The big banks have been hit with several lawsuits over the last few years in regards to lending abuses surrounding the mortgages they drew up or the homes they foreclosed on. The largest thus far was a settlement between the five largest banks and both the Justice Department and Department of Housing and Urban Development for $26 Billion in early 2012. A current settlement for $10 Billion is in the works between banking regulators and 14 banks, and is said to be over foreclosure abuses. The SEC and Justice Department may engage in further settlements over the mortgage assets that were packaged in such a way that they burst during the financial crisis. (Silver-Greenberg, 2012)
So goes the fable of the goose that laid the golden egg, in search of quick riches, the steady income that was a sure thing is lost when greed enters the room. In the case of the duck that laid the golden egg, Daffy took the credit then dealt with the racketeers, who saw him as better odds than an illegal bet. The henchmen beat the rancher, and took his property (Daffy). The duck who originally took credit that he was undeserving of was the one the cohorts looked to for a payout.
Daffy jumped down the laundry chute midway through his five minute time period to produce an egg; he gained a new form still lacking the payoff. Mortgage lenders are once again on the make with higher profits from mortgages pooled and sold as bonds to investors. The profit margin is huge for lenders even though interest rates are much lower than they were before the housing bust, the low rates that lenders pay out on bonds allows money to be made. Less competition in the market gives the banks that survived a chance to benefit from the new mortgage profits. (Eavis, With Rates Low, Banks Increase Mortgage Profit, 2012)
They’re grabbing for profits, and back in the game looking to regulators for a safety shield. They want protection against consumer lawsuits. To appease them, lawmakers have developed the “qualified mortgage.” The Consumer Financial Protection Bureau would like the “qualified mortgage” to be available to many, not just those with great credit. (Eavis, Banks Seek a Shield in Mortgage Rules, 2012) A “qualified mortgage” is not one extended to a consumer who is credit worthy, but rather a mortgage in which the paper work has all the t’s crossed and I’s dotted. All in all, they want less liability for the risk they create.
“No egg – so long, pal.” A duck with a gun to his head can do some amazing things, so what do you know he laid an egg. Once the cartons are filled, it’ll be business as usual again. (Corporation, 1950)
Works Cited
Corporation, W. B. (Director). (1950). Golden Yeggs [Motion Picture].
Eavis, P. (2012, 12 17). Banks Seek a Shield in Mortgage Rules. Retrieved 01 02, 2012, from New York Times: http://dealbook.nytimes.com/2012/12/17/banks-seek-a-shield-in-mortgage-rules/?smid=tw-share
Eavis, P. (2012, August 8). With Rates Low, Banks Increase Mortgage Profit. Retrieved January 02, 2013, from The New York Times: http://dealbook.nytimes.com/2012/08/08/with-rate-twist-banks-increase-mortgage-profit/
Silver-Greenberg, J. (2012, 12 31). Settlement Expected on Past Abuses in Home Loans. Retrieved 01 02, 2013, from New York Times: http://www.nytimes.com/2012/12/31/business/settlement-expected-with-banks-over-home-loans.html?_r=0
So goes the fable of the goose that laid the golden egg, in search of quick riches, the steady income that was a sure thing is lost when greed enters the room. In the case of the duck that laid the golden egg, Daffy took the credit then dealt with the racketeers, who saw him as better odds than an illegal bet. The henchmen beat the rancher, and took his property (Daffy). The duck who originally took credit that he was undeserving of was the one the cohorts looked to for a payout.
Daffy jumped down the laundry chute midway through his five minute time period to produce an egg; he gained a new form still lacking the payoff. Mortgage lenders are once again on the make with higher profits from mortgages pooled and sold as bonds to investors. The profit margin is huge for lenders even though interest rates are much lower than they were before the housing bust, the low rates that lenders pay out on bonds allows money to be made. Less competition in the market gives the banks that survived a chance to benefit from the new mortgage profits. (Eavis, With Rates Low, Banks Increase Mortgage Profit, 2012)
They’re grabbing for profits, and back in the game looking to regulators for a safety shield. They want protection against consumer lawsuits. To appease them, lawmakers have developed the “qualified mortgage.” The Consumer Financial Protection Bureau would like the “qualified mortgage” to be available to many, not just those with great credit. (Eavis, Banks Seek a Shield in Mortgage Rules, 2012) A “qualified mortgage” is not one extended to a consumer who is credit worthy, but rather a mortgage in which the paper work has all the t’s crossed and I’s dotted. All in all, they want less liability for the risk they create.
“No egg – so long, pal.” A duck with a gun to his head can do some amazing things, so what do you know he laid an egg. Once the cartons are filled, it’ll be business as usual again. (Corporation, 1950)
Works Cited
Corporation, W. B. (Director). (1950). Golden Yeggs [Motion Picture].
Eavis, P. (2012, 12 17). Banks Seek a Shield in Mortgage Rules. Retrieved 01 02, 2012, from New York Times: http://dealbook.nytimes.com/2012/12/17/banks-seek-a-shield-in-mortgage-rules/?smid=tw-share
Eavis, P. (2012, August 8). With Rates Low, Banks Increase Mortgage Profit. Retrieved January 02, 2013, from The New York Times: http://dealbook.nytimes.com/2012/08/08/with-rate-twist-banks-increase-mortgage-profit/
Silver-Greenberg, J. (2012, 12 31). Settlement Expected on Past Abuses in Home Loans. Retrieved 01 02, 2013, from New York Times: http://www.nytimes.com/2012/12/31/business/settlement-expected-with-banks-over-home-loans.html?_r=0
