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BB&T Corporation Message Board

  • redpumps10 redpumps10 Jan 14, 2011 1:24 PM Flag

    Provisional Contracts

    According to many Economists including Mr. George Soros, any banking loans whether they are collateralized or not, are and should be the contracts between two parties, the lenders and the borrowers.

    Their idea being if one financial institution takes over another one, the liabilities of the borrowers of the latter institution are valid only when the merger was approved by both parties of original contracts, especially when the acquisition was such a bargain.

    Current financial problems do not stem from any of defaulted loans which have always existed more or less but from the pre-crisis misunderstanding that the collateral was something other than mere nominal value representing prevailing bias of the times.

    And it turns out that it cannot be overcome by any known ways or some other creative methods including ultra CDS’s.

    The issue today is not any of above but rather it is whether the banking industry is putting the financial capital out of the privileged position to the detriment to themselves.

    With no incentive left for depositors in coexisting inflationary (food industry) and deflationary (tech explosions) environments, confused banking industry has been drifting for a while. Now the industry is pretty much relying on Governmental Intra-aortic balloon pumping actions with no idea what tomorrow will hold for them. Rigor Mortis? Hope Not!

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