This page is a permanent link to the reply below and its nested replies. See all post replies »
BlobbyMcBlobface · 100+, M
BlobbyMcBlobface · 100+, M
@Musicman I don't get it at all 🤔
BlobbyMcBlobface · 100+, M
@swirlie No and thanks for explaining. I'm in England so perhaps the translation was lost over the pond.
Musicman · 61-69, M
@BlobbyMcBlobface What was the answer? I couldn't see whoever responded to you.
swirlie · 31-35
@BlobbyMcBlobface
Okay, I'm familiar with the British banking system. If a bank loans out more money than it has on hand in deposits and everyone they lent money to suddenly defaulted on repaying their loans, the bank itself will go bankrupt, which is deemed 'bank failure'.
Okay, I'm familiar with the British banking system. If a bank loans out more money than it has on hand in deposits and everyone they lent money to suddenly defaulted on repaying their loans, the bank itself will go bankrupt, which is deemed 'bank failure'.
BlobbyMcBlobface · 100+, M
@swirlie I honestly didn't know, you learn something new every day 😊
swirlie · 31-35
@BlobbyMcBlobface
Back in 2008 in the USA, several major US banks went bankrupt as a result of American homeowners defaulting on their home mortgages when they came up for renewal.
People were unable to renew their mortgage because the interest rate was jacked up so high that nobody could afford it, so those people simply dropped off the keys to their house on the bank manager's desk and walked away.
Suddenly, the bank owned the house because the bank owned the mortgage on the house, but now there was no money coming into the bank because the home owner walked away from it!
What resulted was a total collapse of the US mortgage and lending institution which was caused by gross incompetency of US banking Executives. This resulted in the total failure of several very prominent US banks.
Anyone who had a simple bank account in any of those failed banks ended up losing everything they had in their savings accounts when those banks failed, which means the bank kept everything and those account holders were left with nothing.
That is what the question is about. The guy wants to know if you've ever had a bank account in a bank that failed?
Back in 2008 in the USA, several major US banks went bankrupt as a result of American homeowners defaulting on their home mortgages when they came up for renewal.
People were unable to renew their mortgage because the interest rate was jacked up so high that nobody could afford it, so those people simply dropped off the keys to their house on the bank manager's desk and walked away.
Suddenly, the bank owned the house because the bank owned the mortgage on the house, but now there was no money coming into the bank because the home owner walked away from it!
What resulted was a total collapse of the US mortgage and lending institution which was caused by gross incompetency of US banking Executives. This resulted in the total failure of several very prominent US banks.
Anyone who had a simple bank account in any of those failed banks ended up losing everything they had in their savings accounts when those banks failed, which means the bank kept everything and those account holders were left with nothing.
That is what the question is about. The guy wants to know if you've ever had a bank account in a bank that failed?
DeWayfarer · 61-69, M
@Musicman Here is her final reply that includes her first reply at the end...
This actually did happen. So I have no problem passing it on.
Back in 2008 in the USA, several major US banks went bankrupt as a result of American homeowners defaulting on their home mortgages when they came up for renewal.
People were unable to renew their mortgage because the interest rate was jacked up so high that nobody could afford it, so those people simply dropped off the keys to their house on the bank manager's desk and walked away.
Suddenly, the bank owned the house because the bank owned the mortgage on the house, but now there was no money coming into the bank because the home owner walked away from it!
What resulted was a total collapse of the US mortgage and lending institution which was caused by gross incompetency of US banking Executives. This resulted in the total failure of several very prominent US banks.
Anyone who had a simple bank account in any of those failed banks ended up losing everything they had in their savings accounts when those banks failed, which means the bank kept everything and those account holders were left with nothing.
That is what the question is about. The guy wants to know if you've ever had a bank account in a bank that failed?
People were unable to renew their mortgage because the interest rate was jacked up so high that nobody could afford it, so those people simply dropped off the keys to their house on the bank manager's desk and walked away.
Suddenly, the bank owned the house because the bank owned the mortgage on the house, but now there was no money coming into the bank because the home owner walked away from it!
What resulted was a total collapse of the US mortgage and lending institution which was caused by gross incompetency of US banking Executives. This resulted in the total failure of several very prominent US banks.
Anyone who had a simple bank account in any of those failed banks ended up losing everything they had in their savings accounts when those banks failed, which means the bank kept everything and those account holders were left with nothing.
That is what the question is about. The guy wants to know if you've ever had a bank account in a bank that failed?
This actually did happen. So I have no problem passing it on.
Musicman · 61-69, M
@DeWayfarer Thank you very much. Considering the FDIC insures bank accounts up to what? $250,000? I find it hard to believe that people lost their bank accounts. Now were these small savings and loans that didn't belong to the FDIC?
DeWayfarer · 61-69, M
@Musicman Some where not insured, some that where insured were eventually bailed out yet only the major ones. This caused a huge sink.
There's some arguing that this might happen again with Chase Manhattan. It's one of the biggest. Chase is buying up gold like mad currently.Yet will it be enough? 🤷🏻♂
There's some arguing that this might happen again with Chase Manhattan. It's one of the biggest. Chase is buying up gold like mad currently.Yet will it be enough? 🤷🏻♂
DeWayfarer · 61-69, M
@Musicman Think about this. FDIC is government run. They could only do so much without increasing the national debt outrageously, when it was already too high.
DeWayfarer · 61-69, M
@Musicman Guy I don't agree with the system as is. I really don't think capitalism works. It's always ever expanding. And the consequences of ever expansion usually end up on the little folk, as this case shows.
These major banks should have been allowed to fail. Not the little Banks. The major Banks took on far more than the little Banks combined.
Heck some of the major banks owned shares in the uninsured banks. And that is still the case.
Why is that allowed? 🤷🏻♂
If you take on a dependent you should be responsible for that dependant and pay into FDIC for them or loose your FDIC insurance yourself.
AI analysis of this very statement after the fact.
These major banks should have been allowed to fail. Not the little Banks. The major Banks took on far more than the little Banks combined.
Heck some of the major banks owned shares in the uninsured banks. And that is still the case.
Why is that allowed? 🤷🏻♂
If you take on a dependent you should be responsible for that dependant and pay into FDIC for them or loose your FDIC insurance yourself.
AI analysis of this very statement after the fact.
Concerns About Capitalism and Banking Systems
Your frustration with the current capitalist system, especially regarding how it impacts smaller entities and individuals, is quite valid. The dynamic you've described reflects broader criticisms of capitalism, particularly how it can lead to unequal burdens during economic downturns.
The Fragile Nature of Major Banks
Major banks often engage in complex interrelationships, including owning shares in smaller, uninsured banks, which complicates the accountability and risks involved. This interconnectedness means that the failure of one institution can have cascading effects, advocating for the idea that if larger banks take on risks through investments or partnerships, they should bear greater responsibility when crises arise.
Why Major Banks Are Protected
The rationale for protecting major banks often lies in the principle of "too big to fail." Policymakers fear that allowing major banks to collapse could trigger widespread financial instability, affecting countless people and businesses. However, this creates moral hazards, as it can encourage reckless behavior, knowing that taxpayer money or government intervention will likely cushion the fall.
Proposals for Accountability
Your suggestion about making major banks responsible for those they have connections with is interesting. Here are a couple of ways this could be structured:
Accountability for Dependent Banks: If a major bank holds shares in a smaller, uninsured bank, it could be mandated to contribute to insurance funds like the FDIC. This would create a safety net and lessen the potential fallout from a failure.
Incentives for Responsible Lending: Creating mechanisms that incentivize larger banks to engage in more responsible lending and investment practices could help align their interests with those of smaller banks and individuals.
Your insights reflect a common concern that the current banking system may require significant reforms to ensure it serves not just the interests of the major players, but the broader economy, including the well-being of everyday people. The balance between regulation and capitalism continues to spark intense debate, with many advocating for a system that holds powerful entities accountable for their impacts on the economy.
Your frustration with the current capitalist system, especially regarding how it impacts smaller entities and individuals, is quite valid. The dynamic you've described reflects broader criticisms of capitalism, particularly how it can lead to unequal burdens during economic downturns.
The Fragile Nature of Major Banks
Major banks often engage in complex interrelationships, including owning shares in smaller, uninsured banks, which complicates the accountability and risks involved. This interconnectedness means that the failure of one institution can have cascading effects, advocating for the idea that if larger banks take on risks through investments or partnerships, they should bear greater responsibility when crises arise.
Why Major Banks Are Protected
The rationale for protecting major banks often lies in the principle of "too big to fail." Policymakers fear that allowing major banks to collapse could trigger widespread financial instability, affecting countless people and businesses. However, this creates moral hazards, as it can encourage reckless behavior, knowing that taxpayer money or government intervention will likely cushion the fall.
Proposals for Accountability
Your suggestion about making major banks responsible for those they have connections with is interesting. Here are a couple of ways this could be structured:
Accountability for Dependent Banks: If a major bank holds shares in a smaller, uninsured bank, it could be mandated to contribute to insurance funds like the FDIC. This would create a safety net and lessen the potential fallout from a failure.
Incentives for Responsible Lending: Creating mechanisms that incentivize larger banks to engage in more responsible lending and investment practices could help align their interests with those of smaller banks and individuals.
Your insights reflect a common concern that the current banking system may require significant reforms to ensure it serves not just the interests of the major players, but the broader economy, including the well-being of everyday people. The balance between regulation and capitalism continues to spark intense debate, with many advocating for a system that holds powerful entities accountable for their impacts on the economy.