The Great Train Robbery Repeated
by, 10-01-2008 at 08:15 AM (824 Views)
Today on CNN:
An example of why the bailout was necessary was to tell the story of a builder in California who was forced to abandon construction on quite a number of unfinished houses because his bank cut off his credit.
I would say hooray for the bank if in their judgement the risk was too great.
As I understrand (not my field) the building business if after examination of a project it is approved the bank begins to extend $$$ to the builder (a bridge loan)to initiate construction and cover the costs as it progresses obtaining a lien on the project for payment and the builder proceeds. When the house is roofed the builder beginns to pay back the bridge loan each month and finishes payment when the house is sold.
The banker if nervious about the loan (house aren't selling) can call it and refuse further credit for additional projects .
Good for them if I have my money in the their bank !!!
In the case of either the bank or the builder or the buyer making a wrong decision> Tough Shit !
Why should the taxpayer cover the loss by buying anyones worthless paper ?