I understand the issue explained in the above article, namely that there is a lack of supply in the mortgage market. However, I do not see what the difficulty in establishing new banks to supply the mortgage market is. Why cant some rich entrepreneurs incorporate a new bank to service this market, if managed intelligently, it could probably make a lot of money. On the other hand, it is good to see that someone recognizes that TARP basically did what it was supposed to do.
Actually reading that list of mortgage lenders made me realize how many really have gone out of business; I had forgotten quickly about so many of those names. In a perfect world I would be backing up Karl's idea of rich entrepreneurs starting up new mortgage lending banks, however we live in a world where it is somewhat challenging to enter into the banking market, and I personally wouldn't be very trusting of a brand new bank at this point in time. Not to say that this couldn't work if tried, I just don't see it happening because many people would fear being a part of a new financial bubble. Instead I think the U.S. economy will continue to keep growing slowly and steadily back to where it once was.
I agree with Beth in the fact that people inherently do not like situations of uncertainty, much like Karl talked about in his presentation the other night. Therefore, if a plethora of new banks started to pop up and act as new mortgage lenders, I too find it hard to believe that it would be as effective as it sounds in theory. It's another great example of economic theory that would struggle when applied to a real world setting.
I agree with both Beth and Karl and we will probably see both happen I feel. I also forgot about all those companies that did fail and it is quite shocking of a number for this market. I will not say immediately but I do think that in the future one the economy recovers more, we will most likely see some rich entrepreneurs join the market and will most likely fail as people will not trust them as much. They are going to stick with the experienced people and those 5 will benefit from it. At this point in the economy, those 5 will have to supply for everyone for a while until we recover.
The banking industry does seem like a lucrative business to be in, especially with supply so low. I feel as though a new bank wouldn't be that difficult to market to the willing consumer. A company detached from the problems associated with the housing crisis would seem to be an attractive component for someone looking for a loan. However, the speculation and risk with such a shaky economy doesn't bode extremely well for such entrepreneurs. But yes, I agree with Karl that it does seem like people do not recognize that the TARP has really done what it was supposed to do.
The banking industry does seem like a lucrative business to be in, especially with supply so low. I feel as though a new bank wouldn't be that difficult to market to the willing consumer. A company detached from the problems associated with the housing crisis would seem to be an attractive component for someone looking for a loan. However, the speculation and risk with such a shaky economy doesn't bode extremely well for such entrepreneurs. But yes, I agree with Karl that it does seem like people do not recognize that the TARP has really done what it was supposed to do.
I had no idea that the number of mortgage lenders out of business was so high! I agree that a new bank could possibly be a solution, but the number of people that would believe it it would be something to consider. With the current situation, I can see the economy rising slowly.
It might be too early for new investors too step into the market as it is still recovering, so I agree with Karl that the rich enterprises should take the responsibility and help for the speedy market. However, there should be someone who is regulating these banks so that they don't repeat the mistake.
It seems that the solution to the mortgage problem is also what is perpetuating a meager housing market. With such a heavy consolidation in the market to just a few firms, I can imagine how it would be difficult for an upstart to compete in a field with players who have so much clout. It could also be that the risk aversion culture that has been established in this country might actually be affecting business. Investors large and small seem to want to keep their hands off unless they have a guaranteed success.
I understand the issue explained in the above article, namely that there is a lack of supply in the mortgage market. However, I do not see what the difficulty in establishing new banks to supply the mortgage market is. Why cant some rich entrepreneurs incorporate a new bank to service this market, if managed intelligently, it could probably make a lot of money. On the other hand, it is good to see that someone recognizes that TARP basically did what it was supposed to do.
ReplyDeleteActually reading that list of mortgage lenders made me realize how many really have gone out of business; I had forgotten quickly about so many of those names. In a perfect world I would be backing up Karl's idea of rich entrepreneurs starting up new mortgage lending banks, however we live in a world where it is somewhat challenging to enter into the banking market, and I personally wouldn't be very trusting of a brand new bank at this point in time. Not to say that this couldn't work if tried, I just don't see it happening because many people would fear being a part of a new financial bubble. Instead I think the U.S. economy will continue to keep growing slowly and steadily back to where it once was.
ReplyDeleteI agree with Beth in the fact that people inherently do not like situations of uncertainty, much like Karl talked about in his presentation the other night. Therefore, if a plethora of new banks started to pop up and act as new mortgage lenders, I too find it hard to believe that it would be as effective as it sounds in theory. It's another great example of economic theory that would struggle when applied to a real world setting.
ReplyDeleteI agree with both Beth and Karl and we will probably see both happen I feel. I also forgot about all those companies that did fail and it is quite shocking of a number for this market. I will not say immediately but I do think that in the future one the economy recovers more, we will most likely see some rich entrepreneurs join the market and will most likely fail as people will not trust them as much. They are going to stick with the experienced people and those 5 will benefit from it. At this point in the economy, those 5 will have to supply for everyone for a while until we recover.
ReplyDeleteThe banking industry does seem like a lucrative business to be in, especially with supply so low. I feel as though a new bank wouldn't be that difficult to market to the willing consumer. A company detached from the problems associated with the housing crisis would seem to be an attractive component for someone looking for a loan. However, the speculation and risk with such a shaky economy doesn't bode extremely well for such entrepreneurs. But yes, I agree with Karl that it does seem like people do not recognize that the TARP has really done what it was supposed to do.
ReplyDeleteThe banking industry does seem like a lucrative business to be in, especially with supply so low. I feel as though a new bank wouldn't be that difficult to market to the willing consumer. A company detached from the problems associated with the housing crisis would seem to be an attractive component for someone looking for a loan. However, the speculation and risk with such a shaky economy doesn't bode extremely well for such entrepreneurs. But yes, I agree with Karl that it does seem like people do not recognize that the TARP has really done what it was supposed to do.
ReplyDeleteI had no idea that the number of mortgage lenders out of business was so high! I agree that a new bank could possibly be a solution, but the number of people that would believe it it would be something to consider. With the current situation, I can see the economy rising slowly.
ReplyDeleteIt might be too early for new investors too step into the market as it is still recovering, so I agree with Karl that the rich enterprises should take the responsibility and help for the speedy market. However, there should be someone who is regulating these banks so that they don't repeat the mistake.
ReplyDeleteIt seems that the solution to the mortgage problem is also what is perpetuating a meager housing market. With such a heavy consolidation in the market to just a few firms, I can imagine how it would be difficult for an upstart to compete in a field with players who have so much clout. It could also be that the risk aversion culture that has been established in this country might actually be affecting business. Investors large and small seem to want to keep their hands off unless they have a guaranteed success.
ReplyDelete