Question...

[Vernon in Virginia~Formerly Alaska]

[size=large]We pay approx. $17,000 a year in payments on this house we're buying. We have been here for 5 years. According to the statements, $5000 of that money goes on principle, and $12,000 goes to the bank in interest. OK. Here's my question. Can someone tell me how a banking institution could POSSIBLY fail in a system like that, even if morons were running it?

Inquiring minds want to know.[/size]

 

[Craig in Alabama]

Morons making too many loans for to much money to, to many people who have no way of making payments. Good thing is that most banks don't make risky loans..mainly the big banks. My local bank is in great shape as are much of the home town banks everywhere.

 

[ihuntrelics!]

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[Butch in Colorado]

And of those that do not, they default on that loan. The mortgage company cannot recoup the loan even if they foreclose on the home, they still never recoup their total losses. So, if they have too many of those risky loans that people default on, it ends up being a net loss for the mortgage company. Eventually all those net losses add up (or subtract down, depending on how you choose to look at it.). The mortgage company ends up owing to their lenders more than they can pay, then end up defaulting to their creditors and they go under.

Those companies that you borrow from lend and also borrow money as well. It is not always so simple as them having a buttload of money that they are sitting on. They invest in residential homes as well as corporate buildings. Building companies default because they cannot make their payments to the lenders. Only this time we are not talking thousands or a couple hundred thousand. We are talking millions. That lender has a building company default on a loan for 30, 40, or even 50 million dollars and how can they recover from that? If a good amount of builders default then chances are the lender cannot recover from that investment, they go under.

My two cents.

 

[Vernon in Virginia~Formerly Alaska]

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[Elson(La)]

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[Vernon in Virginia~Formerly Alaska]

[size=large]Last Tuesday, as President Obama got off the helicopter in front of the White House, he was carrying a baby piglet under each arm.

The squared away Marine guard snaps to attention, salutes and says: "Nice pigs, sir."

The President replies: "These are not pigs...these are authentic Arkansas Razorback Hogs. I got one for Secretary of State Hillary Clinton, and I got one for Speaker of the House Nancy Pelosi."

The squared away Marine again snaps to attention, salutes and says, "Excellent trade, sir."





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[MK_(MO)]

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[charlie (ky)]

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