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I watched the candidates for Vice President debating last night. Sarah Palin said the credit problem was caused by predatory lending. In other words, the evil banks made loans to people who didn't have good credit.

This raises an interesting question: What did the lenders know about the borrowers that the borrowers did not know about themselves?

In theory, the people who got loans from the so-called predators had enough monthly income to pay the mortgage plus their other living expenses. The real risk was that the borrowers would become sick, unemployed, unlucky, or irresponsible. Apparently we expect lenders to be better judges of the strangers asking for loans than the would-be borrowers are of themselves. How did the conversation between lender and borrower go in the old days, before predatory lending?

Banker: "Well, Billy Bob, you can afford this loan now, but based on that dumbass hat you're wearing, I give you two weeks before you drink a case of beer and drive your Chevy into a silo."

If a potential borrower has the monthly income to repay a loan, how much external risk should the banker accept? I think it's somewhere in the 2% range. In other words, a good banker should turn down a loan for someone who has a 2% or greater chance of being doomed during the early years of the mortgage, before any equity has built up.

Lenders should be required to assign a doom factor to all loan applicants, like a fortune teller. It would be interesting to know, for example, that Wells Fargo has assigned a 20% doom factor to you. Then you could find out on the same day that you aren't going to own a house, and you have a 1-in-5 chance of becoming a hobo by 2010.

In one of my earlier career incarnations I was a banker. My job for a few years included reviewing and approving commercial loans for doctors and dentists. One day I declined a loan application for a dentist who, according to his recent tax returns, didn't have enough cash flow to repay the loan. My boss at the time reviewed my work and turned the decline into an approval without even looking at the financials. When I asked why, he explained that the borrower had a Chinese name. I questioned the wisdom of this lending procedure and he directed me to the files of delinquent borrowers, challenging me to find any Chinese names in there. There weren't any. I'm not judging, just telling you what happened.

 
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0 Rank Up Rank Down
Feb 23, 2009

Payday loans or cash advance is now available. You can try this! Since the expenses and costs are too much for some, this can
be of help. Money – it has everything to do with how people make a living in this world; if they need a little bit more, some

people getpayday loans. The history of money and the history of payday loans are long and complex. There’s a story that money

was invented in Phenice, a town in Phoenecia, but the jury is still out on that one. Many cultures used currency of some

sort, as a unit of value relative to a certain commodity. Largely, money today is all based on a vastly complicated system of

credit. It is in the using of that credit that we at times come up short, sometimes due to an unexpected expense, which is

when we get payday loans. www.personalmoneystore.com
 
 
0 Rank Up Rank Down
Feb 23, 2009

Payday loans or cash advance is now available. You can try this! Since the expenses and costs are too much for some, this can
be of help. Money – it has everything to do with how people make a living in this world; if they need a little bit more, some

people getpayday loans. The history of money and the history of payday loans are long and complex. There’s a story that money

was invented in Phenice, a town in Phoenecia, but the jury is still out on that one. Many cultures used currency of some

sort, as a unit of value relative to a certain commodity. Largely, money today is all based on a vastly complicated system of

credit. It is in the using of that credit that we at times come up short, sometimes due to an unexpected expense, which is

when we get payday loans. www. personalmoneystore.com
 
 
-1 Rank Up Rank Down
Feb 23, 2009
Payday loans or cash advance is now available. You can try this! Since the expenses and costs are too much for some, this can be of help .Money – it has everything to do with how people make a living in this world; if they need a little bit more, some people get payday loans. The history of money and the history of payday loans are long and complex. There's a story that money was invented in Phenice, a town in Phoenecia, but the jury is still out on that one. Many cultures used currency of some sort, as a unit of value relative to a certain commodity. Largely, money today is all based on a vastly complicated system of credit. It is in the using of that credit that we at times come up short, sometimes due to an unexpected expense, which is when we get <a href="http://personalmoneystore.com/moneyblog/2009/02/17/history-of-money-and-payday-loans/">payday loans</a>.
 
 
0 Rank Up Rank Down
Feb 23, 2009
Payday loans or cash advance is now available. You can try this! Since the expenses and costs are too much for some, this can be of help . Money, it has everything to do with how people make a living in this world; if they need a little bit more, some people get payday loans. The history of money and the history of payday loans are long and complex. There's a story that money was invented in Phenice, a town in Phoenecia, but the jury is still out on that one. Many cultures used currency of some sort, as a unit of value relative to a certain commodity. Largely, money today is all based on a vastly complicated system of credit. It is in the using of that credit that we at times come up short, sometimes due to an unexpected expense, which is when we get <a href="http://personalmoneystore.com/moneyblog/2009/02/17/history-of-money-and-payday-loans/">payday loans</a>.
 
 
0 Rank Up Rank Down
Nov 10, 2008
Election Day is behind us, and America has a new leader. The U.S. has chosen “change” by electing Barack Obama. There is no doubt that change is in store for the United States. Whether the United States changes for the better or for the worse is yet to be seen. It’s obvious that Americans believe Obama will bring a positive change to our country. Obama has promised the U.S. a lot of things like lower taxes for the middle class, putting a timeline on the war in Iraq, and !$%*!$%* the federal budget “line by line.” What many Americans don’t realize is that Obama has also supported the elimination of the payday loan industry. Obama thinks doing away with the payday loan industry will protect low-income, and often minority, families from being victimized by predatory lenders. However, getting rid of the payday loans is a violation of our financial freedom. Maybe Obama will give America what it needs, but taking away our financial freedom isn’t a great start to creating positive change.

Click to read more on <a title="Payday Loans" href="http://personalmoneystore.com/moneyblog/2008/11/06/obama-to-bring-change-how-will-payday-loans-change/">Payday Loans</a>
 
 
Oct 7, 2008
Sensitivity with a lisp, anyone? Someone earlier raised their eyebrow at your comments wondering if they were racist regarding Chinese? How sensitive can they be? I too have chinese blood floating through my veins. Please do not mention facts that you witnessed first-hand regarding how responsible chinese homeowners are or the fact that lenders target responsible groups of people to lend to. HOW RACIST YOU ARE, SCOTT! Also, please do not mention dim sum or Charlie Chan, otherwise I might cover my mouth, take offense, and write the New York Times that Dilbert is...gulp...racist.

People wake up! You don't have the right to be overly sensitive because your Grandmother twice removed has a drop of Mohican in her. Nor do you have the right because you are Quaker from Nairobe or a Camel Driver from France. We all have a little of this and that in us. Let's drop the racist banner as It's getting quite old, Yes? It's about time that people are PEOPLE and not this race or that pointing our beige little fingers at each other, for Christ's/Allah's/Buddha's sake!
 
 
Oct 7, 2008
Slate has a word on this.

http://www.slate.com/id/2201641/pagenum/all/#page_start
 
 
Oct 7, 2008
Maybe the dentist's tax forms were not fully indicative of his cashflow...
 
 
Oct 6, 2008
See Adam's there are crazy people on your blogs. In fact, I think your theory that one nut/stalker is making most of the comments under different names is correct.
 
 
Oct 6, 2008
CINDYWHO POETRY:
(Snippets of comments woven together:)

"Stop creating a logical chain of logic. Stop empowering women to take back control of their own families. It makes no difference to me if the average police person is polka-dotted. I have a MENSA level I.Q. Just now, I fed my son a non-organic banana. These kids are more likely to be available for such "sex services".

We can profit from the poor, I watched my Grandmother lose an amazing job. Screw families. What do I know. I am a racist, angry, hysterical, confused, misguided, drug-addicted child abuser. ROTFLMAO!!!!"
 
 
Oct 6, 2008
I raised my eyebrows after reading your post, wondering if it was anti-Asian. Having an Asian grandparent, but understanding your history of non-racism, I had to pause for a few days before responding. From what I understand, you did not bring up the issue of the Chinese name, but brought up the issue of looking at the borrower's financial history. You took issue with your boss because he considered the Chinese name. So your original impression of the borrower was not racist. Yet you stepped out on a limb by mentioning this detail in your post. I guess it really depends on how upset you are over this issue. If you are angry over it, I would say you were racist, but since you tend not to get angry at people, I will assume that you are simply observing what had happened.

Concerning the doom factor, we already have credit scores. In the past, when you were a banker, they looked at credit scores and determined the doom factor from that score. These subprime loans, I believe, were a way to get around the doom factor, by giving people a loan with a variable rate. I'll admit that human nature is predatory anyway, and some people probably weren't concerned about the borrowers at all.

Concerning Sarah Palin, she was echoing the sentiments repeated by the media. As a fiscal conservative I cringed at this part of the debate, though otherwise she did well during the debates. I don't understand why there are so few vice presidential debates anyway. There used to be more when Dan Quayle was vice president.
 
 
+3 Rank Up Rank Down
Oct 5, 2008
Jeepers... I now know why I keep paying my loans promptly. Curse this Chinese genes of mine!
 
 
Oct 5, 2008
I dont know if someone has pointed this already -
http://docs.google.com/TeamPresent?docid=ddp4zq7n_0cdjsr4fn&skipauth=true&pli=1
 
 
Oct 5, 2008
Here's what the bankers knew that the new homeowners didn't know - the bankers knew that their financial institution was going to bundle that loan up at an increased value and sell it immediately AS AN ASSET to
another division of their great institution, and then they were going to use that as a basis to get yet more money, guaranteed by AIG or another insurance giant with superb AAA rating to leverage a LOT more money out of foreign investors, and everyone was going to get RICH!

The original bank who made the loan could care less about how well it performed - they were out of the picture in the first month.
We bought a property in 2000 and then refinanced it twice as rates came down. Each time the payment coupon book arrived to send our money to a different company than where the loan originated. The bank tried each time to talk us into some pretty creative financing. Thank god I wouldn't hear of it and my husband is the morgage bankers worst nightmare - a person obsessive with detail who is excellent at math. (Yep, he's an engineer).

I'm sure the bankers did not totally explain the ramifications of each interest rate hike to people who were so excited to own their own home and could have no concept of the fact that the bankers wouldn't care about their ability to repay. It flies in the face of what we've always believed about banks and how they operate.

That is the immoral aspect to all this. It uses our trust in the government's fundemental concern for the American public and uses that against us. Like this bailout. Very soon, many more of us are going to realize we've been played.
 
 
Oct 5, 2008
Reading some of these comments, perhaps the world would be a better place if people could tell the difference between being Chinese as a race rather than being Chinese as a nationality. Supprises me to this day that people expect because I have slitty eyes and yellow skin that my thoughts must be aligned with China the nation.
 
 
+1 Rank Up Rank Down
Oct 5, 2008
Kosmo60 wrote: "I received this interesting idea in an e-mail. I'm sure it would never get past Congress, and there would probably be some unintended consequences, like inflation, but it is nice to think about:

"I'm against the $85,000,000,000.00 bailout of AIG. Instead, I'm in favor of giving $85,000,000,000 to America in
a We Deserve It Dividend. To make the math simple, let's assume there are 200,000,000 bonafide U.S. Citizens 18 .

Our population is about 301,000,000 /- counting every man, woman and child. So 200,000,000 might be a fair stab at adults 18 and up. So divide 200 million adults 18 into $85 billon that equals $425,000.00."


I almost fell over a chair while reading this. 85,000,000,000 divided by 200,000,000 is only 425 dollars. That is about enough money to last a poor person a month. Congratulations on your math skills.

I find this rediculous because people are willing to believe that less than 1 percent of GDP can make everyone wealthy. Even if you take the 14 trillion (approximate) US GDP and divide by 200,000,000; you only get $70,000.
Yes, there is enough money out there to feed, clothe, and house everybody, but there isn't enough money to make everyone independently wealthy long term.
 
 
+1 Rank Up Rank Down
Oct 5, 2008
Hi Scott,

So the banks need to be protected form themselves and forced to implement something like Basel II (more information here: http://en.wikipedia.org/wiki/Basel_II )
 
 
+1 Rank Up Rank Down
Oct 5, 2008
Hi Scott,

maybe that is because most Chinese people I know here in America have a type of family lending where everyone contributes to the common pot, and then they lend it out to family members in time of need.

by the way, have you seen this: http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=12342127

Thought you would be interested.
 
 
Oct 5, 2008
So far Palin has been photo'ed as an attractive 40 lady. All the photos I've seen have her smiling (does she not frown or 'snarl' from time to time). Now she has gone on the attack with 'connections' between terrorists and (you know who). They must be getting really worried!!!

BillG2009
 
 
Oct 5, 2008
A large part of it was the push by Democrat-controlled government !$%*!$%* and laws to push mortgage lending to minority families, and non-discrimination is nice, yes, but they indeed where higher risk loans than the banks would have otherwise made left to their own druthers. And look what happened.

To be fair, some of it was people flipping houses trying to cash in on the real estate boom, so they lost their shirts but not the homes they were actually living in.
 
 
 
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