First Short Quiz

[johnkarls]

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1. What is the main criticism our authors are leveling at the U.S. banking system?

2. Are there other criticisms that could also be made?

3. Do banks make a significant percentage of the loans to American businesses?

4. Do banks make a significant percentage of the mortgage loans in America?

5. If banks were stupid enough to invest in mortgage loans (as distinguished from originating mortgage loans and immediately selling them in the old days to Fannie Mae/Freddie Mac and nowadays to Ben Bernanke’s Federal Reserve -- and then collecting fees for “servicing” the mortgage loans owned by Fannie/Freddie/Bernanke), would we be witnessing the beginning of a Grade Z Hollywood re-make of the “Savings & Loan Crisis” of the 1980’s and 1990’s?

6. Are Ben Bernanke and his Federal Reserve acting properly in buying $85 billion of mortgage loans PER MONTH (which they having been doing for a year already and which Ben Bernanke announced this past week that they would continue to do for the foreseeable future)?

7. What is considered the minimum equity a homeowner must have before a mortgage is considered “sub prime”?

8. What is considered the minimum equity a corporation must have before it is considered over-leveraged?

9. What is the typical equity of a bank?

10. During the 2008-20?? economic meltdown, did Goldman Sachs suddenly register itself as a commercial bank so that nobody would “look cross eyed” at the sudden plummeting of its equity toward the 3% typical equity of a commercial bank?

11. How do commercial banks get their “free money” (that is, deposits at interest rates that do not reflect the actual risk in the absence of federal-government guarantees through the FDIC)?

12. If commercial banks obtain “free money” courtesy of the FDIC and operate on razor-thin 3% equity, don’t the nation’s taxpayers deserve better policing of their potential liability for the other 97% of each commercial bank’s assets financed by the “free money” provided by the guarantees of the nation’s taxpayers through the FDIC?

13. Who provides that policing now? Are the rules enforced by bank regulators adequate? Are our authors correct that a better approach would include the requirement for a significant increase in the 3% equity for commercial banks?

14. Is it really necessary to increase the 3% equity of commercial banks which obtain “free money” courtesy of the guarantee provided by the nation’s taxpayers through the FDIC, since the commercial banks don’t make significant loans to business and they don’t own (vs. originate and service) mortgage loans but instead concentrate on making credit-card loans to the nation’s taxpayers at exorbitant interest rates?