The FDIC premiums charged to banks are going to go up significantally and will be passed on to consumers.
Massive Job layoffs in different sectors will be a question of when, and it is not just a fear factor. The losses caused by massive amounts of bad mortgage paper are NOT eliminated by mergers, and receiverships by the federal government.
I don't even know how much money the sharholders of AIG have lost, as well as Freddie Mac, Fannie Mae, Lehman Brothers, Bear Stearns and prior companies like New Century etc. But I do know its in the BILLIONS and we are talking about small business and consumers retirement money!
I wonder how bad the retail industry will be hit this winter holiday season.
I just had a lender tell me they are going to issue a loan approval on a motel loan tomorrow. so that IS good news. I have heard that Lehman Brothers was to loose --on the residential AND the commercial side. In one of my blogs I had warned that those lenders that became to creative, don't require a downpayment of 20% or more on the commercial side and have rates terms that disregard the payment shock experienced by small business owners will pay a price. It seems that the bad paper Lehman had was enough to discourage some potential buyers...I could be wrong but it seems that was the case.
If I ever become a commercial lender I will NOT permit my bank to become a "lender gone wild".
Small businesses must prepare for tighter lending rules, less credit where credit scores are under 680, and larger amounts of equity required in properties for refinances AND purchases.....and of course higher interest rates comparable to that of the 1980s.
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