It is said that Julius Caesar borrowed so much money to become elected pontifex maximus that he essentially forced his creditors to support his political ambitions in the hope of seeing some payment on the debts.
So, essentially, ‘twas ever so.
notahacker 42 days ago [-]
And for a slight twist on the same theme, MMM Ponzi schemer Sergei Mavrodi, who had no political ambition whatsoever, ran for the State Duma (which granted him immunity from prosecution: the only issue he turned up to vote on) after his scheme collapsed and was voted in by thousands of people whose only hope of seeing the savings he'd conned them out of again rested on trusting his promises to sort everything out
duxup 42 days ago [-]
I suspect even just loaning powerful people money at that time was effectively being on them / a political act in the first place. Less so that it built up over time and surprised anyone.
elmomle 42 days ago [-]
This is true to some extent, but his debtors had a strong interest in Julius Caesar's continued success--which means that even if his later actions were ones that the debtors would not have supported originally, their wagons had been hitched to his and they had a very strong incentive to support him.
xyst 42 days ago [-]
Too indebted to fail
pomtato 41 days ago [-]
hahaha gave me a chuckle.
jonathanyc 42 days ago [-]
While studying anthropology I briefly heard about the theory that in monarchies the support of the nobility should be conceived of as an investment. It really stuck with me.
moffkalast 42 days ago [-]
That man really had the gaul to do anything.
mongol 42 days ago [-]
I wonder if Pontifex Maximus is the oldest title still in use.
JumpCrisscross 42 days ago [-]
> wonder if Pontifex Maximus is the oldest title still in use
The titles Kaiser and Czar literally derive from Cæsar. Meanwhile, we still maintain consuls in diplomatic relations between countries who often have Senate houses filled with Senators.
tempodox 42 days ago [-]
Caesar was the name of Gaius Iulius, not his title. That came later. Pontifex maximus was an honorific title before Caesar's name became one.
bee_rider 42 days ago [-]
I guess if Caesar was borrowing from the Pontifex Maximus, that title must pre-date those based on his name.
toyg 41 days ago [-]
Technically, the current Pontifex Maximus is (or at least claims to be) the official inheritor of the original title (which is very likely to pre-date the creation of the surname Caesar in the Julia family).
That's not the case for "senator", which turned into a generic word and it's not directly connected to the Senate of the Roman Republic.
nvader 42 days ago [-]
I would suggest Emperor of Japan, which started (according to legend) in 660 BC.
I don't know if that has been continuous, though.
pie420 41 days ago [-]
[flagged]
dragonmost 41 days ago [-]
One of them is believable at face value.
Your comment doesn't add to the conversation without disproving parent's point.
tourmalinetaco 42 days ago [-]
Depending on your viewpoint and what “counts”, king is probably the oldest in a loose non-specific way. Though this did lead me down a rabbit hope where I found an interesting bit of trivia. The Akkadian word for king, “šar”, is suspiciously close to the Slavic word for monarch, “tsar”. I can’t find any concrete evidence of a connection, but hey, it’s fun to ponder whether it’s coincidental or not.
arrosenberg 42 days ago [-]
There is no connection. Tsar and Kaiser are both derived from the name Caesar, which became a royal title (along with Augustus) in the 300s under Diocletian.
jihadjihad 42 days ago [-]
Doesn't seem related--looks like šar is Semitic in origin [0] while tsar comes to the language by way of Caesar [1].
Isn't "tsar" derived from "Caesar" which was originally just someone's name?
mlfreeman 42 days ago [-]
I see people pointing out the "Caesar -> tsar" link (and I've heard that myself too), but I have to wonder if Akkadian "sar" somehow became "Caesar".
saalweachter 42 days ago [-]
I believe "Caesar" derives from the word "caesaries", which means "hair/curls/beard-hairs".
Romans at the time were using three names, the given name (Gaius), the family/clan name (Julius) and the cognomen (Caesar), which was originally a nickname that became hereditary to identify a particular branch of a family.
So, the emperor of Russia was called the tsar because Gaius Julius or one of his ancestors was nicknamed "Curly" or maybe "Beardy".
bee_rider 42 days ago [-]
All the statues I’ve seen of him make his hair look not so curly, and they don’t show him having a beard. This open up the possibility that many royal titles are ultimately named after some Italian guy’s magnificent chest hair (which would be hard to capture in a statue).
saalweachter 42 days ago [-]
I'm with you all the way, but I'm pretty sure cognomen had transitioned from nicknames to hereditary by Gaius Julius Caesar's time. Also, clean-shaven was a relatively new fashion in Rome -- Cicero, one of Caesar's political enemies and of the previous generation, had a speech complaining about how women these days liked pretty clean-shaven younger men, and not the robust full-bearded old patricians, like they should.
bee_rider 42 days ago [-]
Hopefully nobody wrote down the true source of his nickname so I can plausibly continue believing…
NeoTar 41 days ago [-]
Another fun idea which has been proposed is that it’s an ironic nickname - so rather than ‘Baldy’ (which is you see busts of Caesar is certainly plausible) people called him or his ancestors ‘hairy’.
saalweachter 41 days ago [-]
Are you familiar with the Three Stooges?
Suppafly 42 days ago [-]
Another less popular theory is that it's from caesus which means to cut, which would be interesting because the cesarean section, also known as a C-section, was named after Caesar so it'd be a bit of circular definition.
>because Gaius Julius or one of his ancestors
Sextus Julius Caesar is the first Julii Caesares according to wikipedia. I just love that the term for all of them is Julii Caesares.
bee_rider 42 days ago [-]
I thought tsar was derived from Caesar? (Or is that just a folk etymology?)
42 days ago [-]
felipelemos 42 days ago [-]
Pharaoh predates it for some thousand years.
mitthrowaway2 42 days ago [-]
Where is that title still being used?
slater 42 days ago [-]
Probably the same places 'Pontifex Maximus' is still in use.
Ifkaluva 42 days ago [-]
"Pontifex Maximus" was originally the high priest of Jupiter in Rome, dating all the way back to the Roman monarchy and before the Roman republic. "Pontifex Maximus" is currently the official title of the pope (in a sense, still the highest priest in Rome). I don't think anybody still has the title "Pharaoh".
mr_toad 41 days ago [-]
For a while the Pharaoh did actually reside in Rome, starting with Caesar Augustus (who was also Pontifex Maximus). Augustus was hailed as a god by both the Roman imperial cult and the pharaonic cult.
Maximinus Daza (the eastern Roman emperor during the Tetrarchy) was the last holder of the title Paraoh, and I think he reigned from Nicomedia, in Anatolia.
It’s funny that Pharaoh died out with the rise of christianity, but Pontifex lived on.
Who's the pharaoh currently residing in the Vatican?
EGreg 42 days ago [-]
Indeed. Shill your own bag. Saw it with Bitcoin too. And every company VCs invest in and the public invests in through wall street.
“Too big to fail”.
Rygian 42 days ago [-]
Related, on a broader level: “Kill one man, and you are a murderer. Kill millions of men, and you are a conqueror. Kill them all, and you are a god.
Thoughts of a Biologist” (Jean Rostand)
> To sate the lust of power; more horrid still, The foulest stain and scandal of our nature Became its boast — One Murder made a Villain, Millions a Hero. — Princes were privileg’d To kill, and numbers sanctified the crime. Ah! why will Kings forget that they are Men?
That’s a gorgeous quote! Something Lord Henry in “The picture of Dorian Gray” would say.
mncharity 41 days ago [-]
A variant I fuzzily recall (regards South Asia banditry?), which retains the TFA's power shift, is something vaguely like "kill one and they will hang you, kill a hundred and they will negotiate with you".
tuyiown 41 days ago [-]
My middle school was named after Jean Rostand, and we never heard that quote somehow, this is hilarious.
s_dev 42 days ago [-]
You get this quote in Civ VI if you research banking. They attribute it to Getty as well.
First place I'd heard the quote. Something I learned via Civ, an interesting idea no matter who it is attributed to.
BuyMyBitcoins 42 days ago [-]
I’ve always appreciated Civ’s quotes. I still quote the ones from IV.
habosa 42 days ago [-]
It’s no coincidence the US, the most powerful country in the world, tries to get every other country to buy as much of its debt as possible.
We owe everyone billions or trillions. They’d hate to see us (or our dollar) fall.
sumanthvepa 42 days ago [-]
This is a bit of a misconception. The US need never formally default on its dollar obligations, as it can simply print dollars. It will never be in formal default, although, it would effectively have defaulted by inflating its debt away.
The consequence for the US economy won't be pretty though.
Supermancho 42 days ago [-]
> The US need never formally default on its dollar obligations, as it can simply print dollars
The assertion was that bond holders would hate for the value of the maturation currency to fall. This is true, regardless of the currency origin.
Beyond that, printing more dollars or defaults, would influence USD value to some degree, but would not guarantee a decline in overall attractiveness.
One of the pillars of US hegemony is OPEC appointing USD as the preferred trading currency, over the last 50 years. Another is the industrial capability that the US exercised in WW2. It demonstrated that the US is capable of incomparable mobilization, growth of production and innovation, when properly motivated.
fuzztester 41 days ago [-]
>It demonstrated that the US is capable of incomparable mobilization, growth of production and innovation, when properly motivated.
B.effing.S.
What hyperbole and hubris.
This is American exceptionalism at its "shining" worst. The incredible stupidity of that statement (to use superlatives like incomparable, as you did) would be hard to believe among rational people, if not already seen in writing, as above...
That capability you talk of, could apply to any country, when ”properly motivated".
Example: India. 1947.
Removed the British as the colonizer, non-violently, except for maybe sporadic incidents, and the 1857 rebellion.
Motivations and results in the same ball park as your example, as regards mobilization (of the population to drive out the British).
Production and innovation not relevant in this case, except maybe innovation of overthrowing an oppressor non-violently.
Supermancho 38 days ago [-]
> That capability you talk of, could apply to any country, when ”properly motivated".
This does not affect the historical narrative. eg I'm sure some other nation could have created an atomic bomb first, but they didn't. Ultimately, regardless of how un/deserved the confidence in the US economy is, the confidence exists and that has been part of the reasoning that the USD is the reserve currency of choice today.
Good luck with whatever.
fuzztester 35 days ago [-]
Jeez. More poor logic, if logic at all.
Rest of the reply coming in a bit.
tcgv 42 days ago [-]
> as it can simply print dollars. It will never be in formal default (...). The consequence for the US economy won't be pretty though.
Argentina tried doing that, resulting in 100% inflation per month.
beezlebroxxxxxx 41 days ago [-]
That's because, in a blunt sense, no one cares about the Argentinian peso except for (some) Argentinians. Many more people (practically everyone) care about the USD. So long as the US commands dominant global influence (in many senses) then the USD retains a "standard" quality that can be very flexible. Sustained deflation and loss of purchase power is far more dangerous than inflation, so long as you don't slip into hyperinflation. Everyone in Argentina, for instance, just immediately converted their money to USD.
neilwilson 41 days ago [-]
Except Argentine debt is largely in US dollars, so they didnt do that.
The US dollar bit is the problem.
From the perspective of anybody outside the US the US dollar is a bond - a zero percent bearer bond.
Therefore it is nothing more than a bond swap with a change in interest rate and term. The entity “owing” doesn’t change
79a6ed87 41 days ago [-]
>Except Argentine debt is largely in US dollars, so they didnt do that.
Exactly, just between a 20 and a 30 percent of our debt is in Argentine pesos. [0]
The US can keep printing money, as soon long as the services is offers is purely in USD. The demand cancels out the inflation from printing money by a small margin.
42 days ago [-]
HPsquared 42 days ago [-]
Couldn't the causality be reversed here? If you're powerful, people are compelled to lend to you. See the situation with government bonds.
So many "paradoxes" make perfect sense if you flip the causality.
happyopossum 42 days ago [-]
> people are compelled to lend to you. See the situation with government bonds.
Uhh, where are people compelled to buy bonds? People buy bonds when they think they're a good investment vehicle - not out of obligation.
HPsquared 42 days ago [-]
For example it's implicit in the capital requirements for banks under Basel III.
I think OP means internal compulsion, not external compulsion. If I have tons of money why wouldn't I want to try to "buy" influence.
crazygringo 42 days ago [-]
Government bonds aren't buying influence with anyone though.
Campaign contributions, sure.
But the idea that there is any kind of compulsion for citizens to buy government bonds seems false. I don't know, maybe in some dictatorships or something, but certainly not in western democracies.
staticvoidstar 41 days ago [-]
I'm not thinking of normal people, I'm thinking of people that own companies that have more money than several countries' GDP
crazygringo 41 days ago [-]
Do you have any evidence?
The idea that Elon Musk or Bill Gates would buy bonds to try to gain influence in the US doesn't make any sense.
Politicians like congressional representatives or the president couldn't care less if someone rich buys bonds. The bond market is enormous, even a rich person is a drop in the bucket.
Government bonds are not an avenue for influence. There are avenues for influences, but bonds aren't one of them.
fiftyacorn 42 days ago [-]
We need to revisit this after the credit crunch -
"Owe Your Banker £1k You are at his mercy; Owe Him £1M the position is reversed; But if everyone owes the banker £1M then its everyone's problem"
margalabargala 41 days ago [-]
What I've heard is "if you owe $1 million, you have a problem. If you owe $1 billion, the bank has a problem. If you owe $1 trillion, the government has a problem"
wanda 41 days ago [-]
If everyone owes the banker £1M, it's the insurer's problem.
Then the government's problem when the insurer melts down.
HPsquared 42 days ago [-]
And if something is everyone's problem, we just ignore it.
datavirtue 41 days ago [-]
It's so efficient.
VyseofArcadia 42 days ago [-]
Is the usage of "your banker" vs "the bank" a difference between British English and American English or a difference between 1940s English and modern English?
pm215 42 days ago [-]
As a British English speaker I would say "the bank". I think it's not so much a difference between 1940s English and modern English as between 1940s banking practices and today's (especially for the more well-to-do customer) -- it implies that you have a personal relationship with an individual person at the bank who knows you and manages your money for you, and that just isn't the way banks work these days, except perhaps for the mega-rich.
vidarh 42 days ago [-]
Even today you "just" need qualify for slightly premium accounts - top ~2% or so will qualify at some banks - to get a named contact person at the bank you can contact, but of course at that level they still have far too many accounts per person to actively manage anything.
Ekaros 42 days ago [-]
For my local European bank the barrier doesn't even seem to be that high only 150 k€ loans or 50 k€ investments. Then again we are not that rich country. Not that the services will be any different at that level, but hey you have named person!
pm215 42 days ago [-]
Mmm, I don't think that would be a sufficiently personal contact for anybody to seriously refer to that person as "my banker".
vidarh 42 days ago [-]
I mostly agree, with the exception that I think the users of those accounts are split between people signing up for the limited extra features, and people signing up because it makes them feel important, and I suspect at least a subset of the latter would love to refer to them as "their banker". It's probably not a very large subset, though. And yes, it's pretentious.
Ekaros 42 days ago [-]
There used to be much more personal relationships. So it was possible you had a banker a person you worked in with in the bank. Especially with a big bank. So certainly for them losing million might mean losing job, even if the bank itself was big enough to manage.
lmm 42 days ago [-]
> Especially with a big bank.
No, especially as a big client, if anything more so at a small bank than a big one.
jon-wood 42 days ago [-]
I think it's a period thing rather than a country one. People are likely to say they owe "the bank" over here in the UK as well. Back in the 40s though your bank manager had a lot more leeway in the debts they'd underwrite, and presumably had more personal investment in any loans that were defaulted on because they'd personally signed off on them.
eesmith 42 days ago [-]
When my US high school US history teacher told us that expression in the 1980s, he used the "bank" variant, not "banker". He was also from the US.
dartos 42 days ago [-]
I’ve never had a banker, so I just say “the bank”
nottorp 42 days ago [-]
The quote needs adjusting for inflation though.
edm0nd 42 days ago [-]
Owe your banker £1k you are at his mercy; owe him £1m the position is reversed (2019)
Owe your banker £1,245.21 you are at his mercy; owe him £1,245,207.25 the position is reversed (August 2024)
Like that but since the first mention of the quote is in 1945...
£36,268.59 and £36,268,585.70 according to the calculator you linked.
_spduchamp 42 days ago [-]
The article is about origins of a quote and has variations on the numbers.
1,000 vs 1,000,000
100 vs 100,000,000
100 vs 100,000
More than smart-ass quotes, I'm curios about these sorts of flips in risk/value in a general abstract sense. What is this sort of thing called? What are examples on other domains beyond lending?
Rury 41 days ago [-]
It's kind of the same concept as the student becomes the teacher, the slave becomes the master, etc.
Anyhow, such a principle typically exists wherever there is an opposing relationship of sorts. In the case of money, for every debtor there is a creditor. Generally, people often equate having lots of money = wealthy, and those with lots of debt = poor. But you can flip this relationship, if those in debt never actually repay (in real terms), and instead simply repay their debts with further debt.
aspenmayer 41 days ago [-]
Paraphrasing:
Give a man a fish, and he eats for a day. Teach a man to fish, and he eats for life.
mncharity 41 days ago [-]
> to the British War Cabinet in 1945 [...] we have persuaded the outside world to lend us upwards of the prodigious total of £3,000 million. The very size of these sterling debts is itself a protection. The old saying holds. Owe your banker £1,000 and you are at his mercy; owe him £1 million and the position is reversed.
Curious. That leverage lies in hope of some repayment, yes? But my very fuzzy recollection (surfed a tome on financing WW2 years ago), is the US "loans" were made without informed hope of repayment - it was just politically unacceptable in the US to say that up front. So while there were assorted small post-war repayments (often non-monetary - leases and such), the bulk was written off. Does the size of an unrepayable debt affect negotiations on the size of a token repayment?
edent 41 days ago [-]
I think you are mistaken. The UK only finished paying off these loans recently
The wiki page for 'lend-lease' says the equipment and supplies was literally lent for the duration of war. ie "here's 10 tons of food, some oil, and a jeep, please give back whatever's left after you win." It claims the 2006 payment was the last settlement for when they sold what was left in Britain to the British after the war for pennies on the dollar in lieu of actually trying to return it. I always thought 'lend-lease' was a debt-for-supplies swap and not a literal lending of war material.
mncharity 41 days ago [-]
> In December 1940, [...] the British were no longer able to pay for supplies. [...] Lend-Lease [...] supplies it needed to fight Germany, but would not insist upon being paid immediately
> Instead, the United States would “lend” the supplies to the British, deferring payment. When payment eventually did take place, the emphasis would not be on payment in dollars. The tensions and instability engendered by inter-allied war debts in the 1920s and 1930s had demonstrated that it was unreasonable to expect that virtually bankrupt European nations would be able to pay for every item they had purchased from the United States. Instead, payment would primarily take the form of a “consideration” granted by Britain to the United States. After many months of negotiation, the United States and Britain agreed, in Article VII of the Lend-Lease agreement they signed, that this consideration would primarily consist of joint action directed towards the creation of a liberalized international economic order in the postwar world.[1]
EDIT: Oops - that article refers to postwar loans. The TFA might be referring to non-lend-lease wartime debt. But that might have been refinanced by... It's late. Edit about to expire. Don't know.
The transfer of wealth from the UK to the US as a result of WW1 and WW2 debts is one of the more substantial wealth transfers in history.
mncharity 41 days ago [-]
Nod. Well, world to UK to US. With an industrial and imperial giant harvesting the wealth of the world, and then impoverishing itself, in part, to the US. I'd love to see Sankey diagrams of it all.
Der_Einzige 41 days ago [-]
Simply reparations for 1776 and 1812!
rogerthis 42 days ago [-]
Same thing in other industries.
Worked on big telecom billing back in the days. There was the average fish like me whose bills go to a normal flow when unpaid, and the big fish, like government, big companies, etc that not even have to pay their bills (for a time, of course).
leshow 42 days ago [-]
Ask the Greeks how that turned out.
DrNosferatu 42 days ago [-]
That was a smokescreen to bailout (a second time) indebted French and German banks:
Also, economist Mark Blyth has written extensively about this.
DrNosferatu 41 days ago [-]
An important question also is:
- Should the population that voted for a crooked, even criminal, government suffer all the consequences from its actions?
TacticalCoder 41 days ago [-]
> That was a smokescreen ...
Yes and no. Yes it was a bail out of others.
But Greece was 175% in debt. That's not the fault of the banks who lent money to Greece. FWIW it's widely documented too that, from the start, Greece cheated to get in the EU / Eurozone, with the help of one of the big four accounting firm, by completely cooking its book to hide how bad the economical situation of Greece was.
So, yup, sure, "evil bankers". But somehow the greek government managed to reach a debt of 175% of its GDP. That's not the fault of capitalism / finance: that's the fault of government overspending.
DrNosferatu 41 days ago [-]
Sure, there was this service to embellish the books provided by Goldman Sachs.
But moving on from moral arguments, the crux is that only some 5% of the bailout money actually stayed in Greece [1].
Furthermore, it takes two to tango: the banks did not diversify their debt portfolio [2], they lent because they wanted to, and, knew Greek debt implied higher risk. After all, that’s why these loans commanded a higher interest compared to other sovereign debt.
PS: Don’t get me wrong, pay to cook the books is totally on the Greek government.
petercooper 42 days ago [-]
(This isn't a political comment, honest! But..) After reading The Art of the Deal, I get the impression this is a lesson Trump took to heart early in life. Always using other people's money to build and do things which, in turn, seems to give him more power than he might otherwise.
RevEng 41 days ago [-]
Also explains how his assistants end up having to put themselves at greater and greater risk. The more they help him, the more trouble they face, and the more they hope he is able to bail them out.
I've heard this as, "If you owe the bank $10,000 you have a creditor; if you owe them $10,000,000 you have a partner."
createaccount99 39 days ago [-]
> "him"
¡Ay, ay, ay!, that's bad use.
pylua 41 days ago [-]
So, does this work at the country macro level ?
Octoth0rpe 42 days ago [-]
Particularly relevant for twitter these days.
DrNosferatu 42 days ago [-]
Too big to fail, too big to bail!
42 days ago [-]
_spduchamp 42 days ago [-]
I've heard about a situation here in Toronto where a family had a double mortgage on their overvalued mansion. The bank would never get their money back on a power of sale, so instead of calling in loans, they just extended them more credit, and connected them with an investment manager to help them manage the money the bank was throwing at them.
Wouldn't be nice to fail upward like that?
jordanb 42 days ago [-]
This is called "extend and pretend." It's what's happening now with office loans.
Conversely during the GFC the Obama administration put a plan together to allow people to get their loan terms adjusted (write down). The plan was very long, bureaucratic, and difficult to follow. Nearly everyone who attempted to use the scheme failed to successfully complete it and receive the write down.
When asked about this, an administration official explained that the plan was never designed to give homeowners relief. Instead the purpose was to dangle a carrot in front of their nose to get them to struggle and sacrifice to continue to make full payments as long as possible so that the banks didn't have to take losses as quickly.
arghwhat 42 days ago [-]
citation needed
Mathnerd314 42 days ago [-]
"Bailout: How Washington Abandoned Main Street While Rescuing Wall Street", Neil Barofsky, page 157
Note though that he is only quoting "off the record" conversations with Treasury Secretary Tim Geithner
throw_pm23 42 days ago [-]
That's the problem with these "citation needed" remarks, those who say it never come back after they received the high quality citations.
arghwhat 41 days ago [-]
Even if I didn’t return, that’s irrelevant - you are not engaging in a 1-1 discussion. You are posting on an open discussion for the entire internet to see. Most threads aren’t back-and-forth between single individuals, but rather a chain of unique authors.
I specified it because the comment very clearly lacked a citation due to touching controversial political subjects, and any future reader benefits from such citation if added.
I could have made a lengthy complaint and specified concerns about not attaching supporting references - such as unclear attribution that can obscure possible underlying political agendas - but that itself would add nothing not covered by: citation needed. With a citation, people can judge for themselves.
miketery 42 days ago [-]
reality is stranger than fiction. yes citation needed. but this seems banal compared to what things go down.
jordanb 42 days ago [-]
You can google "Home Affordable Modification Program" and "foam the runway" [for the banks]. But here's one of many articles:
"The cynical view is that HAMP worked exactly to the Treasury's liking. Both Senator Elizabeth Warren and former Special Inspector General for TARP Neil Barofsky revealed that then-Secretary Geithner told them HAMP's purpose was to "foam the runway" for the banks. In other words, it allowed banks to spread out eventual foreclosures and absorb them more slowly. Homeowners are the foam being steamrolled by a jumbo jet in that analogy, squeezed for as many payments as they can manage before losing their homes."
ta1243 42 days ago [-]
My understanding in the US is you can simply walk away from a house in negative equity and not lose anything?
In the UK, if you owe 200k, the bank takes over your house, sells it for say 150k and has 20k of costs you still owe them 70k, and you have to go bankrupt and spend the next decade in financial misery
sddsdd 42 days ago [-]
This is called a non-recourse loan and the exact rules depend on the state. 12 states are non-recourse, including CA and TX.
Credit standards and interest rates will be different on non-recourse loans, and cancelled debt typically has to be reported as income and taxed.
happyopossum 42 days ago [-]
> 12 states are non-recourse, including CA and TX.
This wording makes it sound like mortgages are required to be non-recourse loans in the 12 states, but that's not the case. 12 states allow non-recourse loans, however they are not common for mortgages, with many lenders not even offering them.
dmoy 42 days ago [-]
IIRC this is incorrect, at least for WA and CA. They only allow non recourse loans at least for purchase mortgages.
sddsdd 42 days ago [-]
Primary home mortgages are all non-recourse in CA. Texas is similar. The exceptions are things like cash out refis, second mortgages, fraud.
actionfromafar 42 days ago [-]
Ha! That explains those weird videos of houses in neighbourhoods which looks like a neutron bomb or the Rapture. Cars left, coffe cups on the tables, sometimes facilities still working, TV on. Nobody there.
newfocogi 42 days ago [-]
Could you share some links? I’m not familiar with this.
RevEng 41 days ago [-]
I don't have links, but look at Detroit during the crash of 2008. There were a lot of photos at the time of entire neighborhoods abandoned by people whose mortgages were underwater.
xenadu02 42 days ago [-]
There's Fed Reserve research on this. The only thing recourse does is make borrowers a bit less sensitive to negative equity and only for high value homes:
"Importantly, recourse affects default only through lowering borrowers sensitivity to negative equity. Unconditionally, there is no difference between the default rates in recourse and non-recourse states."
"The effect of recourse is significant only for higher-appraised properties."
> Credit standards and interest rates will be different on non-recourse loans
"To the extent that borrowers in recourse states are less likely to default in response to negative equity, and are more likely to default in a lender-friendly way if they do default, lenders are likely to face smaller losses from default in recourse states. Thus, one might expect interest rates to be lower in recourse states. However, we find no evidence that they are; in fact, we find that loans are more expensive in recourse states."
Many recourse states require the bank to credit you the full appraised value, not the actual foreclosure sale value - because banks often bid against themselves at foreclosure auctions and control bid acceptance so they effectively set the foreclosure price. Various things (wages, personal property, retirement accounts) are often excluded from recourse for your primary home. In some states like Minnesota a jury must determine the fair market value of a foreclosed home. Other states have strict requirements (like short filing deadlines) or lengthy procedures (all attorney billable hours!).
This effectively makes non-foreclosure options way more popular - where a bank will ofter to take the deed and cancel the debt. In the end it is more cost-effective for the bank and better for the borrower.
Furthermore even if you get a deficiency judgement the old proverb "You can't squeeze blood from a stone" applies. Someone who can't pay their mortgage is unlikely to have significant assets to draw on. All you get for your trouble is a bankruptcy filing from the borrower. After all that time and trouble your deficiency judgement gets discharged anyway.
In the end recourse states mean more defaults happen through a voluntary non-foreclosure process but lending standards and interest rates are not that different and very few borrowers ever actually have a deficiency judgement let alone pay a dime toward one.
42 days ago [-]
happyopossum 42 days ago [-]
For the vast majority of mortgages in the US, the situation is the same. You owe the bank the full amount, even in a foreclosure or short-sale.
42 days ago [-]
duxup 42 days ago [-]
It happened to a lot of every day people during the mortgage crisis in the US.
Bank would foreclose, let the family stay there until the house sold again, and some even PAID people to take care of the property / not damage it on the way out.
My neighbors refinanced at a terrible time, they quit paying, foreclosure happened, then they actually worked out a new mortgage with the bank to stay.
ToucanLoucan 42 days ago [-]
> Wouldn't be nice to fail upward like that?
It's almost like the banking system was designed by rich people to suit the needs of rich people or something.
And to tax the poor but that's a more recent component.
notavalleyman 42 days ago [-]
And if the banking system were actually designed by poor people to suit the needs of poor people.
How would this scenario play out differently?
A bank is underwater on loans to a certain house. If they pull the plug now, the bank takes a loss. If they work with the household to raise the household wealth, then they can recoup their loan amount from the new wealth.
So what's your alternative solution, in the world where banks are designed for the poor?
I ask because I don't see how the personal assets of the people who designed this system come into play, at all
ToucanLoucan 42 days ago [-]
I think you would end up with a lot more institutions designed in the vein of Credit Unions rather than banks. The differences are subtle but noticeable. They still generate profit but they're non-profits, and so the profits they do generate are invested immediately back into the institution, by way of expanding their branch offices, providing lower rates or relief to members who are struggling, and other misc. community-focused projects.
carlosjobim 42 days ago [-]
The alternative would be the removal of the banking system, not to re-make it.
diab0lic 42 days ago [-]
> It's almost like the banking system was designed by rich people to suit the needs of rich people or something.
Food for thought: If they didn’t have an investment manager before this, and their primary asset was a big house they couldn’t afford… these people weren’t rich. They were working class, over extended themselves into a house, and got lucky.
Your premise may have some validity but the story in this thread may be an example of a bank making a working class family rich.
Nasrudith 42 days ago [-]
That is just a plain stupid conspiratorial collection of communist cliches which demonstrate the common symptom of bigotry; treating a disfavored group as though they were a hivemind monolith and being literally unable to comprehend that groups are made up of different people.
Under that logic you get howlers of counter-factuals like "Kings were rich and therefore there was never a war between kings." It is up there with the abject stupidity of System of a Down accidentally going pro-monarchist by asking why don't presidents fight the war.
Apply some actual thought, please. The job of a bank is to accumulate idle money to put to use in investment to generate returns. "Why does money accumulate in the money accumulator that generates more the more money is put inside of it?"
ToucanLoucan 41 days ago [-]
> treating a disfavored group
Hold on: in what possible way, by what conceivable metric, are the wealthy a disfavored group? Name for me any way a wealthy person struggles. It is some mad "leave the billionaire alone" cope to try and say the literally most privileged, by definition, class of folks on the planet are somehow oppressed.
> and being literally unable to comprehend that groups are made up of different people.
Of course they are, but as a group of people who share commonalities of experience, priorities, and oftentimes physical location and interaction, they necessarily also have more in common with one another than with people who are far disconnected from them. That is why people like Ellen Degeneres are taking pictures with George Bush: George Bush has far more in common with Ellen than Ellen does to the vast, vast, vast majority of her audience.
This goes double for economic interest. A world that no longer privileges wealth, even putting aside bogeymen like taxation or confiscation, will be unappealing to every wealthy person, because their wealth currently makes the world bend over backwards for them, and that's pretty sweet and nobody apart from the most principled people on the planet would willingly give that up.
> Under that logic you get howlers of counter-factuals like "Kings were rich and therefore there was never a war between kings." It is up there with the abject stupidity of System of a Down accidentally going pro-monarchist by asking why don't presidents fight the war.
I mean if you don't think it makes politicians of any stripe, kingly or otherwise, more ready to declare war if they know full well they themselves will not be expected to take up arms, then you have far more faith in people than I do.
Though I don't know where you got that quote from, if it is indeed a quote. I'm a much bigger fan of "when the rich wage war, it's the poor who die." And I think you'd be hard pressed to find a conflict where, outside some strange exceptional occurrence, that wasn't quite true.
> The job of a bank is to accumulate idle money to put to use in investment to generate returns. "Why does money accumulate in the money accumulator that generates more the more money is put inside of it?"
I don't object to the money accumulator accumulating money, I object to the money accumulator, when it malfunctions, having it's money replenished with tax dollars it did not earn by performing it's function, from which the guy who owns the accumulator draws a substantial salary afterwards, despite overseeing when the accumulator stopped working.
troyvit 42 days ago [-]
Wow apparently a lot of rich people and/or bankers are here judging by the downvotes.
xyst 42 days ago [-]
This is how we end up in another 2008 crash. Regulators asleep at the wheel, again
ToucanLoucan 42 days ago [-]
Not at all. They're not asleep, they knew about it. A few isolated people had reported exactly how 2008 was going to go down. The banks know the economy is underpinned by their assets, Uncle Sam is NEVER going to let them actually die, not in a million years. It would be the end-toll of the U.S. dollar as the defacto world currency, it would shred trillions of dollars in assets, far beyond the actual homes, I don't think Wall Street could ever actually recover from that.
And like, I don't even think that's necessarily wrong? Like I don't know how you would let some of these banks actually die in such a way that wasn't immensely worse for everyone. My only real issue with it is that these are for-profit businesses that funnel absolutely stressful amounts of money up the proverbial chain. If we just as a society want to say that we're comfortable with the notion of supporting banks with public money because ultimately letting them fail is worse for everyone, that's fine. I get that. I just don't think anyone at the top of those banks should be ripping millions of dollars a year out of that institution. At that point, that's not a business, it's more analogous to a utility and it should be owned and operated by the state.
AnimalMuppet 42 days ago [-]
I saw at least once in 2008 that it was done right. I don't remember which institution, but it got taken over, the depositors were protected, the stockholders lost everything, and the management was replaced.
And that's just about what you want, right? You want the depositors protected, both because they didn't make the bad loans, and because wiping them out is going to cause ripple effects that spread the damage. But the stockholders, the ones that profited (temporarily) from the bad loans? Wipe them out. The management? Wipe them out.
42 days ago [-]
bryanlarsen 42 days ago [-]
Perhaps true in 1945, but these days $1M is petty change to a bank. There are lots of people out there with $1M mortgages out there who are definitely at the mercy of their bank.
£1 in 1945 is ~$25M today and even that value doesn't seem high enough for the quote to apply. I wonder where the cutover is? $100M? $1B?
cmptrnerd6 42 days ago [-]
It probably depends on the bank somewhat. My local community Bank in a small rural town won't have many, if any, million dollar home mortgages, maybe some of the farm or business loans are that large.
Also I hope you meant £1M is ~$25 M today and not £1 :D
TheCoelacanth 42 days ago [-]
I don't think local community banks typically hold onto a lot of mortgages. They would originate the loans and then sell them to someone else.
figassis 42 days ago [-]
I think the quote applies in relative terms of the bank's size. When Elon bought Twitter, and then he started saying there were so many bots, I remember people saying how much the finance department at his creditor was sweating. That to me is Musk owning the bankers, and yet, $45B is likely not close to how much that bank as in deposits.
edit: which I actually just read, was multiple large banks, which is now a great strategy to not being owned by debtors. I assume a single large bank would be sweating a lot more.
https://en.wikipedia.org/wiki/Se%C3%A1n_Quinn is another example; he managed to persuade the bank, via accomplices, to lend him €451 million to buy its own shares in a sort of circular pyramid scheme to inflate its value.
actionfromafar 42 days ago [-]
The trick is to keep the circle extremely wide. Then, it's called an Economy and Healthy Inflation. :) An ecosystem if you will.
CPLX 42 days ago [-]
Worth noting that banks are, on average, a LOT bigger than they used to be.
The popular conception of a bank, even when I was a kid, was a place that was based in your town and had maybe a few branches and took in people’s deposits and wrote mortgages and business loans.
generic92034 42 days ago [-]
Depending on where you live small local banks still exist. Although some merging processes are definitely happening, in my area.
kjs3 42 days ago [-]
In the US, small local banks are everywhere. There's an entire ecosystem that matches capital to start a bank with experienced management teams that run the bank (not just anyone can be an executive at an OCC chartered bank). There are SaaS providers that do the heavy IT lifting. And, of course, specialist lawyers. They open a local bank, build it to a certain size, and (usually) one of the regional or super regional banks comes and picks them up. Lather, rinse, repeat. Not unlike what you see in SV with startups.
generic92034 42 days ago [-]
The situation in Germany with the "Sparkasse" and "Volksbank" is a bit different. They have a special legal form, preventing takeovers from other banks. But the local Volksbanken (or Sparkassen, I guess) can merge with each other. If that process in the end also leads to a "too big to fail" status at some point in time, I cannot predict, but I doubt it.
CPLX 42 days ago [-]
Sure, but over 50% of the assets held by banks in the US are held by five banks.
That’s about double the percentage in 2000. Things have changed a lot and the trend continues.
kjs3 42 days ago [-]
"Big banks have most of the money" and "Big Banks have gotten bigger" has absolutely nothing to do with "Are there small banks". I was talking to some folks I know in this world this week about a small bank they're starting, so it's not 2000 we're stuck in. I get "Big Banks are Bad" is the horse you want to beat, tho long dead, but there's plenty of room in this thread to shoehorn your pet gripe where it would be at least remotely on-topic.
CPLX 42 days ago [-]
My point is pretty easy to follow.
The quote, that is the title of this comment thread (we're discussing a specific thing here, the quote in question, mind you, not which banks are good and bad) was a whole lot more applicable in the past than it is today.
Yes, sure there are small banks. But if you walk around any major city or drive around any major residential area, nearly all the banks you see (and in reality, nearly all the banks people actually bank at) will not be a match for the main point this quote is making.
That's because the banks that nearly all of us interact with now, are so large, and so politically connected and interwoven with our core financial structures, that it's actually impossible for almost anyone living to have a bank at their mercy due to the amount of money they owe the bank.
So the quote, once widely understandable and applicable, is slowly starting to make less sense to the average reader.
Which is kind of interesting.
kjs3 41 days ago [-]
Just in my suburb of a major city, within, say 5 miles of me, physical banks that aren't the top 5: a bunch of small banks (Southstate, Cadence, MemberFirst, FirstCitizen, OZK, Unity National, Southern First, First Horizon, City National, Hyperion), at least 6 credit unions (usually considered 'small banks': Delta Community, Navy Federal, Emory, Associated, American Postal, Peach State), banks that are 'small but something else' (BestBank (bought by First Citizen I think), associated with Kroger, Woodforest National associated with Walmart) and 4 regionals (Truist, Synovus, Regions, Ameris (which is a rollup of 4 or so small local banks around here)).
How do they stay in business I wonder since noone sees them and noone banks there? What was your point again?
NeoTar 42 days ago [-]
Apparently in the UK, the largest four banks control 75% of all current accounts (en-us: checking account ). Admittedly a smaller market, but even more centralised.
geodel 42 days ago [-]
Yes they do exists as you say. However in last 30 years or so 90% of small banks are merged into Too big to fail banks.
bryanrasmussen 42 days ago [-]
In a Man in Full in the scene where the bankers are grilling the guy who owes them money, they are worried because he owes them so much they have a problem - of course they do their best not to let on that such is the case and he evidently doesn't pick up on it either. I'm not sure the amount he owed in the book, published in 1998, but I believe it was 600 million dollars.
bryanrasmussen 42 days ago [-]
evidently a user named wasteduniverse is shadow-banned or something, I saw his question but it was marked dead and I couldn't reply. Looking at his comments page all his other comments were also grayed out and dead.
I don't know what he did but since his question seems unproblematic enough I'll answer here - I didn't finish all the book, my Tom Wolfe phase was done, it seemed ok but not as cool as I thought Bonfire of the Vanities was, I remember some snide reviews of it at the time all about how Wolfe was still trying to be his idea of a great writer which was hopelessly out of date (opinion of reviewers).
My understanding it the Netflix adaptation has gotten a lot of complaints.
wasteduniverse 41 days ago [-]
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wasteduniverse 42 days ago [-]
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lesuorac 42 days ago [-]
Probably whatever is less than your actual assets.
You owe the bank $100 and have $0 to your name then they're just out. Although I guess they didn't lose sleep until it was a bunch of people's mortgages so probably ~250k.
mjlee 42 days ago [-]
There's a big difference between secured and unsecured loans, subprime lending crises aside.
HPsquared 42 days ago [-]
Banks are bigger now, I assume.
jeanlucas 42 days ago [-]
Yeah, I mean, look at Elon Musk's buy of Twitter. Morgan Stanley and others secured about US$6bi? That's more on them than on Elon
PS: I am aware that Elon's shares on other companies were used as collateral, but yet...
So, essentially, ‘twas ever so.
The titles Kaiser and Czar literally derive from Cæsar. Meanwhile, we still maintain consuls in diplomatic relations between countries who often have Senate houses filled with Senators.
That's not the case for "senator", which turned into a generic word and it's not directly connected to the Senate of the Roman Republic.
I don't know if that has been continuous, though.
0: https://en.wiktionary.org/wiki/%C5%A1arrum#Akkadian
1: https://en.wiktionary.org/wiki/tsar#Etymology
[0] https://www.etymonline.com/word/Caesar
Romans at the time were using three names, the given name (Gaius), the family/clan name (Julius) and the cognomen (Caesar), which was originally a nickname that became hereditary to identify a particular branch of a family.
So, the emperor of Russia was called the tsar because Gaius Julius or one of his ancestors was nicknamed "Curly" or maybe "Beardy".
>because Gaius Julius or one of his ancestors
Sextus Julius Caesar is the first Julii Caesares according to wikipedia. I just love that the term for all of them is Julii Caesares.
Maximinus Daza (the eastern Roman emperor during the Tetrarchy) was the last holder of the title Paraoh, and I think he reigned from Nicomedia, in Anatolia.
It’s funny that Pharaoh died out with the rise of christianity, but Pontifex lived on.
https://en.wikipedia.org/wiki/Roman_pharaoh
“Too big to fail”.
http://evene.lefigaro.fr/citation/tue-homme-assassin-tue-mil...
> To sate the lust of power; more horrid still, The foulest stain and scandal of our nature Became its boast — One Murder made a Villain, Millions a Hero. — Princes were privileg’d To kill, and numbers sanctified the crime. Ah! why will Kings forget that they are Men?
-- Beilby Porteus (1759)
[1] https://quoteinvestigator.com/2010/05/21/death-statistic/
That’s a gorgeous quote! Something Lord Henry in “The picture of Dorian Gray” would say.
https://civilization.fandom.com/wiki/Banking_(Civ6)
We owe everyone billions or trillions. They’d hate to see us (or our dollar) fall.
The assertion was that bond holders would hate for the value of the maturation currency to fall. This is true, regardless of the currency origin.
Beyond that, printing more dollars or defaults, would influence USD value to some degree, but would not guarantee a decline in overall attractiveness.
One of the pillars of US hegemony is OPEC appointing USD as the preferred trading currency, over the last 50 years. Another is the industrial capability that the US exercised in WW2. It demonstrated that the US is capable of incomparable mobilization, growth of production and innovation, when properly motivated.
B.effing.S.
What hyperbole and hubris.
This is American exceptionalism at its "shining" worst. The incredible stupidity of that statement (to use superlatives like incomparable, as you did) would be hard to believe among rational people, if not already seen in writing, as above...
That capability you talk of, could apply to any country, when ”properly motivated".
Example: India. 1947.
Removed the British as the colonizer, non-violently, except for maybe sporadic incidents, and the 1857 rebellion.
Motivations and results in the same ball park as your example, as regards mobilization (of the population to drive out the British).
See:
https://en.m.wikipedia.org/wiki/Colonialism
https://en.m.wikipedia.org/wiki/Colonial_empire
https://en.m.wikipedia.org/wiki/Mahatma_Gandhi
Production and innovation not relevant in this case, except maybe innovation of overthrowing an oppressor non-violently.
This does not affect the historical narrative. eg I'm sure some other nation could have created an atomic bomb first, but they didn't. Ultimately, regardless of how un/deserved the confidence in the US economy is, the confidence exists and that has been part of the reasoning that the USD is the reserve currency of choice today.
Good luck with whatever.
Rest of the reply coming in a bit.
Argentina tried doing that, resulting in 100% inflation per month.
The US dollar bit is the problem.
From the perspective of anybody outside the US the US dollar is a bond - a zero percent bearer bond.
Therefore it is nothing more than a bond swap with a change in interest rate and term. The entity “owing” doesn’t change
Exactly, just between a 20 and a 30 percent of our debt is in Argentine pesos. [0]
0: https://www.argentina.gob.ar/economia/finanzas/graficos-deud...
So many "paradoxes" make perfect sense if you flip the causality.
Uhh, where are people compelled to buy bonds? People buy bonds when they think they're a good investment vehicle - not out of obligation.
Campaign contributions, sure.
But the idea that there is any kind of compulsion for citizens to buy government bonds seems false. I don't know, maybe in some dictatorships or something, but certainly not in western democracies.
The idea that Elon Musk or Bill Gates would buy bonds to try to gain influence in the US doesn't make any sense.
Politicians like congressional representatives or the president couldn't care less if someone rich buys bonds. The bond market is enormous, even a rich person is a drop in the bucket.
Government bonds are not an avenue for influence. There are avenues for influences, but bonds aren't one of them.
"Owe Your Banker £1k You are at his mercy; Owe Him £1M the position is reversed; But if everyone owes the banker £1M then its everyone's problem"
Then the government's problem when the insurer melts down.
No, especially as a big client, if anything more so at a small bank than a big one.
Owe your banker £1,245.21 you are at his mercy; owe him £1,245,207.25 the position is reversed (August 2024)
source: https://www.bankofengland.co.uk/monetary-policy/inflation/in...
£36,268.59 and £36,268,585.70 according to the calculator you linked.
More than smart-ass quotes, I'm curios about these sorts of flips in risk/value in a general abstract sense. What is this sort of thing called? What are examples on other domains beyond lending?
Anyhow, such a principle typically exists wherever there is an opposing relationship of sorts. In the case of money, for every debtor there is a creditor. Generally, people often equate having lots of money = wealthy, and those with lots of debt = poor. But you can flip this relationship, if those in debt never actually repay (in real terms), and instead simply repay their debts with further debt.
Give a man a fish, and he eats for a day. Teach a man to fish, and he eats for life.
Curious. That leverage lies in hope of some repayment, yes? But my very fuzzy recollection (surfed a tome on financing WW2 years ago), is the US "loans" were made without informed hope of repayment - it was just politically unacceptable in the US to say that up front. So while there were assorted small post-war repayments (often non-monetary - leases and such), the bulk was written off. Does the size of an unrepayable debt affect negotiations on the size of a token repayment?
https://www.independent.co.uk/news/business/news/britain-pay...
> Instead, the United States would “lend” the supplies to the British, deferring payment. When payment eventually did take place, the emphasis would not be on payment in dollars. The tensions and instability engendered by inter-allied war debts in the 1920s and 1930s had demonstrated that it was unreasonable to expect that virtually bankrupt European nations would be able to pay for every item they had purchased from the United States. Instead, payment would primarily take the form of a “consideration” granted by Britain to the United States. After many months of negotiation, the United States and Britain agreed, in Article VII of the Lend-Lease agreement they signed, that this consideration would primarily consist of joint action directed towards the creation of a liberalized international economic order in the postwar world.[1]
EDIT: Oops - that article refers to postwar loans. The TFA might be referring to non-lend-lease wartime debt. But that might have been refinanced by... It's late. Edit about to expire. Don't know.
[1] https://history.state.gov/milestones/1937-1945/lend-lease
[1] cite I haven't read: https://history.state.gov/historicaldocuments/frus1947v03/d6....
Worked on big telecom billing back in the days. There was the average fish like me whose bills go to a normal flow when unpaid, and the big fish, like government, big companies, etc that not even have to pay their bills (for a time, of course).
https://www.corpwatch.org/article/eurozone-profiteers-how-ge...
Also, economist Mark Blyth has written extensively about this.
- Should the population that voted for a crooked, even criminal, government suffer all the consequences from its actions?
Yes and no. Yes it was a bail out of others.
But Greece was 175% in debt. That's not the fault of the banks who lent money to Greece. FWIW it's widely documented too that, from the start, Greece cheated to get in the EU / Eurozone, with the help of one of the big four accounting firm, by completely cooking its book to hide how bad the economical situation of Greece was.
So, yup, sure, "evil bankers". But somehow the greek government managed to reach a debt of 175% of its GDP. That's not the fault of capitalism / finance: that's the fault of government overspending.
But moving on from moral arguments, the crux is that only some 5% of the bailout money actually stayed in Greece [1].
Furthermore, it takes two to tango: the banks did not diversify their debt portfolio [2], they lent because they wanted to, and, knew Greek debt implied higher risk. After all, that’s why these loans commanded a higher interest compared to other sovereign debt.
[1] https://amp.dw.com/en/most-of-greek-bailout-money-went-to-ba...
[2] https://econreview.studentorg.berkeley.edu/a-tale-of-two-cou...
¡Ay, ay, ay!, that's bad use.
Wouldn't be nice to fail upward like that?
Conversely during the GFC the Obama administration put a plan together to allow people to get their loan terms adjusted (write down). The plan was very long, bureaucratic, and difficult to follow. Nearly everyone who attempted to use the scheme failed to successfully complete it and receive the write down.
When asked about this, an administration official explained that the plan was never designed to give homeowners relief. Instead the purpose was to dangle a carrot in front of their nose to get them to struggle and sacrifice to continue to make full payments as long as possible so that the banks didn't have to take losses as quickly.
Note though that he is only quoting "off the record" conversations with Treasury Secretary Tim Geithner
I specified it because the comment very clearly lacked a citation due to touching controversial political subjects, and any future reader benefits from such citation if added.
I could have made a lengthy complaint and specified concerns about not attaching supporting references - such as unclear attribution that can obscure possible underlying political agendas - but that itself would add nothing not covered by: citation needed. With a citation, people can judge for themselves.
https://prospect.org/economy/needless-default/
"The cynical view is that HAMP worked exactly to the Treasury's liking. Both Senator Elizabeth Warren and former Special Inspector General for TARP Neil Barofsky revealed that then-Secretary Geithner told them HAMP's purpose was to "foam the runway" for the banks. In other words, it allowed banks to spread out eventual foreclosures and absorb them more slowly. Homeowners are the foam being steamrolled by a jumbo jet in that analogy, squeezed for as many payments as they can manage before losing their homes."
In the UK, if you owe 200k, the bank takes over your house, sells it for say 150k and has 20k of costs you still owe them 70k, and you have to go bankrupt and spend the next decade in financial misery
Credit standards and interest rates will be different on non-recourse loans, and cancelled debt typically has to be reported as income and taxed.
This wording makes it sound like mortgages are required to be non-recourse loans in the 12 states, but that's not the case. 12 states allow non-recourse loans, however they are not common for mortgages, with many lenders not even offering them.
"Importantly, recourse affects default only through lowering borrowers sensitivity to negative equity. Unconditionally, there is no difference between the default rates in recourse and non-recourse states."
"The effect of recourse is significant only for higher-appraised properties."
> Credit standards and interest rates will be different on non-recourse loans
"To the extent that borrowers in recourse states are less likely to default in response to negative equity, and are more likely to default in a lender-friendly way if they do default, lenders are likely to face smaller losses from default in recourse states. Thus, one might expect interest rates to be lower in recourse states. However, we find no evidence that they are; in fact, we find that loans are more expensive in recourse states."
You can read the paper for yourself: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1432437. Note that this paper (and many other sources) classify Texas as recourse but it is not. I'm not certain why that is.
Many recourse states require the bank to credit you the full appraised value, not the actual foreclosure sale value - because banks often bid against themselves at foreclosure auctions and control bid acceptance so they effectively set the foreclosure price. Various things (wages, personal property, retirement accounts) are often excluded from recourse for your primary home. In some states like Minnesota a jury must determine the fair market value of a foreclosed home. Other states have strict requirements (like short filing deadlines) or lengthy procedures (all attorney billable hours!).
This effectively makes non-foreclosure options way more popular - where a bank will ofter to take the deed and cancel the debt. In the end it is more cost-effective for the bank and better for the borrower.
Furthermore even if you get a deficiency judgement the old proverb "You can't squeeze blood from a stone" applies. Someone who can't pay their mortgage is unlikely to have significant assets to draw on. All you get for your trouble is a bankruptcy filing from the borrower. After all that time and trouble your deficiency judgement gets discharged anyway.
In the end recourse states mean more defaults happen through a voluntary non-foreclosure process but lending standards and interest rates are not that different and very few borrowers ever actually have a deficiency judgement let alone pay a dime toward one.
Bank would foreclose, let the family stay there until the house sold again, and some even PAID people to take care of the property / not damage it on the way out.
My neighbors refinanced at a terrible time, they quit paying, foreclosure happened, then they actually worked out a new mortgage with the bank to stay.
It's almost like the banking system was designed by rich people to suit the needs of rich people or something.
And to tax the poor but that's a more recent component.
How would this scenario play out differently?
A bank is underwater on loans to a certain house. If they pull the plug now, the bank takes a loss. If they work with the household to raise the household wealth, then they can recoup their loan amount from the new wealth.
So what's your alternative solution, in the world where banks are designed for the poor?
I ask because I don't see how the personal assets of the people who designed this system come into play, at all
Food for thought: If they didn’t have an investment manager before this, and their primary asset was a big house they couldn’t afford… these people weren’t rich. They were working class, over extended themselves into a house, and got lucky.
Your premise may have some validity but the story in this thread may be an example of a bank making a working class family rich.
Under that logic you get howlers of counter-factuals like "Kings were rich and therefore there was never a war between kings." It is up there with the abject stupidity of System of a Down accidentally going pro-monarchist by asking why don't presidents fight the war.
Apply some actual thought, please. The job of a bank is to accumulate idle money to put to use in investment to generate returns. "Why does money accumulate in the money accumulator that generates more the more money is put inside of it?"
Hold on: in what possible way, by what conceivable metric, are the wealthy a disfavored group? Name for me any way a wealthy person struggles. It is some mad "leave the billionaire alone" cope to try and say the literally most privileged, by definition, class of folks on the planet are somehow oppressed.
> and being literally unable to comprehend that groups are made up of different people.
Of course they are, but as a group of people who share commonalities of experience, priorities, and oftentimes physical location and interaction, they necessarily also have more in common with one another than with people who are far disconnected from them. That is why people like Ellen Degeneres are taking pictures with George Bush: George Bush has far more in common with Ellen than Ellen does to the vast, vast, vast majority of her audience.
This goes double for economic interest. A world that no longer privileges wealth, even putting aside bogeymen like taxation or confiscation, will be unappealing to every wealthy person, because their wealth currently makes the world bend over backwards for them, and that's pretty sweet and nobody apart from the most principled people on the planet would willingly give that up.
> Under that logic you get howlers of counter-factuals like "Kings were rich and therefore there was never a war between kings." It is up there with the abject stupidity of System of a Down accidentally going pro-monarchist by asking why don't presidents fight the war.
I mean if you don't think it makes politicians of any stripe, kingly or otherwise, more ready to declare war if they know full well they themselves will not be expected to take up arms, then you have far more faith in people than I do.
Though I don't know where you got that quote from, if it is indeed a quote. I'm a much bigger fan of "when the rich wage war, it's the poor who die." And I think you'd be hard pressed to find a conflict where, outside some strange exceptional occurrence, that wasn't quite true.
> The job of a bank is to accumulate idle money to put to use in investment to generate returns. "Why does money accumulate in the money accumulator that generates more the more money is put inside of it?"
I don't object to the money accumulator accumulating money, I object to the money accumulator, when it malfunctions, having it's money replenished with tax dollars it did not earn by performing it's function, from which the guy who owns the accumulator draws a substantial salary afterwards, despite overseeing when the accumulator stopped working.
And like, I don't even think that's necessarily wrong? Like I don't know how you would let some of these banks actually die in such a way that wasn't immensely worse for everyone. My only real issue with it is that these are for-profit businesses that funnel absolutely stressful amounts of money up the proverbial chain. If we just as a society want to say that we're comfortable with the notion of supporting banks with public money because ultimately letting them fail is worse for everyone, that's fine. I get that. I just don't think anyone at the top of those banks should be ripping millions of dollars a year out of that institution. At that point, that's not a business, it's more analogous to a utility and it should be owned and operated by the state.
And that's just about what you want, right? You want the depositors protected, both because they didn't make the bad loans, and because wiping them out is going to cause ripple effects that spread the damage. But the stockholders, the ones that profited (temporarily) from the bad loans? Wipe them out. The management? Wipe them out.
£1 in 1945 is ~$25M today and even that value doesn't seem high enough for the quote to apply. I wonder where the cutover is? $100M? $1B?
Also I hope you meant £1M is ~$25 M today and not £1 :D
edit: which I actually just read, was multiple large banks, which is now a great strategy to not being owned by debtors. I assume a single large bank would be sweating a lot more.
https://en.wikipedia.org/wiki/Se%C3%A1n_Quinn is another example; he managed to persuade the bank, via accomplices, to lend him €451 million to buy its own shares in a sort of circular pyramid scheme to inflate its value.
The popular conception of a bank, even when I was a kid, was a place that was based in your town and had maybe a few branches and took in people’s deposits and wrote mortgages and business loans.
That’s about double the percentage in 2000. Things have changed a lot and the trend continues.
The quote, that is the title of this comment thread (we're discussing a specific thing here, the quote in question, mind you, not which banks are good and bad) was a whole lot more applicable in the past than it is today.
Yes, sure there are small banks. But if you walk around any major city or drive around any major residential area, nearly all the banks you see (and in reality, nearly all the banks people actually bank at) will not be a match for the main point this quote is making.
That's because the banks that nearly all of us interact with now, are so large, and so politically connected and interwoven with our core financial structures, that it's actually impossible for almost anyone living to have a bank at their mercy due to the amount of money they owe the bank.
So the quote, once widely understandable and applicable, is slowly starting to make less sense to the average reader.
Which is kind of interesting.
How do they stay in business I wonder since noone sees them and noone banks there? What was your point again?
I don't know what he did but since his question seems unproblematic enough I'll answer here - I didn't finish all the book, my Tom Wolfe phase was done, it seemed ok but not as cool as I thought Bonfire of the Vanities was, I remember some snide reviews of it at the time all about how Wolfe was still trying to be his idea of a great writer which was hopelessly out of date (opinion of reviewers).
My understanding it the Netflix adaptation has gotten a lot of complaints.
You owe the bank $100 and have $0 to your name then they're just out. Although I guess they didn't lose sleep until it was a bunch of people's mortgages so probably ~250k.
PS: I am aware that Elon's shares on other companies were used as collateral, but yet...