Personal loan business not a guaranteed success for Goldman Sachs

Source - http://www.forbes.com/sites/nickclements/2015/06/25/personal-loan-business-not-a-guaranteed-success-for-goldman-sachs/

Last week, Goldman Sachs captured headlines with its plans to expand into online consumer lending. Goldman Sachs is famous for its investment banking, trading and wealth management prowess. Making a $5,000 loan to a working class American family couldn’t seem further from their area of expertise. I actually believe they have a good chance of creating a sizeable, profitable franchise. And I explained why I thought Goldman Sachs could succeed last week.

However, their success is far from guaranteed. After publishing the post, I received a lot of feedback from people who had a very different view. In today’s post, I wanted to share some of their best arguments.

Investment Banking and Retail Banking Cultures Don’t Mix

Consumer franchises can take years to build properly. However, once built, the business provides a steady and stable annual annuity. The dynamics of building and managing a consumer business are very different from building and managing a business that is driven by closing deals or trading.
Some of the biggest culprits of the 2008 mortgage crisis were investment banks like Bear Stearns and Lehman Brothers, who brought a short-term mentality and high compensation to the traditionally boring world of mortgages.

I remember having a conversation in 2009 with a former Bear Stearns mortgage banker. He described the way they ran their mortgage operation, and as a retail banker it terrified me. He would start each day talking to the trading floor. He would understand what exposure the traders wanted, and then he would go to the mortgage distribution partners and find a way of originating it. The view was simple: if the market is willing to buy it, the investment bank was willing to sell it. When I joined retail banking, I was taught basic risk management skills from my first day on the job. You only make a loan to someone who can demonstrate the ability and willingness to repay.

Investment banks have the ability to sell assets all over the world, quickly. Historically, poor mortgage underwriting would punish the bank making the bad loans. Regulators would often have to step in and rescue the depositors. But in the last crisis, German banks had exposure to Nevada subprime mortgages. And we did not know who to blame.

Will Goldman Sachs really be able to think like a balance sheet lender, with a long term perspective? Or will they be tempted to relax underwriting standards, package loans and sell them globally? A trading operation would probably prefer originating, selling, and taking a fee. And if they worried about asset quality, they would short the market rather than change underwriting quality, preserving the fee income stream while protecting the balance sheet. That is a very different approach from a commercial bank.

Infographic Credit Cards in USA

 

http://www.buzzsprout.com/45810

financial advice video

Cool video on personal finance I found

Get on your bike for the personal loans rant

Being a humble servant of the paper is a hard life; trying to get yourself some of that precious dough. It is the easiest course of action to rely on money for the better way of life. Being in receipt of much needed cash is a large part of the problematic nature of modern existence. With so many people needing some extra money at this time of year it is no surprise that millions of pounds of personal loan cash has been taken out.

With the numbers of borrowers hitting record highs and with lending becoming ever more easy, the cash loans industry has become a major fixture of many peoples emergency planning. Personal loans - see here for info, are the speediest means of finding some extra money in the United Kingdom. The major obstacle to many a good persons funding is the problems related to being in debt from previous loans. This is something that many people face with a varying degree. The ease with which some people manage to get all their costs covered shouldn't be overlooked.

It is something that many people rely on with such a fanatic desire. Probably the simple mathematics that control our global economy is not an issue many people wish to face. With a number of same day loan options out there, it is no wonder that we see such figures. Many of the recent development that have been observed revolve around the determined efforts of a limited number of high-profile individuals using a great deal of pressure to keep the boat steady, a guarantee that should be only given the respect that such matters deserve.

Trimming down for summer

If you are looking to lose weight in 2013 and live inside the United Kingdom, then there are plenty of ways of doing so that can range from fun to boring to downright naughty, but some of these options require you to invest financially, while others are free - what options do you have? Some people chose to run around fields and spring through the air over the grass and breathe the air in. Other people take the short cut and generally look to get in to the gym and work hard to generate a real sweat and to burn off all the calories.

If you go swimming and there happens to be a very cold stream of water running through the place where you are taking a dip, then it may be chilly. Other people try to diet and eat the right foods and drink the right beverages then that could really aid your regime would if you stick to the plan and don't mess about. Getting the right supplements is also costly, with such a variety and number out there, it is no surprise that some financial assistance is often sought. When it comes to unsecured loans people also cannot mess around with their finances.

That is why in the modern era there are many places that can be found online that provide quick finance. Personal loans from most websites are available 7 days a week and three hundred and sixty five days a year. This means people who need quick and easy finance and small loans can do so with no fuss and with little stress. All in all, this makes for a very happy set of circumstances for those seeking quick finance in an emergency situation.

What Happens If You Don't Pay Off Your Student Loans?

How bad is defaulting on student loans? What happens when you just can't pay them?

Bankruptcy Student Loans

Student Loans - Declaration of Bankruptcy Not Allowed

Filing bankruptcy is utilized by most people so that they will be able to clean out their debts. Cleaning out your debts will open the door towards a new financial start. Before you apply for bankruptcy, you have to think, and rethink about it. You have to put into consideration the types of debts which you wish to clean out. There are a lot of debts which cannot be eliminated by declaring bankruptcy.


One example of this is the declaration of bankruptcy on student loans. Declaration of bankruptcy on this type of loan is normally not allowed. So if you are a student who is worrying over his loans, you cannot run away from it. Instead, you can face it through the bankruptcy student loans.

You are still a student but you have just filed for bankruptcy. Bankruptcy student loans may just be your savior or the ones which will provide you the much needed financial assistance. What are the loans which can help you after you filed bankruptcy? Even if you are already bankrupt, you can still apply for a government student loan since this loan is not a private one. Your needs are the basis of a government loan and not your credit.

What Government Loan Covers

If you are already bankrupt but still wants to pursue your studies, a government loan may help you when it comes to paying the school expenses and the tuition fees. You have to remember, though, that the government loan may not cover all of your expenses or debts. It can only give you enough money which will cover a year. So if you are studying in an expensive school, the loan may not even be able to cover your expenses. However, if you are studying in a graduate school or a major university, the government loan may be sufficient to cover the tuition fee.

If the government loan is not sufficient, you have to look for other alternatives. You may consider the private loans. But since you are already bankrupt and the private loans are based on credit, there is the possibility that your application will not be approved. You would probably end up not studying for several years because you have to build your credit bank up.

Ask About Interest Rate First

 

Bankruptcy student loans may also be offered by some lenders. Before you grab the opportunity, ask first about the interest rate. You may be able to make a loan but the lenders will require you to pay for a high interest rate. Since the interest rate is very high, you might just end up paying for the debt two to three times over.

The payments also depend upon the type of loan which you will make. It will also depend upon the interest rate set by the company or the lenders. If your only option is the government loan, do not give up trying to look for other alternatives even if these alternatives seem too be so rare and hard to find. To help you out, you may even consider applying for a job so that you will be able to pay for your books or for your housing expense. You may also consider transferring to another school wherein you only need to pay for cheaper fees.

Student Loan Debt Statistics In America