View Full Version : We need more consumers to borrow and not pay it back?

11-25-08, 01:41 PM
The newest Fed and Treasury moves are another stoopendous silli-ism.

Consumers are under water. A huge number have a negative net worth. They are losing their jobs right and left. They live in fear that they won't be able to pay their next light bill.

And the Fed wants them to start borrowing again?

And the banks are gonna lend more money to these people?

What, are we gonna go back to 2004 somehow and mail a deluge of zero percent balance transfer offers in unsecured debt to anyone with a pulse?

11-25-08, 02:17 PM
The sentiment of the vox populi agrees with you. (http://community.nytimes.com/article/comments/2008/11/26/us/politics/26paulson.html)

I'm just wondering what or how much longer it will take before these ineffective penned remarks are sparked into pitch-fork reactions.

I guess we'll find out...

11-25-08, 02:34 PM
And the banks are gonna lend more money to these people?

I've been trying to wrap my head around this since we started to hear at large about credit markets tightening and what this means for 'Main Street'.

Have lending standards been tightened because the securities market has dried up or because of recession/job loss/default expectations, or both?

And if the securities market picks up again, will that affect lending standards or just allow the lenders to make more money on the tighter standards that won't be loosened for quite some time (5+ years, 10+?)?

My gut feeling as an outsider trying to read the tea leaves is that this new program is all about the latter (in bold).

11-25-08, 02:48 PM
What is the point of the TALF? (http://www.federalreserve.gov/newsevents/press/monetary/20081125a.htm)

The Federal Reserve Board on Tuesday announced the creation of the Term Asset-Backed Securities Loan Facility (TALF), a facility that will help market participants...by supporting the issuance of asset-backed securities (ABS) collateralized by student loans, auto loans, credit card loans, and loans guaranteed by the Small Business Administration (SBA).

This excerpt is from creditcards.com on November 5th, 2008:

Rising credit card bill delinquencies vex card securities (http://www.creditcards.com/credit-card-news/credit-card-securities-outlook-1282.php)

Mounting job losses and rising credit card delinquencies and defaults are placing a strain on a key capital-generating arm of the credit card industry -- credit card asset-backed securities. Nervous investors in credit card-backed bonds shied away from the investments in October.

They are not going to loosen standards in 2008 or 2009. So what does the TALF actually accomplish?