SeekerDarksteel
Corporal Sucka
Join Date: 10/11/2005
Posts: 25
Location: Champaign-Urbana
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mccracken
VIP Member
Join Date: 1/16/2004
Posts: 262
Location: USA
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Posted: 7/14/2008 5:56:00 PM
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Did anyone else hear about that bank failure? I think the US may be in a larger pickle than previously predicted.
I mentioned it around, and no one seemed to note the signifigance of the bank failure.
Hopefully, no one notices it--elsewise there'll be bank runs and as we all know from our discussions on fractional reserves, all the banks will go down.
Check it out.. check it out... and then pick it out....... Then show me my dinero!!!
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grimmeissen
Administrator
Join Date: 1/14/2004
Posts: 1217
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Posted: 7/18/2008 11:15:29 AM
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A couple of small banks failing wouldn't be too bad, but Fannie and Freddie are the backbone of the mortgage system. Take away that secondary market, and the regular banks will have to actually keep loans on their books and manage the risk themselves.
While it would be painful to allow them to fail and would make loans much harder to get, it would force banks to lend conservatively and would force people to go back to living within their means.
In the end, our taxes will bail them out and the bubble will be allowed to grow a little bigger so that when it finally does pop it will be massive.
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