British Bank Hanging on to their cash for Dear life!

[Mega]

http://www.telegraph.co.uk/money/mai.../cndebt109.xml
Mike

[c1ue]

Re: British Bank Hanging on to their cash for Dear life!

Sublink to above story talks about small businesses being threatened because banks may not extend loans to them due to liquidity crisis

http://www.telegraph.co.uk/money/mai.../cndebt309.xml

I can vouch for this - the mythical accountant of my mother just popped up with an investment opportunity: loaning cash for 15% interest as the other client cannot get a bank loan.

Normally I frown upon this type of transaction as the question is: why not get the loan from the bank at a lower rate?

But with the liquidity crisis and with the fact that the accountant knows exactly what the other client's financial situation is... well...

[Spartacus]

Re: British Bank Hanging on to their cash for Dear life!

Sublink to above story talks about small businesses being threatened because banks may not extend loans to them due to liquidity crisis

http://www.telegraph.co.uk/money/mai.../cndebt309.xml

I can vouch for this - the mythical accountant of my mother just popped up with an investment opportunity: loaning cash for 15% interest as the other client cannot get a bank loan.

Normally I frown upon this type of transaction as the question is: why not get the loan from the bank at a lower rate?

But with the liquidity crisis and with the fact that the accountant knows exactly what the other client's financial situation is... well...

he's claiming the client is good for the risk?
He's guaranteeing it in some way?
>>>>> In writing? <<<<<

[Mega]

Re: British Bank Hanging on to their cash for Dear life!

This go's back to what i said a few weeks back, the CB's can set what ever rate they like, 5 or 4%.....The market will from now on set the REAL rate eg 7% is on offer and i suspect 8% saving bond not far off.
Mike

[c1ue]

Re: British Bank Hanging on to their cash for Dear life!

he's claiming the client is good for the risk?
He's guaranteeing it in some way?

In this case, it is a she.

However, she has said that the client's business has a long and consistent history and that she has full confidence in repayment.

There will be a legal agreement, of course, but at the end of the day my mother does trust her accountant.

Its not a giant pile of money anyway - otherwise I'd both be more suspicious and would want a piece of it :rolleyes:

[c1ue]

Re: British Bank Hanging on to their cash for Dear life!

Here's a deal I did put the kibosh on:

Another person is being recommended by a mortgage broker my mother has done a lot of business with.

He has a client who took out a $600,000 construction loan, now wants another $100,000 2nd loan for 'landscaping'. The house in question is the classic McMansion: 4200+ square feet, etc etc.

The person is saying they will refinance in 5 years and lump everything together, and offering in the meantime 12% interest on the $100K 2nd.

The house is supposedly appraised at $1.1M - and it is NOT in the Bay Area or Los Angeles.

So many red flags I can't count them all, starting with:

1) What type of loan is it? If Alt-A or Neg-Am, BAD BAD!
2) Is the appraisal any good?
3) What is the person's financial situation where they need $100K to landscape? including:
_a) What is the person's hard assets other than this property?
_b) What is their line of work?
_c) Can the person afford to live in the place for 5 years?
4) What is the possibility of a refinance in 5 years?

I'm a big believer in traditional bank behavior: you only lend money to those who don't need it at all.

[zoog]

Re: British Bank Hanging on to their cash for Dear life!

3) What is the person's financial situation where they need $100K to landscape?

That is some serious landscaping. Do they want to create a miniature version of the Rockies, Grand Canyon, and Niagara Falls?

[c1ue]

Re: British Bank Hanging on to their cash for Dear life!

That is some serious landscaping. Do they want to create a miniature version of the Rockies, Grand Canyon, and Niagara Falls?

I think a monster pool plus fully mature trees, sprinkler system, and pool house would probably take $100K.

Something subdued and tasteful on the order of San Simeon :rolleyes:

[Guest]

Re: British Bank Hanging on to their cash for Dear life!

Could be a miniature version of Niagara Falls - maybe a 30 footer? Great for practicing "Swan Dives".