[analyst]

The purpose of the FDIC is to protect depositors, nobody else. The impairments should be recognized, and if that puts the institution in a state that calls for being taken over, that is what should happen.

If the FDIC is confident in the judgment that the loans with impaired loan-to-value ratios will be paid as agreed, the FDIC can just turn them over to the acquiring institution with an agreement that the FDIC will eat any losses if/when they occur. This will insure that volunteers to take over the failing institution can be found.

If the FDIC is not confident in the judgment that the loans will be paid as agreed, it is time to flush the incompetent bankers out of the industry.

[analyst]

The purpose of the FDIC is to protect depositors, nobody else. The impairments should be recognized, and if that puts the institution in a state that calls for being taken over, that is what should happen.

If the FDIC is confident in the judgment that the loans with impaired loan-to-value ratios will be paid as agreed, the FDIC can just turn them over to the acquiring institution with an agreement that the FDIC will eat any losses if/when they occur. This will insure that volunteers to take over the failing institution can be found.

If the FDIC is not confident in the judgment that the loans will be paid as agreed, it is time to flush the incompetent bankers out of the industry.

[analyst]

The purpose of the FDIC is to protect depositors, nobody else. The impairments should be recognized, and if that puts the institution in a state that calls for being taken over, that is what should happen.

If the FDIC is confident in the judgment that the loans with impaired loan-to-value ratios will be paid as agreed, the FDIC can just turn them over to the acquiring institution with an agreement that the FDIC will eat any losses if/when they occur. This will insure that volunteers to take over the failing institution can be found.

If the FDIC is not confident in the judgment that the loans will be paid as agreed, it is time to flush the incompetent bankers out of the industry.

[analyst]

The purpose of the FDIC is to protect depositors, nobody else. The impairments should be recognized, and if that puts the institution in a state that calls for being taken over, that is what should happen.

If the FDIC is confident in the judgment that the loans with impaired loan-to-value ratios will be paid as agreed, the FDIC can just turn them over to the acquiring institution with an agreement that the FDIC will eat any losses if/when they occur. This will insure that volunteers to take over the failing institution can be found.

If the FDIC is not confident in the judgment that the loans will be paid as agreed, it is time to flush the incompetent bankers out of the industry.

[analyst]

The purpose of the FDIC is to protect depositors, nobody else. The impairments should be recognized, and if that puts the institution in a state that calls for being taken over, that is what should happen.

If the FDIC is confident in the judgment that the loans with impaired loan-to-value ratios will be paid as agreed, the FDIC can just turn them over to the acquiring institution with an agreement that the FDIC will eat any losses if/when they occur. This will insure that volunteers to take over the failing institution can be found.

If the FDIC is not confident in the judgment that the loans will be paid as agreed, it is time to flush the incompetent bankers out of the industry.

[analyst]

[quote=davelj] But there’s no reason to push an institution over the edge when the bank can repair itself with a few years’ time. Recall that the “price” of that repair will be borne by its shareholders, not taxpayers.[/quote]

There is no issue of pushing an institution over the edge. The institutions went over on their own initiative. The question is whether to try to pull them back.

The reason not to try to pull them back is to prevent incompetent bankers from continuing to be bankers. All the while the imprudent bankers were getting into trouble, they were making it harder for prudent bankers to gain business.

One effect of all this rescue activity is to make prudent and responsible people, who did not get into trouble, consider the option of being less prudent and responsible.

[analyst]

[quote=davelj] But there’s no reason to push an institution over the edge when the bank can repair itself with a few years’ time. Recall that the “price” of that repair will be borne by its shareholders, not taxpayers.[/quote]

There is no issue of pushing an institution over the edge. The institutions went over on their own initiative. The question is whether to try to pull them back.

The reason not to try to pull them back is to prevent incompetent bankers from continuing to be bankers. All the while the imprudent bankers were getting into trouble, they were making it harder for prudent bankers to gain business.

One effect of all this rescue activity is to make prudent and responsible people, who did not get into trouble, consider the option of being less prudent and responsible.

[analyst]

[quote=davelj] But there’s no reason to push an institution over the edge when the bank can repair itself with a few years’ time. Recall that the “price” of that repair will be borne by its shareholders, not taxpayers.[/quote]

There is no issue of pushing an institution over the edge. The institutions went over on their own initiative. The question is whether to try to pull them back.

The reason not to try to pull them back is to prevent incompetent bankers from continuing to be bankers. All the while the imprudent bankers were getting into trouble, they were making it harder for prudent bankers to gain business.

One effect of all this rescue activity is to make prudent and responsible people, who did not get into trouble, consider the option of being less prudent and responsible.

[analyst]

[quote=davelj] But there’s no reason to push an institution over the edge when the bank can repair itself with a few years’ time. Recall that the “price” of that repair will be borne by its shareholders, not taxpayers.[/quote]

There is no issue of pushing an institution over the edge. The institutions went over on their own initiative. The question is whether to try to pull them back.

The reason not to try to pull them back is to prevent incompetent bankers from continuing to be bankers. All the while the imprudent bankers were getting into trouble, they were making it harder for prudent bankers to gain business.

One effect of all this rescue activity is to make prudent and responsible people, who did not get into trouble, consider the option of being less prudent and responsible.

[analyst]

[quote=davelj] But there’s no reason to push an institution over the edge when the bank can repair itself with a few years’ time. Recall that the “price” of that repair will be borne by its shareholders, not taxpayers.[/quote]

There is no issue of pushing an institution over the edge. The institutions went over on their own initiative. The question is whether to try to pull them back.

The reason not to try to pull them back is to prevent incompetent bankers from continuing to be bankers. All the while the imprudent bankers were getting into trouble, they were making it harder for prudent bankers to gain business.

One effect of all this rescue activity is to make prudent and responsible people, who did not get into trouble, consider the option of being less prudent and responsible.

[analyst]

For eligible borrowers, the VA loan is the very best loan to have. From the seller’s point of view, it is the worst kind of loan.

The VA prohibits the borrower from paying several kinds of fees that are commonly charged to buyers. The seller must pay these, or convince people not to charge them, an undesirable complication.

The VA requires an inspection by a VA-specified inspector. The seller may be required to remedy certain conditions which would not become issues with other types of loans. As much trouble as it is, the VA inspection is not sufficiently detailed to be the only inspection. You should still engage an inspector working for you to give the house an exhaustive examination.

In a competitive situation, the VA loan will be the first one eliminated from consideration (unless you happen to be dealing with a seller who is also a veteran and feels affluent enough to give a fellow veteran a break).

Calculate whether you can tolerate an FHA loan with the 3.5% down payment, taking into account the federal tax credit, if eligible. If it doesn’t work today, listen for the announcement of a larger tax credit, with relaxed eligibility requirements.

[analyst]

For eligible borrowers, the VA loan is the very best loan to have. From the seller’s point of view, it is the worst kind of loan.

The VA prohibits the borrower from paying several kinds of fees that are commonly charged to buyers. The seller must pay these, or convince people not to charge them, an undesirable complication.

The VA requires an inspection by a VA-specified inspector. The seller may be required to remedy certain conditions which would not become issues with other types of loans. As much trouble as it is, the VA inspection is not sufficiently detailed to be the only inspection. You should still engage an inspector working for you to give the house an exhaustive examination.

In a competitive situation, the VA loan will be the first one eliminated from consideration (unless you happen to be dealing with a seller who is also a veteran and feels affluent enough to give a fellow veteran a break).

Calculate whether you can tolerate an FHA loan with the 3.5% down payment, taking into account the federal tax credit, if eligible. If it doesn’t work today, listen for the announcement of a larger tax credit, with relaxed eligibility requirements.

[analyst]

For eligible borrowers, the VA loan is the very best loan to have. From the seller’s point of view, it is the worst kind of loan.

The VA prohibits the borrower from paying several kinds of fees that are commonly charged to buyers. The seller must pay these, or convince people not to charge them, an undesirable complication.

The VA requires an inspection by a VA-specified inspector. The seller may be required to remedy certain conditions which would not become issues with other types of loans. As much trouble as it is, the VA inspection is not sufficiently detailed to be the only inspection. You should still engage an inspector working for you to give the house an exhaustive examination.

In a competitive situation, the VA loan will be the first one eliminated from consideration (unless you happen to be dealing with a seller who is also a veteran and feels affluent enough to give a fellow veteran a break).

Calculate whether you can tolerate an FHA loan with the 3.5% down payment, taking into account the federal tax credit, if eligible. If it doesn’t work today, listen for the announcement of a larger tax credit, with relaxed eligibility requirements.

[analyst]

For eligible borrowers, the VA loan is the very best loan to have. From the seller’s point of view, it is the worst kind of loan.

The VA prohibits the borrower from paying several kinds of fees that are commonly charged to buyers. The seller must pay these, or convince people not to charge them, an undesirable complication.

The VA requires an inspection by a VA-specified inspector. The seller may be required to remedy certain conditions which would not become issues with other types of loans. As much trouble as it is, the VA inspection is not sufficiently detailed to be the only inspection. You should still engage an inspector working for you to give the house an exhaustive examination.

In a competitive situation, the VA loan will be the first one eliminated from consideration (unless you happen to be dealing with a seller who is also a veteran and feels affluent enough to give a fellow veteran a break).

Calculate whether you can tolerate an FHA loan with the 3.5% down payment, taking into account the federal tax credit, if eligible. If it doesn’t work today, listen for the announcement of a larger tax credit, with relaxed eligibility requirements.

[analyst]

For eligible borrowers, the VA loan is the very best loan to have. From the seller’s point of view, it is the worst kind of loan.

The VA prohibits the borrower from paying several kinds of fees that are commonly charged to buyers. The seller must pay these, or convince people not to charge them, an undesirable complication.

The VA requires an inspection by a VA-specified inspector. The seller may be required to remedy certain conditions which would not become issues with other types of loans. As much trouble as it is, the VA inspection is not sufficiently detailed to be the only inspection. You should still engage an inspector working for you to give the house an exhaustive examination.

In a competitive situation, the VA loan will be the first one eliminated from consideration (unless you happen to be dealing with a seller who is also a veteran and feels affluent enough to give a fellow veteran a break).

Calculate whether you can tolerate an FHA loan with the 3.5% down payment, taking into account the federal tax credit, if eligible. If it doesn’t work today, listen for the announcement of a larger tax credit, with relaxed eligibility requirements.

[Author]

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