The People's Bailout

[VigoTheCarpathian]

but they could still write off any loss they took on it, even if they recoup a portion through selling the rights, and they wouldn't be able to write off the loss if they still held the debt on their books, right?

[TomAz]

Not completely but partially.

[VigoTheCarpathian]

Plus, banks are regulated to keep certain debt to asset ratios on their balance sheets; and since most banks push those limits, it would be beneficial to write down troubled assets so to make room for potentially profitable new investments.

[VigoTheCarpathian]

I don't think I said that right

[TomAz]

It goes like this.

I lend Vigo $10. I set up an asset on my balance sheet of $10 for the money you owe me.

After a few weeks, Vigo, unemployed deadbeat that he is, doesn't pay anything on the $10. My accountants tell me that really since collectibility is in question here we need to discount the value of the asset on the balance sheet. We value it at $7, reflecting a 30% chance of nonpayment, and hence have 'written off' $3 of the debt.

Vigo keeps not paying. Tired of his shit, I sell the loan to Corleone Collections for $3. I've now lost $7 but I no longer 'own' the loan; I've washed my hands of the deal. Corleone, meanwhile, has paid $3 on a junky $10 debt because they think they can make the Vigos of the world pay more than 30% of the time. Thus begin the threatening phone calls, the interrogations, the kneecappings.

After a few months of getting beaten by thugs, Vigo still hasn't managed to come up with the $10. Corleone then puts the loan for sale on the deep aftermarket for 50 cents. This is highly speculative territory - I mean if Corleone can't make you pay who can? -- but there are firms out there who buy a shitload of this stuff and just robocall and hope that some Vigo somewhere comes up with $10 through an inheritance or a poker game or something and decides to pay.

But instead of a speculative firm, now OWS is stepping up and buying the bad debt at this point, and telling Vigo, "Vigo! You're free to go! We've gotten the man off your back! Fuck Wall Street!" etc etc

[amyzzz]

So this thing just gets the debt collectors off one's back?

[TomAz]

Not my back. Vigo's.

[amyzzz]

Fixed.

[marooko]

So basically this doesn't matter because vigo wasn't planning in paying. Got it.

[VigoTheCarpathian]

OK that makes sense. Why in the hell did Bank Of America finance Vigo's Coachellas anyways. foolish bankers

[TomAz]

then Zack de la Rocha writes a song about you called "Vigo Hero of the People".

[VigoTheCarpathian]

I'll be in the music video wearing a big syndicalist flag and Nordstrom camo khakis

[Mugwog]

Miley Cyrus will have a dub step beat box solo while being surrounded by 1000s wearing the v for vendetta mask.

[PlayaDelWes]

So basically this doesn't matter because vigo wasn't planning in paying. Got it.

Exactly. Random people who weren't going to pay anyway get a letter from OWS that it's cool if they still don't pay.

[nosurprises12]

Some members of Strike Debt did an IAMA today.