By what legal authority can the banks demand repayment?

kingstreet

AC - surely you can simply change your name and deny the jurisdiction of the courts?

We're heading into "Freeman On The Land" territory here, I suspect...

Mike63

Thanks for the response. This is not really a property question. I think the priciple applies to all loans from banks: they are only partially capitalised, so they generate new money each time. It can't all come from depositors because there is not enough to cover the loans. It can't come from the 85% assets that are existing loans without these debts becoming bigger, which does not happen. So to make that next loan, they only have to cover the reserve, then the rest is generated with a few keystrokes. They hand you that cash, and put an equal debt against you to balance their books, and charge you interest on both the capitalised part and the new money. The bank later reclaims that new money when the loan is paid off. To me it sounds like prinitng money electronically, whereas most businesses have to earn all their income.

If I do something with cash that is illegal, such as steal, it is equally illegal with electronic money, such as hack your account and steal online. The banks were specifically prohibited from making new cash by Parliament, and here they are working around that law. I have not heard anything on here that says otherwise, which was the request of the posting.

superfran_uk

:rotfl:

Ok then...

DevCoder

It can't all come from depositors because there is not enough to cover the loans

I can assure you it does and there is, in fact for liquidity ratio purposes banks have to maintain a higher percentage on their balance sheet of deposits compared to loans.

Heres some reading

http://www.google.co.uk/url?sa=t&rct=j&q=basel%203%20liquidty%20ratio&source=web&cd=3&cad=rja&ved=0CFgQFjAC&url=http%3A%2F%2Fwww.iif.com%2Fdownload.php%3Fid%3DksIsGMopBoE%3D&ei=WeveULerNK2W0QWrw4CgBA&usg=AFQjCNHMmMokyotrE_GkUfXcyUp-ZC_fQw

holly_hobby

The bottom line is no matter how the banks choose to source the finance for your loan (capital from deposits, profits, interbank or money market borrowing, shareholder finance etc), in obtaining a loan with them you have agreed to and entered into a contractual arrangement directly with the bank for its repayment ..... and its under that legal agreement that the bank may legally puruse repayment through the courts.

How they provided or obtained the finance to facilitate your application,has no bearing on the contractual agreement you entered into with the bank to secure the loan or your agreement to its repayment.

Couldn't be any simpler or clearer really, and in reality any Judge to whom such an argument was presented, in an attempt by the debtor to avoid payment, would simply and firmly dismiss it.

Holly

Mike63

I don't think the challenge should be via any particular contract. I think it should be through Parliament deciding, as they did last time, that a few private companies should not have the ability to 'print' their own money.

krisdorey wrote: »

I can assure you it does and there is, in fact for liquidity ratio purposes banks have to maintain a higher percentage on their balance sheet of deposits compared to loans.

Agree, I phrased that badly. The initial money comes from depositors, then the bank uses the fractional reserve to create new money as loans, which unless it gets stuffed into a matress, gets put back into a bank because the money is used to buy something, thus essentially fulfilling your requirement that it does all come from depositors. However that second class of money is really a debt due to the bank that has been, what's a good word, perhaps 'laundered' through depositors.


An example.

1) I deposit 1000 of my hard earned cash in a bank. (Bank sets aside 150 to cover their reserve requirement.)
Bank Assets: 1000 cash reserves; Bank liabilities: 1000 debt to me.
2) You ask the bank for a loan of 500 which the bank provides as electronic money.
Bank Assets: 1000 cash reserves + 500 loan; Bank liabilities: 1000 debt to me.
3) You repay the loan.
Bank Assets: 1500 cash reserves; Bank liabilities: 1000 debt to me.
4) I withdraw my deposit.
Bank Assets: 500 cash reserves.

How did the bank end up with the extra 500? They made a computer entry into your account, then you worked at a job to get paid to clear the debt.

opinions4u

Mike63 wrote: »

An example.

1) I deposit 1000 of my hard earned cash in a bank. (Bank sets aside 150 to cover their reserve requirement.)
Bank Assets: 1000 cash reserves; Bank liabilities: 1000 debt to me.
2) You ask the bank for a loan of 500 which the bank provides as electronic money.
Bank Assets: 1000 cash reserves + 500 loan; Bank liabilities: 1000 debt to me.

This is where you've got it wrong.

The assets remain at 1000. 500 being the loan to you and 500 being the reserves, which have to reduce to provide the loan.

3) You repay the loan.
Bank Assets: 1500 cash reserves; Bank liabilities: 1000 debt to me.
4) I withdraw my deposit.
Bank Assets: 500 cash reserves.

Making points 3 and 4 inaccurate.

How did the bank end up with the extra 500?

It didn't. You made it up.

Any more troll feed anybody?

_Andy_

I like turtles.

antrobus

opinions4u wrote: »

....

It didn't. You made it up.

Any more troll feed anybody?

It's a sad state of affairs when even trolls can't do basic arithmetic.

holly_hobby

The calling of parliment into the mix, in their deciding and restricting how a business generates profit, when the treasury directly benefits from the corporate taxes levied on it, is equally mindbending to the basis of this thread.

OP, if you want to look at the suggested immoratlity of finance houses and profits generated from loans - take a look at the payday loan industry, whereby in some cases we have chargeable interest in excess of 1000 % !! .. .. now that in my opinion IS scandalous however it is legally permitted, if the debtor is aware of and accepts the terms before they enter into the agreement (which of course you do, by applying and signing the contractual agreement).

In signing off, this is an utterly ridiculous thread ..... with the warped logic behind the cited argument, really quite scary.

I'll leave this to the committed !!

H