Sun, 05 Oct 2008
Apologies to anyone bored of this topic but it is something I have been thinking about recently.
We have even have a few solutions from some people within the Free Software community.
I think the first thing is to identify who should lose, and who should win.
Much of the annoyance about the rescue from ordinary people is that it seems that investors are not losing (enough). They took some risks, those gambles failed, and now everyone else is paying the price.
If IBM were to go bankrupt, would the government step in? Unlikely. Investors would lose (money), staff -- another word for investors -- would lose (jobs), but customers would win (their computers would keep working). Some customers would win more than others (especially those who had the equipment on lease); if no one is collecting, why pay?.
So let's apply the same set of outcomes to banks.
But hang on, you rightly ask, - a bank has the title deed (a mortgage is a promise to pay amount X over Y year in return for the deed) - why would customers (depositors), realising a bank is no longer viable, since remove their funds
I think that those two issues can be addressed fairly simply. The government would guarantee all depositors money. Customers never lose. They never have to worry about their funds.
For banks, who enter into administration, the standard laws about possession should apply. If a borrower is utilising (living in) the asset to which the bank has title for over Z years (where Z equals 5 or 7), then the possesor now owns it outright. That is plenty of time for a bank to either be bought, have the underlying asset value recalibrated, or to completely go bust.
All without a detrimental effect.
ॐ (aum) - what was, what is and what will be, wildfire's musings
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