America will soon see a wave of bank mergers? • Hacker News Board

Re: America will soon see a wave of bank mergers?

#431

Post by HWR_14 » Wed, May 03, 2023, 7:06 PM UTC

c22 wrote: post #429

nickjj wrote: post #409

Earlier quoted context omitted.

It's messed up because rent could be let's say $800 to $3,500 a month, if paying that every month on time isn't an indicator that you have consistent income to reduce risk on other loans then I don't know what is. It's especially messed up if the same system will ding your score if you buy $8 headphones and forget a payment.

Last time I got a loan they asked me about my rent/mortgage (and utility!) payments so they could subtract that amount from my take-home pay when determining the risk of me defaulting on the loan. They seemed to assume I'd be paying my rent first and consistently regardless of any other debts I'd accrued.

I think that's a valid assumption. That's also why it's easier to get a mortgage on your primary house instead of an investment property.

Re: America will soon see a wave of bank mergers?

#432

Post by throwaway68911 » Wed, May 03, 2023, 7:31 PM UTC

orangepurple wrote: post #425

throwaway68911 wrote: post #400

Earlier quoted context omitted.

I subscribed to both the Experian and Transunion apps. Both I quickly open either app and lock or unlock my credit(Transunion allows you to lock/unlock Equifax too). I can also see my credit scores as much as I want and ensure that I am using no more then 30% of my total accumulated credit limit. For example say I have 10 credit cards equally $100,000 combined then as long as don't have credit debt higher then $30,00…

I pay nothing for these services, have lived rent free for 3 years, purchase and pay off my credit cards to the tune of $2000 a month, and just bought a house hundreds of thousands over 500k with an interest rate 1.75% to 2% below what is shown on Google for the current rates for 30 year fixed rate. The lender credited me for all points. You don't need to waste 50 a month to make the bottom of the rate sheet. Just go…

That's cool and I was explaining how these apps have proved valuable and prove valuable to me. It is a bit of a racket, but I learned a lot by using them and able to lock/unlock my credit instantly (easily) and the other points that I mentioned that I found valuable (worth the cost).

How many know they can rack up $10,000 in credit card debt and only pay $100 a month with a zero APR card? Im not sure many know this especially those in their 20s and maybe early 30s.

So whose your lender.. love to get a 2 percent interest rate on my next house. Moving into one soon and its much higher then that.

Re: America will soon see a wave of bank mergers?

#433

Post by HWR_14 » Wed, May 03, 2023, 11:46 PM UTC

Spivak wrote: post #430

kristianbrigman wrote: post #426

Earlier quoted context omitted.

Your friend often asks for you to spot them $5 when you are out at lunch, it’s no big deal and they’ve always paid it back. Now they want to borrow $5k all of a sudden. Do you give it to them, just based on the above history?

Let's make this more realistic since it's just mortgages but divided by 100. I'm bank of Spivak and you just submitted your loan application to me. As part of your loan application I can see your savings, income, employment history, and credit history. The payment on a 30-year fixed $5000 loan is $35/mo with current interest rates so that's the bar I need to hit. * I see that your monthly cash flow is $200 which puts…

You gave them an income (post-tax?) of $200/month. Of course that makes it easy to loan them money.

It's also very easy to qualify for a $500k mortgage if you are clearing $250k a year. It makes me wonder how old you are, as "house prices are 2.6x a household income" is something that last existed in most places in the mid-1990s.

> To second order no one has a six figure credit history.

It is remarkably incorrect to treat it as a flat "no six-figure history means they are all are equivalent to a $500 history". Almost everyone has four-figure credit history based on credit cards, most people have five-figure credit history based on car loans and many people have six-figure student debts.

Re: America will soon see a wave of bank mergers?

#434

Post by fowtowmowcow » Thu, May 04, 2023, 12:04 AM UTC

diordiderot wrote: post #406

fowtowmowcow wrote: post #352

Earlier quoted context omitted.

Okay Joe and Sue don't pay back their loan. Either Beth now has to borrow for her house or business at a higher rate of interest OR we deflate the value of the currency (by increasing the money supply) to make up for the loss on the balance sheet. Congratulations your civilization just discovered run away inflation.

The house is still there, it is repriced and sold. The bank cannot lose money because money is a representation of all production and resources in the economy. (Edit: balance sheet is always zero) There is no deflation because you are the bank and you can print money. There isnt inflation because you can tax assets or reduce velocity of money (i.e. inflation) through transaction tax.

[flagged]

Re: America will soon see a wave of bank mergers?

#435

Post by fowtowmowcow » Thu, May 04, 2023, 12:26 AM UTC

pessimizer wrote: post #372

fowtowmowcow wrote: post #352

Earlier quoted context omitted.

Okay Joe and Sue don't pay back their loan. Either Beth now has to borrow for her house or business at a higher rate of interest OR we deflate the value of the currency (by increasing the money supply) to make up for the loss on the balance sheet. Congratulations your civilization just discovered run away inflation.

Joe and Sue also don't pay back their loans to private banks, and those banks get bailed out.

Depends on the size of the bank. Obviously the government prints money when it needs to buy ideally it ain't just freely printing willy nilly every day.

Re: America will soon see a wave of bank mergers?

#436

Post by orangepurple » Thu, May 04, 2023, 1:09 PM UTC

throwaway68911 wrote: post #432

orangepurple wrote: post #425

Earlier quoted context omitted.

I pay nothing for these services, have lived rent free for 3 years, purchase and pay off my credit cards to the tune of $2000 a month, and just bought a house hundreds of thousands over 500k with an interest rate 1.75% to 2% below what is shown on Google for the current rates for 30 year fixed rate. The lender credited me for all points. You don't need to waste 50 a month to make the bottom of the rate sheet. Just go…

That's cool and I was explaining how these apps have proved valuable and prove valuable to me. It is a bit of a racket, but I learned a lot by using them and able to lock/unlock my credit instantly (easily) and the other points that I mentioned that I found valuable (worth the cost). How many know they can rack up $10,000 in credit card debt and only pay $100 a month with a zero APR card? Im not sure many know this e…

1.75 to 2% below market, not 2%. Nobody is giving out 2% loans right now haha

Re: America will soon see a wave of bank mergers?

#437

Post by Spivak » Thu, May 04, 2023, 2:39 PM UTC

HWR_14 wrote: post #433

Spivak wrote: post #430

Earlier quoted context omitted.

Let's make this more realistic since it's just mortgages but divided by 100. I'm bank of Spivak and you just submitted your loan application to me. As part of your loan application I can see your savings, income, employment history, and credit history. The payment on a 30-year fixed $5000 loan is $35/mo with current interest rates so that's the bar I need to hit. * I see that your monthly cash flow is $200 which puts…

You gave them an income (post-tax?) of $200/month. Of course that makes it easy to loan them money. It's also very easy to qualify for a $500k mortgage if you are clearing $250k a year. It makes me wonder how old you are, as "house prices are 2.6x a household income" is something that last existed in most places in the mid-1990s. > To second order no one has a six figure credit history. It is remarkably incorrect to…

I'm '96 and currently looking to buy a house. I wouldn't expect to qualify for someone to give me a $500k 30yr/fixed loan unless I was pulling in $10k/mo. post tax which yeah, is in the neighborhood of $200k household salary and even then I would be stupid to take it.

Re: America will soon see a wave of bank mergers?

#438

Post by than3 » Thu, May 04, 2023, 4:03 PM UTC

SamReidHughes wrote: post #405

than3 wrote: post #366

Earlier quoted context omitted.

Am I wrong in thinking that all banks should have no exposure to the stock market period? The whole being able to trigger aggregate indebtedness violations through synthetic shares (options), seems like a systemic risk that no ones paying attention to. Also, its hard to say we still have a fractional reserve system when required deposits have been set at 0% since the pandemic. There's no fraction, its 0 unless you ch…

What exposure to the stock market are you talking about?

Any bank with a ticker on a market. Technically no security on the market is safe from this mechanism. Banks are particularly vulnerable.

With a properly timed news drop, shorting, and forcing the market maker to exit delta-hedging (due to volatility) you end up having them create synthetic shares that in addition to the loaned shorted shares push the price downwards (because there will always be more shares since they were created via the contracts and are not constrained by short limits/availability and float). The market maker may even participate to offset losses.

Once the capitalization rate falls below a certain threshold you get aggregate indebtedness violations. At which point any loans they might have had create a liquidity event (i.e. frozen), which must be paid back and price levels returned to normal within 30 days (Basel 3), or 2 months (Nasdaq).

It creates a spiral which can't be recovered from, they will bleed deposits, and then the regulator will seize them, and sell their assets to one of the survivor banks for pennies on the dollar (with guarantees). Another form of bailout.

This is what largely happened with FRC, and now its starting to a lesser degree (a/o last night) other regional banks.

Re: America will soon see a wave of bank mergers?

#439

Post by User23 » Thu, May 04, 2023, 8:08 PM UTC

imtringued wrote: post #404

User23 wrote: post #285

Earlier quoted context omitted.

> It's value is not notional. If you make more currency then all currency in circulation now has less value. That's not how pricing works. It's easy to see. Consider the following. Treasury could mint a 10^33 dollar platinum coin[1], stick it in a vault at Fort Knox, and forget about it. At that point the money supply would nominally be almost all in that vault. Yet prices not only wouldn't go asymptotic, they wouldn…

A lot of hyperinflations follow this simple pattern. The government is bankrupt for whatever reason. It has to create new money. Then inflationgets worse and the government introduces price controls. Businesses quit (or are shut down by the government for violating price controls) because they have to pay inflated prices but sell at regulated prices, ending up with a loss, inflation gets worse because of a lack of su…

I submit that the first step of the hyperinflation is everywhere and always the collapse in productivity AKA supply. Then the cycle you describe takes effect and you are correct.

I've done some research on the subject and I've never found an historical counterexample, so if you have one I'd be very interested.

Re: America will soon see a wave of bank mergers?

#440

Post by llsf » Thu, May 04, 2023, 11:03 PM UTC

HWR_14 wrote: post #330

llsf wrote: post #326

Earlier quoted context omitted.

But he said that he used credit cards and never missed a payment. That should count, right ? I can relate, as I came in US from Europe. I arrived, opened a bank account in a big bank, I could only get a debit card, because I had not credit history. After few months I could get a credit card, but with a $500.00 limit! I needed a car, so I bought one cash. When came the time to buy a home, I was asked to open more cred…

You never proved you could handle more than $500 in debt. You then asked for maybe three-orders of magnitude more debt. Surely you can appreciate that difference.

I guess that is where Europe differs. They look more into what you currently earn (and how stable you are at jobs) than past debts.

So, if I have been making $100K for 6 years at the same company, with no credit card (I only used debit in Europe because there was very little incentive for me to use credit card that I pay at the end of the month), even though I have never had a debt before, they would be willing to give me loan. While in US, with no credit card before, they could not.