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It's just a matter of time (lemmy.world)
submitted 6 months ago by to c/facepalm@lemmy.world
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[–] 42 points 6 months ago (7 children)

I worked in finance for 14 years. If you think that AI is going to markedly decrease the accuracy of the Excel spreadsheets underpinning our financial system, then you've never seen those spreadsheets.

I once saw a formula that ended in "+15". Because that's what it took to get it to balance. It was like that for years.

And honestly I worked at one of the better banks, one of the ones that didn't actually need to take the TARP loans.

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  • [–] 29 points 6 months ago (1 child)

    I found that to be a turning point in my life after working a few years at a real job at a respectable place and realized holy shit even the big places are full of people that have no idea what they are doing and lots of stuff is just winging it. Its really scary when you realize it.

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  • [–] 7 points 6 months ago

    There is almost always some sort of discrepancies in the figures. That’s why the auditors never say that the numbers are ”correct”, instead they ”present fairly, in all material respects, the financial position”.

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  • [–] 0 points 6 months ago (3 children)

    And honestly I worked at one of the better banks, one of the ones that didn’t actually need to take the TARP loans.

    Any bank that didn't take TARP was leaving free money on the table and was therefore a bad bank.

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  • [–] 1 point 6 months ago (2 children)

    I said they didn't need to take a TARP loan. They did take it.

    It was explained to me that this was because the government requested for them to take it, because it would help legitimize the program if all the banks took it.

    But it wasn't free money. It was a loan that was paid back with interest. As much as I hate and disagree with the concept of "too big to fail", the US government made a huge profit on the TARP program.

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  • [–] 0 points 6 months ago (1 child)

    It was explained to me that this was because the government requested for them to take it, because it would help legitimize the program if all the banks took it.

    Sure. I've heard this line - "If everyone takes the loan, then nobody has a stigma for taking the loan". But it was also an incredibly generous line of credit extended against assets that were trading at decade lows. That was part of the enticement to get more banks onboard.

    As much as I hate and disagree with the concept of “too big to fail”, the US government made a huge profit on the TARP program.

    They made a tiny gross profit off flipping equity off the post-'08 dip, booking $15.3 billion in surplus, as it earned $441.7 billion on the $426.4 billion invested.

    Although the Government arguably did not profit from the transaction considering that the program was funded by deficit spending, with an interest rate of between 2% to nearly 4% during 2008 to 2009. The cost to service the debt the Government incurred to fund the program would be at least $8 to $16+ billion a year.

    The Treasury could have made significantly more, if they'd traded the equity they held as collateral back at market rates. Finance stocks saw a 50-100% jump between the '08 lows and '10 recovery. Dividends on the preferred shares would have, similarly, produced a much bigger ROI. These loans were structured to be favorable to the businesses if they recovered and costly to the government if they followed the Lehman Bros crash out.

    But it wasn’t free money. It was a loan that was paid back with interest.

    It was a below-prime-rate loan with a number of debts written off as a loss, where the Treasury basically broke even.

    It also did nothing to provide relief for the home owners paying through the nose on double-digit sub-prime mortgage rates with property that was underwater. The end result was the 2010 Foreclosure Crisis during which banks lobbied state courts and legislatures to allow aggressive and often fraudulent repo of delinquent mortgages (many of which weren't even delinquent, just bundled with other delinquent debts).

    So, plenty of scandal to go around for both the "bad" banks and the "good" ones.

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