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A comment on Bank Underground, the blog written by Bank of England staff. Parent comment

Re:Bank Underground, the blog written by Bank of England staff by peteretep on Thursday May 05, 2016 @07:09AM (#11635107) 

    > Do you know of a bank that has robbed from the small
    > people? I work in finance
There was that whole subprime crisis thing.

Now you could split hairs here, and say that rather than technically robbing their clients, the banks involved merely cheated them, but as you follow with:

    > there's tremendous protection for the small people
    > in everything we do
I'm guessing you're not going to do that.

Matt Taibbi sums it up nicely, so rather than paraphrase him, I'll just quote him:

    > > about two-thirds of all subprime loans between
    > > 2000 and 2007 were made to people who already
    > > owned their homes. The targets were often
    > > elderly, in particular men and women of color.
    > > Visiting loan officers convinced these borrowers
    > > to use the homes they'd poured their savings into
    > > their whole lives as ATM machines.

    > > The pitch was: refinance your home, and get a
    > > little extra spending money each month! Lots of
    > > people went for it. But there was mischief hidden
    > > in the fine print of many of these "refi" deals,
    > > which often quickly exploded. Before long, the
    > > now-departed agent's promises would evaporate into
    > > a toxic quicksand of debt, unforeseen penalties
    > > and foreclosure.
As the same article goes to point on, Wells Fargo paid a $175,000,000 settlement for this shit. From the Baltimore Sun[1]:

    > > "80-year-old African-American resident of the
    > > Baltimore area with a 714 credit score and a
    > > rock-solid credit file who received a subprime
    > > loan instead of a prime loan, and who was not told 
    > > that she may have qualified for a prime loan with
    > > better terms."
    > > "By the time she realized she had an
    > > adjustable-rate mortgage, and not the fixed rate
    > > she thought, it was too late,"
Does it get worse? Of course it gets worse, we're talking about a bank! Not content with merely going after vulnerable people with predatory lending practices, they made to sure to refer to the POC they lent to as "mud people"[2]

Tell me again about those protections for the small people? They sound great.

[0] http://www.rollingstone.com/politics/news/the-line-that-may-...

[1] http://articles.baltimoresun.com/2012-07-12/news/bs-md-ci-we...

[2] http://www.nytimes.com/2009/06/07/us/07baltimore.html

[ Parent | on HN ]
Re:Bank Underground, the blog written by Bank of England staff by pjc50 on Thursday May 05, 2016 @09:13AM (#11635755)
I don't know why you're being downvoted, there's a genuine point here. Especially if you count robosigning as well.
[ Parent | on HN ]
Re:Bank Underground, the blog written by Bank of England staff by spicerguy on Thursday May 05, 2016 @10:03AM (#11636164)
agreed - though I think the grandfather comment was probably referring to the UK marketplace and the US experience of subprime credit sales is somewhat different at the mortgage level. Payday loans are a different story all together and have the a similar, or even more vulnerable target market here in the UK as subprime mortgages in the US. However payday loans are not usually offered by traditional banking vendors in the UK and as such banks get off the hook here.
[ Parent | on HN ]
Re:Bank Underground, the blog written by Bank of England staff by peteretep on Thursday May 05, 2016 @10:17AM (#11636271)
Having personally had a £10 unarranged overdraft turn in to over £200 of fines, the idea that UK banks get off the hook is ludicrous. They've been forced to tone it down now.
[ Parent | on HN ]
Re:Bank Underground, the blog written by Bank of England staff by spicerguy on Thursday May 05, 2016 @10:54AM (#11636604)
Yes, I've been stung with these sort of charges myself in the past here in the UK - the banking code has cleaned up this practice a bit in more recent times; however I think it's fair to say there's a material difference between being stung for £200 and having your house being ripped from under you by sharp banking practice. I recommend watching the film "99 homes" - it's not a perfect film by any means but illustrates many of the coal face issues of mortgage repossession in the US.
[ Parent | on HN ]
Re:Bank Underground, the blog written by Bank of England staff by peteretep on Thursday May 05, 2016 @11:03AM (#11636698) 

    > however I think it's fair to say there's a material
    > difference between being stung for £200 and having
    > your house being ripped from under you by sharp
    > banking practice
The difference is solely in scale.
[ Parent | on HN ]
Re:Bank Underground, the blog written by Bank of England staff by spicerguy on Thursday May 05, 2016 @11:58AM (#11637216)
yes, and scale is a material difference.
[ Parent | on HN ]