Thursday, January 27, 2011

Credit given to anyone who asked.

Bank gave shopkeeper €31.8m for development

Mr McConnon was a shopkeeper who had never previously engaged in development "of any shape or size" and there were issues as to how it came about that the bank had approached him, not vice-versa. One of the largest estate agents in the world had also provided valuations beyond what would be reasonably expected, he added.

Posted by ontheotherhand @ 12:08 PM (1129 views)
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4 thoughts on “Credit given to anyone who asked.

  • Well, it’s easier to lend somebody €32m than it is to lend 64 people half a million each.

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  • Now we know where all the FTB money went to.

    Lots of us on this site have met/know peoplr who have been lent millions to buy houses at their peak “as a speculative investment”. Should we blame the dim, get rich quick speculators or the negligent, clueless bank manager?

    Don’t they make bank managers sit exams anymore?

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  • Alan, re bank managers and exams. The culture of managing in a bank has changed (in fact it changed some time ago). The old prudent bank manager who assessed risk has long gone, and is largely replaced by in effect a glorified salesman. This change was bought about by the banks themselves where they managed the manager with tough sales targets.

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  • ontheotherhand says:

    Remember when it comes to the workings of the market, Keynes really got it. Career risk drives the institutional world. Basically everyone acts as though their job description is “keep it”. Keynes explains perfectly how to keep your job: never, ever be wrong on your own. You can be wrong in company; that’s okay. For example, every single CEO of, say, the 30 largest financial companies failed to see the housing bust coming and the inevitable crisis that would follow it. Keynes had it right, “A sound banker, alas, is not one who forsees danger and avoids it, but one who, when he is ruined, is ruined in a conventional and orthodox way along with his fellows, so that nobody can blame him.” And if everyone is looking at everyone else to see what’s going on to minimise their career risk, then we are going to have herding.

    Lifted from here http://www.zerohedge.com/article/jeremy-grantham-q4-letter-pavlovs-dogs where there are many wise words about bubbles. In this case of the loan to the shopkeeper, you would have got fired again and again for turning this kind of loan applicaiton down when all the other banks were giving it.

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