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Dec 6th, 2017
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Joined: May 2005
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People on "main street" have no idea how payrolls are financed and that most of them are on credit. They'll cry when they find out that because they didn't want to bailout the banks, the company that they work for can't pay them because they can't get a loan from those banks. What?? Given that most people are paid every two weeks - employers are borrowing money to pay their employees? The payroll monies are coming from loans and not because the company has sold enough goods and services to pay its employees? If this is the case, then the company needs to go out of business. That's like me borrowing money to pay my bills.
Contrarian, extraordinaire
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People on "main street" have no idea how payrolls are financed and that most of them are on credit. They'll cry when they find out that because they didn't want to bailout the banks, the company that they work for can't pay them because they can't get a loan from those banks. What?? Given that most people are paid every two weeks - employers are borrowing money to pay their employees? The payroll monies are coming from loans and not because the company has sold enough goods and services to pay its employees? If this is the case, then the company needs to go out of business. That's like me borrowing money to pay my bills. You obviously don't know how the financial world is financed. Everything is based on credit. Most companies have lines of credit opened with banks and they use that credit to cover day to day operation costs, payroll being one of them. Those line of credits do not carry a large balance and are paid back within days. But let's say that your company has a slow week and has not made enough money to cover the payroll this Friday. No problem. You can still pay the employees through the line of credit and pay back the bank next week. I'm not an accountant so I can't really explain how payroll line of credit work. But I do know that they are backed by real assets and do not have a high re-payment time... Kinda like Amex.. you pay balance in full when statement is due.
Last edited by kap17; 09/30/08 06:14 PM.
A gem cannot be polished without friction, nor a man perfected without trials. ~Chinese Proverb
The early bird gets the worm, but the second mouse gets the cheese. ~Jon Hammond
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Joined: Feb 2006
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Here's something interesting...
I was just watching the House Dems' hearing being broadcast live on CNN, and Rep. DeFazio mentioned that many credit unions have come to him and told him:
a) They are doing fine, have plenty of money to loan, being based on deposits and not 'financial instruments'
b) They are now getting new customers, large companies that, although solvent with plenty of assets, have been working with large commercial banks, who can no longer use their credit lines because
c) their commercial banks told them that the FDIC told THEM to freeze all credit lines...
His question: Are the Feds trying to solve the problem, or are they trying to make the problem more of a crisis, to get the solution they want?
Last edited by Reality Bytes; 09/30/08 07:40 PM.
Castigat Ridendo Mores
(laughter succeeds where lecturing fails)
"Those who will risk nothing, risk everything"
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Joined: Jun 2004
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Administrator Bionic Scribe
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Administrator Bionic Scribe
Joined: Jun 2004
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Here's something interesting...
I was just watching the House Dems' hearing being broadcast live on CNN, and Rep. DeFazio mentioned that many credit unions have come to him and told him:
a) They are doing fine, have plenty of money to loan, being based on deposits and not 'financial instruments'
b) They are now getting new customers, large companies that , although solvent with plenty of assets, have being previously working with large commercial banks, who can no longer use their credit lines because
c) their commercial banks told them that the FDIC told THEM to freeze all credit lines...
His question: Are the Feds trying to solve the problem, or are they trying to make the problem more of a crisis, to get the solution they want? Is this the last puscht attempt by the neocons as predicted by Naomi Klein in Shock Doctrine?
Last edited by Phil Hoskins; 09/30/08 07:40 PM.
Life is a banquet -- and most poor suckers are starving to death -- Auntie Mame
You are born naked and everything else is drag - RuPaul
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veteran
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Back in the real world today:
Boing, boing! Are we on a pogo-stick, or is this the staid world of high finance in the twentyfirst century? Stocks in Asia and Europe were mixed as people tried to grab profits and make sense of the global mess we have caused. The Dow was up 485 points.
Expect markets to fall tomorrow.
_____________
Last edited by numan; 09/30/08 08:12 PM.
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Joined: Jun 2007
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old hand
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old hand
Joined: Jun 2007
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Technical correction. It will drop again tomorrow. But maybe some market makers in the know are sure a bailout is coming. My crystal ball broke many years ago.
Get your facts first, then you can distort them as you please.
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Joined: Jun 2007
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old hand
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old hand
Joined: Jun 2007
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Rep. DeFazio mentioned that many credit unions have come to him and told him: "The Faz" is our district guy. He can sometimes be off the wall but I have grown to love him. He has always been consistant and will respond promptly if I should email him..
Get your facts first, then you can distort them as you please.
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member
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Here's something interesting...
I was just watching the House Dems' hearing being broadcast live on CNN, and Rep. DeFazio mentioned that many credit unions have come to him and told him:
a) They are doing fine, have plenty of money to loan, being based on deposits and not 'financial instruments'
b) They are now getting new customers, large companies that, although solvent with plenty of assets, have been working with large commercial banks, who can no longer use their credit lines because
c) their commercial banks told them that the FDIC told THEM to freeze all credit lines...
His question: Are the Feds trying to solve the problem, or are they trying to make the problem more of a crisis, to get the solution they want? Credit unions still sell the loans that they originate to corresponding lenders like Well Fargo, Countrywide (or BofA now), Suntrust, Citi and US Bank. A small bank like a credit union does not hold the loan for more than 30 days max. The goal is to sell it before the first payment in order to get the best price and also to free up the money to lend it to other people. Now what will happen if nobody will buy those loans from credit unions? If they are forced to keep on the books 100 loans averaging $200,000 that's $200,000,000 that is tied up and they cannot lend anymore. And really, I doubt any credit union has that kind of cash on hand to lend. I've dealt the past 3 years with a lot of credit unions in IA and MO. I worked for one of those correstponding banks that were buying the loans... some of them could not originate more than 5 loans at a time and were begging me to review their loans as soon as possible and wire the money same day. People do not understand how the financial world really works.
A gem cannot be polished without friction, nor a man perfected without trials. ~Chinese Proverb
The early bird gets the worm, but the second mouse gets the cheese. ~Jon Hammond
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Joined: Feb 2006
Posts: 1,004
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Joined: Feb 2006
Posts: 1,004 |
Here's something interesting...
I was just watching the House Dems' hearing being broadcast live on CNN, and Rep. DeFazio mentioned that many credit unions have come to him and told him:
a) They are doing fine, have plenty of money to loan, being based on deposits and not 'financial instruments'
b) They are now getting new customers, large companies that, although solvent with plenty of assets, have been working with large commercial banks, who can no longer use their credit lines because
c) their commercial banks told them that the FDIC told THEM to freeze all credit lines...
His question: Are the Feds trying to solve the problem, or are they trying to make the problem more of a crisis, to get the solution they want? Credit unions still sell the loans that they originate to corresponding lenders like Well Fargo, Countrywide (or BofA now), Suntrust, Citi and US Bank. A small bank like a credit union does not hold the loan for more than 30 days max. The goal is to sell it before the first payment in order to get the best price and also to free up the money to lend it to other people. Now what will happen if nobody will buy those loans from credit unions? If they are forced to keep on the books 100 loans averaging $200,000 that's $200,000,000 that is tied up and they cannot lend anymore. And really, I doubt any credit union has that kind of cash on hand to lend. I've dealt the past 3 years with a lot of credit unions in IA and MO. I worked for one of those correstponding banks that were buying the loans... some of them could not originate more than 5 loans at a time and were begging me to review their loans as soon as possible and wire the money same day. People do not understand how the financial world really works. Understood. My main point there was, what is the role the FDIC is playing in this? There may very well be a good reason, but at the same time they may not exactly be helping 'us', as much as 'them'. I hope that doesn't make me a CT now...
Castigat Ridendo Mores
(laughter succeeds where lecturing fails)
"Those who will risk nothing, risk everything"
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Joined: Jul 2008
Posts: 1,026
member
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member
Joined: Jul 2008
Posts: 1,026 |
Here's something interesting...
I was just watching the House Dems' hearing being broadcast live on CNN, and Rep. DeFazio mentioned that many credit unions have come to him and told him:
a) They are doing fine, have plenty of money to loan, being based on deposits and not 'financial instruments'
b) They are now getting new customers, large companies that, although solvent with plenty of assets, have been working with large commercial banks, who can no longer use their credit lines because
c) their commercial banks told them that the FDIC told THEM to freeze all credit lines...
His question: Are the Feds trying to solve the problem, or are they trying to make the problem more of a crisis, to get the solution they want? Credit unions still sell the loans that they originate to corresponding lenders like Well Fargo, Countrywide (or BofA now), Suntrust, Citi and US Bank. A small bank like a credit union does not hold the loan for more than 30 days max. The goal is to sell it before the first payment in order to get the best price and also to free up the money to lend it to other people. Now what will happen if nobody will buy those loans from credit unions? If they are forced to keep on the books 100 loans averaging $200,000 that's $200,000,000 that is tied up and they cannot lend anymore. And really, I doubt any credit union has that kind of cash on hand to lend. I've dealt the past 3 years with a lot of credit unions in IA and MO. I worked for one of those correstponding banks that were buying the loans... some of them could not originate more than 5 loans at a time and were begging me to review their loans as soon as possible and wire the money same day. People do not understand how the financial world really works. Understood. My main point there was, what is the role the FDIC is playing in this? There may very well be a good reason, but at the same time they may not exactly be helping 'us', as much as 'them'. I hope that doesn't make me a CT now... FDIC guarantees the first $100,000 in an account. When banks fail, FDIC takes over and settles all accounts under $100,000. If you had more than $100,000, you get the whole $100,000 plus pennies on the dollar on the rest depending on how much debt the bank has and how much money is left over. When Indymac failed, FDIC gave people 50 cents for every dollar over $100,000.
A gem cannot be polished without friction, nor a man perfected without trials. ~Chinese Proverb
The early bird gets the worm, but the second mouse gets the cheese. ~Jon Hammond
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