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Finding Laws about bank loans.
Devalon
Member UncommonPosts: 496
I was wondering if anyone know a site showing list of laws. I'm trying to find laws about loans from the bank . Partically money they don't have and "printing it".
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"Any free people have the right to choose how it wants to be govern thats the essence of democracy. It's sad when America has chosen for the stability and consistency of a dictatorship and doing it democratically" -utnow
Comments
You most likely will come across the problem that the laws you are looking for aren't laws, but regulations from a few different groups. There should be federal statutes giving power to the Federal Reserve as well as the Treasury Department on the subject. Within those powers, they pass regulations which are same as law in this country for the most part. Banks use a system called fractional reserves. Last I checked, the required amount of deposits to keep on hand is 1%. That means for every100$ you loan a bank, they can loan 99$.
Actually there are a range of fractional reserve limits. Many banks can loan out 100x what they have in deposits. So if they have $100 in deposits they can loan out $10,000. This is where the "banks printing money" idea comes into play. That $9,900 doesn't actually exist. Yet they can loan it and collect interest on those loans. Thats why fractional reserve banking is so profitable. Instead of making money off of money, they make money off of thin air. Which is a pretty sweet deal if you happen to be a stockholder.
A bank lends against it's assets.
If you take out a mortgage for example, the money the bank has lent you is counted as an asset and the bank may borrow money against that asset.
If they owe you money and you think they can't pay, you can file them for insolvency, at which point they would be audited and if they owed more than they owned, they would be closed down. There is no guarentee however that you would get first dibs on whatever money they owed.
Actually there are a range of fractional reserve limits. Many banks can loan out 100x what they have in deposits. So if they have $100 in deposits they can loan out $10,000. This is where the "banks printing money" idea comes into play. That $9,900 doesn't actually exist. Yet they can loan it and collect interest on those loans. Thats why fractional reserve banking is so profitable. Instead of making money off of money, they make money off of thin air. Which is a pretty sweet deal if you happen to be a stockholder.
What a load of codswallop.
If a bank has $10,000, it cannot loan out more than that $10,000. If a bank has $10,000 in assets but not cash, it may borrow cash from another bank against it's assets in order to fulfill that loan.
The $9,900 most certainly does exist and must be accounted for each year.
The bank however does not need to keep all $10,000 in it's vaults at any one time since it is very unlikely that all it's depositers will want all $10,000 back simultaneously. Instead it keeps a fractional reserve of this $10,000 in the vault and lends out the the other $9,900 for a profit. If someone does ask for the full $10,000 back at the same time (a run on the bank) the bank then borrows the cash form another bank at a commercial rate against it's assets, (the 9,900 it has loaned out to someone else at a commercial rate), in order to meet the repayment. Problems occour if no one is willing to lend the bank the $9,900 in this event. When this happens you will see the Fed or the Bank of England step in to make that loan rather than see a profitable enterprise collapse.
The recent problems with the credit crunch occoured, when banks realised that many of the loans they had made, and had counted as assets, were unsafe and not all likely to be repaid. At which point they all had to revalue their assets and write off billions of pounds of them.
Pretty sucky if you are a shareholder. My bank stock has all dropped 25%.
This has the danger of creating a domino effect as banks have all loaned eachother money against over valued assets. So one unpaid mortgage is a duff asset that has been borrowed against at another bank. In the event of this repayment going bad, both banks must revalue their assets accordingly. However bank 2 has borrowed money against that incorrectly assesed asset too and a chain reaction ensued in which banks all over the world wrote off their assets. The value of these banks is hence diminished and this is reflected in the value of their stocks.
Banks are currently uncertain of each other, and unwilling to lend to other banks against their assets. This leads to mortgages being harder to come by now. Saving's banks rather than commercial banks being the best place to look as they have actual cash reserves as opposed to just now defunct lending agreements with other banks.
Money is not "created out of thin air". People go to work and earn it, and then instead of spunking it on crap, they invest it.
Baff you don't know much about the operations of a modern monetary system apparently.
I do alright.
The Federal Reserve creates money out of thin air all the time. Yes, you and I go to work for money, however at a certain level there are people with the power to just summon it into existence.
The Federal Reserve creates money out of thin air all the time. Yes, you and I go to work for money, however at a certain level there are people with the power to just summon it into existence.
Federal Reserve is a privately owned bank with the large percentage of the voting stock owned by foreign investors. The M3 is no longer done so no one really knows how much printed money is in circulation. Remember gas prices on the world market are about the same as ten years ago your money is not worth as much now as back then. So blame them for soaring fuel costs after all they devalued your money to where it is by printing it like monopoly money.
Have a great day!
Once again, The Federal Reserve is *not* a privately owned bank. It’s an independent agency of the US government. It’s governors are appointed to the president and it must report to congress regularly.
http://en.wikipedia.org/wiki/Independent_agencies_of_the_United_States_government
@Ankua
If the Fed was a bank owned by foreign investors, I would be one of them.
All your banks are belong to us.
P.S. where I live, petrol prices are nothing like what they were ten years ago. It has gone up 50%.
The value of the Pound has also gone up considerably. My money is worth more. (Although this really does depend on what you spend it on).
The Federal Reserve creates money out of thin air all the time. Yes, you and I go to work for money, however at a certain level there are people with the power to just summon it into existence.
I don't go to work for money matey.
My money works for me.
People don't just "summon money out of thin air". Not at any level of power. Printing dollars doesn't create money, it creates currency. It is not the number of notes in circulation that is important, it is the redeemable value of each one. If you print more, the whole lot become worth less. You don't "create money", you just lower the value of your currency.
If you ever intend to stop working, I suggest you take the opportunity to learn from lomillers posts. I know I have.
I bet that mostly do to your taxes . Also what were you comparing it to? The dollar?
thanks for the site. It's a little difficult to navigate but thanks again.
The laws I'm trying to find is interest. I think what you said was regulations and not laws. This company already been sued over raising interest and lost.
--
"Any free people have the right to choose how it wants to be govern thats the essence of democracy. It's sad when America has chosen for the stability and consistency of a dictatorship and doing it democratically" -utnow
A bank lends against it's assets.
If you take out a mortgage for example, the money the bank has lent you is counted as an asset and the bank may borrow money against that asset.
If they owe you money and you think they can't pay, you can file them for insolvency, at which point they would be audited and if they owed more than they owned, they would be closed down. There is no guarentee however that you would get first dibs on whatever money they owed.
I was wondering where they can charge interest of something. They don't even have themself.
--
"Any free people have the right to choose how it wants to be govern thats the essence of democracy. It's sad when America has chosen for the stability and consistency of a dictatorship and doing it democratically" -utnow