Question

1)One of the fastest growing segments of Dime Community Bank’s portfolio is home equity and home improvement loans. True or False? 2)Dime Community Bank only funds single family homes with fixed rate mortgages. It dropped out of the commercial real estate market on 2013. True or False? 3)The main source of funds for Dime Community Bank is capital gains on real estate development in New York City. True or False? 4)The main source of funds for Dime Community Bank that it uses for its lending and investment activities include deposits, loan and MBS payments, investment security principal and interest payments, and advances from the Federal Home Loan Bank of New York (FHLBNY). True or False?

Answer 1

February, I posted right here about Roubini international Economics' prediction that defaults in subprime mortgages would ripple by way of the financial method and prompt a recession. The following week, the inventory market tanked, and lots folks blamed subprimes. What is the link between subprimes and the leisure of us? Here is how I summed it up last month:
[The] argument is lovely easy: personal loan debtors with the worst credit are defaulting, and the monetary associations that own these loans are taking a success they failed to see coming. That's going to make them extra cautious about lending cash--and no longer just to subprime borrowers, however even to these of us with glowing credit score scores. What's extra, Roubini observes, even many prime borrowers are low on financial savings and have not had a significant lift for a at the same time. And falling actual estate values have taken one of the crucial air out of their home equity.

Stir this witches brew collectively long ample and you get a very unhappy customer. We're about due for an fiscal slowdown as it is. Roubini thinks the credit score crunch would turn that slowdown into a "tough touchdown."
certainly, I oversimplified things somewhat bit here. You could, whilst reading this, snapshot on your head a single bank that has given out some loans to top debtors, and some other loans to subprime borrowers. When the subprime borrowers start lacking payments, a anxious financial institution president looks at his balance sheet and calls the pinnacle mortgage officer and tells him to tighten up lending requirements throughout the board. At the same time that's now not a foul way to feel about it, sincerely we're not speakme about man or woman banks however an whole financial procedure. Banks promote their mortgages, which get bundled into trade-able securities, which in flip grow to be the raw fabric for all method of fancy economic derivatives. These things finally ends up on the books of mutual funds, hedge funds, coverage businesses, pension dollars, and so on. (yes, i'm oversimplifying right here, too.) the day gone by in the new york instances, Gretchen Morgenson painted a vivid, as a substitute horrifying snapshot of this market, strongly suggesting that it's set to go pop! In our faces any day now. Felix Salmon raises some questions concerning the occasions analysis right here.

So what is going on to happen? I dunno. But after I'm weighing the probability of a prediction coming actual--or worse, making a prediction myself--i try to recall a few of what I've realized from psychologist Philip Tetlock. He's made a study of proficient predictions, and he's located that they rather don't seem to be excellent. They do about as well, he says, as "the moderately attentive reader of excellent newspapers."

that doesn't imply you shouldn't hearken to specialists like Roubini; you simply shouldn't overvalue them. However what's even more fascinating about Tetlock's work is why specialists make errors. One situation experts tend to have is loquacious overconfidence: they've numerous expertise, so they can put together very convincing experiences to explain extreme effects. Tetlock additionally determined that experts were more probably to foretell severe routine if they have been pressured to think targeted story-strains. For instance, they had been extra seemingly to foretell the disintegration of Canada in the event that they were asked to place odds on a collection of eventualities--similar to an fiscal downturn, mixed with political victories for Quebec separatists--than they have been in the event that they have been simply requested in regards to the possibilities Canada breaking up. Imagination is powerful.

I am no expert. However three weeks ago, in the event you had requested me whether or not subprime mortages were a chance to the economic climate i would have shrugged and said, "Ehhhh.... More often than not now not." Statistically, that's a fairly secure response. The popularity quo has a method of staying that way, provide or take. But previously few weeks i have been studying Roubini, Morgenson and Salmon, and blogs like Calculated threat. I am speakme about this stuff at the office, and i am following the anxious feedback on the field on this blog. I'm finding out all about CDOs, HELs, AltAs and the ABX. (Three weeks ago, if Alex Trebek had asked me what those had been, i might have answered, "What are the worst fraternities in Urbana-Champaign?") i have lots of know-how now. Out of the blue, the probability of a housing credit score crunch that breaks the economy is far more vivid to me. That does not necessarily imply it's to any extent further seemingly.