TOT Sub prime mortgages

[alan_m]

Why have the Halifax started advertising that they are giving sub prime mortgages for property in the USA?

Haven't they learnt any lessons from the near past?

[Capitol]

No. Stupidity is endemic in our banks WRT the US market. I bet they don't mention the exchange rate risks!

[Brian Gaff]

What I never understood about this practice was how so called well educated finance savy folk fell for this in the first place. if you work it through, probably less than a couple of minutes thought required, any financial organisation would spot the flaw and how they would end up holding the baby so to speak. Its obviously some form of hypnosis! Brian

[Dave Plowman (News)]

It's no different to payday loans. You charge a far higher interest rate to make up for those who default on repayments.

So as ever, the poor pay far more to borrow money they desperately need than the rich. ;-)

[David]

As soon as the people worked out that they could give out a dodgy loan at low initial rates, run it for a year to establish a repayment history, and then sell it on to a 3rd party with no comeback the "easy money" light came on and any moral scruples (in financial salesmen??) went straight out of the window.

The same model applied all down the line. Buy so called "good" loans, mix them with sub-prime, discount the whole package, sell on, profit!

The people getting bonus and promotion were buying and selling these derivatives. So everyone else piled in because they were driven by performance bonuses (and keeping their jobs).

Eventually the derivatives were so mixed up it was impossible to accurately qualify them,

Free money with no responsibility?

Just like finding a broken candy machine which gives out free candy if you bang the side.

It may be theoretically wrong, but hey - free candy! And it isn't like shoplifting or mugging is it? Serve them right for not fixing the machine.

So everyone could see the obvious flaw, but nobody believed that they would be the one without a chair when the music stopped.

Cheers

Dave R

[Cursitor Doom]

They have learned their lesson and that's why they're doing it again. They sell sub-prime loans for a premium. The loans eventually turn bad threatening a systemic collapse. The loans then get lumped onto the national debt and you and I and our children and their children foot the bill for it all. It's good business innit.

[The Natural Philosopher]

they wer all cahsing short term, profits .

It goes like this.

You are a junior investment operator. You get offered junk that is A1 rated by Moodies and pays out big time. Itf you refeuse it you get fired fir low performance. If it lasts a year your bonus will be stupendous. If it all comes down, its not your bank, its the shareholders.

And the government will always bail you oput, because they owe your bank trillions.

[3899jk]

Bear Stearns didn?t get bailed out.

[alan_m]

If I remember correctly the character in the advert wanting the loan was somewhat dodgy. Could the repayments also be considered as money laundering?

[polygonum]

Given the lack of truth in so much advertising, it might be regarded as reassuring that they are only advertising - they might not actually be doing any lending at all.

[Adam Aglionby]

Private Eye pointed out that HSBC have now been convicted of so much money laundering and rate fixing offences in so many territories that they should more properley be regarded as Serious Organised Crime rather than a bank....