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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: TobagoJack who wrote (13870)	1/27/2007 1:16:20 AM
From: energyplay	Respond to of 218083

Excuse me if I don't cry for any lenders who lent at 100% loan to value for anyone who did not have significant other NET assets, a history with the lender, and a FICO over 750. A 750 Fico is all it takes for a $100 down auto lease. A 700 score isn't all that great. This isn't like the S&L mess of the 1980s, where they made good loans but had their deposits disapear with rising interest rates. There was a lot of this stupidity, but not enough to blow up the fianancial system. LTCM, Long Term Capital Management, did cause systemic risk. Enron cause systemic risk also, but not as much as LTCM, and when Enron asked the Fed to bail them out, the Fed and the White House said no. I think many people would be pissed off if any taxpayer money was used to bail out the stupid lenders. Possible exceptions might be the Hurricane hit areas of Louisana and Missippi, and maybe the Detroit area. I expect excess competition goes away, and the remaining lenders will start making better margins - maybe only 30-50 basis point higher, but much more profitable. I don't thing this will crash the financial system. Maybe something else, but not sub prime follies.