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 Post subject: IndyMac's Demise
PostPosted: Fri Jul 11, 2008 10:24 pm 
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:? Senator Schumer should be blamed for IMB's early collapse. I'm not sure if IMB would have been able to weather through it's troubles, but Sen. Schumer definitely played a role in the $1.3billion run on the bank by customers.


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PostPosted: Sat Jul 12, 2008 1:43 pm 
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One letter brought down a multi-billion dollar company? Hardly. It may have been the straw that broke the camel's back, I'll give you that. Did he cause the company to lose 900 million dollars last year?
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The Pasadena, California-based lender specialized in so-called Alt-A mortgages, which didn't require borrowers to provide documentation on their incomes.
That's a good business practice! :roll: You can blame the mortgage crisis, but quite a few mortgage companies are coming through just fine because they stuck to good business practices and didn't lend money to people just because they said they were good for it.

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 Post subject: Re: IndyMac's Demise
PostPosted: Sat Jul 12, 2008 8:18 pm 
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Flying bird wrote:
:? Senator Schumer should be blamed for IMB's early collapse. I'm not sure if IMB would have been able to weather through it's troubles, but Sen. Schumer definitely played a role in the $1.3billion run on the bank by customers.


Schumer has a (D) next to his name. That makes him immune to such things. Move along; nothing to see here.

This concludes this message from the mainstream media.


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PostPosted: Sat Jul 12, 2008 8:55 pm 
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:roll:


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PostPosted: Sun Jul 13, 2008 6:07 am 
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This week I move out of a home that I lost due to IndyMacs' foul business practices. Am I enjoying watching the crash and burn? You bet! :D


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PostPosted: Sun Jul 13, 2008 11:00 am 
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ok... what is IndyMac?

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PostPosted: Sun Jul 13, 2008 12:39 pm 
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http://www.earthtimes.org/articles/show/indymac-what-went-wrong,451909.shtml
http://money.cnn.com/magazines/fortune/fortune500/2007/snapshots/2317.html

Basically, the #3 savings and loan institute in 2007 according to Fortune. They ranked 722 overall companies that year. Their lending practices were questionable because they did not require people to prove they could actually pay back the loans they were receiving, thus causing foreclosures or making the housing market crash worse. From the Earth Times article above ...

"CRL's interviews with former employees and a review of lawsuits in 10 states indicate that IndyMac pushed through loans based on inflated appraisals and income data that exaggerated borrowers' finances;worked hand-in-hand with mortgage brokers who misled borrowers about their rates and other loan terms and stuck them with unwarranted fees; andtreated many elderly and minority consumers unfairly.

In interviews and court documents, 19 former employees describe an atmosphere where the drive to close loans ruled even when IndyMac's own risk experts recommended against approvals. Most of the ex-employees who provided information for this report were mortgage underwriters who were supposed to be making sure borrowers could afford the deals. They say their efforts to do their jobs were hamstrung by higher-ups."

Since housing is one of the "big three" economic indicators, IndyMac's crash and burn by their own hand means that regulation of the lending industry needs to be a tad more restrictive.

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PostPosted: Sun Jul 13, 2008 1:03 pm 
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Consumer confidence is dwindling in all this mess. I wonder if the FDIC will release their list of the 90 institutions that may be in trouble...


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PostPosted: Sun Jul 13, 2008 9:33 pm 
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Two of them are Freddy Mac and Fannie Mae, the #1 and #2 loan companies in the country. The Feds have already announced their intent to "save" these companies, too.

Sen. Charles Schumer said Sunday the Bush administration is trying to "blame the fire on the person who calls 911" by suggesting he had a role in one of the costliest U.S. bank failures.

CNN.com


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PostPosted: Tue Jul 15, 2008 10:02 am 
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The Bush administration did not tell people to take out loans out for huge amounts because they could afford the monthly at the low interest rate. That is why I still rent; not in a financial position to pay for an overpriced house.

Apparently some congress people got nice deals on loans from certain companies. BOTH parties.

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PostPosted: Tue Jul 15, 2008 1:57 pm 
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The Bush Administration, and their poor handling of the Iraq war have put us into a huge economic recession though, the likes of which hasn't been seen in this country for years. Which certainly didn't help.

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PostPosted: Wed Jul 16, 2008 1:30 am 
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The Aceman wrote:
The Bush Administration, and their poor handling of the Iraq war have put us into a huge economic recession though, the likes of which hasn't been seen in this country for years. Which certainly didn't help.


Um, yeah... Keep drinking the kool-aid. Bush and the Iraq war are not to blame for EVERYTHING.

Again, Bush did not get people to take loans that they would be unable to repay when rates changed. Rates CHANGE; that is what they do. When rates change, your payment changes unless you have a loan that is at a fixed rate. People should learn more about the loans they are taking BEFORE they sign on the dotted line.

The other side of this is the institutions, and perhaps the mortage brokers themselves, that decided to issue loans to people that THEY SHOULD HAVE KNOWN would most likely ended up defaulting. Perhaps they felt the government would step in and "fix it".

Look at the other aspects of the situation:
The real estate agents inflated sale prices to increase their commissions...
The people thought they could afford overpriced houses because they could afford the monthly payment, AT THE RATE AT THAT TIME...
The lending institutions approved loans that they never should have, but the mortage brokers cared about their commissions...
Who knows WHAT the people that had the FINAL decision in approving the loans were thinking...

BAD BUSINESS DECISIONS ARE NOT THE ADMINISTRATION'S FAULT!!! No matter WHO is the President at the time.


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PostPosted: Wed Jul 16, 2008 3:31 pm 
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seanrj wrote:
Um, yeah... Keep drinking the kool-aid. Bush and the Iraq war are not to blame for EVERYTHING.

Again, Bush did not get people to take loans that they would be unable to repay when rates changed. Rates CHANGE; that is what they do. When rates change, your payment changes unless you have a loan that is at a fixed rate. People should learn more about the loans they are taking BEFORE they sign on the dotted line.

The other side of this is the institutions, and perhaps the mortage brokers themselves, that decided to issue loans to people that THEY SHOULD HAVE KNOWN would most likely ended up defaulting. Perhaps they felt the government would step in and "fix it".

Look at the other aspects of the situation:
The real estate agents inflated sale prices to increase their commissions...
The people thought they could afford overpriced houses because they could afford the monthly payment, AT THE RATE AT THAT TIME...
The lending institutions approved loans that they never should have, but the mortage brokers cared about their commissions...
Who knows WHAT the people that had the FINAL decision in approving the loans were thinking...

BAD BUSINESS DECISIONS ARE NOT THE ADMINISTRATION'S FAULT!!! No matter WHO is the President at the time.


The Aceman wrote:
Which certainly didn't help.


I rest my case.

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PostPosted: Wed Jul 16, 2008 10:17 pm 
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Sorry Aceman, as much as I would love to take this opportunity to destroy Bush, I don't really think you can link this one to him. There are two major factors influencing the current economic downturn, neither of which is the direct result of anything Bush/his administration have done.

First, the skyrocketing price of oil is stagnating the economy. People don't want to spend their money because they don't know how much they'll need tomorrow. Now you could claim that the Iraq War created tension in the Middle East, which led to rising prices, but that only tells half the story. Oil speculators (who rely on every factor from refinery fires to the '04 tsunami to, admittedly, Middle East unrest) are the main reason the price keeps rising.

The administration already responded with the economic stimulus package on this years taxes ($300 - $2000 cash money per household). If the partisan politics ever clears up in congress, they might pass laws to help alleviate the situation as well.

Second, the mortgage crisis has us in trouble. There's a pretty basic rule in money lending: the lender will (almost) always be greedy. That's why you had the negative amortization crisis a few years back. It's why lenders today convince so many people that interest-only loans are an economically feasible investment. It's also why banks invented the collateralized debt obligation (CDO) in the 90s. It meant they could loan money to people they shouldn't loan money to, and give the risk to American stock holders.

The security in these CDOs was the subprime home mortgage market. Big loan companies enticed people who would otherwise be unable to buy property by offering low APR, fixed rate mortgages. The only catch? They rolled over to adjustable rate after 2-5 years. After that reset, the mortgage holder would almost invariably be unable to pay. That posed no problem as long as interest rates held steady or went down. The mortgage holder could refinance onto a new 2/28 loan and be in the clear. What about when interest rates when up though?

Rates started climbing, people started defaulting. The defaults ran all the way up the chain, from the original lender, to the CDO shareholders. As more and more subprime mortgages caved, the CDOs they supported caved. Suddenly, investors were losing hundreds of thousands of dollars on what were supposed to be good investments. Adding to the chaos, there was no way to know what financial institutions held what CDO, and whether they were at risk of failure. Slowly, financial institutions started to feel the strain, and had to close down.

The weakening subprime market bled into the prime market relatively quickly. Worried lenders were more scrutinous on credit applications and interest rates went up. Suddenly, borrowers (who under normal circumstances could pay their mortgage) found themselves unable to make their payments.

Now, again, I ask, where's the administrations footprint on that?

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