
| IIRC this is incorrect, at least for WA and CA. They only
| allow non recourse loans at least for purchase mortgages.
| sddsdd wrote:
| Primary home mortgages are all non-recourse in CA. Texas
| is similar. The exceptions are things like cash out
| refis, second mortgages, fraud.
| xenadu02 wrote:
| There's Fed Reserve research on this. The only thing
| recourse does is make borrowers a bit less sensitive to
| negative equity and only for high value homes:
|
| "Importantly, recourse affects default only through
| lowering borrowers sensitivity to negative equity.
| Unconditionally, there is no difference between the default
| rates in recourse and non-recourse states."
|
| "The effect of recourse is significant only for higher-
| appraised properties."
|
| > Credit standards and interest rates will be different on
| non-recourse loans
|
| "To the extent that borrowers in recourse states are less
| likely to default in response to negative equity, and are
| more likely to default in a lender-friendly way if they do
| default, lenders are likely to face smaller losses from
| default in recourse states. Thus, one might expect interest
| rates to be lower in recourse states. However, we find no
| evidence that they are; in fact, we find that loans are
| more expensive in recourse states."
|
| You can read the paper for yourself: https://papers.ssrn.co
| m/sol3/papers.cfm?abstract_id=1432437. Note that this paper
| (and many other sources) classify Texas as recourse but it
| is not. I'm not certain why that is.
|
| Many recourse states require the bank to credit you the
| full appraised value, not the actual foreclosure sale value
| - because banks often bid against themselves at foreclosure
| auctions and control bid acceptance so they effectively set
| the foreclosure price. Various things (wages, personal
| property, retirement accounts) are often excluded from
| recourse for your primary home. In some states like
| Minnesota a jury must determine the fair market value of a
| foreclosed home. Other states have strict requirements
| (like short filing deadlines) or lengthy procedures (all
| attorney billable hours!).
|
| This effectively makes non-foreclosure options way more
| popular - where a bank will ofter to take the deed and
| cancel the debt. In the end it is more cost-effective for
| the bank and better for the borrower.
|
| Furthermore even if you get a deficiency judgement the old
| proverb "You can't squeeze blood from a stone" applies.
| Someone who can't pay their mortgage is unlikely to have
| significant assets to draw on. All you get for your trouble
| is a bankruptcy filing from the borrower. After all that
| time and trouble your deficiency judgement gets discharged
| anyway.
|
| In the end recourse states mean more defaults happen
| through a voluntary non-foreclosure process but lending
| standards and interest rates are not that different and
| very few borrowers ever actually have a deficiency
| judgement let alone pay a dime toward one.
| happyopossum wrote:
| For the vast majority of mortgages in the US, the situation
| is the same. You owe the bank the full amount, even in a
| foreclosure or short-sale.
| ToucanLoucan wrote:
| > Wouldn't be nice to fail upward like that?
|
| It's almost like the banking system was designed by rich people
| to suit the needs of rich people or something.
|
| And to tax the poor but that's a more recent component.
| notavalleyman wrote:
| And if the banking system were actually designed by poor
| people to suit the needs of poor people.
|
| How would this scenario play out differently?
|
| A bank is underwater on loans to a certain house. If they
| pull the plug now, the bank takes a loss. If they work with
| the household to raise the household wealth, then they can
| recoup their loan amount from the new wealth.
|
| So what's your alternative solution, in the world where banks
| are designed for the poor?
|
| I ask because I don't see how the personal assets of the
| people who designed this system come into play, at all
| carlosjobim wrote:
| The alternative would be the removal of the banking system,
| not to re-make it.
| ToucanLoucan wrote:
| I think you would end up with a lot more institutions
| designed in the vein of Credit Unions rather than banks.
| The differences are subtle but noticeable. They still
| generate profit but they're non-profits, and so the profits
| they do generate are invested immediately back into the
| institution, by way of expanding their branch offices,
| providing lower rates or relief to members who are
| struggling, and other misc. community-focused projects.
| troyvit wrote:
| Wow apparently a lot of rich people and/or bankers are here
| judging by the downvotes.
| diab0lic wrote:
| > It's almost like the banking system was designed by rich
| people to suit the needs of rich people or something.
|
| Food for thought: If they didn't have an investment manager
| before this, and their primary asset was a big house they
| couldn't afford... these people weren't rich. They were
| working class, over extended themselves into a house, and got
| lucky.
|
| Your premise may have some validity but the story in this
| thread may be an example of a bank making a working class
| family rich.
| Nasrudith wrote:
| That is just a plain stupid conspiratorial collection of
| communist cliches which demonstrate the common symptom of
| bigotry; treating a disfavored group as though they were a
| hivemind monolith and being literally unable to comprehend
| that groups are made up of different people.
|
| Under that logic you get howlers of counter-factuals like
| "Kings were rich and therefore there was never a war between
| kings." It is up there with the abject stupidity of System of
| a Down accidentally going pro-monarchist by asking why don't
| presidents fight the war.
|
| Apply some actual thought, please. The job of a bank is to
| accumulate idle money to put to use in investment to generate
| returns. "Why does money accumulate in the money accumulator
| that generates more the more money is put inside of it?"
| ToucanLoucan wrote:
| > treating a disfavored group
|
| Hold on: in what possible way, by what conceivable metric,
| are the wealthy a disfavored group? Name for me any way a
| wealthy person struggles. It is some mad "leave the
| billionaire alone" cope to try and say the literally most
| privileged, by definition, class of folks on the planet are
| somehow oppressed.
|
| > and being literally unable to comprehend that groups are
| made up of different people.
|
| Of course they are, but as a group of people who share
| commonalities of experience, priorities, and oftentimes
| physical location and interaction, they necessarily also
| have more in common with one another than with people who
| are far disconnected from them. That is why people like
| Ellen Degeneres are taking pictures with George Bush:
| George Bush has far more in common with Ellen than Ellen
| does to the vast, vast, vast majority of her audience.
|
| This goes double for economic interest. A world that no
| longer privileges wealth, even putting aside bogeymen like
| taxation or confiscation, _will_ be unappealing to every
| wealthy person, because their wealth currently makes the
| world bend over backwards for them, and that 's _pretty
| sweet_ and nobody apart from the most principled people on
| the planet would willingly give that up.
|
| > Under that logic you get howlers of counter-factuals like
| "Kings were rich and therefore there was never a war
| between kings." It is up there with the abject stupidity of
| System of a Down accidentally going pro-monarchist by
| asking why don't presidents fight the war.
|
| I mean if you don't think it makes politicians of any
| stripe, kingly or otherwise, more ready to declare war if
| they know full well they themselves will not be expected to
| take up arms, then you have far more faith in people than I
| do.
|
| Though I don't know where you got that quote from, if it is
| indeed a quote. I'm a much bigger fan of "when the rich
| wage war, it's the poor who die." And I think you'd be hard
| pressed to find a conflict where, outside some strange
| exceptional occurrence, that wasn't quite true.
|
| > The job of a bank is to accumulate idle money to put to
| use in investment to generate returns. "Why does money
| accumulate in the money accumulator that generates more the
| more money is put inside of it?"
|
| I don't object to the _money accumulator_ accumulating
| money, I object to the money accumulator, when it
| malfunctions, having it 's money replenished with tax
| dollars it did not earn by performing it's function, from
| which the guy who owns the accumulator draws a substantial
| salary afterwards, despite overseeing when the accumulator
| stopped working.
| xyst wrote:
| This is how we end up in another 2008 crash. Regulators asleep
| at the wheel, again
| ToucanLoucan wrote:
| Not at all. They're not asleep, they knew about it. A few
| isolated people had reported exactly how 2008 was going to go
| down. The banks know the economy is underpinned by their
| assets, Uncle Sam is NEVER going to let them actually die,
| not in a million years. It would be the end-toll of the U.S.
| dollar as the defacto world currency, it would shred
| trillions of dollars in assets, far beyond the actual homes,
| I don't think Wall Street could ever _actually recover_ from
| that.
|
| And like, I don't even think that's necessarily wrong? Like I
| don't know how you would let some of these banks actually die
| in such a way that wasn't immensely worse for everyone. My
| only real issue with it is that these are for-profit
| businesses that funnel absolutely stressful amounts of money
| up the proverbial chain. If we just as a society want to say
| that we're comfortable with the notion of supporting banks
| with public money because ultimately letting them fail is
| worse for everyone, that's fine. I get that. I just don't
| think anyone at the top of those banks should be ripping
| millions of dollars a year out of that institution. At that
| point, that's not a business, it's more analogous to a
| utility and it should be owned and operated by the state.
| AnimalMuppet wrote:
| I saw at least once in 2008 that it was done right. I don't
| remember which institution, but it got taken over, the
| depositors were protected, the stockholders lost
| everything, and the management was replaced.
|
| And that's just about what you want, right? You want the
| depositors protected, both because they didn't make the bad
| loans, and because wiping them out is going to cause ripple
| effects that spread the damage. But the stockholders, the
| ones that profited (temporarily) from the bad loans? Wipe
| them out. The management? Wipe them out.
| Octoth0rpe wrote:
| Particularly relevant for twitter these days.
| _spduchamp wrote:
| The article is about origins of a quote and has variations on the
| numbers. 1,000 vs 1,000,000 100 vs 100,000,000 100 vs 100,000
|
| More than smart-ass quotes, I'm curios about these sorts of flips
| in risk/value in a general abstract sense. What is this sort of
| thing called? What are examples on other domains beyond lending?
| nottorp wrote:
| The quote needs adjusting for inflation though.
| edm0nd wrote:
| Owe your banker PS1k you are at his mercy; owe him PS1m the
| position is reversed (2019)
|
| Owe your banker PS1,245.21 you are at his mercy; owe him
| PS1,245,207.25 the position is reversed (August 2024)
|
| source: https://www.bankofengland.co.uk/monetary-
| policy/inflation/in...
| fiftyacorn wrote:
| We need to revisit this after the credit crunch -
|
| "Owe Your Banker PS1k You are at his mercy; Owe Him PS1M the
| position is reversed; But if everyone owes the banker PS1M then
| its everyone's problem"
| HPsquared wrote:
| And if something is everyone's problem, we just ignore it.
| datavirtue wrote:
| It's so efficient.
| margalabargala wrote:
| What I've heard is "if you owe $1 million, you have a problem.
| If you owe $1 billion, the bank has a problem. If you owe $1
| trillion, the government has a problem"
| habosa wrote:
| It's no coincidence the US, the most powerful country in the
| world, tries to get every other country to buy as much of its
| debt as possible.
|
| We owe everyone billions or trillions. They'd hate to see us (or
| our dollar) fall.
| sumanthvepa wrote:
| This is a bit of a misconception. The US need never formally
| default on its dollar obligations, as it can simply print
| dollars. It will never be in formal default, although, it would
| effectively have defaulted by inflating its debt away. The
| consequence for the US economy won't be pretty though.
| Supermancho wrote:
| > The US need never formally default on its dollar
| obligations, as it can simply print dollars
|
| The assertion was that bond holders would hate for the value
| of the maturation currency to fall. This is true, regardless
| of the currency origin.
|
| Beyond that, printing more dollars or defaults, would
| influence USD value to some degree, but would not guarantee a
| decline in overall attractiveness.
|
| One of the pillars of US hegemony is OPEC appointing USD as
| the preferred trading currency, over the last 50 years.
| Another is the industrial capability that the US exercised in
| WW2. It demonstrated that the US is capable of incomparable
| mobilization, growth of production and innovation, when
| properly motivated.
| tcgv wrote:
| > as it can simply print dollars. It will never be in formal
| default (...). The consequence for the US economy won't be
| pretty though.
|
| Argentina tried doing that, resulting in 100% inflation per
| month.
| beezlebroxxxxxx wrote:
| That's because, in a blunt sense, no one cares about the
| Argentinian peso except for (some) Argentinians. Many more
| people (practically everyone) care about the USD. So long
| as the US commands dominant global influence (in many
| senses) then the USD retains a "standard" quality that can
| be very flexible. Sustained deflation and loss of purchase
| power is far more dangerous than inflation, so long as you
| don't slip into hyperinflation. Everyone in Argentina, for
| instance, just immediately converted their money to USD.
| navigate8310 wrote:
| The US can keep printing money, as soon long as the
| services is offers is purely in USD. The demand cancels out
| the inflation from printing money by a small margin.
| petercooper wrote:
| _(This isn 't a political comment, honest! But..)_ After reading
| _The Art of the Deal_ , I get the impression this is a lesson
| Trump took to heart early in life. Always using other people's
| money to build and do things which, in turn, seems to give him
| more power than he might otherwise.
| rogerthis wrote:
| Same thing in other industries.
|
| Worked on big telecom billing back in the days. There was the
| average fish like me whose bills go to a normal flow when unpaid,
| and the big fish, like government, big companies, etc that not
| even have to pay their bills (for a time, of course).
| teddyh wrote:
| Instance from 1998:
| <http://freefall.purrsia.com/ff200/fv00123.htm>
| mncharity wrote:
| > to the British War Cabinet in 1945 [...] we have persuaded the
| outside world to lend us upwards of the prodigious total of
| PS3,000 million. The very size of these sterling debts is itself
| a protection. The old saying holds. Owe your banker PS1,000 and
| you are at his mercy; owe him PS1 million and the position is
| reversed.
|
| Curious. That leverage lies in hope of some repayment, yes? But
| my very fuzzy recollection (surfed a tome on financing WW2 years
| ago), is the US "loans" were made without informed hope of
| repayment - it was just politically unacceptable in the US to say
| that up front. So while there were assorted small post-war
| repayments (often non-monetary - leases and such), the bulk was
| written off. Does the size of an unrepayable debt affect
| negotiations on the size of a token repayment?
| edent wrote:
| I think you are mistaken. The UK only finished paying off these
| loans recently
|
| https://www.independent.co.uk/news/business/news/britain-pay...
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