Are small banks safer from all the poor practices of the “big” banks like wachovia etc?
or do small new banks engage in all the same mortage bundling?
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Many small banks don't have a in-house mortgage department, or if they do most of the loans are sold on the secondary market pretty quickly.
"Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Every bank is unique in that they have particular philosophy in which they govern themselves.
My guess would be that most of them make loans both ways: some get sold on the after market and some are kept in-house. In-house loans are called "portfolio" loans. Portfolio loans can be loans that fall outside of the normal requirements that the aftermarket demands. For instance, if you buy a unique piece of property in a small town, the local bank president might fully understand it's value and give you a loan. But if you tried to get a mortgage on that property from a national lender, their appraisal policies might not understand the true value of a particular property and turn you down because it would fall outside of the guidelines they need to fit into to sell the security on the after market.
So, there is no easy answer to your question. Small private banks can have bad decision makers reviewing the loans too.
Interestingly, several local banks ran large ads in the Sunday paper here, stating that they didn't have sub prime mortgages and are solvent and ready and able to make loans. I'm not sure if it was a preemptive strike on their part or whether they have already seen people taking their money out, a downturn in loan apps, etc.The biggest impact of this whole deal might be the impact on consumer psychology. Seems like we are going to be headed for a sharp downturn based on that alone.(edited grammer)
Edited 9/28/2008 1:22 pm ET by Marson
a preemptive strike on their part
I would imagine the bank had received several phone calls from older high-deposit customers asking about the security of their money."Put your creed in your deed." Emerson
"When asked if you can do something, tell'em "Why certainly I can", then get busy and find a way to do it." T. Roosevelt
Our bankmanager walked out with literature and a full explanation of their policies when we inquired about their financial health. I can imagine every bank in America has been fielding a lot of questions about their financial health.
Someone told me today about Alt A loans ( in which you not disclose ANY financial data).
what madness!!! He said a golfer biddies daughter got one when she graduated from college and Dad made the payment for 6 mo til she got a job.
Are these bankers crazy AND greedy?
Just the ones that golf with biddies;)
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Not sure if this has been posted elsewhere . . . For those concerned about their bank's fiscal health, the feds' watch list is not published; but here's a site where one can get at least some information. http://www.bankrate.com/brm/safesound/ss_home.asp"Bankrate.com's Safe & Sound¯ service is a proprietary system designed to provide information on the relative financial strength and stability of U.S. commercial banks, savings institutions and credit unions. The system employs a series of twenty-two tests to measure the capital adequacy, asset quality, profitability, and liquidity (CAEL) of each rated financial institution. Individual performance levels are determined from publicly available regulatory filings and are compared to asset-size peer norms, industry standards and key absolute benchmarks. Combined results form the basis for our Composite CAEL and Star Ratings, which are described below. When possible, the system also produces a report that provides a detailed explanation of our findings, for each rated financial institution."soj