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March 16

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Despair for my old bank…

By Sean Ring

March 16, 2021

monetary policy, non-performing loans

According to the FT and Bloomberg, my old bank stands to lose $140-160m over a non-performing loan.  (Which is a nice way to put it.) Risk managers negged the loan, but “top brass” overruled them because the client was a big one.

It beggars belief this stuff still happens in 2021.

Herein lies the problem.  Since 2008, the Federal Reserve, the ECB, the PBOC, and the BoE have printed so much money, there have been no consequences to bad decision-making.

I remain shocked by how many washed-up managers, who’d normally have been put out to pasture over a decade ago, still hold their jobs.  That’s what happens when the market isn’t allowed to clear.

The great economist, Thomas Sowell, once said,

“It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.”

He was talking about politicians.  The same applies to bankers.

Reading 16 of CFA Level 1 teaches you all about monetary policy and central banks.  Head over to Finlingo to practice those questions so you’re not only ready for the exam, but for some really silly conversations at the water cooler.

All the best,

Sean

Sean Ring

About the author

Sean Ring, CAIA, CMT, FRM is the Co-Founder and CEO of Finlingo. When he's not chasing his son around the house, he's making sure his friend and colleague, Andy (Finlingo's CTO) eats his Wheaties and continues to code the state-of-the-art Finlingo CFA Total Recall app.

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