Wednesday, February 25, 2009

Have we learned nothing from this crisis??!

How did the whole subprime mess start? Banks lent money to people with low income and these people defaulted on their debt.

MAS has now lowered the income requirement for unsecured loan to S$20K. Now instead of the govt giving workfare to the people whose income is not sufficient for their basic needs, they can send these people to borrow from the banks. The same day this revision was announced there was a report to say that an increasing number of people are struggling with their personal debt:

http://sg.news.yahoo.com/cna/20090224/tap-167-more-consumers-struggling-pay-cr-231650b.html
-------------------
SINGAPORE: From next month, the minimum income requirement to apply for unsecured credit facilities will be lowered from S$30,000 to S$20,000. This will essentially allow more individuals to obtain such facilities subject to a cap of twice their monthly income. The Monetary Authority of Singapore (MAS) said the revision will allow access to unsecured credit to more individuals who may have occasional genuine borrowing needs but not if they have a spotty record with Credit Bureau Singapore. That's because MAS has made it a requirement for financial institutions to conduct comprehensive checks with the bureau before granting each new credit card, charge card or unsecured credit facility. Under the revised rules, financial institutions will also be barred from making unsolicited offers of unsecured credit facilities to customers unless customers write in for them. This follows similar restrictions on unsolicited offers of credit cards already in place.

56 comments:

santary said...

one of the ways to earn money is to lend cash ma.. boh bian

--www.currypaper.tk

Anonymous said...

I've worked in a bank before

not sure about unsecured loans, but the "comprehensive check" part for housing loans...

let's just say looking through the credit bureau report for a few seconds doesn't constitute a "comprehensive check"

Taishan said...

More will now be able to enjoy the legal loan-sharking rates.

Anonymous said...

Isn't it a clear and pointblank declaration of WAR against the Singaporean peasants by the PAP government.

PAP government operates to the benefits of Banks, MNCs, Foreigners, GLCs, Govt Hospitals, Lawyers, Doctors, PAP circle of Cronies.

Anything else is care-la-fare.

Anonymous said...

We have all learned from this crisis, the PAP's Government learned more, their financial cronies have to survive and be profitable. A PSC scholar explained, "its the only way forward".

HDB apartments are no longer a safehaven for debtors. In face of the financial Tsunami, where people scramble for "easy cash" its call modern slavery. Taiwan banks sold credit card debts to Triad debt collectors. Citibank, DBS, UOB, OCBC, etc may soon have their Triad Department!!!

The PAP government are trying to create a nation of credit-card slaves for PAP's license Loan-shark (28% default rate)using the credit-card scheme. After SM Goh created "A Nation of Share Ownership" for their Singtel IPO.

PAP's MPs are so ever ready explaining to Serangoon's residents the need to build Worker Quarters in their neighbourhood.

With HDB's 1 year waiting list for HDB's rental flat, I wonder how prepared the MPs are in face of a credit-card debt meltdown to accepting CARDBOARD BOX dwelling at HDB's void deck.

Anonymous said...

This is an unimagineably bad piece of pro-business legislation by the MAS. Yesterday report that outstanding credit card debt has ballooned in Singapore.

How is a person making $20K a year even able to service any debt given that income barely sufficient to sustain the person's basic needs. It just makes no sense.

The truth is this is the most profitable segment of the banks' business given they are no longer able to push out structured products, the PAP govt is eager for them to replace the lost business by allowing them to lend to the poor people in Singapore.

This is an unconscionable act by the govt and it reflect the values held by this govt - business first people second.

Anonymous said...

The new generation of Singaporeans are spenders. So lowering the limit practically opening up spending opportunity for them all the more merrier considering win-win situation for govt & younguns

Anonymous said...

Modern slavery is putting it mildly.

Try...murder.

Anonymous said...

A man was praying to God.
He said, "God!?"
God responded, "Yes?"
And the guy said, "Can I ask a question?"
"Go right ahead," God said.
"God, what is a million years to you?"
God said, "A million years to me is only a second."
"Hmmm," the man wondered. Then he asked, "God, what is a million dollars
worth to you?"
God said, "A million dollars to me is as a penny."
So the man said, "God, can I have a penny?"
And God cheerfully said, "Sure!!.....just a second."

Anonymous said...

Sick jokes!

Anonymous said...

I am just as shock by this piece of news.

govt is defintely driving people to borrow in this recession - insted of providing work fare or something - it is unconscionable. Why is Tharman and PM Lee allowing this?

Anonymous said...

It sounds like the govt of the day is feeding these people to the sharks. Those on the border line need help eg loan from their CPF savings. Not market interest rate loans from the banks..... or imagine them approaching a few banks.....

Anonymous said...

May be the PAP's idea is to make people buy its expensive HDB flats more easily. Given that Temasek and GIC have been such horrible performers, they probably thought that loans by DBS to the people might "kill 2 birds with 1 stone":

1) make sure interest from them

2) HDB flats with high price tag will be bought up quickly with those loans and also with the flat owners' cpf savings.

That way, if the national coffers have been hollowed out by Temasek and GIC follies, no worry, the figures can simply be deducted on paper through such overpriced housing payments. And it is all legal. But who tell you to buy the expensive hdb flats? Answer: For a new family, where else can we live?

May be I am over-imaginative but with PAP facts have proven to be stranger than fiction, as we have learnt over the years.

Anonymous said...

They really are believing in spending to pull the economy out of the recession and are making credit more easily available.

The problem is that local comsumption will do nothing to address the falling exports and job losses. It may mitigate the retail sector and prevent shop rentals from falling too much. In the end it is just about helping the banks and landlords. And does nothing more than putting a noose around more people's neck.

hatasan said...

Hmmm... not sure how the subprime housing mess is related to MAS lowering since this is about 'unsecured loan'. Can we use our credit cards to pay for our HDB downpayment? And the problem with the recession now is not purely people with low income buying houses, its those mortgages being marketed as something else to the world's investors.

As for the lowering of income requirement, do you consider $20,000 as low? It works out to be about a monthly income of $1,800. I guess we shouldn't allow them to buy houses in Singapore too - if we compared these group of people with those caught in the US subprime.

Should we let a few financially irresponsible individuals ruin the market for those who genuinely needs the credit in a hurry? The way you guys are arguing in here - you make it seems like those earning $1,800 and below are incapable of thinking for themselves, that given a credit card, they will surely go mad and sign like there's no tomorrow.

Legal loansharks? Hey, what's the worst a bank can do to you as compared to those ah longs? Tell me, I am quite curious to know :)

And to the person who said that this is pro-business, why not? I rather the business grow and hire a few more 'loan sharks' so we can all 'chop' those innocent and naive credit cards user :p

Anonymous said...

Please read Obama's speech in why America is in such a deplorable and bad situation.

Easy credit, spending on credit, and short term perspectives by the business leaders.

Anonymous said...

Anon 2:50 PM, you presented a different and thoughtful perspective.

By the way you asked a very good question "what's the worst a bank can do to you as compared to those ah longs? "

Actually in some other ways they can do more if you fail to pay up : you are forced to downgrade to a smaller flat, or even no flat at all because the PAP govt had largely stopped building the smaller flats and only lately is planning to re-build such flats in greater number.

One family of 6 I know got shipped out with all their furniture into a relative's old 1-room hdb flat because they could not service their bank loans. Imagine, 1 room flat!

Okay another different case just to show how caring PAP is. An old lady friend could not live with her children because they were having marital problems like divorce. She could not even apply for an old HDB 1-rm flat because the govt requires a co-applicant.

Because of this policy there are such individuals like unmarried people and old folks who are forced to live in old 1 rm flat with total strangers, their co-applicants. This was even once broadcasted on a Channel 8 documentary once.

Anonymous said...

Hi Lucky

Subprime crisis is really about fraud, flippers and unregulated lending. A small problem. the big mess was some rocket scientist decided to turn those into *innovative* financial products. Like selling bets on your neighbour's house getting burning down sort of thing.

Now, lending to the poor (and middle class) is a very traditional and safe way of making money. Its not perfect but sure beats having those folks borrowing from unlicensed loan-sharks.

In fact, I am in favor of microfinancing in SG.

A shockingly poor article by your standard.

NoName

LuckySingaporean said...

hatasan,

I may have been quick to shout at this idea. But that is because there is already a growing problem among Singaporeans for this type of unsecured loans. Also, there were previous articles in my blog citing the work of Harvard professor Elizabeth Warren maker of the film Maxed Out. This type of lending has become predatory and irresponsible becuase of the high interest rates charged by the banks they can afford a high level of default. For example at 24% the banks can afford 10% defaults and with Singapore's pro-lender bankruptcy laws they can basically become far less than responsible lending to many who shouldn't borrow.

There has to be a balance of regulation and personal responsibility. Unless we have done something special to change human behavior we should have regulation in place to contain the greed at both sides.

Many country has had consumer loans implode on them besides the US we have seen earlier episodes in Taiwan and S. Korea, the harm to their society wasn't small. Malaysia to their credit acted pre-emptively by limiting credit card interest rates to 13% and unsecured loan to 8%, I have not heard responsible borrowers complain they can't get a loan there. Lenders become more cautious at these interest rates to avoid high rates of default.

At the end of the day, who benefits from lending to the the poorer people at high interest rates? None other than the banks. In many countries, the govt actually run micro-loans schemes lending money at very low rates for the poor people to invest in themselves -farm equipment, irrigation etc. When banks lend at high interest rates to the poor, I don't think they bother why the person wants the money, they don't even bother if a number default because the high interest rates guarantees a profit.

If people are capable of personal responsibility, why don't we legalise loan sharking surely people who need short term loans should be given access to loan sharks willing to lend them. There is a line and a balance that must be struck.

LuckySingaporean said...

Noname,

Read my reply to Hatasan. I would also like to add that I'm agreeable only if there is a balance of such a scheme. MAS should also limit the interest rate charged on this loans to prevent predatory lending.

I agree that my article is substandard because I simply shouted at this idea. Already, the problems of predatory lending is starting to show up - read today's news paper on ballooning credit card debt. I was a bit angry as I felt the govt has done nothing and simply allowed this problem to grow. It is a foreseeable problem and there are many precedents on were we will end up if we do nothing. The PAP govt has done nothing - and yesterday the did worse than nothing by promoting unsecured lending to the poor. With this type of economic situation, it doesn't take a genius to figure out where we will end up with this type of loans.

Anonymous said...

If you are interested, watch these video clips and learn.

http://www.youtube.com/watch?v=ThXpjmfyiMQ&feature=related
http://www.youtube.com/watch?v=LgkYjFYr2QI&feature=related
http://www.youtube.com/watch?v=qTu4kGkQOvE&feature=related
http://www.youtube.com/watch?v=CPmZBfBx53Q&feature=related
http://www.youtube.com/watch?v=-IdpkvLdKLQ&feature=related


Cheers!

Anonymous said...

Lucky, I agree with you.

The minibond saga occured because the govt of the day allowed these instruments to be sold to the public, while I understand that in Malaysia, they were careful not to allow it.

Now this. Sure, we won't see painful stories of AH Longs banging on door, but know that the banks have got other means to make the borrower miserable.

Something is not right.

Anonymous said...

I was reading this piece of news and the same question popped into my mind.

Availability of easy credit at a time like this is not going to help.

Comment like "Its not perfect but sure beats having those folks borrowing from unlicensed loan-sharks." is not helpful at all. This is not a either this or that question. There are a whole lot of other options available.

Who is going to protect the financially less savey on these traps?

Justina said...

On the contrary, letting these new group of people have access to credit might help boost consumer spending, and prevent some companies from going belly up.

This doesn't mean they begin overcharging. It simply means that now, they have access to this magic thing called:

0% INSTALLMENT PLANS!

6/12/24/36 months sir/madam?

Anonymous said...

Hi Lucky

Now this crisis is as bad as I have seen.

Anyone stupid enough to go on an crazy shopping spree now, would do so irregardless.

$20k is more like lower-middle class.

What other options? No one would borrow from a loan shark unless they have no choice. A $20k credit line would give the desperate some breathing space even if for a few months. In fact, knowing how kiasu our gahmen is, you should worry that the $20k credit is out of reach of those who actually needs it.

Of course it is not perfect. In a perfect PAP would not get 66.6%!

NoName

Anonymous said...

Once upon a time, a beautiful, independent, self assured princess happened
upon a frog in a pond.
The frog said to the princess, "I was once a handsome prince until an evil
witch put a spell on me.
One kiss from you and I will turn back into a prince and then we can marry,
move into the castle with my mom and you can prepare my meals, clean my
clothes,
bear my children and forever feel happy doing so."
That night, while the princess dined on "Frog Legs",
she kept laughing and saying, "I don't think so!"

Anonymous said...

People who think that this is a good idea are totally missing the point.

Lending money is easy. Getting them returned is another thing. That's what caused the subprime thingy to implode.

Go google "The Credit Crisis Visualized". There's a nice animation that explains how the money flow caused the crisis.

Who's to say that credit card debts/unsecured loans are not being chopped up into CDO-like instruments right now? You know, most people *never* learn.

Anonymous said...

@NoName

Lucky is right in highlighting the irresponsibility of the govt to allow the $20K bracket group access to a credit card. In this difficult times to spend on them selves like buying a car a new tv set.

Read Obama speech, credit as in lending money to buy a house, pay for education etc and not about being issue with a credit card to go on a spending spree.

Micro-financing I am in favour too but these people borrow to start a business but being issued with a credit card is micro-financing you really surprise me.

The sub prime mess is manageable but not the CDS, that sunk everyone including GIC's and Temasek's favourite banks.

Lucky has no need to apologize for writing this article the message is important but not the style. What's the point of some people who speaks so will but at the end of the day is uttering rubbish and nonsense.

Anonymous said...

Anon 7:17 PM

I absolutely agree with you. The current financial turmoil is caused exactly by such policies as PAP is paradoxically pushing at this time.

Lucky is right is sounding off the alarm ; there is or was already too much easy money in the market: business loans up to $200,000 without any security (mortgage). The post offices have even been advertising all these to ordinary people. Have all these being withdrawn yet?

But when you don't pay, you will see what trouble you get into. The lender always smile and encourage to take it up because he is going pocket a huge sum if the deal goes through. But the misery is yours if you fail to make good.

I believe the reason PAP has allowed all these over the years was due to coercion from the US banks. And Lee Kuan Yew fears & sucks up to the US like anything.

So he allows the kind of policy. But now that, that policy has been shown to be very diseased, why is PAP extending this practice.

Anonymous said...

extraoridnary time requires extraordinary measures. this is on the assumption that the financially challenged will be wise to dispense the lifeline and recover when times are better. give and take a few casualties, i think the establishment is wise to recognize the impending social distress.

Anonymous said...

Two very successful psychoanalysts occupied offices in the same building. One was 40 years old, the other over 70.
They rode on the elevator together at the end of an unbearably hot, sticky day. The younger man was completely
done in, and he noted with some resentment that his senior
was fresh as a daisy.
"I don't understand," he marvelled, "how you can listen to complaining patients from morning till night, on a day like
this, and still look so spry and unbothered when it's over?"

The older analyst replied, "Who listens?"

Anonymous said...

There is more to unsecured credit than credit cards. And there is certainly no easy credit around.

U should caution about excesses in times of plenty and cautious about over-reacting in times of famine.

Tar-man is doing fine.

U may want to re-direct your anger at the dudes running Temasek\GIC\MOH\MOM\EDB\MCYS\A*STAR.

NoName

Anonymous said...

http://suddendebt.blogspot.com/2009/02/trouble-with-harry-or-ccc.html

Anonymous said...

CIC earns 10 billions by doing nothing.
Doing nothing can earn so much money, why pay top $ to get "loser" to loss money?

Anonymous said...

fuk. many bad shit in tonights news. from a possible wipe out of half of contractor's firms by end of the year to longer queue for job fair..

one piece of good news though, our minister of state still dress as sharp and look like a million dollar.

choonway said...

There are way too many bankers and lawyers in the government.

Not enough engineers/scientists taking part in the show.

At least the techies don't get fooled by claims of a perpetual motion machine...

Anonymous said...

all morons

Anonymous said...

A guy goes to the doctor.
The Doc tells him, "I have some very bad news for you.
I'm afraid that you're afflicted with a fatal and incurable disease."
So the guy asks, "Well isn't there ANYTHING I can do, doc?"
"Well... if I were you, I'd join one of those fancy spas and start
taking daily mud baths", replies the Doc.
"Mud baths? Will that cure me Doc?"
"No, not really... but at least you'll get used to being covered in dirt!"

DanielXX said...

Goodie! Now the construction workers can all borrow big-time to spend in Geyland every weekend! Hip hip hooray for the garment's loose credit policy!

Anonymous said...

NoName, you're certainly quite a stuffy person. You can't think clearly yet you want to talk a lot

hatasan said...

To Anonymous, at 3:21 PM


I wonder which is worse, getting chopped up or having your flat confiscated. :)

Anonymous said...

A Government that cares for their people would not allow more sufferings upon them. Yes, lowering the limits and other measures will ease some of those in
need but will open the doors to those who are less prudent in spendings and self-indulgence. Being
self-serving and taking the easy route to create
wealth by putting the ordinary citizens into more debt is simply heartless and calculative.

If we have leaders who believe that in being
charitable one should always consider "what is in it for us" syndrome, then, we as a nation has failed miserably. Consider NS, where citizens are asked to serve the nation but paid pittance for sacrificing 2 - 21/2 years of their youth. Our leaders sacrifice themselves by being paid millions to "serve the nation." Time and again we have been hearing about how wealthy and successful Singapore is, and this no doubt is all due to good governance. I completely agree, but wasn't this also something that all Singaporeans had contributed one way or another? Where is the quality of life that GCT promised Singaporeans long ago?

Now there is a serious problem in our economy, one funny Minister tells you that what you see as a light at the end of the tunnel may turn out to be the headlights of a truck bearing down upon you. So, this lightening of the credit rules will be that kind of light or otherwise? What other lights at the end of the Singapore tunnel do you foresee in the near
future? Tell us Mr. Minister.

hatasan said...

Dear Lucky,

You must help correct my less than stellar economic know-how but I don't think we should be comparing the poors in developing countries who require micro-loans schemes with the lower-middle income Singaporeans we are talking about here. Both groups have different needs and wants. What is seen as a win-win situation for both the poor and business in Africa seems a bit ridiculous here when I 'borrow' $3,600 ($1,800 x 2) for my house renovation or wedding and expect to pay minimal interest for it.

As for your example about loans in Malaysia, I have also heard how most of them avoid the bank when it comes to loans (except for the bumiputras) - prefering the 'unathorised' versions. No reason why they should complain about the lack of funds. You should see their loan-sharks over there. Make ours look like pussycats :)

As for the part about legalizing loan sharks... read in the papers last year more and more such finance company coming up.

http://www.asiaone.com/Business/News/My%2BMoney/Story/A1Story20080313-54322.html

Singaporeans are, and should be, tightening their belts. The ones taking the loans are those who have an urgent/legitimate need for it. As far as I can see, Singaporeans are well informed about credit hazards. Eyes wide open guys! :)

Anonymous said...

beg.bow and beg is the new economy.

Anonymous said...

"Being self-serving and taking the easy route to create wealth by putting the ordinary citizens into more debt is simply heartless and calculative."

therein lies your problem. but how do you dismantle it?

Onlooker said...

"Have we learned nothing from this crisis??!"

1)Wage slavery is here to stay an endorsed by our government.
2)PAPer for more goodyear.
3)today is feb 27 2009, 1 year on and they still haven't found what they are looking for :) How 'efficient' kind of make one wonder if the $$Million$$ dollar pay is justified, no?

Anonymous said...

True. I am a nobody. I am quite dumb and talk too much. But Lucky is different. Election is coming. Any mistake he makes will be used to discredit him.

NoName

Anonymous said...

Hatasan, I like your humourous style when you said:

"You should see their loan-sharks over there. Make ours look like pussycats :)"

And you actually answered your own question thereby : "I wonder which is worse, getting chopped up or having your flat confiscated. :)"

Thanks to PAP's strong law and order, our loan sharks can't do much violence here unless they want to land themselves in jail or worse.

At the same time, we must remember that housing have been monopolised by the govt unless one is wealthy enough to afford private houses and condos.

Are there any attap or zinc-roofed houses people can opt for?

The majority of people have no choice but live in HDB flats whether they like it or not, which is why the high prices and the lack of smaller, more affordable flats is a big problem.

Instead of making flats affordable, the govt tries to "solve" it by liberalising bank loans for housing.

Of course bank loans are not just for public housing purpose; but it does represent the bulk of it I would believe.

Anonymous said...

moral of the story is:

those who think they know alot get the license to assault the backside of those who know nothing.

those who know just enough watch them both get aids. LOL

Anonymous said...

yah, i think some people tend to forget the real fuckers are those "smart ones" who are paid millions to run your life.

not just fuckers, IDIOTIC fuckers who play with numbers and harry cats hahhaaaaaaaa

Anonymous said...

The pastor shocked the congregation when he announced that he was resigning from the church and moving to a drier climate.
After the service, a very distraught lady came to the pastor with tears in her eyes, "Oh, Pastor Bob, we are going to miss you so much. We don't want you to leave!"
The kindhearted pastor patted her hand and said "Now, now, Carolyn, don't carry on. The pastor who takes my place might be even better than me".
"Yeah", she said, with a tone of disappointment in her voice, "That's what they said the last time too . . .

Anonymous said...

OPPOSITION WILL SAVE THE DAY!VOTE THE OPPOSITION IN AND THE WORLD WILL BE A BETTER PLACE!

WOW

MUHAHAHAHAHAHAHAHAHA

cyber outlaw said...

Whilst our so called leaders have learnt nothing from this crisis,
it is even more tragic that the people who mindlessly support them learnt nothing from their incompetence.

Anonymous said...

The Reverend Billy Graham tells of a time early in his ministry when he arrived in a small town to preach a sermon. Wanting to mail a letter, he asked a young boy where the post office was. When the boy had told him, Dr. Graham thanked him and said, "If you'll come to the Church this evening, you can hear me telling everyone how to get to Heaven." "I don't think I'll be there," the boy said. "You don't even know your way to the post office."

Anonymous said...

Jie ling hai xu ji ling ren : Whoever tied the knot on the bell is the one to untie it

We the citizens of Singapore, pledge ourselves as one united people,

Familiar?

We tied the knot to vote PAP who now terrorise the Citizens. We have to untie the knot ourselves by kicking out PAP if we want to live a decent life.

Why our pussycat Triad had not been successful? It because PAP when their mighty pen and command of LAW has became the biggest Triad in Singapore. Only the Ah Long flourish, the same reason PAP would become the most successful Ah Long in Singapore via credit cards.

Anonymous said...

Coming Soon - Akan Datang - to Singapore;

Euthanasia is permitted for the physically healthy but financially unhealthy Singaporean.

Just Give Up Your Healthy Organs.

They are worth SGD600,000 to the government hospitals.

HAHAHAHAHHAHAHAHAHAHAHAHAHAHAHAHA

Pathetic Singaporeans