Tags: ability to pay back loans, american banker's association, American Banker’s Association, bank, Bankruptcy, consumer delinquencies, credit card, credit card defaults, Credit Cards, credit crisis, Financial economics, Foreclosure, home equity loans, Interest Rates, job losses, Personal Finance, Real Estate, un-employment, united states, US economy
Defaults and Late payments on home-equity loans and credit cards are climbing to the highest levels. According the the American Banker’s Association the figures are alarming and disturbing. The worst hit area is home-equity loans. If this trend continued, it has a potential to develop into a major credit crisis in near future.
How This Happened?
In my opinion availability of cheap credit and rising house prices during early part of this decade created a window for home owners to take home-equity loans. Consumers were literally treating their homes like they were liquid assets (cash in bank or ATM). They were buy consumables and services(insane). All was well until the home prices started going down and down. The market collapsed and the consumers were left in pile of debt. 
The data shows that default rates on home equity loans have climbed to more than 3.5 percent in first quarter of 2009. The late payments on credit cards is also touching 2% levels. This is a big jump compared to the figures this time last year.
One in 9 American is Jobless
The major contribution in this mess is Un-employment. According to official data, every 1 in 10 person is out of job. This is national average. there are states where every 1 in 8 people is out of job. worse thing is that is just a beginning. Job losses will keep on rising and people’s ability to pay their bills will come to a grinding halt.
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Tags: bank failures, bank faliure, Banks, California, credit crisis, Federal Deposit Insurance Corp, Georgia, Idaho, insurance fund, Michigan
As credit crisis deepens, the pressure on regulators to safe guard depositor’s interest mounts further. In a recent move Four more banks have been closed by regulators, one each in states of Georgia, Michigan, Idaho and California. Total number of bank failures is now around 30. Nearly $700 million USD will be paid from Deposit insurance fund by Federal Deposit Insurance Corp to protect depositors.
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Tags: broker, credit crisis, economy, Finance, financial crisis, global economic crisis, loan, reasons behind crisis, reasons economic crisis, reasons housing crisis, reasons mortgage crisis, sub prime, U.S. government, united states, us housing bubble
Here is a nice little comic we arranged for your viewing pleasure. source of it is unknown. It is available at multiple blogs without mention of source. This funny, shocking and surprising. It. Just what happened? How did this American (US) sub-prime crisis all start? Who screwed up? Why was it so predictable and why are the current US government reactions, by cutting interest rates, the wrong course of action If you want to truly know how it all came to be, this is a must see! here is a glimpse of it
Slide 04 : Scene Set at a typical Mortgage Broker: At Ace Mortgage Brokers: “We Make Your Dreams Come True”
Slide 04 : Scene Set at a typical Mortgage Broker: At Ace Mortgage Brokers: “We Make Your Dreams Come True”
Broker: An we can give you a really really low interest rate for a few years. We will raise it later, okay?
Customer: Sure, no problem. Umm, there’s one another thing.. my employer is a real prick and might not verify my employment. Would that be a problem?
Broker: NopeWe can get you a special “liars Loan” and you can verify your own employment and income!
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Tags: Alan Greenspan, Bush, Chairman, credit crisis, economy, Federal Reserve System, global economic crisis, reasons behind crisis, the reason for economic crisis, united states, us housing bubble
It is now fairly established that the recent crisis in US sub-prime housing market is the primary reason behind the global economic melt-down. In order to fully understand the dynamics and depth of current global recession, It is very important to know what led us to this crisis. I have found the illustration below very thought-provoking and useful. It helped me explain the reasons effectively.
The visual guide to the financial crisis:
We all know, Alan Greenspan and Bush said they are sorry for the Global economic crisis. But do you know what Greenspan said in 2003?
“The notion of bubble bursting and the whole price level coming down seems to me as far as a national nationwide phenomenon, is really quite unlikely,” By Alan Greenspan, Federal Reserve Chairman, in 2003.
Via
