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banks, debts, deep discounting, japan, new york, UK

December 6, 2014

Globes: “The financial system is close to the abyss” by Irit Avissar quoting Prof. Anat Admati:

Zombie banks constantly gamble

it will reveal which banks are good and healthy, and which are weak to the point of being zombies – the walking dead.

If a bank is a zombie it won’t be able to raise capital, and I fear that there are a lot of banks like that.

A zombie bank cannot issue new credit, so it is already not a source of oxygen for the economy. Zombie banks only continue to gamble with more and more money to try and cease being a zombie, while simultaneously not recognizing their losses in their balance sheets, in order to avoid collapse.

FT Adviser: “FCA restructuring to see two executives depart” By Ruth Gillbe :

Financial Conduct Authority chief executive Martin Wheatley admitted the regulator’s handling of the probe into so-called zombie insurance funds that caused a ‘disorderly market’ was not the FCA’s “our finest hour” in April.

Referring to FT Adviser: “Wheatley admits he will face ‘serious questions’ on blunder” By Donia O’Loughlin:

Financial Conduct Authority chief executive Martin Wheatley has admitted the regulator’s handling of probe into so-called zombie insurance funds that caused a ‘disorderly market’ on Friday (28 March) was not “our finest hour”.

Consider Japan, see Market Oracle: “Princes of the Yen: Central Banks and the Transformation of an Economy” by Jesse:

Japan, and the ‘Asian tigers’ as well, were mercantilist in their outlook and crony capitalist in their composition. The enormous amounts of monetary stimulus were dissipated in supporting zombie corporations, a ruling elite, unproductive investments, and widespread soft corruption and insider dealing.

Times: “Japan’s ‘zombienomics’” by Kevin Rafferty:

My worry is that Japan and Abe are practicing “zombienomics,” repeating mantra — like “three arrows” — as if they are magic spells that will bring instant success.

Japan is becoming a zombie society, where people do not question old shibboleths.

From my base at Osaka University, I despair of the emphasis on conformity and refusal to question authority, when Japan needs more questions, more solutions, more entrepreneurial thinking, not more zombies.

Meanwhile in New York, the Governor is getting credit for new rules for debt collection – particularly regarding attempts to collect illegal debts that have exceeded their statutory limit – so not really a new rule, so much as new ways to protect a rule that already exists.

Local Syr: “New York State issues new rules for debt collection“:

The fourth regulation guards against zombie debt collection.

Long Island Exchange: “Senator LaValle: NY Making Additional Efforts to Protect Consumers from Fraudulent and Abusive Debt Collectors“:

Protections Against Collection of “Zombie Debts”: If a collector attempts to collect on a debt that exceeded its expiration date, before accepting the debtor’s payment, the collector must provide notice that they believe the debt has expired.

CUTimes: “NY Adds New Rules on Debt Collection” by David Morrison:

The notification that the statute of limitations may have expired is meant to help consumers confronted by debt collectors trying to collect on what the department called “zombie debt”, which is debt older than its legal statute of limitations.

Post Star News: “GOVERNOR CUOMO ANNOUNCES NEW REGULATIONS AGAINST ABUSIVE AND DECEPTIVE DEBT COLLECTION PRACTICES“:

These new, finalized state Department of Financial Services regulations will provide consumers with important disclosures to help combat aggressive and deceptive practices that take advantage of confusion or fear, help stop attempts to sue to collect “zombie debts,” establish a new debt “substantiation” requirement so that consumers can request information to avoid paying what they do not owe, and address other widespread abuses in the debt collection industry.

Meanwhile, and only tangentially related, at 4Hoteliers: “Why You Shouldn’t Sell Rooms for $7 on Hotel Tonight.” by Vikram Singh:

Discounting is dead. Granted, it’s a zombie that comes back to life every now and then when hotel owners, managers and marketers completely run out of ideas. But you don’t have to be a victim of zombie discounting. There are many other approaches that can help you through a slow season.

It’s tangentially related because banks might try to deep discount their bad debt and less scrupulous debt collectors take the risk. But if the risks are too high then the deep discounts cause bigger problems.

Recall there are at least three types of “zombies debt”.

And see more ZombieLaw: Money

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