Recently the large US banks are scrutinized for their failures in risk management, especially products related to mortgages. Heavy exposure to mortgage products lead the US banks to incur heavy losses and record breaking write downs. Funny thoughts came to my mind how the banks might have framed their risk management policies. Such as,
* Owning a home is an American dream. If you can't payoff the mortgage, don't worry, the Banks will not only own your home but also your dream. Large banks in US are so kind to stock all your dreams.
* Nowadays US banks love the old US folk song remixed as 'This land was your land. Now you don't have any land'
* Old mantra is 'Higher the risk, higher the return'. The new mantra is, 'Higher the risk, better the chance that US bank CEO will get fired'
* A fundamental idea in finance is the relationship between RISK and RETURN. Large US banks have changed this relationship to RISK and BEATEN
* Risk always comes up with a reward. US banks should reward foreclosed home owners with holiday gifts, since they were responsible for banks to be in the headlines for last few months. The banks got free advertisement.
* May be, in the past year, large US banks might have followed more stringent loan policies, such as:
- Individual who applies for loan should have default at least once, to be qualified for loans.
- If you are convicted as a criminal, loan issued with no credit check required. Why bother?
- Gangsters can use the force to get better interest rates
- Folks with poor credit history can command interest rates
- Income folks with good credit history scrutinized as follows:
----Photo id, passport or driving license
----Proof of going to work (a photo or video showing catching morning train or bus)
----Proof of address
----Proof of wife (a photo or video showing wife snoring when Dad changing the kids’ diaper)
----Proof of husband (a photo, pretending listening when his wife is talking)
----Proof of kids (a photo showing Dad paying tuition fees)
----Proof of dogs, spider webs, etc
----History of past employers who always take care of its employees(firing them on the interests of wall street analysts)
----Proof of excellent credit history(a photo of you holding all pre-approved credit cards coming in mails)
