Culpability is a two way street. Yes no one forced these people to take loans just like no one forced the banks to give them. Yet the tax payer has bailed out the public company and the person who took the loan and could not pay get's fucked. Who exactly was the beneficiary there?
You think banks benefited? The top execs legally had to be paid no matter what according to the contracts they had. Unless you want to have the government telling corporations what contracts they can and can't offer that was fairly unavoidable. Outside the top brass, there was mass layoffs and redundancies of people who had done nothing wrong, had seen entire 25 year pensions wiped out and the ones who were lucky to survive are still getting squeezed hard with pay cuts, bonuses in deferred stock and more brutal working environment than ever. They didn't exactly benefit from it at the time, they were kept afloat to stop the entire economy crashing. They survived long enough to restructure, it was hardly benefiting, not to mention all the support and tertiary industries which got practically ruined.
If you don't see a clear conflict of interest between the relationship between bank and credit agencies who the banks pay money for ratings then you aren't looking hard enough. If they want a triple AAA rating and didn't get one from S & P, then they kicked up a fuss and threatened to take their business to moody's. This happened and has been documented and you know as well as I do this is wrong. Essentially ratings for cash.
Again though, decisions about ratings and those negotiations are held at a level unknown to most of the people who suffered and are now being villainsed. Of course that is a conflict of interest, but why should the entire industry be smeared as a result?
The people who could not afford to re-pay the loans did not bankrupt these companies, the companies screwed themselves by having lax lending requirements.
Yes, they did. Defaulting on loans in huge numbers is what crashed the economy and caused the whole crisis. Again though, its circular, you may counter by saying those people shouldn't have been loaned money in the first place, but bottom line, had they all paid and not defaulted, 2008 wouldn't have happened.
In regards to the UK and Ireland, they've tightened up their lending requirements which if they would have had in place at the start none of this would have happened. This is something they should have done long ago and we would be seeing very similar results like what happened to the Australian banking system.....................nothing. Because our banks had much stricter lending criteria and were not exposed to garbage debt, our banking system was essentially shielded from the effects.
You're missing the fact that Australia has a massive metals and mining industry that plays a big part in its economy, the UK and Ireland doesn't and FS made/makes up a huge portion of their GDP. As such, when this happened, there was nothing to balance it out. Same with Canada. So although it may sound like Australia did things right, it wasn't much different and was still loaning on money and trading on the CDO markets, it just wasn't as exposed and had other basic industries to fall back on.
and your 40% down number is bullshit, I can get a loan with 20% down and no mortgage insurance whatsoever. I can get a a loan with 5% down with mortgage insurance. Any bank that is putting a minimum 40% down as a lending requirement is going to have some serious issues attracting customers.
They are!! Banks are being heavily criticised now with populist nonsense like "we bailed them out and now they are keeping it all for themselves" from tabloids and the like and they are being very cautious about loaning money out. Rent demand is high, landlords are able to raise rent knowing that borrowing money is much harder there, its exactly what I said, the ugly side of heavy regulation.
Banks played a part and got off scot free and in tact with a big fat bonus cheque paid to execs, if you can't see who got screwed here you might need to adjust your moral compass.
No, they didn't get off scot free. Were you not paying attention to thousands of people being marched out without any notice during that time. Whole departments were being laid off, and the ones who stayed have been squeezed. They very much felt the pain, and still do. Once again, most of these people had nothing to do with the CDO and MBS markets, they just felt the pain throughout as their employer got hurt, so this "scot-free" argument needs some addressing.
Also, the only people being paid out big bonuses were the top brass who were contractually obligated to be paid one way or another, or they sold the stock they they bought with their own money got sold and they got paid. That isn't a bonus, that is selling something they own.
And it is not hating on anyone, these people who make a lot of money and important decisions fucked up big time so heaven forbid they become accountable for their actions. You certainly don't seem to have an issue with the person who took out the loan they could not afford being accountable, not sure why you have a problem with the top brass of these failed companies being held to a similar standard?
A lot of them got fired, and their reputation damaged. If other people still want to hire them or still rate their experience, who is anyone to stop that happening? Say a top IB'er goes to a hedge fund and earns $100m, is that not allowed now that they screwed up in their previous role?
What would you like to see happen to them?
