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Guest Message by DevFuse

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CFPB structure is unconstitutional, Justice Department says


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28 replies to this topic

#21 OFFLINE   jpd80

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Posted 22 March 2017 - 07:22 AM

 

If they do so, it will not end well; not because they'll run afoul of the laws, but rather because they'll run afoul of human nature.

So, is this one of those situations that's better managed without a government nanny controlling the amount  of new subprime lending?

 

Should we just let the greedy go after as many subprime sales as possible and let them suffer the consequences without intervention?

If so, I kind of understand that but wouldn't that drag down the whole industry?









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#22 OFFLINE   jniffen

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Posted 22 March 2017 - 07:29 AM

You and I have rules/laws we have to follow.

 

Professional sports has rules and umpires, referees,  etc.

The 'free market' needs some as well.

 

Not saying this organization is the end all be all for the market, but there needs to be some oversight.

 

There wasn't much oversight in Chicago in the  20's - Hey Al, got a minute... ;)



#23 ONLINE   akirby

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Posted 22 March 2017 - 07:42 AM

No issue as long as the lender retains the risk of default - that makes it self-policing.   Allowing companies to make bad loans and then escape the liability is the problem.

 

Also - with mortgages there was big profit in the sale itself - real estate commissions, attorney fees and up front interest.   Not so much with car loans.



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#24 OFFLINE   RichardJensen

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Posted 22 March 2017 - 10:53 AM

So, is this one of those situations that's better managed without a government nanny controlling the amount  of new subprime lending?

 

Should we just let the greedy go after as many subprime sales as possible and let them suffer the consequences without intervention?

If so, I kind of understand that but wouldn't that drag down the whole industry?

 

Well, that all depends on how you weigh various factors.

 

On the one hand, the market can sort out bad players somewhat effectively over time; on the other hand, those bad players can get quite large and have quite extensive impacts when they fail, which argues against allowing them to grow and lend without restriction.

 

The CFPB is, at least in my estimate, a toothless wonder. It's like the NCAA: It has to give the appearance of doing something, but none of the people that dictate how it works want it to be capable of effective action.


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#25 OFFLINE   Fordowner

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Posted 22 March 2017 - 12:07 PM

With the ever increasing length of time on these auto loans we might as well consider them mortgages.    Seriously though, these extended auto loans have led to the average auto loan being severely underwater for much of the life of the loan.   Increased risk taking by a few players that don't have as much to lose or who don't have a long term view puts unfair pressure on Ford.    And the performance of Ford's stock price the past few days shows how important Ford's financial unit is. 



#26 ONLINE   akirby

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Posted 22 March 2017 - 12:51 PM

And the performance of Ford's stock price the past few days shows how important Ford's financial unit is. 

 

What investors and stock analysts think is important and what is really important to Ford's bottom line are 2 different things.

 

A smart company doesn't make business decisions based on stock prices.   If they make the right decisions for the business long term the stock price will eventually reflect that.



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#27 OFFLINE   jpd80

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Posted 22 March 2017 - 02:54 PM

 

Well, that all depends on how you weigh various factors.

 

On the one hand, the market can sort out bad players somewhat effectively over time; on the other hand, those bad players can get quite large and have quite extensive impacts when they fail, which argues against allowing them to grow and lend without restriction.

 

The CFPB is, at least in my estimate, a toothless wonder. It's like the NCAA: It has to give the appearance of doing something, but none of the people that dictate how it works want it to be capable of effective action.

So it was set up as a way of showing that the government was doing something

without actually affecting or influencing the market...got it.


Edited by jpd80, 22 March 2017 - 02:55 PM.


#28 OFFLINE   jpd80

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Posted 22 March 2017 - 03:00 PM

 

What investors and stock analysts think is important and what is really important to Ford's bottom line are 2 different things.

 

A smart company doesn't make business decisions based on stock prices.   If they make the right decisions for the business long term the stock price will eventually reflect that.

Correct.

Ford is in a great position in that stockholders have little or no influence in day to day running of the company.

In some respects, that's a great way to run the company because it prevents hostile take overs and  stockholder uprisings.

 

I can only imagine what would have happened in 2006  if stockholder had control of Ford and not the Ford family....



#29 OFFLINE   RichardJensen

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Posted 22 March 2017 - 03:20 PM

So it was set up as a way of showing that the government was doing something

without actually affecting or influencing the market...got it.

 

Pretty much. Periodically they have to do something noisy, and when there's a major scandal they have to "investigate".

 

The only executive agencies & laws with teeth are those that came from existential crises (the SEC, the FBI, RICO, etc.) Presentist bias aside, the '08 Crisis was nothing at all like the Great Depression.


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