TL;DR Theatre Presents ZOMG WTF BANKING CRISIS, Act I: "Banking Ain't Rocket Science"

[crossfire]

Good evening everyone and welcome to a very special edition of TL;DR Theatre, in which I'm going to present ZOMG WTF BANKING CRISIS, a play in two acts that attempts to explain the banking crisis we are currently facing. I've been doing a lot of reading and research on this, and though I don't have any formal education in business management, I do

Comments

[nightfallcub]

I like shoes.

actually:

a. thank you for explaining this in a semi-simplified way.

b. I'm astounded at your mind sometimes. Even with this simple way of putting it, I am having trouble with wrapping my head around it. I'm so bad at understanding how the business world works.

[wordweaverlynn]

Is there any chance you could unlock this, so I could share your wisdom with the world?

Also. Also. Have you heard that the banks haven't been paying their FDIC premiums in years? FDIC collected no insurance premiums from most banks from 1996 to 2006.

[alessar]

I heard that. My head almost asploded. This is how I distilled the bank comments:

"We were doing good and didn't think the good times would ever end, so we stopped paying into the insurance fund that was created that one time the economy really tanked suddenly and caught us pantsless."

Yeah, some people need to be kicked in the head.

[crossfire]

Sure, I'll unlock it. (It just got locked because that's the default setting when I post, so no biggie.)

I did know about the FDIC premiums. I didn't mention it because I wanted to keep things uber-simple. Right now, the vast amounts of money being thrown around cover the depositor's equity, so we don't actually need the FDIC...at least, not for the money.

[randomdreams]

I'm glad you unlocked it: I'm taking that as an invitation to post a link to it because I think a lot of people should read it.

[twfarlan]

Yeah, and if that's all that was happening, I'd be less pissed off. So would a lot of people. If bankers, company executives, and so on were actually sacrificing company capital to protect those who were owed money, this wouldn't be as toxic intellectually and emotionally as it is financially. Problem is, those bankers and executives who are smiling and saying, "Ride it out with us; it'll pinch but pass," are then quietly making sure that they get their cuts FIRST and are then bailing out on everyone. "Well, that happened while I was still at that bank/company/agency, but I'm no longer associated with it and was contractually obliged to this payout, so I've got mine and my successor will have to explain to you where yours might come from; not my problem anymore."

I'm guessing this will part of Act II?

[crossfire]

Yes, I'm planning on talking about the intellectual and emotional toxicity--which is a really good way of describing it. But probably not in the way you are thinking, however.

[tigerbright]

That's an excellent explanation.

[bradferd23]

Pretty close to what is going on out there. The only thing you left out, was this:

As you are waiting for the person to pay the mortgage, you (the bank) is paying the interest to the investor. You are obligated to pay them according to the agreement you signed with the investor. Not only is the asset going up in smoke, but you are also losing the interest payment to the investor.

The whole foreclosure process has been quite interesting to learn. Especially how figures have been calculated for when the asset goes to sale.