I have come to believe differently.
Let me do this in formal terms:
I have had (recently) trouble paying off credit card debt.
I have an MBA and experience with accounting (I’m not a complete idiot when it comes to analyzing the risk associated with extending credit to a given individual “A” nor am I in the habit of simply blowing off debt.).
Bank (call it “Bank of A” or “A of Bank”) extends to me a line of credit (call it $xxxk). They do so ON NO SOUND BASIS WHATSOEVER. In fact they INUNDATE me with literature telling me that I’ve been “pre-qualified”. They do not ask me for my any documents. They do not analyze whether or not my condition and history suggest that I will or will not be able to make the payments over time. They simply say: “here’s the money”.
Now...
I believe (given my MBA education) that they are UNDERVALUING THE RISK of lending to me (for many reasons).
But the fact that their underwriting department UNDERVALUES THE RISK (from MY perspective) does not mean that I should believe that they (WITH THEIR MUCH GREATER EXPERTISE AND ACCESS TO DATA)have ALSO undervalued THEIR risk.
Look: if someone says to you “here’s $10 no questions asked all you have to do is pay me $11 a year from now” is it YOUR job to do the risk analysis to determine whether or not (given that X% of people will ALWAYS default) the person lending you the money makes money over that period? Or is that THEIR job?
Your are combining a plethora of issues. Underwriting, secured v. unsecured, etc. The article to me is about moral hazard rather than substandard underwriting.
I believe it customary in real estate to find a purchase you wish to make then ask a lender to finance it for you. Presumably your personal risk analysis was completed prior to the loan request. They underwrite you and make an offer, knowing that in secured lending the risk of total loss is usually non-existent. Now you have an asset on your balance sheet with offsetting debt and they have an asset and a security interest.
It’s lame to say the behavior your lender engages in by dispositioning his assets later on has any impact on your original agreement to pay. This article isn’t talking about weak underwriting, it’s talking about a clear title issue that isn’t part of what you even bargained for. If title was clear in the first place and you pay, it will be clear again.
Comparing that to walk aways on risk priced unsecured lending doesn’t work for me. Lenders know the risk and price accordingly. Also people walk away and file bankruptcy all the time. Both behaviors are expected and thats why GE lends to persons at 30% APR.
So, to winnow all this BS down to basics, are you suggesting it is OK to be a thief if you’re an educated one, eh?
JC
No, philosopherdeadbeat - if YOU accept the conditions and use the product it's YOUR job to pay.
You're evidently a prime example why these days MBA generally stands for nothing other than More Bullshyte Ahead, deadbeat.
[I have had (recently) trouble paying off credit card debt.]
In other words you’re RINO deadbeat retard (with an MBA) who’s too stupid not to eat the bait - and now that you’ve been hooked you expect the rest of us bail you out.
Well NO SALE, deadbeat - do not pass GO, do not collect 50,000 Baraqi Inflato bucks: GO DIRECTLY TO JAIL.