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Thread: Bank regulation and slow house repossessions on mortgage defaults threaten to make zombies of banks

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    Default Bank regulation and slow house repossessions on mortgage defaults threaten to make zombies of banks

    Have the banks become zombies that are incapable of lending to even viable businesses?The bank regulator Matthew Elderfield demanded that banks meet capital and liquidity standards that are higher than in other countries and at a faster pace. That is a desirable long run goal but in the short term it could stifle lending as banks constrain their business loans both to increase their cash and reduce their ratios of loans to shareholder capital. Hopefully, the regulator will relent on target standards if he sees that business loans are drying up.

    An even greater risk to business lending is that banks could be prevented by the government from taking prompt action to repossess houses on mortgage defaults and arrears,now running at 11% of mortgages. If the banks can't sell off those houses,that means they have less money to lend and their potential to lend is further reduced by the writedown of mortgage assets.

    Folk memories of heartless 19th century evictions in Famine and post Famine Ireland still have some sway in Irish thinking and the numerically large number of families threatened with eviction are a potent political lobby.

    The seemingly reasonable solution talked up by the media is for the banks to give writeoffs on mortgages,reducing them to levels families can afford. The banks could also retain an interest in potential future capital gains above the level of the written down amount in the event of a sale.However,going by US experience most bank restructurings of mortgages in default resulted in repeated defaults in a relatively short time,suggesting that those debtors are hopeless cases.

    If the government makes it easy for debtors to declare bankruptcy,a new wave of defaults on mortgages under water (ie house worth less than the mortgage) is likely.
    Last edited by patslatt; 14th December 2012 at 01:53 AM.

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    Pat, still out phishing?
    Racism = fear, low self-esteem and breath-taking ignorance.

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    the banks should repossess hopeless cases where the mortgage holders have no hope of paying the mortgage back.

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    Politics.ie Member Flimflam's Avatar
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    They've been Zombie Banks for the past five years! Where have you been ?

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    Politics.ie Member storybud1's Avatar
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    Developers spend 12 months in the UK going bankrupt and come back laughing.

    Joe Bloggs goes hungry so he can pay the crazy mortgage sold to him by the politicians/bankers and developers.

    Conclusion, Politicians and banks may end up at the wrong end of a Pike soon, the despair will eventually turn to anger as Irish people don't do protests very well, they get pent up and then blow!

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    Politics.ie Member richie268's Avatar
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    It is not about banks anymore but about Countries and the so called Capitalist system that has failed so miserably.

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    Quote Originally Posted by Flimflam View Post
    They've been Zombie Banks for the past five years! Where have you been ?
    I was one of the first to use the phrase zombie banks in relation to Irish banks on P.ie years ago.

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    Quote Originally Posted by storybud1 View Post
    Developers spend 12 months in the UK going bankrupt and come back laughing.

    Joe Bloggs goes hungry so he can pay the crazy mortgage sold to him by the politicians/bankers and developers.

    Conclusion, Politicians and banks may end up at the wrong end of a Pike soon, the despair will eventually turn to anger as Irish people don't do protests very well, they get pent up and then blow!
    The last time that happened was 99 years ago in the 1913 General Strike and before that in 1798. The odds of still relatively prosperous Irish people rioting on a large scale are almost nil.

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    Banks aren't Zombies. They're the Lich Lords of Finance.

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    Quote Originally Posted by storybud1 View Post
    Conclusion, Politicians and banks may end up at the wrong end of a Pike soon, the despair will eventually turn to anger as Irish people don't do protests very well, they get pent up and then blow!
    The problem with the Irish people,” Ian says, as we drive away from the black hole that ruined Joe McNamara, “is that you can push them and push them and push them. But when they break they go wacko.”
    When Irish Eyes Are Crying

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