Financial Information
What do you think is the real problem, behind all these banks and investment firms, failing?
Question : What do you think is the real problem, behind all these banks and investment firms, failing?
Do you believe it has to do more with our image and policies overseas? Or do you believe it has to do with more of greed and unscrupulous lenders? How long before a full blown collapse and depression? Do you feel safe with keeping over 10K in you company’s stock/IRA?
investment firms
Best answer:
Answer by vitalogo
GREED.
the people running those banks simply took more risk than they could handle.
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#2 written by Al 1 year ago
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#3 written by cbjack 1 year ago
Greed.
The value of houses kept going up way beyond what they were worth. Banks and investment companies were to eager to get in on the easy money. Now houses are worth what they should be worth and the big shots took one in the shorts. Big deal.
And the greedy home owners who kept refinancing and taking the equity out of their homes for swimming pools, SUV’s, and vacations also got stung. To bad.
Funny thing, about 20 years ago the same thing happened to farms and nobody cared save for Willie Nelson and a few others. Thousands of farmers were foreclosed on and lost family farms that had been in the family for over a hundred years. But it didn’t hurt the big banks so no one paid any attention.
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#4 written by Heather 1 year ago
The real problem started on Wall Street. Brokerage firms package and resell pools of mortgages to investors. These pools are rated. Wall Street sold these mortgages in bits and pieces to insurance companies, mutual funds (ie individuals like you), pension plans, profit sharing plans, individual investors. The product disclosure was inadequate. Investor knowledge was inadequate. These mortgages included sub prime (better known as junk) mortgages.
Additionally there was too much leverage in the economy — too much borrowing against assets going down in value.
This is like having a chip in your windshield which if not repaired, spiderwebs out through the whole panel of glass. The glass is shatterproof, but not immune to damage. The mortgage mess was the rock that hit the windshield.
Look at AIG: 100,000 employees, 17million customers, formerly A+ Best rating. Now a piece of junk. Irresponsible investing and leverage.You asked about image – Wall Street is filled with huge egos, but that’s not the reason.
Overseas – Yes, foreign money is going to be needed to bail these companies out. By the end of this disaster, Wall Street will be owned by foreign companies. Most of it is already.Impact on your money? Get some reliable advise in person from sources who know you, your objectives, your company. This question cannot be answered with the limited information you provided.
Is this serious? Yes. Washington applies patches to a deeply wounded economy. A full windshield replacement is necessary
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#5 written by Tara 1 year ago
If I were to keep anything in a stocks, it would be in overseas companies (Which still aren’t doing well, but with longevity I’m sure they’ll be more successful than some American companies) Anyway it seems like there is absolutely NO certainty in pension benefits. It’s a very scary time.
I think it’s caused by the fact that everyone’s credit has dried up.
There’s no money to invest, Americans are being spread thin. Now these big Investment firms have to eat up a ton of costs they’ve accumulated and they’re crashing hard.I wouldn’t say it’s anyone’s ‘fault’ directly. Money is scarce, investment firms need to understand that, instead of looking for money where-ever they can get it by using whatever ‘tricks of the trade’ they have up their sleeves.
I don’t know what the future holds for American finance
-Concerned American
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In 1999, Phil Gramm (McCain’s economic adviser up until a couple of months ago, when he called us all a bunch of “whiners”), coauthored a Bill that was signed into law by Bill Clinton. This legislation basically deregulated the whole finance industry. Before this Bill was signed into law, Investment Bankers on Wall Street could not buy stock in Mortgage Companies and Insurance Companies and visa versa. This was because it was feared that if one of these industries started to collapse, it might pull the other ones down with it if too much cross investing occurred. This regulation had been in place since after the Great Depression.
The reasoning behind this deregulation was simple, allow investment bankers to buy mortgage stock and “presto”, a whole ton of new money becomes available to lend to people, thus causing a mortgage and real estate “boom”.
Anyway, as we all know, it didn’t work out so well. Now we are threatened with the exact problem that we were once protected against. Phil Gramm is an idiot and Bill Clinton is a fool for signing it.
So in other words, Bill Clinton and Phil Gramm are mostly at fault for the current crisis.