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Originally Posted by Ron Bennett
Read up on Quantitative Easing - the injection of more money, literally out of nothing, to the tune of trillions, into the economy making dollars worth less - that's costing everyone a lot more than some consumer debt write-offs.
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That may be the case, but at least Quantitative Easing is done in good faith to improve the economy... while the same can't be said about someone defaulting on a loan...
Quote:
Originally Posted by Ron Bennett
As for interest rates remaining higher than they should, the main reason is greed - banks pay less than ever for money and yet the spread (the % bank pays verses the % they lend for) is larger. It's no wonder banks are still reporting record breaking earnings.
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Greed may be one of the reasons, but additional risk caused by higher default rates is certainly one of the causes too...
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Originally Posted by Ron Bennett
And in regards to the bank employee, they're not going be fired assuming they did what the computer said and followed policy. Anyways, what bank employee still makes important decisions these days? Ok, I suppose maybe at some small, local banks, but most all banks, including credit unions, the lending decision is mostly automated with the employee doing little more than gathering data on the borrower, inputting it into the computer, and proceeding, in accordance with bank policy, with whether to lend or not - the bank employee is not really deciding much of anything, the computer is!
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Computers don't magically tell bank employees what to do, someone somewhere had to program the computer, someone had to make a decision on what variables will be used, how they will be connected, etc... so it seems completely reasonable that a programmer or statistician or manager or whoever that came up with an algorithm for determining who gets the loan could get fired over it, especially if that algorithm resulted in unusually high default rates...
Quote:
Originally Posted by Ron Bennett
Individuals get criticized for purposely not paying on their mortgage so as to get out of the loan. And businesses, which do likewise all the time (strategic default), are usually commended for cutting costs and saving money.
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Business are supposed to act in the best interest of their shareholders, so there is nothing really unethical about a business cutting losses on a venture that didn't work out...
On the other hand, a person not paying back a loan despite ability to do so is clearly acting unethically..
This is perhaps a paradox, but since businesses are setup to act in the best interest of their shareholders, they are acting ethically, while a person in a similar situation is not....