I'm not sure if the Alabama Coast is seeing any of this, but the NY Times is reporting boat owners are abandoning their vessels because they can't sell 'em, can't afford to keep 'em up, and can't even afford to properly dispose of them. Think of the aquatic version of homeowners mailing the keys to the mortgage holder when they hit bottom.
There's a lesson for our nation now, found in the gospel of Luke in chapter 16.
ReplyDeleteFaced with the prospect of losing his job after being discovered short on accounts receivable, he went to the debtors and took less than what was owed, thus clearing the books at the accounting.
He was called "wise."
American financial institutions should take a lesson, get what they can, and write off the resulting losses. At least they wouldn't take a 100% loss!
Kevin,
ReplyDeleteThey can't simply take the losses and go on, sadder but wiser. The federally mandated reserve requirments do not allow bank assets to fall below a certain level without forcing the institution to call in its loans.
How would you or your private sector boss like it if the business lost its operating loans or its line of credit? Be careful what you wish for - a bank that learns the "lesson" you suggest would quickly become a source of severe difficulties for many others. This is precisely the problem the wizards in DC are attempting to address as we speak.
williakz
Maintaining a federally mandated reserve I understand. Perhaps the loaning institutions could - with regard to the parable in Luke - cut the payments in half and extend the time for repayment. Such actions are not without precedent.
ReplyDeleteYet, the purposeful obfuscation of "financial products" (may of which defy understanding by even the most fiscally astute) by the financial industry in conjunction with deregulation of much of the same (the walls of protection prohibiting commingling and which separated banks, brokerages & insurance being destroyed, they were all "in bed with" one another - a virtual financial orgy) are having deleterious effects.
The long & short of it? "Deregulation" - being the destruction of rules - is NEVER good.