From: Ronald Raygun 
Subject: Re: IMF warns Britain over =?ISO-8859-1?Q?=A31=2E1?= trillion debt mountain
Newsgroups: uk.finance
Date: Sun, 18 Sep 2005 19:31:15 GMT

Mel Rowing wrote:

> Ronald Raygun wrote:
>> Mel Rowing wrote:
>>
>> > I can never understand this notion of "irresponsible lending"
>> > rather than irresponsible borrowing. At the end of the day who stands
>> > the loss the borrower or the lender?
>>
>> The lender, obviously.  What's your point?
> 
> That "irresponsible lending" would lead in effect to irresponsible loss
> and therefore begs the question as to why financial institutions should
> seek to lose money as a matter of commercial policy.

I thought, reading between your lines, that I detected a hint of rhetoric,
i.e. I understood your question "who stands the loss" to be rhetorical and
assumed that *your* answer would be "the borrower, obviously".  There is
the old adage that if you owe the bank a hundred thousand and can't pay,
then you're in trouble, but if you owe them a hundred million and
can't pay, then the bank's in trouble.  Hence my contrary answer "the
lender, obviously".

Irresponsibility is a question of degree, though, and I imagine it
certainly can make commercial sense to push the boundaries of caution
into the high-risk area.  Clearly one wouldn't go as far as actually
seeking to lose money, but one could sail so close to the wind that one
would expect some loans to go bad.  That wouldn't matter so long as those
that didn't made enough profit to make up for the ones which did.