The FED sets the prime rate. Everything else is higher. So if the prime rate hits 10% then you'll never find a loan for less than that. It's
artificial manipulation of the market, because the FED is a controlling monopoly on credit.
Fine, go ahead and abolish the Fed. Your Congress has every right to do so.
Since the Fed creates this money out of thin air, and so do it's member banks, and so do the commercial banks, charging interest on something created
out of nothing is an enormous profit.
Only the Federal Reserve prints money. Not the member banks.
If it's so profitable, then how do you explain the unprecedented number of bank failures the past couple of years?
The bank only has to have a small amount of money. They loan out much more than they have, usually at least by a factor of ten.
Baloney. Take the Balance Sheet of any well-run mid-sized bank. They have billions of dollars on deposit that they can lend against.
Take Comerica Bank as an example. Per their 2009 audited financial statements, they have $42.2 billion in outstanding loans out on the street. Total
deposits? $40 billion. Investment securities for sale? $7.4 billion.
Hardly a factor of ten, pal. And this is your typical Main Street retail bank. Look it up yourself. They're publicly-traded.
You conspiracy guys always come up with this nonsense that banks lend money out of thin air. It's a complete fabrication. Banks have deposits.
They also have assets, such as buildings, equipment, land, investments, cash, oftentimes to the tune of billions of dollars.
Banks don't operate in a make-believe fairy world of made up deposits. I can assure you, that when you close on a house, that the check cut at
closing is a real live check with real live purchasing power.
And this "profit" you speak of is simply the added value you get when you take raw materials and arrange them into an automobile. It's worth more
that way, and so that's what people are paying for. The business might call it profit, but in reality it's an exchange for similar value
So Ford is permitted to make a profit, but a bank is not allowed to make a profit for taking a risk on a loan? What's wrong with this picture?
If I lend you $100, and you agree in writing to pay me back in 6 months, am I entitled to any interest? Yes or no. You tell me.
No one is putting a gun to your head to force you to borrow. If you don't like the terms of the loan, then don't borrow money. Can't do it?
Baloney. Ask any debt-free Dave Ramsey fan if it can be done. It can. Millions of families live debt-free if they only take control of their
Most banks won't let you do that anymore. Somewhere in the fine print of your contract they have made sure that they're going to get all that
interest from you in the long run.
Nonsense. Most mortgages do NOT have pre-payment penalties. You can pay off your loan at any time without a penalty.
Quit spreading distortions and misinformation.
Are you really serious trying to convine us that the bank doesn't gain in foreclosure?
You're kidding me, right? Most of these residential real estate loans were speculative real estate loans, not owner-occupied loans. That means that
a house flipper, a real estate speculator, or a builder had the loan. The house sat vacant - No one ever lived in the house.
The bank got royally screwed. The borrowers default, and the bank takes the losses. The borrower skips town, and never repaid the principal balance
owed, let alone the interest that was owed.
And, you might want to remember, we have an epidemic of mortgage fraud in this country. The banks were defrauded - Big time. Anyone familiar with
these matters knows this to be true - Mortgage fraud was rampant, and banks were the losers. Hence, bank failures at a record pace. Why? Fraud.
Banks got ripped off by sub-prime mortgage brokers and borrowers.
How can you call that a loss, considering that the fractional reserve system let the bank create most of that money out of thin air in the first
Again, if Ford manufactures a car and it costs them $15,000 to do so, and then sells the car for $20,000, did it create $5,000 out of thin air or
If a bank lends $15,000 to a borrower, and the bank conducted the credit investigation, analysis, appraisal, etc. to verify that the loan was a wise
investment, and the borrower then repays to the bank $20,000 over the course of say 3-5 years, is the bank creating money out of thin air? Of course
not. It's the profit for taking a risk. The borrower could have defaulted, and never repaid the $20,000.