Just coming on board here to discuss commercial banking laws, and I see some non experts talking about lending like they are experts.
In the closed thread titled foreclosure drivel, they are incorrect.
The promissory note is the basis of the loan, it is the makers asset. I know this because I am a v.p. for lending for Regions bank and have done this for 20 years.
Let me explain something.
Banks need reserves in order to make loans, there are only two ways to increase reserves. First is deposits, but with only around 1 trillion in printed currency, at the 9 to 1 reserve ratio that would mean only 10 trillion in TOTAL loans for every bank for any reason. Second way to increase reserves is by accepting notes. The note increases reserves and allows us to loan out 9 times the amount of the note.
Without the note a loan is NOT possible ( meaning banks can not loans against reserves it does not have)
, unless you can show how on a 9-1 ratio, how 1 trillion in deposits can support 13 trillion in home loans alone, not counting any other loans made.
For those of you who think they can get technical about it, here is a Forbes write up on it.
Also if you are skeptical of what I say, feel free to contact Todd Walker as he is considered an expert on this subject.Firstly, here’s a short explanation of bank lending. Under normal circumstances, deposits and loans are more-or-less equal across the banking system as a whole.
This is because when a bank creates a new loan, it also creates a new balancing deposit.
It creates this “from thin air”, not from existing money: banks do not “lend out” existing deposits, as is commonly thought.
Good day gentlemen and ladies
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Here is an even more technical write up based off the Forbes link.
Read the comments as well.
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Here is Todd Walker in a case that was lost but the facts of what he said were not disputed.
As in the other thread was talk of the Daly case and someone said Daly snowed the justice.
If the person read the case he would know the justice did not believe Daly, he did believe the bank president who backed everything Daly said.