Saturday 24 February 2018

Banks failed to see the obvious

Churchgoers not idiots Sins of a few tarnish many Problems are speculative Norris has charisma Twink is some woman Explain this madness

Sir -- I wish to reply to the questions posed to me by Mr BA O'Sullivan in Letter of the Week (Sunday Independent, February 21, 2010).

Banks, contrary to popular opinion, are not in the business of risk lending. It has been proven at great cost to the taxpayer that it is not in anyone's interests for them to do so. The main banks lend primarily on the basis of repayment capacity. Security is taken as a fallback. Asset-backed lending is done by some other financial institutions.

Banks financed developers to purchase land with repayment to come from building and sale of houses, apartments etc. Pride, greed, etc, resulted in the banks failing to see what to many was obvious and virtually inevitable. The cost of property in general had spiralled out of control. It remains a matter of opinion as to who could and should have put a stop to this insanity. It certainly was not the fault of "Global Crisis", as many would have us believe.

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