Bankers need to change their attitude

Implications: 1. Current crisis is the child of greedy bankers. 2. Fast loans are not criteria for high bonus.

Analysis: There is a wrong perception in the "current" banking industry and also with the rating agencies.Anyone talking about collateral security is a conservative.The assumption is that when a loan is backed by a marketable security then any further requirements is the brainchild of a consevative.LVR is only on paper and for the record.All parties involved need to change their attitude as a outcome of this crisis.That is one thought. There is another line of thinking.Which is provision of housing to the needy.A social objective.Good one at that.But isn't there another way ? Why do Governments not take responsibility for provisioning of subsidised housing loans.Has it not intervened now to rescue bankers.Had the governments not blinked, this crisis could have been averted.Why do we have to wait for a crisis for a hero to rise.

An asset like land can rise in value as well as fall in value dependent on market forces and economic conditions. All assets attract depreciation in one form or the other (antiques notwithstanding).Therefore taking a considered decision should not be frowned upon.The rescue package may create a temporary rise in share prices but not land prices.Therefore the rescue package coming from Washington will be a band-aid solution albeit much needed. But the problem lies elsewhere.And that problem requires a solution though long term.It is the Economy as such.Why did the economy take a downturn? put rules in place to avert a furture crisis.

The subprime crisis has been running for 2 years.Bank failures should have been seen in coming. WaMu could be the begining of the end.More banks not only with subprime but normal mortgages will face a crisis because of the effect of the economic downturn consequent to fall in house prices and jobs.The rescue package may create a ripple effect on the world economy.China and India could have limited the impact but for how long ? Maybe there is something in there.But China's milk crisis could create a reverse limiting any positive effect.

There are more questions than answers.But one answer to all questions - It is the Economy stupid!