There was recent guidance from the Department of The Treasury, FDIC, OTS and other agencies regarding Subprime Lending. The “Final Guidance” applies directly to any institution that is under their thumb. In general this is directly banks that lend their own money, with deposits that are covered by FDIC insurance.
It probably does not apply to those who broker loans or hope to sell them off on Wall Street.
I believe that any BANK could have a BANC division so these regulations wouldn’t apply. Crazy loophole.
There will always be someone willing to take a risk at some rate, so crazy leneding won’t disappear completely.
The potential losses in the next 36 months are staggering, but much of the risk is already spread out upon the global economy.
There probably will be institutions that will fail and need a federal bailout ala Lincoln Savings Days. There are pension funds and other major funds that will collapse.
The aftermath could be 1930’s like and further separate the rich from the poor. The middle class is shrinking.
