Comments on: Elizabeth Warren Talks TALF

By: Hugh

Hugh — Mon, 25 May 2009 05:21:56 +0000

Because in a deflationary period you are lending out money, an appreciating asset, in return for what is likely to be an asset losing value. On top of that, banks would prefer to use their money where their profit margins are highest and that is in a return to speculative ventures and gouging customers.

By: MarkH

MarkH — Mon, 25 May 2009 05:17:08 +0000

Does this practice also exist for a bank extending a line of credit to a small company? If so, when they reduce the amount of credit based on the current crisis then it makes no sense for that to affect the company’s credit rating.

There are truly a lot of things out of whack in this economy.

By: MarkH

MarkH — Mon, 25 May 2009 05:13:51 +0000

Warren notes primary lending isn’t taking place. And the reason is that normal lending is a losing proposition at the moment for most banks.

“a losing proposition”? How so?

By: masaccio

masaccio — Sun, 24 May 2009 20:52:51 +0000

Maybe when democrats take control of congress?

By: kyeo

kyeo — Sun, 24 May 2009 20:25:20 +0000

I just have the biggest crush on her.

By: earlofhuntingdon

earlofhuntingdon — Sun, 24 May 2009 19:18:20 +0000

“Repricing” credit is a euphemism for bait and switch: enticing consumers with one rate, while building a business model on and quickly charging another higher rate.

That “rate” practically includes, but owing to various legal fictions excludes, late payment and default charges and charges for exceeding credit limits, as well as interest rate hikes.

It also includes surprise adjustments in the amount of a debtor’s permitted credit. When a lender arbitrarily cuts a borrower’s available credit from five or ten grand to two hundred dollars over the amount already borrowed, it lowers the borrower’s credit rating. That’s because credit rating depends on several factors, one of which is the amount borrowed as a percentage of the amount available to borrow. A lower credit rating - even when it is manufactured by the lender, with no change in the borrower’s income, debt load or repayment history - “justifies” charging a higher rate of interest.

Consumer lending is rife with legalized corruption. Time for Congress to clean it up. Now.

By: masaccio

masaccio — Sun, 24 May 2009 18:57:41 +0000

She limits herself to scholarly discussions, filling the role she was given. On tv she has that calm we see in the President, fairly characteristic of academics when they get into the public eye.

Just reading enough to write these posts gives me fits, I can’t see how she manages such self-control.

By: masaccio

masaccio — Sun, 24 May 2009 18:49:03 +0000

Exactly. The process of securitization made more sense when pension fund managers and insurance company portfolio managers thought they understood risk well enough to try to tailor their portfolios to specific degrees of risk tolerance. That isn’t so any more, at least we can hope that the leaders don’t trust those thugs at the big houses.

By: newtonusr

newtonusr — Sun, 24 May 2009 18:46:52 +0000

I understand where you’re going with this.
If I were Congress, however, I would have picked someone without her wicked-smarts. There’s always the chance she will find a way to break through.

By: Teddy Partridge

Teddy Partridge — Sun, 24 May 2009 18:42:02 +0000

It’s as if the powers-that-be have put Elizabeth Warren out there to be the public face of compassion, caring, concern, and questioning — while at the same time ensuring she has absolutely no power to enact, accomplish, regulate, or punish. She becomes the face of Washington’s apparent unwillingness to free itself from its banker-owners.