[Summit] Marco's bank worries

Thu Dec 25 17:27:17 UTC 2008

I understand your worries about banks, and you are right to take an interest
in how business is handled, but the situation is very complicated.

And it is important to know, that If "everyone" takes their money from a
bank, even "GOOD" banks will collapse, because the way the banks make money,
is they invest it, and even good investments have time commitments.  No bank
is completely "liquid"-  it can't be.  And if banks didn't invest in at
least some high risk investments, they would have trouble making money.

If you seriously try to get lots of people to take money out of a specific
bank, without having a very specific reason for questioning that bank,  I
think you can get in trouble with the law, because you can destroy a
perfectly upstanding bank that way.  Some people will see that others are
worried, and assume they have a reason, and more and more people take out
their money till it is too much for the bank- to have enough money to
continue in business.  This is called "starting a run on a bank."

A different example would be- It would be like someone coming and saying
that you, Marco, are not trust worthy as a contractor, and after they
convince just a few people, then others would see that some people are
avoiding you and decide there "must be a reason", and soon "the word gets
around" that "no-one is using you" so then how would you stay in business?
If there is no reason for that; it would not be right.

But Human beings often just go by what other people are doing, because they
do not have enough information to make their own choices; and we do have so
many decisions to make daily, we make many without thinking how we decided.
We have to be very careful.

People often thoughtlessly repeat what other people have said, not thinking
how damaging their words may be, and EVEN if they don't know if what they
are saying is true.  Because of this there are some some laws about this.

By the way, banks make annual reports to the FDIC and those are public
information, and often they make their share holder reports available also.
So you can get quite a bit of information.  (Credit Unions have the NCUA )

And the FDIC (Federal Deposit Insurance Corporation) insures them.  That
would be a good place to complain, in my opinion. It is the FDIC that
"allows" or doesn't allow risky behavior, and then uses our taxpayer money
to broker deals to clean up messes which maybe they "allowed" to happen in
the first place??

If banks had not been "allowed" to "sell" the risky loans they made, and
were required to keep them, to hold and collect on them themselves, the way
it was done years ago, I am sure a lot less would have gotten made.

At least this is my understanding of all this. I am not in finance, just a
small business person.  If you are interested in this, there are a bunch of
magazines at the local library that help us regular folks understand some of
what is going on- although due to freedom of the press, they sometimes say
contradictory things.  Kiplinger's, Money Magazine, Forbes, Fortune,
Business Week

Elianna

On Wed, Dec 24, 2008 at 6:07 PM, marco pereira <markenid2004 at mac.com> wrote:

> Since the banks do not want to talk about how they will use the money,
> Imagine if everyone takes his money from the banks?
>
> That could me they listen us? This is more important than name some place.
>
>
> Marco
>
>
>
>
>
>
> CNN contacted the banks that were given the biggest chunks of the bailout:
> Citigroup, JPMorgan Chase, Wells Fargo and Bank of America<http://topics.edition.cnn.com/topics/Bank_of_America_Corporation>
> .
>
> The latter received $15 billion as part of the federal Troubled Assets
> Relief Program (TARP).
>
> Where the money went is not clear.
>
> "We are using the TARP funds to build our capital and make every good loan
> that we can," Bank of America said. The bank said it expects to release more
> information in its fourth quarter earning report.
>
> Citigroup <http://topics.edition.cnn.com/topics/Citigroup_Inc>, JPMorgan
> Chase <http://topics.edition.cnn.com/topics/JP_Morgan_Chase_Co> and Wells
> Fargo <http://topics.edition.cnn.com/topics/Wells_Fargo_Company> each
> received $25 billion -- the largest amount given to any bank.
> Don't Miss
>
>    - *CNN/Money: *Banking on another bad year<http://edition.cnn.com/money/2008/12/22/news/companies/banks_2009/index.htm?cnn=yes>
>
> Wells Fargo said it can't provide any details until it releases its fourth
> quarter statement, though the bank said it intends to use the money to help
> customers avoid foreclosure.
>
> Citigroup said it was using TARP money to help expand the flow of credit
> and had formed a special committee to oversee the TARP money.
>
> JPMorgan Chase pointed out that it recently bought more than $1 billion in
> Illinois bonds and plans to lend $5 billion to nonprofit and health care
> companies.
>
> "What the banks have said largely is that we're using the money to
> stimulate the economy, to get the economy moving," said Sarah Binder, a
> senior fellow at The Brookings Institution, a Washington think tank. "That's
> far, far too general to know what ... the banks are doing with the money."
>
> The vague responses from the banks should not come as a shock, said one
> U.S. House Financial Services Committee member who opposed the bailout.
>
> "One of the fundamental problems with the Wall Street bailout was the
> people who had caused the problem were never called in front of Congress to
> explain what they had done, what needed to be done," said Rep. Thaddeus
> McCotter, a Michigan Republican.
>
> Congress did not put conditions on the bailout money, leaving lawmakers to
> press the Treasury Department for transparency after the money was handed
> out.
>
> Critics say Congress needs to demand conditions before the second round of
> bailout money is distributed.
>
> Earlier this month, members of a key congressional committee blasted the
> Treasury for its handling of the bailout, saying it lacks appropriate
> measures to ensure the bailout is working. At a hearing held by the
> Financial Services Committee, chairman Barney Frank, D-Massachusetts,
> accused the Treasury of failing to address its obligation to address
> foreclosures and enforce lending obligations on banks.
> [image: advertisement]
>
> The hearing served as a follow-up to two reports on how the Treasury has
> conducted its bailout program, including the Congressional Oversight Panel's
> report on TARP, as well as a GAO report delivered to lawmakers that called
> for more accountability and transparency.
>
> Congressmen on both sides of the aisle used the scathing reports as a
> launching pad, lambasting the Treasury for a general lack of clarity about
> its strategy as well as a dearth of measures that ensure banks are using the
> bailout funds for their intended purposes.
>
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