Bad C’s
by ilene - October 31st, 2009 2:04 pm
Bad C’s prompts me to recycle my introduction to George Washington’s Blog’s "The Ongoing Cover Up of the Truth Behind the Financial Crisis May Lead to Another Crash":
Our freedom depends on our government enforcing and abiding by the law. It’s apparent that we are headed down the slippery slope Justice Louis Brandeis describes in Olmstead v. United States (1928):
"In a government of laws, the existence of the government will be imperiled if it fails to observe the law scrupulously. Our government is the potent, the omnipotent teacher. For good or ill, it teaches the whole people by its example. Crime is contagious. If government becomes a lawbreaker it breeds contempt for law: it invites every man to become a law unto himself. It invites anarchy."
We have the Federal government’s massive and flagrant display of lawlessness, and population somewhere on the way from apathy to dependency in the Fatal Sequence cycle of civilization. – Ilene
Michael Panzner elaborates on this theme:
Bad C’s
Courtesy of Michael Panzner of Financial Armageddon
Before the era of Frankenstein Finance and the fanatical focus on fee-based income, lenders tried to hold themselves out as models of probity (for the skeptics out there, I did say "try."). Those responsible for making credit-granting decisions and looking after the interests of shareholders also demanded that borrowers meet certain standards before they would see even a dime of their employers’ money. These criteria are known as the "5 C’s of Credit," which are the
key elements a borrower should have to obtain credit: character (integrity), capacity (sufficient cash flow to service the obligation), capital (net worth), collateral (assets to secure the debt), and conditions (of the borrower and the overall economy).
In an interesting twist of fate, the firms that have traditionally decided who should get credit have been put in the position of needing extraordinary amounts of other people’s money just to stay alive. Unfortunately, based on what we’ve seen so far, including reports like those that follow, it’s doubtful whether most, if not all, of today’s troubled financial institutions would even qualify for a loan based on traditional measures of suitability — like "character," for example — if their friends in high places weren’t so intimately involved in the process.
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Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...
Ilene is editor and affiliate program
coordinator for PSW. She manages the site
