[quote=jpinpb][quote=XBoxBoy]
If you want to cure the current problem, you need to allow the foreclosures to happen. If you want to keep this problem from happening in the future, you better make sure that banks only make loans to people that can/will pay them back.
[/quote]
Some banks are not suffering from any of this. Remember, the taxpayers are bailing them out. It’s a win-win for them. Give bad loan. If they make payments, bank wins. If they don’t make payments, government gives them money. Bank subsidy.
They won’t care much if this problem happens again (and I can see it happening again, maybe in our lifetime). No one will have learned from this b/c no one suffered but the taxpayers.[/quote]
The only banks who are “not suffering from any of this” are the banks who didn’t get involved in subprime lending, construction lending, or absurd CRE lending. Every bank that has had any involvement in the aforementioned areas has suffered. Perhaps not as much as you’d like, but they’ve suffered. The KBW Bank Index is down 70% from its peak. Trust me, shareholders of large banks have suffered a plenty.
And the preferred and bond holders of banks that have failed have been wiped out as well. And this is going to continue for a few years on a large scale. Now, perhaps the bond holders of some of the large banks should have taken haircuts as well, but certainly there’s been some degree of suffering on the fixed income side as well. Moreover, there have been hundreds of thousands of folks laid off in the banking industry.
My point is that while you may believe that the suffering among bank management/shareholders/other investors/etc. hasn’t been enough – and that’s a debatable point – more than just taxpayers have suffered from this banking debacle. That should be pretty clear at this point.
