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Originally posted by CookieMonster09
Baloney. Take the Balance Sheet of any well-run mid-sized bank. They have billions of dollars on deposit that they can lend against.
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.
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 spending habits.
Originally posted by daggyz
Oh my God. You're right. Why invest in bank when there are plenty of high risk low accountability options to invest in. Man, why play it safe just after all that's happened.. What were we thinking !!!!!
Originally posted by FortAnthem
Not to mention the fact that, thanks to fractional reserve banking, they get to loan out 10 times more money than they actually have in those savings accounts. They're charging people massive interest to loan them money that they don't even have, that they created out of thin air.
[edit on 5/14/10 by FortAnthem]
Originally posted by CookieMonster09
Explain to me, please, how Comerica Bank is "making money out of thin air."
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.
Banks Create the Money They Lend
Bankers will tell you that they do not create money. At a 10% reserve requirement, they simply lend out 90% of their deposits. The catch is that their “deposits” include the money they have written into their customers’ accounts as loans. That is how loans are made: numbers are simply written into the accounts of borrowers, as many reputable authorities have attested. Here are two of them, dating back to when officials were either more aware of what was going on or more open about it:
“[W]hen a bank makes a loan, it simply adds to the borrower’s deposit account in the bank by the amount of the loan. The money is not taken from anyone else’s deposit; it was not previously paid in to the bank by anyone. It’s new money, created by the bank for the use of the borrower.”
– Robert B. Anderson, Treasury Secretary under Eisenhower, in an interview reported in the August 31, 1959 issue of U.S. News and World Report
“Do private banks issue money today? Yes. Although banks no longer have the right to issue bank notes, they can create money in the form of bank deposits when they lend money to businesses, or buy securities. . . . The important thing to remember is that when banks lend money they don’t necessarily take it from anyone else to lend. Thus they ‘create’ it.”
– Congressman Wright Patman, Money Facts (House Committee on Banking and Currency, 1964)
Okay, now let me explain it - in my own words - as I have understood it, through my research.
Derivatives Meaning = Lets say: A bank has a deposit of $1000 - they are suppose to only lend up to 90% of that deposit out. So they then lend $900 out to someone, now they add that $900 loan to "deposits" - because it is seen as money in the bank. So, now they took that $1000 and made it to $1900 as deposits. So now they are able to loan 90% of $1900 - so they loan $1710 to someone else. Once that happens, again they can add that $1710 as money in the bank. The cycles goes on and on - until the reality is quadtrillion - some say quintrillions is loaned out - in money that is not actually there. Thus we have a house of cards that has no base and that is WHY the banks - don't actually have all the money that are in deposits in the banks. So that means - what you think you have in the bank in the form of money - is NOT THERE!
I'll give you three of many ALT-A/exploding ARM subprime lenders that failed...three big ones, three commercial banks you might remember. IndyMac...WaMu...Wachovia.
On another note, the low interest rate policy you praise fueled the housing bubble under Greenspan.....
17 years ago, I went to the bank to cash a check for a measly $15,000.
Probably so, as long as you don't try to convert it to cash. As long as everything stays in bits and bytes, it's all good, eh?
Cookiemonster, I ask you these questions: Where does money come from? How much is there? How much was there? By what method did the amount increase?
Seems they loaned more than they had, didn't they? Where did that extra 2.2 billion come from?
The question keeps coming down to this: how can a bank loan money it doesn't have? Because loaning creates money
Savings and loan crisis
The savings and loan crisis of the 1980s and 1990s (commonly referred to as the S&L crisis) was the failure of 747 savings and loan associations (S&Ls aka thrifts). A Savings and Loan is a financial institution in the United States that accepts savings deposits and makes mortgage, car and other personal loans to individual members - a cooperative venture known in the United Kingdom as a Building Society. The ultimate cost of the crisis is estimated to have totaled around $160.1 billion, about $124.6 billion of which was directly paid for by the US government via a financial bailout under the leadership of George H.W. Bush—that is, the US taxpayer provided the funding for the bailout, either directly or through charges on their savings and loan accounts and increased taxes—which contributed to the large budget deficits of the early 1990s.
The concomitant slowdown in the finance industry and the real estate market may have been a contributing cause of the 1990–1991 economic recession. Between 1986 and 1991, the number of new homes constructed per year dropped from 1.8 million to 1 million, which was at the time the lowest rate since World War II.
Read more: Wickipedia
Originally posted by CookieMonster09
17 years ago, I went to the bank to cash a check for a measly $15,000.
Unusual scenario. Typically, only drug dealers and con artists need that kind of cash all at once. I am sure you raised a few eyebrows.
Probably so, as long as you don't try to convert it to cash. As long as everything stays in bits and bytes, it's all good, eh?
Blame Microsoft. Computers - It's the modern age.