Restructure The Financial System?

Apr 11th, 2008 @ 2:21 PM by Alden Smith

With so many people in a jam and facing foreclosure, you would think that the banks would just gather these people together, give them a decent loan rate, and make it affordable to stay in their home.  The banks would not have to be bothered by unnecessary paper work, would surely save billions of dollars, and every one would be happy.

Too bad it doesn’t work that way.  Any more the bank is mainly a “middle man” in most of these transactions.  The loans are made through the lender, and then are packaged into a security that is sold on the open market.  This method of bundling mortgages is called securitizing.  Banks are in the retail business these days, and buying and selling money is the name of the game.

Now, money is tight.  The Fed has tired keeping up with things by dropping the prime, but it does little good when these securities are undervalued.  Banks cannot dig down into these portfolios and pick out the bad apples, and the fact that hundreds of investors own these securities makes it even more of a mess.

All of the plans, stimulus packages and relief efforts in the world will not straighten out this crisis.  While Congress shows the flag, people are getting their hopes up for something that cannot possibly happen without a complete restructure of the entire finance system.  All of us have been around long enough to know this – it ain’t gonna happen…

One Response to “Restructure The Financial System?”

1. Rosemary Schlindwein says:

   November 30, 2010 at 12:59 pm

   Just like any other job upon hire. If they have a random testing you agree too when hired.