The latest Rethink email bulletin from the Relationships Foundation contains the following modest proposal about relational lessons from the 'credit crunch':
"It is disastrous, from a relational perspective, for a bank which makes a loan to be able to sell on the whole of that loan to other banks. The economic consequences of this taking place on a massive scale are ones which we are all living with at the moment. At the very least, originating banks ought to be required to retain 20% of the risk in relation to the original loan, so that they have sufficient incentive to take proper precautions to see if the borrower can afford to make the repayments. In relation to more complex forms of on-selling, where the repackaged loans have been divided up into different tranches, the originating bank ought to be required to hold on to a greater percentage of the so-called equity tranche, i.e. the riskiest portion of the loans, which bears the highest risk of non-repayment."
Read the whole piece here and blog comments here.
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The Flying Lizards - Money (that's What I Want).
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