Banks Open Loan Spigot

witness23 · Dec 30, 2010

Link: Banks Open Loan Spigot for Businesses - WSJ.com

Uptick in Lending to Businesses Is Expected to Accelerate Next Year.

I am hoping this is a good sign, but it will only be good news if the banks are loaning money to good business' with a well thought out and solid business plan. Only time will tell.

A snippet from the article.

We may be on our way to clearing one hurdle on the path to economic recovery: We're seeing the first quarterly increase in commercial and industrial lending in two years, reports the Wall Street Journal, compliments of big banks like JPMorgan Chase and US Bancorp. Moody's Analytics estimates 0.2% fourth quarter growth over the third quarter, to $1.22 trillion, and predicts a 3% rise in lending for 2011. Commercial and industrial lending "is the last thing that turns in a business cycle," notes a chief economist at Moody's.

Business will likely use the loans to beef up their operations, which could snowball into new jobs, and increased borrowing and spending by those fresh employees. Though the amount of outstanding business loans is nowhere near historical levels, and lending activity isn't consistent between all banks and industries, analysts say the uptick is worth acknowledging. "As banks get healthier, they get more rational and reasonable about normal risk taking," says a JPMorgan exec. However, lending normally sees a bump at year-end as companies increase their inventories, notes a Goldman Sachs analyst, who says "the true acid test" will come in early 2011.

greg334 · Dec 30, 2010

Actually there is more to this than what meets the eye. Many banks are now back to making sub-prime loans which was the problem in the first place. With the auto companies using sub-prime and the housing market ramping up their sub-prime loans, we are going to be right back to the same thing as we were in 2007/8

witness23 · Dec 30, 2010

greg334 said:
Actually there is more to this than what meets the eye. Many banks are now back to making sub-prime loans which was the problem in the first place. With the auto companies using sub-prime and the housing market ramping up their sub-prime loans, we are going to be right back to the same thing as we were in 2007/8

I agree greg, not totally, but to a degree. This story is about commercial and industrial loans though.

layoutshooter · Dec 30, 2010

It will be good IF the loans are good and IF there are no government "strings" attached to those loans. The ONLY thing that should be looked at is the business it self. Giving preference to "Green industry" so to speak has no place in this country.

witness23 · Dec 30, 2010

layoutshooter said:
It will be good IF the loans are good and IF there are no government "strings" attached to those loans. The ONLY thing that should be looked at is the business it self. Giving preference to "Green industry" so to speak has no place in this country.

You are correct layout. Although, if there are tax credits, tax breaks, to help the U.S. to bring back or start new manufacturing jobs I am for that. I would hope that it would be done with the utmost integrity.

We need MANUFACTURING jobs here in the states.

layoutshooter · Dec 30, 2010

witness23 said:
You are correct layout. Although, if there are tax credits, tax breaks, to help the U.S. to bring back or start new manufacturing jobs I am for that. I would hope that it would be done with the utmost integrity.

We need MANUFACTURING jobs here in the states.

NO tax breaks for anyone or anything. That smacks of "government intervention". Instead, have a more equal tax system, NOT an income tax and insure that EVERYONE pays taxes. NO more free rides. Hard working Americans should NOT have their money taken from them at the point of a gun and given away to those who did not EARN it. That is armed robbery. Robin Hood was a THIEF and so is our government. They have been robbing hard working Americans for YEARS!!

Government cannot create manufacturing jobs through tax engineering. The ONLY thing that can do that is an industry that can produce a product that people want to buy, produce a QUALITY product at price that people will want to pay. Nothing else works. Government is in the way when it comes to this. Government needs to get OUT the way of industry.

letzrockexpress · Dec 30, 2010

greg334 said:
Actually there is more to this than what meets the eye. Many banks are now back to making sub-prime loans which was the problem in the first place. With the auto companies using sub-prime and the housing market ramping up their sub-prime loans, we are going to be right back to the same thing as we were in 2007/8

Sub Prime has existed in the auto market for many, many years. In recent years, these loans accounted for more than 40% of car sales. I spent a little more than 3 years in the consumer lending business. Companies like Ford Motor Credit have made a fortune through this process. They actually never quit this type of lending all the way through the lending crisis. They raised their fico requiremets a little bit but it never completely stopped. They are about to break the bank this coming year. Mortgage lending is an entirely different animal. I could tell you stories that will curl your hair ( and I know how much you have

). I won't go into it here but it was unbelievable what I saw some lenders do. We are lucky it didn't get any worse than it did! But I digress..

greg334 · Dec 30, 2010

Witness, the only way we can get manufacturing back into the country is if we become a third world economy and that won't happen. I posted many times that the fallacy of the manufacturing jobs is just that, a fallacy and with improvements in manufacturing (like the one man shops now popping up), what used to take 10 people, now takes one.

Letz, Yes they have been selling cars with sub-prime loans but a lot of those loans end up as repos and then those are back on the market as used but salable cars. GM is a great example, one BIG problem has been, especially with GM is their sales through sub-primes caused them to have a backlash with sales of new cars (GM's comment). They have also been proactive in returning back to controlling the sub-prime lender which I think should have been part of the agreement for the bailout - never to venture back into that part of lending. The funny thing is I posted a couple weeks back about how Canada has yet to have the banking problems we have, they don't allow sub-prime loans - period. I would think that this would have been the number one issue with the "New Banking Regulations" but wasn't.

witness23 · Dec 30, 2010

letzrockexpress said:
Mortgage lending is an entirely different animal. I could tell you stories that will curl your hair ( and I know how much you have ). I won't go into it here but it was unbelievable what I saw some lenders do. We are lucky it didn't get any worse than it did! But I digress..

You are absolutely right when you said we were lucky it didn't get worse. My neighbor was the manager and a loan officer for Countrywide from '04 to '08 and told me stories that would make you want to lynch the guy. He also ran a PayDay Loan business for one year in 2007 that also would prepare your taxes. He knew what he was doing was unethical but justified it by saying the Government is letting us write these loans, so why shouldn't he take advantage of the opportunity that was facing him, and make money while he could. One thing this guy is, he's smart. He told me he was getting out of the mortgage lending business in 2008 when President Obama was campaigning for the presidency. He said everything was going to change if this guy got into office. He voted for him

AMonger · Dec 30, 2010

Hope you have plenty of money on hand. The long-awaited release of these funds will trigger substantial price inflation.

letzrockexpress · Dec 30, 2010

greg334 said:
a lot of those loans end up as repos and then those are back on the market as used but salable cars.

Yep, you know what they say...."we drive em' first"....

muttly · Dec 30, 2010

witness23 said:
You are absolutely right when you said we were lucky it didn't get worse. My neighbor was the manager and a loan officer for Countrywide from '04 to '08 and told me stories that would make you want to lynch the guy. He also ran a PayDay Loan business for one year in 2007 that also would prepare your taxes. He knew what he was doing was unethical but justified it by saying the Government is letting us write these loans, so why shouldn't he take advantage of the opportunity that was facing him, and make money while he could. One thing this guy is, he's smart. He told me he was getting out of the mortgage lending business in 2008 when President Obama was campaigning for the presidency. He said everything was going to change if this guy got into office. He voted for him

He voted for Obama and considered smart? That's not really possible.

greg334 · Dec 30, 2010

How is a payday loan thing unethical?

witness23 · Dec 31, 2010

muttly said:
He voted for Obama and considered smart? That's not really possible.

Go away kid, you're bothering me.

witness23 · Dec 31, 2010

greg334 said:
How is a payday loan thing unethical?

Depends on the reasons why you would you open one and run one? Let me ask you this, would you own and operate a PayDay loan store?

greg334 · Dec 31, 2010

witness23 said:
Depends on the reasons why you would you open one and run one? Let me ask you this, would you own and operate a PayDay loan store?

Yes, I don't see the unethical reasoning behind it.

It is the same as a pawnbroker or a bank. The ethics of the individual seeking the loan has more to do with it than the ethics of making money on lending it out as far as I can see.

No one makes them come into 'my' store, ask for money and make the agreement of a loan. Their circumstances are not my concern, but if they agree to the terms then it is their problem to live up to the terms that we agree upon.

The same holds true for what people call predatory lending. There is are two factors involved the problem of blaming the lender, one is the greed of the individual(s) who seeks out the loan and the other is a need to tell people they have to have something they don't need or really can't afford through different means (TV, politicians, sales people, friends). The lender comes up with the terms and like it or not, it is their terms but no one forces the individual to sign. If someone can't understand to read and ask questions before signing that loan document, then it is their problem, not the lenders.

layoutshooter · Dec 31, 2010

greg334 said:
Yes, I don't see the unethical reasoning behind it.

It is the same as a pawnbroker or a bank. The ethics of the individual seeking the loan has more to do with it than the ethics of making money on lending it out as far as I can see.

No one makes them come into 'my' store, ask for money and make the agreement of a loan. Their circumstances are not my concern, but if they agree to the terms then it is their problem to live up to the terms that we agree upon.

The same holds true for what people call predatory lending. There is are two factors involved the problem of blaming the lender, one is the greed of the individual(s) who seeks out the loan and the other is a need to tell people they have to have something they don't need or really can't afford through different means (TV, politicians, sales people, friends). The lender comes up with the terms and like it or not, it is their terms but no one forces the individual to sign. If someone can't understand to read and ask questions before signing that loan document, then it is their problem, not the lenders.

Be careful Greg, that sound an awful lot like requiring personal responsibility. Liberal/leftist politicians HATE that!! If people accept responsibility for their own actions and their own lives it takes away power and control from the government. Personal responsibility is a threat to this government and liberal/leftists in general.

mrgoodtude · Dec 31, 2010

greg334 said:
Yes, I don't see the unethical reasoning behind it.

It is the same as a pawnbroker or a bank. The ethics of the individual seeking the loan has more to do with it than the ethics of making money on lending it out as far as I can see.

No one makes them come into 'my' store, ask for money and make the agreement of a loan. Their circumstances are not my concern, but if they agree to the terms then it is their problem to live up to the terms that we agree upon.

The same holds true for what people call predatory lending. There is are two factors involved the problem of blaming the lender, one is the greed of the individual(s) who seeks out the loan and the other is a need to tell people they have to have something they don't need or really can't afford through different means (TV, politicians, sales people, friends). The lender comes up with the terms and like it or not, it is their terms but no one forces the individual to sign. If someone can't understand to read and ask questions before signing that loan document, then it is their problem, not the lenders.

Now there is a concept..
People being responsible...Well said Greg