It Get's Even Better: Banker says, "Now people are going to actually have to have a job to get a loan.."

In yesterday's (September 18, 2008) online version of the New York Times, Louis Uchitelle wrote an article "Pain Spreads as Credit Vise Grows Tighter".

In the article, he quotes Bradley E Rock, Chairman, President and CEO of Bank of Smithtown, Smithtown, NY (L.I), and current Chairman of the American Bankers Association, "Now people are going to actually have a job to get a loan and they are going to have to make installment payments that are actually higher per dollar borrowed than they used to be,"..

Uchitelle has this to say: "The winners so far are the Brad Rocks of America, the bankers who have emerged unscathed, their capital intact and with enough retained earnings to support lending, on their terms. A residential mortgage from Bank of Smithtown requires 20 percent down and clear evidence of adequate income to repay the loan, as well as a good record of paying down debt. "

Then, as a further comment: "Bank of Smithtown specializes in small businesses — the stationery stores, pizza parlors and pharmacies of eastern Long Island with annual revenue of $2 million or less, regularly in need of bridge loans, for example. During the credit boom, Mr. Rock said, many of these business owners went to lenders who required, as he put it, nothing more than a tax ID number to qualify for a loan. [Emphasis added]
“Now many of these lenders are gone,” Mr. Rock said, “and the small-business borrowers are coming to us, and we are doing good old-fashioned underwriting, and the result is that fewer people are getting loans.”

Also, in the same piece in the New York Times, there is also an example about loans in the trucking business:" “The banks were giving loans for the full value of these trucks and the value was falling, and the truckers found themselves owing more than the trucks were worth,” Mr. McCormack said. “They found themselves forced to keep driving or let the banks repossess, and many have elected repossession.” In the Times article, Mr. McCormack is referenced as being the operator of an online site called truckertotrucker.com.

So let's see, not only were loans made on homes, but also on businesses and on personal property (trucks), with the same lack of standards. And, some bankers, who held to standards are in pretty good shape. Furthermore, traditional Wall Street brokerage firms and insurers are in trouble.

This would seem to emphasize that the real source of the problem is NOT the housing market. IF, the source of the problem is in the housing market, then that's were you would need to find and make the fix. But as you can see, the problem is being worked on in the financial marketplace. They need to stop the rhetoric of blaming housing. That's just where we all live.