Interesting follow-up to Friday’s failure of Venture Bank via the Tacoma News Tribune: Some banks in state risk failure
The best news to derive from Friday’s announced failure and sale of DuPont-based Venture Bank came in the form of a report from a Seattle TV and radio station.
But the news – that no other banks in Washington were in trouble and facing closure – was very wrong.
I believe that the remark above is referring to this report from KOMO news, which contained the (false) claim that “as of right now, there are no other banks in financial trouble in the state.”
Yes, Venture did fail.
But yes again, in fact, there are other banks in the state that might also fail.
Scott Jarvis, director of the state Department of Financial Institutions, said Monday that he thinks he knows how that incorrect information was relayed to the public.
“The consumer reporter called Brad,” Jarvis said. (That would be Brad Williamson, head of banks at DFI.)
The reporter asked if any other banks were in trouble. Williamson – on Friday evening – answered, “We are not closing any more banks this week.”
“Somehow that got translated for the 11 o’clock news that there are no other banks in trouble,” Jarvis said.
“The truth is that we did not close any more banks on Friday,” he said.
And he continued, “There is considerable strain on our banking system attributable to the expansion we had in commercial real estate growth.”
With Ben Bernanke out there claiming that “the recession is very likely over,” it will be interesting to see how many more local banks continue to fail under the continued financial stress of non-performing construction loans.
(C.R. Roberts, Tacoma News Tribune, 09.15.2009)
Pndscm » Sep 15, 2009 at 11:00 am
I’m starting a one-man bank run soon.
AMS » Sep 15, 2009 at 11:03 am
Unofficial Troubled Bank List:
http://cr4re.com/PBLSept1109.html
There are 11 from Washington, including Venture (10 others).
More can be found here:
http://www.calculatedriskblog.com/2009/09/problem-bank-list-unofficial-sept-11.html
Indy » Sep 15, 2009 at 11:47 am
My guess for Seattle implosion is Homestreet bank. Their homepage has that same strange, desperate feel to it that Countrywide did before it fell into BofA’s embrace.
Slumlord » Sep 15, 2009 at 11:56 am
AMS,
Thank you for posting the links! The unofficial list shows 11 Washington banks in trouble, the largest of which is Frontier Bank. Of the local banks that are in trouble, the three that I know about, Frontier, Citi (Lynnwood), and Mountain Pacific all have had to foreclose a large amount of land that was under development for houses. With problems in commercial real estate just beginning in earnest, we can probably expect the list of troubled (and failed) banks to grow.
This makes me wonder, does anyone know of any new banks in the last year? If so, what is the source of their capital?
Flying Ape » Sep 15, 2009 at 12:31 pm
I think the question is not how many banks will fail but how many will remain independent. The banking industry is healing through consolidation, albeit forced. Since many of the big banks were able to capitalize themselves, thanks to some part to the inflated equity rally, it wouldn’t be surprising if they gobble up local banks that could survive this crisis.
AMS » Sep 15, 2009 at 12:50 pm
RE: Slumlord @ 4 –
There are two things to consider here:
1. The number of troubled banks
2. The size of the troubled banks
While the list of troubled banks is growing, the size is growing even faster.
WaMu is by far the largest failure, and it dwarfs all others by comparison.
Some of the banks that have failed have been quite small, but others have been larger. Corus went down last week.
Compare:
VENTURE BANK:
“As of July 28, 2009, Venture Bank had total assets of $970 million and total deposits of approximately $903 million. In addition to assuming all of the deposits of the failed bank, First-Citizens Bank & Trust Company agreed to purchase approximately $874 million of the assets. The FDIC will retain the remaining assets for later disposition.”
“The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $298 million.”
CORUS:
“As of June 30, 2009, Corus Bank had total assets of $7 billion and total deposits of approximately $7 billion. MB Financial Bank will pay the FDIC a premium of 0.2 percent to assume all of the deposits of Corus Bank. In addition to assuming all of the deposits of the failed bank, MB Financial Bank agreed to purchase approximately $3 billion of the assets, comprised mainly of cash and marketable securities. The FDIC will retain the remaining assets for later disposition. The FDIC plans to sell substantially all of the remaining assets of Corus Bank in the next 30 days in a private placement transaction.”
“The FDIC estimates that the cost to the Deposit Insurance Fund (DIF) will be $1.7 billion.”
Sources found here: http://www.fdic.gov/news/news/press/2009/
So we have Venture at ~$970M with losses of ~$300M.
And we have Corus at ~$7,000M with losses of ~$1,700M.
Clearly size should be considered.
I think it should be noted that the brokered FDIC/JPMorgan Chase deal with the failure of Wamu cost the FDIC insurance fund nothing. Of course the assets are just buried in a bigger operation. Do you think the problem went away?
softwarengineer » Sep 15, 2009 at 12:53 pm
Let’s get the FDIC Chairwomen’s Opinion on Bank Failures:
States in part:
“….When asked what keeps her up at night, Bair, speaking at the Reuters Regulation Summit in Washington, said: “Probably a large bank failure…”
Then the same article states:
“…. An analyst with RBC Capital Markets said last week that between 50 and 150 U.S. banks could fail by early 2010, mostly those with no more than a couple of billion dollars of assets….”
Not to worry bubble brains, the bank failures will only amount to about $0.1-0.3 Trillion in the next several months. Hades, that’s ony a portion of the two $0.8 Trillion bailouts we’ve had the last 9 months….chump change.
But what scares me, if Bair is kept up all night worrying about the really big ones hitting the dust; why is the chance of that very, very small?
The rest of the URL:
http://www.reuters.com/article/Regulation08/idUSN0518804120080205
ray pepper » Sep 15, 2009 at 1:07 pm
Relatively easy to follow who will not make it. Follow the Cease and Desist orders. Look at the Cash on the hands for Loan Loss Reserves and you will see who goes bye bye.
I blogged about Venture 6 months ago after attending the meeting in Gig Harbor with their CFO and CEO. What buffoons blaming Paulson. Why did they continue to hold FRE and FNM to pennies? I asked the CFO. No stop loss orders?
All the little guys including Banner, Homestreet , Sterling, Frontier, and a few others will be absorbed into more powerful mid-level Mkt Cap size banks.
Just evolution of a capitalistic society where poor management and decision making results in new improved entities taking their place. In 3 years nobody will ever remember there was a Venture Bank, Homestreet, Frontier, Sterling…Except me….
TJ_98370 » Sep 15, 2009 at 1:25 pm
.
FWIW, a thread was started over in Forums about this topic awhile back.
Troubled / Untroubled Banks
Last December, the following Washington State based banks were listed to be in trouble as per the “Texas Ratio”; Westsound, City, Horizon, Venture, Seattle Savings, Anchor Mutual, and American Marine. Since then Westsound and Venture have failed.
Sniglet » Sep 15, 2009 at 1:45 pm
Just ask yourself which banks will be impacted the most if both residential and commerical real-estate prices in the Puget Sound were to drop another 60% from where they are now? Frankly, I am hard pressed to think that there would be any banks that wouldn’t be on the brink of insolvency in such a situation.
Let’s put this another way, if my prediction of an 80% price drop (from peak) takes place, I expect to see well over half of all local financial institutions go bust. The better question to ask is which banks are strong enough to survive massive price declines, and huge defaults? This list will be far shorter than the list of institutions which will fail.
Of course, just because I believe most financial institutions will become technically insolvent, this isn’t to say they will all close their doors. I suspect the FDIC and Federal Reserve will become extremely lax in enforcing capitalization rules, or sound bookkeeping, as they do anything they can to avoid more failures. As a result, we could have quite a few zombie banks.
mukoh » Sep 15, 2009 at 3:18 pm
RE: Sniglet @ 10 – Snig, if your predictions would come to RL someday then NO banks would survive a hit to their assets and capital requirements.
If FDIC were to actually lose a bank because of its lax enforcing that would be an unfolding national terror.
JF » Sep 15, 2009 at 3:40 pm
Horizon Bank is toast for sure.
mukoh » Sep 15, 2009 at 3:57 pm
RE: JF @ 12 – Care to share where you got that from?
Scott Weitz » Sep 15, 2009 at 3:57 pm
RE: Sniglet @ 10 –
Snig-
I would suggest most banks are technically insolvent already were we to already force them to mark to market. No one talks about the repeal of M2M, but its the single greatest catalyst to this quasi-recovery. Banks across the land are playing fantasy land with their books…and still going under….its going to be a long process to unwind this mess when we keep trying to prop it all up.
Kary L. Krismer » Sep 15, 2009 at 4:04 pm
RE: Scott Weitz @ 14 – But conversely, as we discussed before, in this case it’s really better to account for the issue as an estimate for bad debt rather than marking down assets where there is no market for them. Yes the estimates can be off, but we know the market is off.
Scott Weitz » Sep 15, 2009 at 4:15 pm
Kary-
That’s where we differ. I think there is a market for these assets….its simply lower than most want to admit.
I would be the first in line to buy a home if it made economic sense.
David Losh » Sep 15, 2009 at 4:25 pm
RE: Scott Weitz @ 16 –
I agree that the problem is the value of the assets which is sinking every day. The mortgages have been written and as long as people pay there may be some resolution. Banks may continue to get interest income, investor have a hope of being made whole.
in my opinion, over the next two years, as property prices continue to erode there will be a back lash. I think people will stop paying in greater numbers and want to renegotiate.
At some point the debt structure will have to be made more palatable. The claim this year that we may be at some bottom of pricing was a disservice. There is no way prices will stabilize where they are.
David Losh » Sep 15, 2009 at 4:38 pm
RE: mukoh @ 13 – RE: mukoh @ 11 –
What?
These banks that made construction loans a business model are in trouble, I don’t think that’s news to anybody.
Banks in general are in serious trouble for more reasons than the FDIC which is trying hard to look the other way. The global economy is hoping consumers will continue to make payments on debt. That’s the current float and the only float there is.
The reserves are tightly held in the event there is a run on the financial markets. If the assets are based in Real Estate and the pricing of the properties exceeds the value, core value of rental income as opposed to interest income, then why would investors hold on the hope people will not walk away? Why would a consumer pay on a $500K Note when the property is worth $350K, or $300, or $250K?
The market may not crash, but it will certainly slip away.
Scott Weitz » Sep 15, 2009 at 5:00 pm
RE: David Losh @ 17 –
Agreed….especially with this ‘disservice’ part. We have not seen capitulation in the real estate market yet (certainly not in the Seattle area). My personal take is that the bottom will not be seen until the huge shadow inventory of sellers comes onto the market and either allows the bank to foreclose (more likely) or sells at a fire sale price.
There are far too many people hanging by a thread and continuting to pay a mortgage that is for far more than the value of their home. Until they let go, we will not see a bottom.
Sorry for the pessimism. Its just how I see it. No amount of govt intervention can overcome the prevailing market forces in the long run. While I genuinely like Obama, I think this bailout is doing a disservice . Now we will have deflationary hard assets, and inflation with global commodities (gas, food) simply because we are destroying the value of a dollar….I heard the term ’skewfalation’ thrown out, but not many are talking about this concept…yet. But how is inflation not more broad, you ask? Killing the dollar does not save the value of our homes unless the Chinese all decide to relocate to California or Washington. True inflation must be based on increased demand…which we certainly do not have as all the stimulus is going to prop up banks, and allow municipalities to continue their wasteful ways…the is inflation purely based on currency devaluation.
mukoh » Sep 15, 2009 at 5:15 pm
RE: David Losh @ 18 – David I didn’t say that they weren’t in trouble or you reading somewhere else? I asked JF for info on why he believes horizon is next as I have some interests in their notes ATM.
And in #11 I agreed with Sniglet and actually if it were to happen that values would drop the predicted 80% most banks PERIOD would fail.
Can you please re-read?
Kary L. Krismer » Sep 15, 2009 at 5:44 pm
By Scott Weitz @ 16:
I doubt they could sell them for even the interest that they’ll collect on them. That there is a price doesn’t mean it’s correct. There’s just too much uncertainty regarding the underlying assets, and too little ability to economically determine it.
Imagine if you went to a used car auction, and you knew 30% of the cars there were cash for clunkers cars that had their engines destroyed, but you couldn’t inspect the cars. (Yes I know they can’t be sold, but pretend). That would greatly reduce the value of all the cars, far below 30%.
Kary L. Krismer » Sep 15, 2009 at 5:46 pm
On the valuation issue, what I can’t believe is that value was given to the 20% loans on 80/20 packages, or any seconds for that matter. Yes they’re technically secured, but very high risk. That institutional investors would buy such things is incredible to me. Those are the type of secured loans you sell to ignorant suckers.
ray pepper » Sep 15, 2009 at 6:04 pm
RE: David Losh @ 17 –
I think people will stop paying in greater numbers and want to renegotiate.
Ya think???????????? I guarantee it. Its happening as we speak and the amount of Short Sales and Foreclosures will soar far beyond we ever imagined.
People are not stupid………….Remember this everyone……………….**People are not stupid**…………………….some just take ALOT longer to recognize what they SHOULD do.
When the masses realize just how upside down they are, and will continue to be, the payments will stop and the short sale parade will continue on for many years.
However, don’t fight the FED. Some programs that will roll out in 2010 and 2011 will be very enticing for homeowners to stay put. BANK ON IT!
The masses will care far less about personal credit and be saving cash BIG TIME…Continue to watch personal bankrutcy’s soar as well. But, this is obvious.
Lastly, How about the Heloc 2nd’s????????? Do you really believe the masses will continue to make payments on these while upside down on the 1st. Be real!! Do you know the banks (Wells Fargo) are accepting 20-25% of value on these when threatened with Foreclosure on the 1st?
Its happening friends………..
S-crow » Sep 15, 2009 at 6:23 pm
By ray pepper @ 23:
20-25%? That is exceptionally high from what I’m seeing from short sales. Most 2nd’s I see are essentially wiped out give or take a gratuitous amount, particularly if the 1st and 2nd are with the same lender.
Orion » Sep 15, 2009 at 8:06 pm
I have been a KOMO news watcher for a long time, and while I have a certain fondness for them, they are often very sloppy with the facts (like the rest of our local tv news stations). If you’ve ever known some of the facts of a news story personally and then saw them present it on air, you have seem that they almost always get their facts wrong in some way (through distortion, omission, just all around sloppy reporting).
Local news is to journalism as McDonald’s is to cuisine.
David Losh » Sep 15, 2009 at 8:55 pm
RE: S-crow @ 24 –
You missed that part, people stop paying on seconds. People stop paying on firsts, or become spuratic in payments. After a year or two, with the Investor getting more nervous about a short sale or foreclosure, some people make an offer directly to the investor to cash out the Note for a per cent of value.
You have the right to buy your Note and more people will be doing that. It’s like settling for pennies on the dollar for unsecured debt.
ray pepper » Sep 15, 2009 at 9:31 pm
RE: S-crow @ 24 –
Forget the short sales S-crow… Heloc holders who have stopped paying are being offered incredible deals to extinguish the second position note. The owners continue to pay on the first and then negotiate the 2nd away. Two cases in point were 1st’s for 160k and seconds for 40-45k. The current home values are about 150k. Owners quit paying nearly a year ago on the 2nd’s and were offered 10-15k to wipe the debt clean.
Both owners of these Helocs (who were with Wells Fargo BTW) said HELL NO! They countered at 5k and the banks said no…LOL…The fact is they were willing to kiss away 75% amazes me. They know what we all know………Its not coming back for a very long time.
S-crow » Sep 15, 2009 at 9:32 pm
Hi Dave,
Didn’t misunderstand at all. Just thought I’d add that what lenders are receiveing on 2nds, in my experience, is just about nothing. Some may receive 20-25% of the outstanding owed, but I’m seeing substantially less.
AMS » Sep 15, 2009 at 9:54 pm
RE: S-crow @ 28 –
From my own personal observations, which is far from scientific, most first in line are seeing substantially less than the principal balance. If there were big equity, then it would just be sold…
Kary L. Krismer » Sep 15, 2009 at 10:07 pm
AMS, sometimes the second position lenders get paid something even if the first doesn’t get paid in full. It’s often just 1-5k. Their security isn’t worth squat, so they’ll accept a tiny amount. It would be interesting to compare the deals they make to the deals credit card companies make.
AMS » Sep 15, 2009 at 10:26 pm
RE: Kary L. Krismer @ 30 –
Just like “cash for keys.” It’s cheaper to pay and have a friendly separation.
I should add that I knew a guy who was paid to “just get the hell out.” He could have stayed and been evicted, but he moved and took the cash payment…
David Losh » Sep 15, 2009 at 10:34 pm
We are off and running in the next round of discussions about what will happen to banks in the near future.
Ray said people will not pay and I think that will be the case more and more.
My thought recently is that even if you have perfect credit there is nothing to buy with it. Who would run up debt in today’s economy? How many garage sales have you seen? How many plasma TVs are going to be up for sale because they were purchased with free money?
For that matter why would I get a new loan on a house when banks are up to their necks in foreclosures. Why wouldn’t I contact an investor directly, by pass the thieving bank servicers, and make a deal? The investor already has the money in play, the threat is another foreclosure to deal with, why not just renegotiate the terms?
Anybody?
mukoh » Sep 15, 2009 at 11:04 pm
RE: David Losh @ 32 – What you call an “investor” in banking circles is referred to as speculator. By a president of a bank who once told me that anyone below $5m+ in liquid is a speculator. That was 1999 theory described to me, which still holds true today.
An “investor” just to bypass the bank, underwriter, appraisal, etc. will offer you a generous 10% APR. At 60% LTV in todays dollars. Its a great deal, considering it won’t hit your credit report. There are plenty of those “investors” out there. They are called dentists, PACs, attorneys, etc…. You should run for it David, maybe set up a website investorsbypassgreedybanks.com? Its available I am sure.
David Losh » Sep 15, 2009 at 11:51 pm
RE: mukoh @ 33 –
If you look at loan modifications that servicers have stalled there are some people who have made claims that by going directly to the investor they have gotten better results.
Let me just point out that in your comment you said anyone $5M minus is a speculator and those are dentists CPAs, and attorneys. You are again correct. Those are speculators.
Investors deal in billions of dollars. There is no doubt that now and in the past they couldn’t be bothered, but today, and two years from now, I’m willing to bet the stock holders will want some resolution to a non performing asset inventory. Who’s the buyer pool? You? An investment group for cash? Why? How will this mess ever get packaged?
I don’t see how generating more mortgages on declining asset value is going to resolve anything. That is all predicated on the borrower continueing to pay. I’m really beginning to see that borrowers will stop paying.
Unemployment will force some people to stop paying then others will look at how fruitless it is to pay for thirty years on an asset worth 50% of the purchase price. OK, I’ll kick you a bone, 75% of purchase price.
As far as my domain names go they are a hobby. Some day maybe they will become something, maybe not, but they do seem to feed a lot of families.
Really kid what do you do for anybody?
A bank president? Come on. Was that at the same lunch with the owner of a huge title company or were you having a poker night?
Jonness » Sep 16, 2009 at 12:39 am
By Sniglet @ 10:
Isn’t this already the case? The game is to hide the losses, cook the books, report fake profits, and increase the stock price. Japan chose the same route. As you know, that led to a prolonged period of deflationary pain because the underlying problems were never addressed. The U.S. has not addressed any of what caused its problem either. They’ve simply covered it up and used the same methodology to try to cure the problem as what caused the problem in the first place (i.e. additional leverage).
MV=PQ. Bernanke can increase M to the max, but the V multiplier will continue down unless the banks start lending and consumers start spending. The banks can’t lend when they have cooked books (i.e. zombie banks). In addition, the consumer is too tapped out and jobless to spend in a sustained manner. (Hello Japan!)
The massive increase in the Fed’s balance sheet has created a large increase in excess reserves. Since M2 = monetary base (MB) * money multiplier (m), and m = 1/reserves (R), we are left with MB/R. Thus, rising PQ will face opposition despite the governments increased money printing. IOW, the increased reserves cause the money multiplier to decrease. And we still are left to service the new debt that led to the increased monetary base. This exerts back-pressure on economic expansion.
Nothing has changed, Sniglet, other than some cooked books and some market cheerleading. If this were not the case, the banks would still be marking their assets to market.
And for those who don”t think we’ll go the way of Japan, so what? If the the banks start lending, and the consumer starts spending, inflation won’t be much fun either. It’s game over for the U.S. for a good long while.
And now we’re getting so desperate we’re starting protectionist policies, which is something everyone agreed at the start that we should never do.
The machine continues to grow weirder.
meadows » Sep 16, 2009 at 8:51 am
RE: Jonness @ 35 –
Well that sure nails it…. I wondered why I enjoy zombie movies so much… so we have a zombie banking system and a zombie-lovin’ Bernanke who declares “The recession is over!” Actually more like vampires, since vampires need human enablers to watch over them during the day. That would be the media.
Astute political commentators have said that we have a Corporatocracy. The Transnational Corps buy the leadership, the leadership writes laws enabling more bait and switch swindling. They get richer, the rest of us poorer. Oh and sicker.
But Japan just overturned the long-running LDP, corporate whores since end of WW 2. Guess who originally encouraged this group? United States. Calvin Coolidge said, “The business of America is business.” China has proven that democracy isn’t necessary for functional capitalism. The oligarchy knows this full well. Propaganda is the curtain between Wizard Oz and the little fat guy. Also known as advertising.
That is the fundamental shift that must happen. The worship of “more money” and its delusional subsets of necessary destructive actions.
Such as homes as “investments” instead of places to live and raise families.
Kary L. Krismer » Sep 16, 2009 at 8:57 am
By meadows @ 36:
Well they can be both. But when you borrow more against it than what you did originally when you purchased, it’s no longer an investment (unless perhaps you invest the excess). Or if you get an interest only loan, or a loan that requires refinancing in X years, it’s less likely to be an investment. And when the house has a full bathroom in every bedroom, that’s really becomes more consumption than investing.
Scott Weitz » Sep 16, 2009 at 9:14 am
RE: Jonness @ 35 –
Good Post. I completely agree with a Japan style prolonged downward spiral. The similarities are abundant.
meadows » Sep 16, 2009 at 9:27 am
By Kary L. Krismer @ 37:
The_Dude_Abides » Sep 16, 2009 at 9:31 am
No doubt, it’s difficult to to be a community bank today. The money center banks took all the unsecured(very profitable) loans with their easy credit card underwriting; the government and shadow banking took away almost all of the portfolio real estate loans, and the shadow banks took away almost all of the car loans. With big corporations utilizing the bond and equity markets, all the small banks had left was small commercial loans – unsecured or secured w/ commercial real estate or perilous raw land.
Actually, it might be a good time to open a new community bank(no legacy toxic sludge), with shadow banking almost dead and the MC banks actually underwriting their loans.
Prediction – there will be more than 1000 community banks go under or merged the next 2 years. We lost 4600 in the 89-93 timeframe. Still way too many of them.
Urban Artist » Sep 16, 2009 at 9:39 am
I can understand if you become unemployed or a medical problem makes it hard to pay bills. I am not unfeeling I know there are many reasons why people get into trouble. However, I was raised that you pay what you owe even if you over paid. Why is it now okay for people to just walk away from their loan obligations just because the house lost value? OOps, maybe you should think before you buy during a bubble.
Cars lose value as soon as you drive off the lot does that mean it is okay to just walk away from the loan. I certainly don’t condone the banks in all this, they are greedy and dishonest on about every level. It just seems like the banks are not learning any lessons because they are getting bailouts and a lot of home owners aren’t learning a lesson either. I think if a bank made bad choices in investing then they should fail. That’s what happens to any other business that messes up. What is to prevent this all from happening again?
Both my husband and I have been laid off so we are working contract , it is not easy, but we pay our bills. I wish the Government State and Local, Banks and all the others that helped to create this mess would face the situation as it is and stop trying to cover it up and make it all pretty. It is just going to drag this out.
softwarengineer » Sep 16, 2009 at 10:10 am
We Can’t Ask This Bank CEO if He Thought the Recession is Over
States in part:
“… Finn M.W. Caspersen, the former chairman and chief executive officer of Beneficial Corp., was found dead from an apparently self-inflicted gunshot wound to the head, authorities said. He was 67….”
The rest of the URL:
http://www.bloomberg.com/apps/news?pid=20601087&sid=aXX9.46XaVU0
ray pepper » Sep 16, 2009 at 10:41 am
RE: Urban Artist @ 41 –
” Why is it now okay for people to just walk away from their loan obligations just because the house lost value?”
Urban, people ALWAYS have and ALWAYS will walk away from their credit obligations……………HOWEVER, now the sheer numbers will be so high that it will remain in the Media spot light for a decade….
What you must realize is we are a mobile society. When you own a home and can’t sell it you walk. We must move due to job, family, divorce, health, etc…………..In the past we could sell our homes. Now we cannot. So we walk in numbers.
The kicker is that when a homeowner decides its time to not pay anymore everything else goes with it. There was a great seminar given by the CEO of AXP. In a nut shell when the consumer gives away all they ever had with perceived value(their home) they most certainly will not pay virtually any other debts. Their credit is already destroyed and the “golden carrot” of great credit is nullified.
Then we add into the mix heath care collections on people , judgements, and in the end you get a Bankruptcy filing.
The positive spin is people will learn again how to live off of CASH and life goes on. Families need to do whats in the best interest of themselves and their families. Each and every homeowner that I witnessed personally walk away from their home in Washington, Nevada, and Arizona have made the correct decision for life must go on and the stresses they were experiencing were proving caustic on their family structure.
Its ALWAYS family first in my book. Societal expectations and morals must be thrown out the window if your family structure is suffering……………
Sorry about your recent lay off but again you and your husband must do whats in the best interests of you both. The family up the street paying 3600 per month on a home they can rent for 1200 has a different set of problems **potentially** that they must address at some point (or hopefully not.)
CCG » Sep 16, 2009 at 11:55 am
By Urban Artist @ 41:
Sadly, you and I were raised to be shark bait in a world of greedy, ignorant, irresponsible fools.
Sniglet » Sep 16, 2009 at 3:03 pm
The people who truly subscribe to this philosophy wouldn’t have over-extended themselves into silly loan products in the first place. It’s nice to hear that moral people still exist, I just think that most of the people who got themselves into trouble did so due to a lack of morals, so it is unlikely they will have some sudden epiphany now.
Neither do I have much sympathy for the institutions that were making the crazy loans in the first place. Everyone was playing a game, and now everyone suffers the consequences.
mukoh » Sep 16, 2009 at 5:57 pm
RE: David Losh @ 34 – David your comment/reply to the post proves that you are quite a few months behind the curve.
David Losh » Sep 16, 2009 at 6:29 pm
RE: mukoh @ 46 –
Really? How so? Did the recession end or did Bernanke say unemployment is still a problem in the most positive way possible.