In particular, we now have the full details of the council’s lender option borrower option (LOBO) portfolio, obtained during the summer by local Green party candidate Rachel Collinson. I noticed this theme when studying the latest disclosures obtained from Newham council. The beauty is that the ‘tool’ convinces customers to sell the product to themselves. Rather than the bankers taking the risk of pitching a product whose suitability might be questioned, they merely respond to the customer’s wishes. Once the customer’s belief is anchored to something, the bankers devise a structured product that amounts to a bet on this prediction coming true. This may be tenuous, but it immediately anchors peoples’ beliefs. It allows the customer to fill the blank space of the future with some financial market data and call it a ‘prediction’. First, the bank provides its customer with a ‘risk management tool’ or computer model. New information on the council’s controversial loan portfolio shows the impact of its relationship with Barclays, raising questions about risk management decisionsĬlient blow-ups and lawsuits over the years have taught banks a lot about selling complex products.
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