Talk Morgan Forums Community The Malvern Arms PCP Car Finance Future Problems

If borrowers can't control themselves, then the lenders should. The crash happened because of untested CDO's (broadly) and at the heart of that was people borrowing vast sums against worthless properties. These people very promptly blamed the bankers - when really it was their fault for borrowing more than their properties were worth.

The properties weren't worthless when the borrowing was taken out. Affordability was the issue, not equity ratios.

The two key issues, as I see them, were:

Lenders accepting self-certification of earnings and mortgage brokers knowing that if earnings weren't effectively checked they could coerce clients into stretched (fraudulent) applications

The creation of mortgage products with discounted interest rates for the first few years, which then ramped up sharply (allowing brokers to say "don't worry, you'll be earning more by the time that happens").

But blue-collar earnings didn't rise (globalisation) mortgage-holders started handing back the keys to their houses as arrears grew, and the bank balance sheets cracked as mortgage defaults finally dragged down the CDO debt securities the mortgages were packaged into. And a decade later, the world is still dealing with the mess it grew into.

Beat me too it - the point I was going to make

Be that as it may, how far do we go with the idea that the public are incapable of looking after themselves and so someone, whether state of business, should do it for them?

We have applied that philosophy to money lending. Why not to food - making the food companies responsible for supervising the food you buy. And then of course there are the car companies who should check you out to make sure you are capable of driving one of their cars. And the clothing companies, who have to make sure you dress up warmly.

Why not? None of these issues are any simpler than working out loan interest.

We can't save them all.

A little bleach in the gene pool could be valuable as we overpopulate our little planet.

Worthless in the true sense of the word - worth less than many of the over 100% mortgages being taken out. Or 100% LTV mortgages. I have little sympathy with highly leveraged borrowing to buy cars with tinted windows.

Indeed..
When we lived in Germany in the 90s the bank controlled all your credit. Any and every application, car loan, credit card, store card, whatever, had to go through your bank and they and they alone made a call on your ability to pay.
Oh, each person could only have one bank account.

How very Germanic.All following orders but this time from Herr Mannering!

It's probably not a bad idea - multiple lines of credit (a wallet full of maxed out credit cards) would be avoided.

As they say,"Befehl ist Befehl"...

And as the Borge Queen said, resistance is futile...!