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ETMA accomplishes its primary objective, improving risk management, efficiency and transparency of the secondary market, by surveying and legal requirements and developments. (Buckley, 1998, p. 47)
Loan Sales FAQs
What is a loan sale?
A loan sale is a commonly used term for the sale of loans or loan pools. Loans acquired by the FDIC from failed financial institutions are generally sold in pools through sealed bid sale or English outcry auction.
How are sales structured?
Typically, sales contain loans that have similar characteristics. The loans are refined into pools according to specific criteria. Pooling considerations may include loan size, quality, type, collateral and location.
What documents are available on the site?
The storeroom provides documents for the sale offering and the individual loan pools. The documents that can be found in the storeroom are the: Invitation to Bid, Bid Instructions, Purchaser Eligibility Certification, Loan Sale Agreement, Loan Spreadsheets and…
Berger, a.N., & Frame, W.S. (2007). Small Business Credit Scoring and Credit Availability. Journal of Small Business Management, 45(1), 5+. Retrieved September 22, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5019679285 www.questia.com/PM.qst?a=o&d=5001398208
Buckley, R.P. (1998). The Regulation of the Emerging Markets Loan Market. Law and Policy in International Business, 30(1), 47. Retrieved September 22, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5001398208 www.questia.com/PM.qst?a=o&d=34689598
Cranston, R. (1997). Principles of Banking Law. Oxford: Clarendon Press. Retrieved September 22, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=34690467
Derivative. (2007). Investopedia. A Forbes media company. Retrieved September 23, 2007, at http://www.investopedia.com/terms/d/derivative.asp www.questia.com/PM.qst?a=o&d=5000176748
Norwest Bank had been lending money to Tresch to run a dairy farm. The balance due the bank after several years was $147.000; the loan agreement stated that Tresch would not buy any new equipment in excess of $500 without the express consent of the bank. Some time later, Tresch applied to the bank for a loan of $3,100 to purchase some equipment. The bank refused to make the loan because it did not believe the new equipment would correct the condition for which it would be bought and would not result in significant additional income. Tresch then sued the bank, claiming that its refusal to make the loan was a breach of the implied covenant of good faith and fair dealing. Decide.
Although, in this case the lender is accused of acting in bad faith against the bank that gave him the loan, really it seems as…
"Bad Faith." (2004) Retrieved November 23, 2004 at http://law.freeadvice.com/general_practice/suing_being_sued/lawsuit_bad_faith.htm
" When Does a Breach of Contract Occur?" (2004) Retrieved November 23, 2004 at http://law.freeadvice.com/general_practice/legal_remedies/breach_contract.htm
92. The total loan service cost will therefore be $4,382.92.
It should be noted that the interest portion of each payment is tax deductible. The interest for the first year is going to be $2,100. The interest for the second year will be $1,489.46. The interest for the third year will be $793.45. The interest declines each year as the remaining principle on the loan declines. Thus, the interest for the first year is on the entire amount of $15,000. After the first year, the remaining principle will be $10,693.03. The interest for the second year will therefore be calculated based on that figure, not the original $15,000.
The same holds true for the third year. The remaining principle after two years will be $5,667.52. The interest for the final year will be calculated on that amount only. As a result, the interest for each year will decline. The overall…
Liquidity and Loan Quality: the Impact it is having on ank Health
Since the 1980's, there has been an emphasis on deregulation within the banking industry. Part of the reason for this, is because of shifts in the economy (thanks in part to globalization) as the markets and products have changed. This has forced many different governments around the world to reduce regulations to include: liquidity and loan quality standards. As a result, the underlying risks at many financial institutions have increased exponentially. In this research project, we will show how these reduced standards have contributed directly to: the financial crisis and stagnant economy. Once this takes place, it will provide the greatest insights as to how these two factors will determine the strengths of different of financial institutions. At which point, we can present specific ideas about how to effectively address these challenges in the future.
Comparative Analysis. (2011). Business Dictionary. Retrieved from: http://www.businessdictionary.com/definition/comparative-analysis.html
Criticism of Obama's Financial Reform Plan. (2010). Raw Finance Blog. Retrieved from: http://rawfinanceblog.com/2010/04/23/criticism-of-obamas-financial-reform-plan-focuses-on-negative-economic-effects/
The Dodd Frank Act. (2011). FDIC. Retrieved from: http://www.fdic.gov/deposit/deposits/unlimited/index.html
Empirical. (2010). Your Dictionary. Retrieved from: http://www.yourdictionary.com/empirical
Low Income Home Loans as Public Policy
Since World War II, the United States government has developed public policies that aim to increase opportunities for home ownership through direct housing grants, loan guarantees, and targeted tax breaks (Dye, 2001). For many low-income families, these policies enabled them to purchase a home.
Many of these policies were focused on providing assistance to low-income people. The Housing Act of 1959 expanded the Federal Housing Association's (FHA) aggregate loan-granting authority and raised the limits on individual mortgages (Dye, 2001). The FHA now had the power to assume defaulted mortgages on family homes to prevent foreclosure. Congress extended FHA coverage to new or rehabilitated buildings in which low-income, elderly residents occupied half the units. Low-interest loans and community renewal programs also rose in priority. Congress created the cabinet-level Department of Housing and Urban Development (HUD) in 1965.
The Housing and Urban Development Act of…
Almasi, David. (2003). Giving With One Hand, Taking Away with the Other: Competing Government Policies Both Promote and Deny Homeownership Opportunities for Minorities.
Bailyn, Bernard. (1967). The Ideological Origins of the American Revolution. Harvard University Press.
Bethell, Thomas. (1999). The Noblest Triumph: Property and Prosperity Through the Ages. St. Martin's Press.
DiNitto, Diana. (1999). Social Welfare: Politics and Public Policy (5th Edition). Pearson Allyn & Bacon.
Student Loans Dangerous to the Economy?
In Sharon Epperson's interview with Sarah Bloom askin, it becomes clear that not only are student loans dangerous to the economy, but also that the solution to the student-loan debt crises might have a significant impact on the financial future of multiple generations of Americans. The interview also makes it clear that Bloom askin's approach to loan debt does not appear to involve making education more affordable for students, but rather on educating people about interest rates and the ramifications of taking on certain levels of debt (Epperson, 2014). However, that solution ignores the fact that education cannot work as a stepping ladder to success if financial barriers continue to outline who has access to the best educational opportunities and all of the networking opportunities that come with those schools. The fact that there may be equivalent educational opportunities in lower-cost schools ignores the…
Epperson, S. (2014, May 1). Is student loan debt dangerous to the economy? Retrieved May
12, 2014 from NBC News website: http://www.nbcnews.com/business/economy/student-loan-debt-dangerous-economy-n94916
Rizzuto, R. (2014, May 6). Sen. Elizabeth Warren introduces bill to reduce burden of student loan debt in U.S. And enact "Buffet Rule." Retrieved May 12, 2014 from MassLive website: http://www.masslive.com/politics/
Borrowers who focus on the size of their monthly payment may end up paying more in overall interest, and if a buyer can afford to pay a larger monthly payment, by making small monthly sacrifices that can be budgeted with the help of a financial advisor, he or she may emerge the winner from the refinancing bidding wars.
One way to convince a client is to remind the client that a car, unlike a home, depreciates quickly. Homes can increase in value, and often do, but cars, with wear and tear, and the advances in technology usually do not -- something a financial advisor must also remind someone aching to buy a fancy but impractical vehicle, or balking at a good refinancing deal. The buyer must be aware that he or she may owe more than the car is even worth, over time, and ask if it is worth paying…
Flinn operated a loan brokering business without a license. Flinn was prosecuted for violating the statute required that persons engaged in the business of brokering loans obtain a license from the state. Flinn's defense was that he was unaware of the statute and therefore lacked criminal intent. Where criminal intent is not a specific element of the crime, a party's intent is irrelevant to a determination of guilt or innocence. Furthermore, ignorance of the law is not a defense. Because criminal intent is not a necessary element in the charge of violating a licensing statute, Flinn's defense that he lacked criminal intent will be unsuccessful.
Jennings, a courier, used money that belonged to his clients to make investments, but always delivered the money to his clients on time. Jennings kept the profits from the investments and was prosecuted for embezzlement. Embezzlement involves the fraudulent conversion of property that is…
Currently on loan from the Frick Collection in New York, Hans Memling's "Portrait of a Man" is unique among paintings in the Norton Simon Museum, which does not otherwise boast a collection heavy in Flemish art. The Memling portrait is executed in oil on oak panels, and completed in the mid-1470s. It is relatively small in scale, at just over a foot high and nine inches wide.
The museum's description of the piece and the artist indicates that Memling was actually born in Seligenstadt, Germany and later moved to Bruges in 1465. Memling was trained as an artist in Brussels, alongside ogier van der Weyden. Memling enjoyed a high degree of career success as a painter in Bruges. The "Portrait of a Man" in particular "testifies to the artist's popularity and renown during his lifetime," ("Memling's 'Portrait of a Man' on loan from The Frick Collection"). The portrait depicts…
"Memling's 'Portrait of a Man' on loan from The Frick Collection." The Norton Simon Museum. Retrieved online: http://www.nortonsimon.org/memling-s-portrait-of-a-man-on-loan-from-the-frick-collection#
Bank Loans, & Leasing vs. Buying
Most companies acquire their inventory on credit which results into accounts payable and sell their products on credit which results into accounts receivables where in both cases there is no involvement of cash. Cash Conversion Cycle (CCC) therefore is a matrix that determines the length of time in days taken by a company to sell its inventory, and the duration of time taken to collect receivables and the duration of time taken by a company to pay its bills.
Cash Conversion Cycle is calculated as the Average Inventory Collection Period + Average Receivables Processing Period -- Average Payables Period. For instance if company 'X' has an average Inventory Collection Period of 85 days, an Average Receivables Processing Period of 55 days and an Average Payables period of 70 days then CCC will be (85+55-70)days which will be 70 days.
The length of time a…
Federal Student Tuition Loan Limits
Current federal student loan limits make it difficult for many students to pursue the educational program of their choice. Therefore, student loan limits must be raised.
Despite financial aid and federal loans, a college education remains beyond the reach of many Americans.
Illustration of problem - Many colleges fix their loans at levels very low levels, without taking into account the effects of inflation.
Individual level - Many students, particularly those from out of state, cannot afford college even in public and state colleges.
Society level - Many students drop out of programs such as education, in order to go into more "highly paying" majors such as business.
Pointing - By decreasing the number of younger people who go to college or into field such as social work and education, society loses valuable human resources.
Satisfaction - Federal student loan limits must be increased.
2.0.2 Interest on loan
Before any loan is granted, the borrower must clarify the position as to the payment of interest on the loan draw-downs during construction. The mode of payment of this interest may vary and may be payable every six months from the date of the first drawdown with a final payment in respect of the pre-delivery draw-downs on the day of delivery, this is the standard pattern for years. It is a usual tendency to allow the 'roll up' of the interest and added to the total loan outstanding when the vessel is delivered, this leads to a substantial reduction on the cash sums that the owner has to pay prior to the vessel entering service. As an alternative to the owner drawing down the favorable loan to help make his payments during construction, in some countries the yard itself arranges to borrow the equivalent funds and…
Business Financing: Increasing One's Chances of Obtaining a Bank Loan
Applying for a loan in a bank or any financial institution with lending capabilities can be frustrating, especially if the applicant does not know exactly what they are supposed to do to win the loan officer's confidence. Banks have an obligation to protect the funds and assets that clients have entrusted to them; as such, they often are very conservative. At the same time, they also are in business, out to make profit by recouping the principal of loans that they extend to borrowers, obtaining a profitable rate of return on the same, and ensuring that borrowers prosper and increase their deposits with them. In the final analysis, this only shows that it is the borrower's responsibility, therefore, to develop and maintain positive relations with the bank, and provide sufficient reason for the bank to feel safe entrusting their capital…
Abrahams, C.R. & Zhang, M. (2008). Fair-Lending Compliance: Intelligence and Implications for Credit Risk Management. Hoboken, NJ: John Wiley & Sons
Bangs, D. (2010). Getting a Loan. Entrepreneur Media Inc. Retrieved 19 February 2015 from http://www.entrepreneur.com/article/241831
Bartram, P. (2014). When the Bank Says No. Director Publications. Retrieved 20 February 2015 from http://www.director.co.uk/magazine/2009/8%20September/finance_when_bank_says_no_63_01.html
The 30-year provides simplicity and a sense of security for the buyer which an ARM with its potential for rate changes may not. For now the 30-year is here to stay as "Fannie, Freddie and other federal programs now support roughly 90% of new mortgage loans because lenders cannot raise money for mortgages that do not carry government guarantees" (Appelbaum, B. March 4, 2011. P.1). If the government does exit from its participation in the mortgage market the 30-year product may disappear altogether, and some say that would not be a bad idea. "One of the reasons that American housing finance is in such bad shape right now is the 30-year mortgage," he said, noting that such loans are not available in most countries. "For many people, it's not at all clear that that's the best product (Appelbaum, B. March 4, 2011.P.1).
hether the 30-year becomes a relic of the…
While lenders may prefer adjustable rate loans there are significant advantages for borrowers in utilizing the 30-year fixed rate option. Because the amount of the loan is amortized over 30 years the monthly payments are significantly smaller than for 10, 15, or 20-year options. Additional benefits include the stability of a fixed rate for the life of the loan as well as the consistency of payment. There are disadvantages as well including: the allure of lower adjustable rates particularly in higher interest rate environments, lower initial payments with an ARM which increase affordability, the longer time required to build equity because total interest paid over the life of the loan is higher. The 30-year provides simplicity and a sense of security for the buyer which an ARM with its potential for rate changes may not. For now the 30-year is here to stay as "Fannie, Freddie and other federal programs now support roughly 90% of new mortgage loans because lenders cannot raise money for mortgages that do not carry government guarantees" (Appelbaum, B. March 4, 2011. P.1). If the government does exit from its participation in the mortgage market the 30-year product may disappear altogether, and some say that would not be a bad idea. "One of the reasons that American housing finance is in such bad shape right now is the 30-year mortgage," he said, noting that such loans are not available in most countries. "For many people, it's not at all clear that that's the best product (Appelbaum, B. March 4, 2011.P.1).
Whether the 30-year becomes a relic of the housing market or a continued staple is tied to the overall mortgage industry and its practices and development of products. The financial crisis highlighted serious regulatory deficiencies not only with mortgage giants such as Freddie and Fannie, but in the private sector with institutions such as Countrywide and Washington Mutual. Most of the issues regarding products and practices involved the collapse of rule based and responsible lending however, fraud was also a factor from the lowest level unscrupulous mortgage broker all the way up to the Wall Street Investment banks.
Fraud may in fact have played a substantial role, by deceiving the investors who ultimately purchased mortgage-backed securities. There's a pretty strong case that banks that
However, equity in the company cannot be used as collateral because its value fluctuates. The banker would have to consider that if the company is insolvent enough to require the bank's acquisition of collateral, retained earnings would not likely have any value remaining.
3) the current ratio is calculated as the current assets/current liabilities. The current assets are as follows:
Accounts Receivable 5,000
Total Current Assets 20,000
The current liabilities are as follows:
Accounts Payable 2,500
Customer Deposits 3,000
So therefore, the current ratio is as follows:
5500 = 4.18
This is a great current ratio. The ratio is a measure of a firm's liquidity, its ability to meet its pending debts. This company has a limited debt load, consisting of accounts payable and customer deposits. The current assets include accounts receivable and cash. With $15,000 in cash, this firm is very liquid at present.
4) the current…
The customer also wishes to borrow 90% of the purchase price of the new vehicle. In looking at the full picture the loan officer recognizes that the customer's late payments were the result not of choice but of extenuating circumstance. In explaining the turndown of the loan application the officer cites the collateral issue as well as the late payments as reasons for not extending the loan. He points out to the customer though that in six months with no late payments on outstanding debt, and a larger down payment (capital) that the loan could be made. The moral risk of default is low and the loan officer recognizes this fact.
The obverse scenario is the customer looking to borrow $40,000 on a new Cadillac Escalade. The credit report indicates a similar 615 score however, there are considerable differences to the application. Borrower B. is ready to put 30% down…
Credit Score Scale.net. Credit Score Scale. Credit Score Scale.net. N.D. 1. Retrieved May
13, 2011 from http://www.credit-score-scale.net/
Investopedia. The Five C's of Credit. Investopedia. N.D. 1. Retrieved May 12, 2011 from http://www.investopedia.com/terms/f/five-c-credit.asp
Pitt, David. Car Loan Approval Rates are Improving. MSNBC.com. July 19, 2010. 1.
" Personal happiness has since become a primary ideal of Western political thought with the idea that the government is there to secure people's freedom and their ability to find happiness. The smiley face image has since been incorporated into modern American society as a symbol of happiness, whatever that happiness may entail, and many project their ideas of happiness onto the symbol. But the symbol is so simple and universal it will continue to exist despite those who attempt to assign a definition to it. [3: Lumpkin, Libby. Deep Design: Nine Little Art Histories. (Los Angeles: Art Issues, 1999), 23.]
While many in the modern world associate artistic smiles with happiness, the article points out that this has not always been the case. In the past, smiles have been associated with many other things like the fulfillment of desire or the attainment of secret knowledge. Smiles were used to…
Lumpkin, Libby. Deep Design: Nine Little Art Histories. (Los Angeles: Art Issues, 1999), 15-27.
The third piece, which creates the "burden of history" to Sam, was the fact that Pilar was his half-sister, and that his relationship with her should not be continued. Finally, the last piece of mystery was the assumption, or truth, that it was uddy who did the crime against Charley.
In the early part of the story, it was thought that the differences in race between Sam and Pilar was the reason why his father was disapproving of their relationship. Ironically, it was the "burden of history," so to speak. Also, the assumptions that uddy killed Charley became a burden to Sam because it somehow haunted him that soon led him to search for the truth.
Tomas Sandoval also suggested in another way how history can create a burden depending on how the people create things out of what happened in the past. In the end of the film, it…
Sandoval, Tomas. The Burden of History and John Sayle's Lone Star.
Portfolio Risk Management
In today's competitive banking environment, an important challenge is to ensure adequate diversification of revenue sources across products, market segments and market and credit risks (Sturzinger). anks must assess their risk appetite and risk capacity as basic components of the budgeting and planning processes and identify their vulnerabilities through risk management techniques.
Risk is defined as uncertainty of returns from a portfolio (Credit-stress testing, 2002). The volatility of a portfolio's returns indicates the level risk and is influenced by many risk factors. Therefore, one of the risk manager's primary goals is to measure the influence of each risk factor on the volatility of portfolio returns and to manage the composition of the portfolio so that the volatility of its returns is reduced. The risk manager also has to measure the influence of the risk factors on each other. Determining the effects of multiple risk factors and quantifying…
Avraamides, S. The handbook of world stock, derivative & commodity exchanges. Retrieved January 26, 2005 from Web site: http://www.exchange-handbook.co.uk/articles_story.cfm?id=5632
Brooks, M., Beukes, L., Gardner, D. And Hibbert, J. (2002, June 26-28). Predicting tracking errors -- the search continues. Retrieved January 26, 2005 from Web site: http://www.actuaries.org.uk/files/pdf/library/proceedings/fin_inv/2002/Brooks.pdf
Credit-stress testing. (2002, January 31). Monetary Authority of Singapore. Retrieved January 26, 2005 from Web site: http://www.mas.gov.sg/regulations/download/ConsultativepaperonCST.pdf
Davidson, C.. Turbo-charged models. Retrieved January 26, 2005 from Web site: http://18.104.22.168/search?q=cache:GU8uTKXvAV8J:www.derivatech.com/Publications/Risk%2520Monte%2520Carlo%252002_2002.pdf+%22monte+carlo+simulation%22+and+risk+and+banks& hl=en
There was little difference in terms of library use and retention between SES groups, although, "overall, the differences in library use between the SES groups were not statistically significant over the semester; however, PC logins at 1 April were significantly higher for students from low SES backgrounds than their colleagues from medium and high SES backgrounds" (Haddow & Joseph 2010: 240-241).
The study design and approach seems flawed from the beginning, given its emphasis on using the physical location of the library, which the authors admit is relatively outdated, given the number of students who access the library virtually, either at workstations or remotely, versus the relative paucity that use its physical resources. Even giving undue emphasis to the use of workstations as proof of student engagement with the library seems questionable and unwise, since less affluent students will invariably have a greater need to use the physical location of…
Demographic and student library use were logged over the course of a semester at a single Australian university. The findings raised some questions about the initial hypothesis -- of all students, both those whom remained at university and did not, very few actually took out a physical book from the library. There was a higher rate of student library usage by retained students, but that may partially have been due to the fact that once students dropped out, they no longer had access to (or a need to) use the library. What the authors found significant were "the significant differences found for use of library workstations and other electronic resources and retention early in the semester [which] may be the most useful results to emerge from the study" (Haddow & Joseph 2010: 240). There was little difference in terms of library use and retention between SES groups, although, "overall, the differences in library use between the SES groups were not statistically significant over the semester; however, PC logins at 1 April were significantly higher for students from low SES backgrounds than their colleagues from medium and high SES backgrounds" (Haddow & Joseph 2010: 240-241).
The study design and approach seems flawed from the beginning, given its emphasis on using the physical location of the library, which the authors admit is relatively outdated, given the number of students who access the library virtually, either at workstations or remotely, versus the relative paucity that use its physical resources. Even giving undue emphasis to the use of workstations as proof of student engagement with the library seems questionable and unwise, since less affluent students will invariably have a greater need to use the physical location of the library if they lack ready computer access. The most committed of the least affluent students, logic would dictate, would use the workstations; more affluent students would use home computers and less committed students would eschew the library entirely.
Instead of determining the correlation between retention and library usage, a more interesting question would be the correlation between effective library use and retention, an area which students from high SES backgrounds might have an advantage and explain their higher retention rates. The incoming class could have been given and Internet-administered quiz asking them such questions as how to use the online library catalogue; how to access an academic database; and their relative comfort level in conducting academic research. This would have allowed researchers to compare demographic characteristics with responses. At the end of the semester, the retention rates of the class vs. their scores on the initial quiz could be assessed to see if comfort and confidence in using the library gave an advantage to incoming students in terms of their overall freshman year career.
Loans Envisioned Research Methodology
Association Loans: Association Loans Envisioned Research Methodology
Association Loans: Envisioned Research Methodology
Envisioned research Methodology and Design
Descriptive Research Methods
Research Designs Considered
Explanatory Sequential Design
Exploratory Sequential Design
The Embedded Design
Research Validity and Reliability
Strengths and weaknesses
Method of Data Collection
Primary Data Collection
Secondary Data Collection
Justifying Choice and Alternative methods/designs
The loan associations work on different grounds as compared with commercial bank loans. The commercial and saving bank loans and financing options are usually provided by the financial service providers are more focused to provide funds for business venture. The loan's security is also devised based on credit cards, business performance, and the likelihood of growth potential. However, the loan associations and building loans are more concerned about promoting land and building ownerships.…
Bryman, A., & Bell, E. (2007). Business research methods. USA: Oxford University Press.
Caprio Jr., G., & Vittas, D. (Eds.). (2007). Reforming financial systems: historical implications for policy. USA: Cambridge University Press.
Creswell, J. W & Clark, V.L.P (2010). Designing and Conducting Mixed Methods Research. USA: SAGE Publications, Inc.
Dexter, S. (2009). A treatise on co-operative savings and loan associations. USA: BiblioLife, L.L.C.
Loans in Maryland
1. What is the maximum possible rate of interest for a loan made in Maryland, by a Maryland-based creditor?
2. Assuming that an unsecured consumer loan falls within the Interest and Usury subtitle, what would be the maximum rate of interest for a loan made by oral agreement?
Answer: There is no absolute maximum because there is no cap on rates for some kinds of loan.
3. Assuming that a loan falls within the Interest and Usury subtitle, which of the following would be FALSE?
Answer: To have an interest rate higher than 6%, all loans must be in writing.
4. Which of the following would NOT be covered by the definition of Creditor under TILA?
Answer: A store which allows an individual to buy a $500 computer, with the price payable in one month, on the condition that the individual also purchases a $50…
Subprime loans are said to be among the biggest reasons for the most recent financial crisis which hit the world economy at the end of year 2008. Had the lenders considered the level of income and repaying abilities of the borrowers before lending them money, the World's financial sector would not have seen such critical circumstances. The consequences of subprime loans have not ended yet; economists and researchers in the field of International Finance are of the view that they may further get worsen in the coming five to ten years period. Beside the criticism regarding the approval of subprime loans to low income borrowers, the lenders have also been strongly criticized for using unethical business practices in their customer dealings and transactions (Mandal, 2010).
This paper investigates the consequences and risks that were caused by subprime loans in the World's financial sector and their impact on the lenders, borrowers,…
Donath, L.E., & Cismas, L.M. (2009). The Current Financial Crisis Revisited -- Causes and Remedies, the Romanian Economic Journal, 31 (1): 85-92.
Goldmann, P. (2010). Financial Services Anti-Fraud Risk and Control Workbook, 1st Edition. Hoboken, N.J.: Wiley.
Jennings, M. (2012). Business Ethics: Case Studies and Selected Readings, 7th Edition. South-Western Legal Studies in Business. Australia; Mason, OH: South-Western.
Magdoff, F., & Foster, J.B. (2009). The Great Financial Crisis: Causes and Consequences. N.Y: Monthly Review Press
Student loan debt forgiveness has become an increasingly controversial hot-button topic in American higher education today. On one hand, the American system of higher education has grown increasingly expensive. More students have been forced to take out loans to support their education as a result. On the other hand, many people oppose debt forgiveness on financial and ethical grounds. This paper argues in favor of debt forgiveness on principle, and offers a practical solution about how to achieve it.
Student Loan Debt Forgiveness: An Argument in Favor
Student loan debt is crippling young—and many older—Americans. More people are in debt for their educations than at any time in the nation’s history. As a democracy, having an educated populace is considered necessary for government to function, so people are able to vote in an educated fashion. Our society is growing increasingly technologically complex, and greater and more specialized knowledge is…
Chingos, M. M. (2017). The rich get richer. Education Next, 17(4). Retrieved from: https://www.proquest.com
Fields, S. (2019). 70% of college students graduate with debt. How did we get here? Marketplace. Retrieved from: https://www.marketplace.org/2019/09/30/70-of-college-students-graduate-with-debt-how-did-we-get-here/
Lowrey, A. (2020). Go ahead, forgive student debt. The Atlantic. Retrieved from: https://www.theatlantic.com/ideas/archive/2020/11/why-biden-should-forgive-student-loan-debt/617171/
Nuckols, W., Bullington, K. E., & Gregory, D. E. (2020). Was it worth it? using student loans to finance a college degree. Higher Education Politics & Economics, 6(1), 1-19. doi: http://dx.doi.org/10.32674/hepe.v6i1.1358 . Retrieved from ProQuest.com:
Weiner, J. (2014). Why sally can\\\\'t get a good job with her college degree: College-educated women find it hard to get a job because the market doesn\\\\'t value their bachelor\\\\'s degree. The Washington Post. Retrieved from:
ITT Technical Institute, Sylmar Campus, Computer and Electronics Engineering Technology (AAS), 15-MA-04 / 05-MA-06, Electronics and Communications Engineering Technology (BS) 13-MA-06 / 02-DEC-07
Department of Education,
This letter will describe my experiences at ITT and why I believe I was misled by the school and the victim of fraudulence. As a result of these experiences and the facts that have come to light regarding ITT (enclosed in the Appendix), I am seeking a forgiveness on my federal loan based on current events that made me realize that what ITT did was a completely wrong to not only myself but to countless other people.
While I understand that my satisfaction of the school is not a foundation for the fraud, however, the promise that ITT gave me regarding cost, job, value and experience of my education is what is fraudulent. They created an expectation of job security and financial future that…
Federal Student Aid. (2016). Closure of ITT Technical Institutes. Retrieved from U.S. Department of Education website: https://studentaid.ed.gov/sa/about/announcements/itt
"ITT Tech Fact Sheet." (2016). ITT Technical Institute for the Future of Debt. Retrieved October 29, 2016, from http://www.debtcollective.org/
Kerpen, P. (2016, August 8). Fed Set to Unload Explosive Student Loan Rule that will Dump Billions on Taxpayers. CNS News. Retrieved October 29, 2016, from http://www.cnsnews.com/commentary/phil-kerpen/fed-set-unload-explosive-student-loan-rule-will-dump-billions-taxpayers
King, J.B. (2016, September). A Message from the Secretary of Education to ITT Students. Retrieved from U.S. Department of Education website: http://blog.ed.gov/2016/09/message-secretary-education-itt-students/
ITT Technical Institute, Sylmar Campus, Computer and Electronics Engineering Technology (AAS), 15-MAR-04 / 05-MAR-06, Electronics and Communications Engineering Technology (BS) 13-MAR-06 / 02-DEC-07
Department of Education,
This letter will describe my experiences at ITT and why I believe I was misled by the school and the victim of fraudulence. As a result of these experiences and the facts that have come to light regarding ITT (enclosed in the Appendix), I am seeking full reimbursement of my tuition at ITT.
I was enrolled in ITT Technical Institute from 2004 to December 2007 in Sylmar, CA. My hope was to learn new skills and broaden my employment opportunities. Unfortunately, I was grossly misled about what ITT could do for me. The "tour" was where it all began: my recruiter asked me what my ideal school would be -- I was candid and replied that I thought I might start at a community…
Tax Deductions: Are Unpaid Loans Tax Deductible?
John loaned his friend Jack $1,000. Jack did not repay the debt and left town. John wants to know if he can claim any tax deduction, and, if so, what is the character of the deduction? However, to answer John's question, one must first find out more information about the nature of the loan. This is critical because there are two broad types of loans and debts: business loans and personal loans. Furthermore, under the correct circumstances, it is possible for people to take tax deductions for certain types of business loans and personal loans. Knowing whether John made Jack a loan from his personal money or from his business money is the crucial first step in determining which, if any, Internal evenue Service (IS) regulations or tax laws will permit John to deduct the unpaid debt.
If John is a business owner…
Bailey, A.C. (2014). Unpaid personal loans can reduce your tax bill. Retrieved April 12, 2014
from MyTaxHQ website: http://mytaxhq.com/unpaid-personal-loans-can-reduce-your-tax-bill/
Fishman, S. (2013, June 7). Bad loans to friends and family may be tax deductible. Retrieved April 11, 2014 from Inman News website: http://www.inman.com/2013/06/07/bad-loans-to-friends-and-family-may-be-tax-deductible/
Internal Revenue Service. (2013, December 12). Topic 453- Bad debt deduction. Retrieved April 12, 2014 from IRS website: http://www.irs.gov/taxtopics/tc453.html
As a response to the savings and loans debacle, there have been several attempts by congress and other governmental agencies to assists consumers and some financial institutions alike. The most significant and some say extreme solution thus far came when the Federal government assisted JP Morgan with the purchase of Bear Stearns for $2 per share.
One of the most discussed solutions has to do with baling out the mortgage lenders and assisting borrowers. There are several different remedies that have been proposed. These remedies include everything from a moratorium on foreclosures to the freezing of interest rates.
As it pertains to the mortgage companies it has been suggested that limits should be lifted so that companies can purchase jumbo housing loans. According to one article this type of mortgage relief could help staunch the hemorrhaging in high-priced housing markets...where buyers have had difficulty getting loans and are paying…
Jumbo Loans Spell Relief; Analysts See Economic Fix. (2008, January 29). The Washington Times, p. A01.
Kuttner, R. (2007, October). The Bubble Economy: The Financial Meltdown Is the Logical Consequence of Deregulation. Will We Reverse Field in Time to Prevent Another 1929?. The American Prospect, 18, 20+.
Peterson, J.R. (2005). Designer Mortgages: The Boom in Nontraditional Mortgage Loans May Be a Double-Edged Sword. So Far, Most Banks Have Moved Cautiously. ABA Banking Journal, 97(10), 30+.
What is the real definition of inflation?." Retrieved May 8, 2007 from; http://www.inflationdata.com/Inflation/Articles/Definitions.asp
"hy do you think they are called for-profit colleges:"
The big business of (not) educating students 'You need a college degree.' This is the conventional wisdom articulated in today's society, where job prospects remain scarce, despite the softening economy. On average, "unemployment is still far lower for the college-educated than for high school graduates (10%) and those without high school diplomas (15.7%)," and the most severe effects of the recession were felt in the manufacturing and construction sectors, typically the areas of the economy which offer the brightest prospects to non-college degree holders (Davidson 2010). orries about one's viability in the job market have driven many workers to seek out higher education in nontraditional formats. Few adults have the ability to afford a traditional four-year school and balance the needs of home and work. Online, for-profit colleges or nighttime schools may seem the ideal solution. On the surface,…
Carey, Kevin. "Why do you think they're called for-profit colleges?" Chronicle of Higher
Education. 25 Jul 2011. [4 Mar 2010].
Davidson, Paul. "Unemployment rate for college grads is highest since 1970." USA Today.
Bsba Integrative Project
Internal Business Processes
Employee training hours, employee satisfaction,
New loans created, new accounts, new products introduced, cross sells, and referrals.
Number of products per customer, number of new customers, customer satisfaction, customer retention, sales calls to customers, and thank you calls to existing customers.
Outstanding Loan Balances, Deposit Balances, Noninterest income,
Internal Business Process
Objectives and Performance Measures
VISION & STATEGY
Learning & Growth
Objectives and Performance Measures
The causal chain indicates that objectives of the company in relation to the balanced scorecard depend significantly on the vision and strategies of the business entity. The objectives and measures in relation to the consumers of the company play a critical role in achievement of the three main financial goals: loan balances, deposit balances, and noninterest income. The company should focus on improving services to their…
Albright, T.; Davis, S.; & Hibbets, A. (2001, October). Tri-Cities Community Bank: A Balanced Scorecard Case. Strategic Finance, 83(4), 54-60.Retrieved May 17, 2010, from the library: https://coursenet.trident.edu
Silverthorne, S. (2008). Executing Strategy with the Balanced Scorecard. Retrieved May 17, 2010, from http://blogs.bnet.com/harvard/?p=397&tag=nl.e713
Raab, G. (2008). Customer relationship management: A global perspective. Aldershop: Gower.
McBride Security Policy
Security Policies and ecommendations for McBride Financial Services
McBride Financial Services has experienced increased consumer interest in its innovative and economical loan offerings and terms. With rising competition in the market, McBride is now aggressively working to boost market share through a renewed focus on customer service and simple and speedy loan processing (Fluss, 2009). While many automated processes in the financial sector can be convenient for customers, they can also present unique and significant security risks for companies (Compton, 2004). The following policies are aimed at covering certain critical security areas for the loan department at McBride Financial Services.
General Information Security
Sensitive information can be defined as a customer's full name, address, phone number, credit information, social security number, date of birth, mother's maiden name, employment and salary information, username/passwords combinations, or PIN ids (Bilich, 2000). All such information should be stored securely in order…
Bilich, F. (2000). 'Total quality management: quality macro-function model for banks. (Cover story)', Total Quality Management, 11(1), 15.
Brandt, D. (2012). 'Work Perfect', Industrial Engineer: IE, 44(9), 66.
Britt, P. (2005). 'Finding the Formula for Successful Cm', Econtent, 28(1/2), 38-42.
Compton, J. (2004). 'CRM Is Go!', CRM Magazine, 8(10), 30-35.
46. So far the firm looks to be a good potential candidate for a loan.
The current and quick ratio looks at the short-term ability of a firm to meet its obligations. A lender will also want to look at the longer term position and the ability to repay the entire debt plus interest and fees (Libby et al., 2010). The solvency ratio assesses the level of cash generated in a year as a percentage of the debt. The cash generated is calculated by taking the net profit after tax and adding back the depreciation. The total liabilities are calculated by adding together the current and the long-term (non current) liabilities.
Table 3; Solvency ratio for Tootise oll Industries Inc.
Net profit after tax (a)
Adjusted net profit (a + b) (c )
Current liabilities (d)
Paper is based on a case supplied by the student
Howells P.G.A, Bain, K, (2007), Financial Institutions and Markets, London, Longman
Libby, R; Libby, P. Short D, (2010), Financial Accounting, McGraw-Hill
I would advise that Mr. Haskins has to understand that the banks are businesses, and make strategic investments when they think those businesses will pay off. This means that AMD needs to ensure that the banks are happy, in order to secure financing. That means giving the banks what they need to feel secure in this investment. Receivables are not adequate collateral, for a lot of reasons, and ancient receivables are especially worthless. Likewise, giant stockpiles of inventory are not good collateral for a bank. Mr. Haskins has to understand that banks are not interested in these things as collateral, but if he gives the banks what they want he can have loans on the strength of his business.
Mr. Haskins must realize that banks are partners, but they need something out of the deal as well, and do not operate on blind faith. As such, Mr. Haskins needs to…
Where pricing integration typically fails however are in the handling of exceptions. Columbus (2003) makes the point that the use of automated approaches to managing special pricing requests can be one of the highest OI activities of any company. The focus for LOM then is in turning the one-off loan request specifically including a differing rate or structure into a competitive advantage by quickly being able to fulfill it. The use of automated special pricing requests applications and techniques as defined by Columbus (2003) are strong competitive tools that could be used as part of FlashQuote and BFOT overall.
FlashQuote Use Case Analysis
Identifier: FlashQuote Use Case Analysis
Name: BFOT System component that includes quoting, pricing, loan interest rates and the ability to electronically upload the loan, once approved, to the LOS.
Purpose: To more accurately and completely capture the quotes given to prospects over the telephone, the Web, and…
AMR Research (2003) - Configuration is the Heart of Customer Fulfillment for Complex Product Manufacturers. AMR Research Report. Monday March 31, 2003. Retreived from the Internet on July 21, 2006 at http://lwcresearch.com/filesfordownloads/ConfigurationIstheHeartofCustomerFulfillmentforComplexProductManufacturers.pdf
Askegar and Columbus (2002) - Channel Management Best Practices: It's All About Orders. AMR Research Report. Monday September 9, 2002. Retrieved from the Internet on July 21, 2006:
Columbus (2002) - The Sell-Side E-Commerce Market: It's All About Integration. AMR Research Report. Monday April 1, 2002. Retreived from the Internet on July 21, 2006:
damages is whether or not there is a contract that has been breached. Under Texas law, a plaintiff must be establish four elements in order to prevail on a breach of contract clam. The four elements are: 1) the existence of a valid contract; 2) performance or tendered performance by the plaintiff; 3) breach of the contract by the defendant; and 4) damages sustained by the plaintiff as a result of the breach (Valero Mkfg. & Supply Co. v. Kalama Int'l. LLC).
The best evidence available for the plaintiff in establishing a possible breach of contract action is the loan commitment letter issued on March 31, 2005. The letter in question sets forth all the terms and conditions but, unfortunately, it also included a new term of which the plaintiffs were not aware. Additionally, the bank's employee, Max Brandt, assured the plaintiffs that compliance with the new term was not…
Gaughan, Patrick A. Measuring Business Interruption Losses and Other Commercial Damages. Hoboken, NJ: Wiley Publishing, 2009.
Valero Mkfg. & Supply Co. v. Kalama Int'l. LLC. No. 51 S.W.3d 345, 351. Texas Ct. Of Appeals. 2001.
nd we must take into consideration what would happen if, somewhere down the line, we encountered the very real possibility of changed financial circumstances.
The financial knots we're tying ourselves into now, as we scramble to purchase homes and wind up owning less of them, can have serious long-term ramifications. Because today's overall tighter finances often necessitate putting off major purchases, many adults don't buy their first home until they're well into their thirties or even forties.
s a result, those thirty-year mortgage payments follow us right into retirement, hanging around even as rising health care and tuition expenses for college-aged children begin to spike. s a result, we discover too late that the asset we gambled everything to acquire because it was going to see us through retirement is instead pushing that retirement further and further away. lready, an increasing number of seniors are borrowing against their homes, accumulating…
Adam Tanner, San Francisco Suburb Vallejo Files for Bankruptcy, REUTERS, May 23, 2008;
Fishbein & Woodall.
Michael M. Phillips, to Help Broke Homeowners, He's Taking the Law into His Own Hands, WALL ST. J., June 6, 2008, at A1.
student aid programs.
Student finance aid can be described as funds given to the student to make it easy for them to fix cost of education such as fee and tuition, room and board, supplies and books where the students are undertaking their education like in universities, colleges or private schools.The funds which is being given out to public educations by government in general is known as financial aid meaning that it is being given to particular students, Financial aid can also be referred to as scholarship, although scholarship has some other components like students loans and grants.Loans are finance that one lend and must be paid back with an intrest after a period of time.In the case of student loan the money will be taken back after graduating.Aid is the help one is given.
All the U.S. states governments and The United States government offer loans, grants and work…
Berkeley (December 2009)"students debt "Schackner Pittsburgh Post Gazette
Fetterman Mindy (2006)"Young people struggle to deal witht kiss of debts "USA Today
Kantrowitz, Mark (2010-03-26). "Student Loans - The New York Times." Nytimes.com. http://www.nytimes.com/info/student-loans/?inline=nyt-classifier . Retrieved 2011-02-07.
Schemo, Diana Jean (June 10, 2007) "Private loan deepen acrisis in student Debt "by new York times Tim Grant,(July 29,2009) "student loan puts college graduates into deep financial hole" Pittsburgh Post Gazette
Skills and Knowledge Area
The ability to research and interpret and then apply various local and federal and State laws as well as ordinances related to Community Programs is an extremely important and demanding skill. One example of the demonstration of this ability is that explained by Thomas R. Suozzi, the County Executive of Nassau, and Lorna B. Goodman, County Attorney of Nassau County, in their Annual Report on their County presented in December 2004. Herein, it is stated that with the support of the people of the county, they have managed to indeed accomplish a great many things, and they then proceed to list out the various activities and accomplishments. The first one is, according to the Report that of managing to bring 'in-house' the remaining part of the more than $10 million of specified legal work that had actually been given to the private bar earlier. The reason…
Predictably, adjustable rate mortgages had a higher rate of default than non-adjustable rate mortgages, given the increase in interest rates in the years before the crisis, after many borrowers took out loans during an era of unusually low, near-zero rates. But another puzzling finding was that loans below $100, 000 and loan amounts in the $250,000 to half-million range had higher interest rates than loans of a half-million and above, once again suggesting that while middle-income individuals who might otherwise appear to be 'good' risks had been targeted for loans that were not advantageous to them.
"The finding that blacks and Latinos tended to borrow more helps explain why they received a disproportionately high share of high-cost loans, but the larger amounts borrowed by Asians contradicts the hypothesis that loan amount explains the rate spread differentials the best predictor that a borrower would default is the amount borrowed" as Asians…
Doviak, Eric & Kevin MacDonald. (2011). "Who defaults? Who goes into foreclosure?" 1-34.
The term "adjustable-rate mortgage" describes any mortgage with an interest rate and payments that adjust according to some formula agreed upon by the borrower and lender. ARMs have been generally available to borrowers for about three decades on prime mortgages, but variants have been common to subprime mortgages over the past 10 years. The traditional ARM linked the mortgage's interest rate to the LIOR plus several percentage points." (Utt,2008)
Alt -- a Mortgages. Sometimes referred to as a "low-doc" mortgage, an Alt -- a mortgage is structured like the other mortgages described in this section but is made available only to prime borrowers or those with FICO scores above 660. However, these prime borrowers were required to offer only limited documentation on their qualifications, so many may not have been as "prime" as they represented themselves to be, as subsequent default rates indicate." (Utt, 2008)
Extremely Low- or No-Down-Payment Mortgages.…
Utt, Ronald D. (2008) the Subprime Mortgage Market Collapse: A Primer on the Causes and Possible Solutions. Backgrounder 2127 the Heritage Foundation. Online available at http://www.heritage.org/research/economy/bg2127.cfm
The Subprime Mortgage Market (2008) National and Twelfth District Developments. Federal Reserve Bank of San Francisco. Online available at http://www.frbsf.org/publications/federalreserve/annual/2007/subprime.pdf
Chomsisengphet, S. And Pennington-Cross, a. (2006) the Evolution of the Subprime Mortgage Market. Federal Reserve Bank of St. Louis (2001) Online available at> http://research.stlouisfed.org/publications/review/06/01/ChomPennCross.pdf
Federal Government's Impact on the Rise of Student Loans
On the surface, student loans seem like such a beneficial and risk-free government program that there appears to be no reason to object to them. After all, the purpose of federally subsidized student loans is to give students who might not otherwise have a chance to get a post- high school education the chance to get that education. College degrees, vocational certificates, and graduate degrees all expand a person's earning potential, and, theoretically increase the likelihood that the person will elevate, not only his or her own financial status, but also the status of his immediate family. Therefore, the federal government subsidizing student loans seems like an efficient and responsible use of government money. However, further investigation suggests that student loans may simply be a way of shifting a tax burden into groups that are basically tax-immune. Therefore, the appropriate policy…
Closing the loan is also known as firm commitment, and involves the completion of all key paperwork within a designated time. A closing date is set, and the closing costs are established. hen the client pays the costs and completes the paperwork, the loan is closed.
The next step is to service the loan. Servicing refers to the management of the payments. The loan creates an obligation on the part of the borrower to make payments as specified in the agreement. The role of the bank is to ensure that those payments are received. Servicing may be contracted out to a secondary party. In the U.S. that might be Fannie Mae or Freddie Mac, who provide a secondary market for mortgages. In a servicing arrangement, the bank would collect the payments and remit most of this money to the secondary market investor. The bank would keep a portion of the…
Federal Deposit Insurance Corporation website. Retrieved April 30, 2009 from http://www.fdic.gov/regulations/laws/rules/6500-1400.html
Rajan, Raghuram G. (no date). Why Bank Credit Policies Fluctuate: A Theory and Some Evidence. University of Chicago. Retrieved April 30, 2009 from http://faculty.chicagobooth.edu/raghuram.rajan/research/fluct.pdf
Penwell, Tracy L. (2009). The Credit Process: A Guide for Small Business Owners. Federal Reserve Bank of New York. Retrieved April 30, 2009 from http://www.newyorkfed.org/education/addpub/credit.html
No author. (2009). Closing. Mortgage X. Retrieved April 30, 2009 from http://mortgage-x.com/library/closing.htm
Video Tape and Disc ental
Health and Personal Care Stores
Table 2: Comparisons of Most isky Small Business (BizStats.com, cited by Telberg, 2003)
An Engine of Economic Growth
More and more, Craig, Jackson and Thomson (2007) argue, policymakers perceive the small business sector "as a potential engine of economic growth. Policies to promote small businesses include tax relief, direct subsidies, and indirect subsidies through government lending programs." These authors stress that encouraging lending to small business purports the Small Business Administration's (SBA's) primary policy objective of the loan-guarantee program. In their study, Craig, Jackson and Thomson (2007) implement empirical research to focus on SBA-guaranteed lending, utilizing a panel data set of SBA-guaranteed loans, they assess whether SBA-guaranteed lending discernibly impacts local economic performance. Ultimately, these authors cautiously conclude that "There is a positive (although small) and significant relationship between the level of SBA-guaranteed lending in…
Authority, purpose and scope. (2002). EXTENSIONS of CREDIT by FEDERAL RESERVE BANKS (REGULATION a). Retrieved November 10, 2007, at http://ecfr.gpoaccess.gov/cgi/t/text/text-idx?c=ecfr&sid=57016e116171461106934124459aa8aa&rgn=div5&view=text&node=1-2:22.214.171.124.1&idno=12#12:126.96.36.199.188.8.131.52 http://www.questia.com/PM.qst?a=o&d=108945401
Bannock, G. (2005). The Economics and Management of Small Business: An International Perspective. New York: Routledge. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=108945415
Bielski, L. (2006). On the Hunt for the Meaningful Segment: With a Deluge of Customer Information to Choose from, Bankers Struggle to See Their Customers in More Refined, Specific Ways. ABA Banking Journal, 98(9), 45+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5017258794
Brew, J. (2007). Taxes: The Forgotten Piece of Bank Profits Investigating Two Overlooked Strategies Could Put You on Your Way to Cutting Taxes by Half. Got Your Attention?. ABA Banking Journal, 99(5), 22+. Retrieved November 12, 2007, from Questia database: http://www.questia.com/PM.qst?a=o&d=5020964964
There are also non-qualitative, or financial risks, associated with foreign currency loans. Namely, because foreign currencies can be effected by such uncontrollable as political, governmental and natural factors, a foreign currency can suddenly change in a manner that either significantly benefits or disadvantages the borrower. For example, often time the rate of a foreign currency is based on such things as internal, regional or international political conditions. If a particular country has a significant political upheaval, the instability associated with such an event can have a negative impact on a nation's economy, which of course effects the foreign currency exchange rate and, thus, the borrowers investment. When such an event happens to a nation with a dominant currency, this change can have devastating effects on a loan, as was the case following the September 11, 2001 terrorist attacks on the United States.
Another means to reduce risk is to use…
Almekinders, Geert J. (1995): Foreign Exchange Intervention: Theory and Evidence. New York: Edward Elgar Publishing, Inc.
Eijffinger, Sylvester. Foreign Exchange Intervention: Objectives and Effectiveness. New York: Edward Elgar Publishing, Inc.
Discuss the asymmetric informational problem that arises in the case of hourly loan officers issuing loans. Propose at least two proposals to minimize these concerns.
One of the primary reasons that so many home loans were issued in recent years to individuals who were not sufficiently creditworthy to be able to make timely payments on those loans is that there was an ongoing condition of asymmetric information. The individuals seeking the loans had much more information than the loan officers; in many cases they knew that they could not reasonably meet the conditions of the loan.
The hourly loan officers in many cases could probably have been able to determine that the individual was unlikely to be able to service the loan. However, these hourly loan officers were being rewarded for making loans and they had no real personal investment in whether or not the loan conditions were honored. They…
4. There has been much discussion about grade inflation at schools and universities. Discuss and display graphically the impact of grade inflation and the loosening of educational standards. Make sure to discuss how this will affect the ability of education to be used as a signal of worker quality.
One of the reasons that many individuals are focused on getting the best possible education for themselves is that they believe it will lead to a better job for them -- not just because they will have better skills and increased knowledge but also because a sparkling transcript will impress potential employers and give them a leg up in the employment process.
This is a reasonable assumption on the part of students and future employees. However, an essential part of this assumption is that there is a stable and predictable relationship between a student's efforts and abilities and the grades that that individual receives. Both the stability and predictability of this relationship are being deteriorated by grade inflation, in which students have to work less hard and demonstrate lower skills to get the same grades that more talented students once got. The following graph ( http://gradeinflation.com/ ) demonstrates how badly grades and scholastic accomplishment have become unhinged:
Michael has no moral "right" to undermine their loan evaluation process even if he genuinely believes that the lender will not be harmed by the deception. After all, beliefs are always subjective and people in Michael's position can be very sure about what they genuinely believe but still be wrong.
One need look no further than the .S. housing market in 2007 to see what can happen when peoples' beliefs about the value of property and about the ability of borrowers to pay back loans are wrong. Therefore, Michael is acting unethically to misrepresent information to the lender that the lender intends to use to determine whether or not the loan to Kokomo is safe enough to issue. Michael probably believes (honestly) that the lender simply does not understand enough about Kokomo's business processes and competitive situation to make the "right" decision. He probably feels morally justified in lying for…
Undoubtedly, Michael believes that his deception will not actually cause harm to anybody. On that level, his approach to securing the loan is only unethical "technically" because the lenders are entitled to use whatever criteria they want to decide how to make lending decisions. Michael has no moral "right" to undermine their loan evaluation process even if he genuinely believes that the lender will not be harmed by the deception. After all, beliefs are always subjective and people in Michael's position can be very sure about what they genuinely believe but still be wrong.
One need look no further than the U.S. housing market in 2007 to see what can happen when peoples' beliefs about the value of property and about the ability of borrowers to pay back loans are wrong. Therefore, Michael is acting unethically to misrepresent information to the lender that the lender intends to use to determine whether or not the loan to Kokomo is safe enough to issue. Michael probably believes (honestly) that the lender simply does not understand enough about Kokomo's business processes and competitive situation to make the "right" decision. He probably feels morally justified in lying for that reason.
The more ethical approach to the same situation and the one that I would prefer would be to devote the necessary effort to teach the lender about Kokomo's position and to present all of the facts that might not be apparent from the traditional information requested on the loan application. Michael should create a presentation to educate the lender so that the lender can understand that the poor past profits recorded for Kokomo are simply not a reliable indicator of the security of the loan. Michael should illustrate why the loan will enable Kokomo to become profitable and repay the loan instead of relying on unethical deception to get the loan.
This is a short review of literature that discusses the subprime mortgage crisis which many believe had a significant impact on the financial crisis that began in 2008. The discussion will range from how the crisis started and what the banks knew might happen because of faulty legislation and greedy lenders prior to the crash, to how the crash has impacted families and how some entities have tried to mitigate it with little success.
The financial crisis that began in earnest in 2008 followed many decisions which, in retrospect, were not wise. Legislation can be traced back to the 1960s that began allowing lending companies (banks) and hedge funds to buy large numbers of mortgages and leverage them as if they were real assets (Block-Lieb & Janger, 2011). Other laws followed such as the Community einvestment Act first passed in 1977 and amended with much stronger language in 1995…
Block-Lieb, S., & Janger, E.J. (2011). Reforming regulation in the markets for home loans. Fordham Urban Law Journal, 38(3), 681-699.
Canner, G.B., & Passmore, W. (1995). Home purchase lending in low-income neighborhoods and to low-income borrowers. Federal Reserve Bulletin, 81(2), 71-78.
Miller, M. (2009). Stemming the subprime crisis: The North Carolina foreclosure prevention project. Stanford Law & Policy Review, 20(1), 213-231.
Peterson, J.R. (2005). Fannie fallout: The ongoing scrutiny of Fannie Mae will affect you. The effects could be a plus for some mortgage lenders, but hedging will require more careful attention. ABA Banking Journal, 97(4), 34-53.
4. I did not obtain my current mortgage under any materially false pretenses.
As part of the Hope for Homeowners program, I would be able to attain a new affordable mortgage based on a current appraisal value. I would retain 10% equity in the property, and would be sharing the equity and future appreciation with the Federal government, which would prohibit me from taking out any additional loans against the property except for direct repairs and/or maintenance. There are also up front insurance premiums for this type of loan, which I am aware of.
If you would please consider one of these two options, I believe we can come up with a mutually satisfying solution to help avoid foreclosure on my home. I am writing this hardship letter to plead with your company to review my loan information, take into account my current financial situation, my excellent payment history prior…
Mortgage Bankers Association. Fannie Mae Posts Conventional Mortgage Servicing Modifications (06-18). Related Documents, 2008 Mortgage Bankers Association. Website with .pdf file:
Even Fannie Mae and Freddie Mac should be made totally independent from the government. This should be followed up by other methods to increase the individual ownership of housing and at the same time reduce the costs of owning a house. Even if the housing sector cannot be made totally private, it is important that the government make statements saying that it has no intentions of supporting Fannie Mae and Freddie Mac any further, and at the same time, try to improve the operations of these two companies. This can be achieved by limiting the amount of debt that these regulatory deposit organizations can hold and also focusing clearly with the two institutions on the sections of the housing market where their activities would provide the best social benefits. (Fannie Mae, Freddie Mac, and Housing Finance: Why True Privatization Is Good Public Policy)
The weakness comes from the feeling that…
After the Housing Boom. 11 April, 2005. Retrieved at http://www.businessweek.com/magazine/content/05_15/b3928001_mz001.htm . Accessed on 30 April, 2005
Cederholm, Fred. Is the Housing Market Going to Crash? Retrieved at http://baltimorechronicle.com/033105Cederholm.shtml . Accessed on 30 April, 2005
Federal Home Loan Bank System. Retrieved at http://www.fhfb.gov/FHLB/FHLBS.htm. Accessed on 30 April, 2005
Housing' Direct Economic Impact. 2005. Retrieved at http://www.nahb.org/generic.aspx?sectionID=784&genericContentID=543Accessed on 30 April, 2005
redit Analysis Smehra
redit Analysis for Neal Harris
Neal Harris recently submitted his credit application for our consideration. Mr. Harris is 45 years old, married and has 2 children. He currently works at Franklin Industries where he has been employed as office manager for 2 years. Prior to that, he was in sales at Providencial Insurance for 3 years. Neal has resided at his current residence in Tennessee for 1 year.
His credit application has been filed in joint with his wife, Helen Harris, 43 years old. Helen has recently returned to the workforce from being a housewife. She is also employed by Franklin Industries where she has been marketing director for 4 months. Both individuals have a checking and savings account with AmSouth. The purpose of their loan is for a 2003 hevrolet Tahoe. Following is a review of the 5 's of redit for Mr. And Mrs. Harris…
After reviewing the joint credit application for Mr. And Mrs. Harris, I have drawn the conclusion that they should be granted the loan under the terms listed. These are for a loan of $24,000, repayable over 48 months at 4%, minimum monthly payment of $540. While Neal Harris has on record a Chapter 7 file in January, 2001, review of their assets and liabilities reveals that they are suitable candidates for this loan. They also demonstrate timely repayments to their current obligations which include a mortgage with Countrywide, an auto payment with Nissan, and 4 credit cards, one of which is currently at a 0 balance.
The couple is also within the 20% average for credit capacity- net income, and have also demonstrated that they will be able to take on the extra expenditure through this loan through their supplementary income listed. I recommend that AmSouth give Mr. And Mrs. Harris their requested loan under the conditions mentioned.
Of course, the FEMA application process itself was also problematic. The SBA created secure Internet-based application templates for aid to expedite the loan request process. Stress testing and plans for maximum user capacity levels was instituted within the system (SBA, 2006, GMO).
User applications were thus better 'triaged' based upon likelihood of approval, and where the loan should be directed. isk modeling was introduced, to help cope with future emergencies. The prediction of damage from a variety of types of disasters, in target locations would allow for anticipation of increased levels of demand (SBA, 2006, GMO). Unfortunately, improvement of the system was undertaken only after the backlog had been created. Unmet demand can create more demand, as businesses without critical resources can fall into more debt and see more damage being done to their businesses, as a result of the aftereffects of the disaster.
While the SBA blamed its faulty…
SBA: Actions needed to provide more timely data assistance. (2006). GMO. Retrieved August
8, 2010 at http://www.gao.gov/new.items/d06860.pdf
US Small Business Association awards contract to SRA. (2006, April 3). SRA. Retrieved August
8, 2010 at http://www.sra.com/news/press-releases/phoenix.zhtml?print=1&ID=837791&c=131092&highlight=&p=irol-newsArticle
"Under group liability, clients have an incentive to screen other clients so that only trustworthy individuals are allowed into the program. In addition, clients will make sure that funds are invested properly and effort exerted. Finally, enforcement is enhanced because clients face peer pressure, not just legal pressure, to repay their loans. Thus, by effectively shifting the responsibility of certain tasks from the lender to the clients, group liability claims to overcome information asymmetries typically found in credit markets, especially for households without collateral" (Gine & Karlan, 2008, p.2).Social collateral becomes a replacement for financial collateral.
Additionally, the data suggests that when individuals alone have liability there is less monitoring of one another other's loans although "this lowered monitoring does not lead to higher default" statistically (Gine & Karlan, 2008, p.2).However, lenders "with weaker social networks prior to the conversion are more likely to experience default problems after conversion to…
Gine, Xavier & Dean S. Karlan. (2008, January). Peer monitoring and enforcement:
Long-term evidence from microcredit lending groups with and without group liability.
World Bank. Retrieved November 21, 2009 at http://karlan.yale.edu/p/bulak.pdf
The Bank CEO's ole in Defining Ethical Integrity
Based on a thorough review of existing literature of the role of ethics in the banking industry, the role of the CEO as the ethical leader of their organization is next discussion. Based on the concepts presented in the paper to this point as the foundation, these key points provide insights into how CEOs and senior management actively shape the ethical standards of the organizations they manage on behalf of shareholders.
isk Management Is a CEOs' Ethical esponsibility combination of forces -- changing regulatory expectations that open companies up to intense levels of examination, heightened stakeholder sensitivity to and scrutiny of corporate behavior, and the severity of punishment by financial markets for corporate missteps -- push reputation and ethics management onto the CEOs' and senior managements' agenda. The paradox CEOs face is when to risk the reputation and brand of the company…
John Bond (2007). A safety culture with justice: A way to improve financial performance. Loss Prevention Bulletin,(196), 31-39. Retrieved October 20, 2008, from ABI/INFORM Global database. (Document ID: 1333256011).
Donald R. Cassling (2008). Poehl v. Countrywide Home Loans, Inc. The Banking Law Journal, 125(9), 865. Retrieved October 21, 2008, from ABI/INFORM Global database. (Document ID: 1571291211).
Chris Churchill (2007). State targets lender ethics: Mortgage brokers must get training, undergo criminal checks starting next year. Knight Ridder Tribune Business News. Retrieved October 21, 2008, from ABI/INFORM Dateline database. (Document ID: 1335614991).
Greenberg, J. (1990). Employee theft as a reaction to underpayment inequity: The hidden cost of pay cuts. Journal of Applied Psychology, 75, 561-569.
Response 1: Robyn Finster
You make a good point about asymmetry of information. There was no third party made available to draw up this contract to make it equitable, or explain its terms. The Commercial Credit Loan drafted the agreement. There was no opportunity for the borrower to allow a lawyer or other individual to examine the terms of the agreement, given the pressure Commercial Credit exerted upon the borrower for an immediate signature.
Response 2: Elizabeth Laage
Your personal story indicates how even when consumers seek out information, frequently the language used is so confusing it sounds contradictory. Part of the notion of contractual unconscionability, I believe, should include consideration of language that is deliberately misleading to one of the parties. Consumers often are confused and agree to lopsided legal contracts, based upon biased information they hear, or because of the way the agreement is phrased.
Response 3: Derek…
interest paid at the beginning of a loan period than at the end of the loan period?
Whether an equal total payment plan is adopted or an equal principle plan, in both cases the interest paid at the beginning of a loan repayment period is more than at the end. This is because the interest is calculated on the amount that is loaned. When the first payment is made then a specific principle amount that the borrower has paid for is deducted from the total loan given. Thus the total amount loaned reduces and hence the interest on the new amount is lesser for the second payment.
Using an example of an equal principle plan, if a borrower borrows $10,000 for a repayment plan of 10 years at the rate of 10% per annum, the premium will be divided equally in 10 parts. Which means that each year $1,000 will…
Consumer Borrowing -- Spending an Economy Out of a Recession
The 'answer' provided by consumer borrowing and spending during recessions and even depressions revolves around the classical, microeconomics 'answer' to what seems like an economics paradox. Namely, how does one stimulate the economy into a state of recovery, when one is faced with consumers who have less money to spend on basic goods? Consumers who may be unemployed are understandably cautions about their economic future, so how does one 'give' them money to spend and encourage producers to produce.
Neo-classical or naturalistic theories of economics have tended to stress the need for the Federal Reserve Bank to lower the interest rate. This makes it cheaper for consumers to borrow money from banks, less punitive for consumers to use their credit cards to make purchases with money they do not have at the moment, and it also gives consumers an incentive…
But, the family must also consider that the interest rate is variable and is subject to inflation indexation in case of high market volatility and thus future monthly payments of the family may increase significantly if the risks of the lender increase. Presently the Federal eserve discount rate is increasing constantly and there is overall tendency to growing cost of financial resources in international markets which can further push interest rates upwards and the family will have very high mortgage servicing costs.
The renting option would include $1,400 per month plus utilities of $220 and insurance of $25, thus overall monthly payments of $1,645, while mortgage servicing and utilities costs are $2,758. Presently they are purchasing a house for $280,000 and it is expected to increase in value by 3% annually, or up to $324,500 approximately by the end of the fifth year. This means that their rental payments will…
References Available at http://www.dinkytown.net/java/TaxMargin.html
Brealey, Myers. Fundamentals of Corporate Finance, 6th Ed., McGraw & Hill, 2003. Available at
Calculate Touring Enterprises' weighted average cost of capital (WACC).
Work as follows: first, compute the after-tax cost of debt, then compute the cost of equity.
WACC = E/V x Re + D/V x Rd x (1 - Tc)
Re = cost of equity
Rd = cost of debt
E = market value of the firm's equity
D = market value of the firm's debt
V = E + D = firm value
E/V = percentage of financing that is equity
D/V = percentage of financing that is debt
Tc = corporate tax rate
Cost of equity 5%
Cost of debt 10%
Total Equity- 7 million
Total debt- 18 million
Total 25 million
Determine the weightings of debt and equity in the capital structure.
Equity -28% (7 divided by 25)
Using your answers to the above questions, calculate the WACC
WACC = E/V x Re + D/V x Rd…
While it was generally agreed that the increase in prices was due mainly to an insufficient offer as the stock house was limited, opinions have also been forwarded according to which the buy-to-let purchases have contributed to the inflation of the house prices (Property Mark).
The debate concerning the reasons for the massive price increases for residential properties (materialized mostly between 1996 and 2005) is however still ongoing. On the one hand, there are the property bulls, who argue that the increase in the prices of residential builds is the result of natural processes of economic growth and development. In other words, they state that the increase in prices was the natural reaction to higher levels of employment, economic stability and lower interest rates. On the other hand however, sit the property bears, who claim that the increase in property prices is not linked to any economic processes, but is…
Billington, I., 2010, 2011 set to be slow year for U.K. market, the Source, http://blogs.wsj.com/source/2010/12/23/2011-set-to-be-slow-year-for-uk-housing-market / last accessed on January 14, 2011
Blackson, S., 2005, the practical guide to total financial freedom, Volume 3, Lulu Press Incorporates, ISBN 1411620569
Blackson, S., 2005, the guide to real estate investing, Lulu Press Incorporated, ISBN 1411623835
Booth, T., 2003, the buy to let guide: how to invest for profit in residential property and manage the letting yourself, 2nd Edition, How't Books, ISBN 1857038649
Another important issue to consider in the contraction of debt is represented by the impact of this debt on the company stakeholders -- employees, business partners, the public, and most importantly, the share holders. The primary scope of the economic agent is that of creating value for its stakeholders, but excessive debt could jeopardize this desire, especially since debt is money that has to be repaid and it as such reduces the future levels of profitability.
At the level of value creation, a crucial aspect to be analyzed is represented by the source of the debt to be contracted. On the one hand, there is the contraction of debt through loans, which are characterized by the fact that control and ownership of the company remains intact, but payments have to be regularly made; the payments are nevertheless tax deductible.
On the other hand, there is the contraction of…