Real estate collateral … A facet of the “Loss Distribution Battle”: burglary borrowers’ property

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The “party” made up of the banking sector and a large number of MPs and politicians do not want the central bank and commercial banks to bear the losses of the current crisis. Their job is for society, and in particular the most vulnerable classes, to receive only calamities, even if they try to crypt using gentle literature in the form of: “protecting depositors”. The basis today in the interactions between the various forces of power lies in determining how the losses are distributed, and who will bear the bulk of it. The almost complete merger between the bankers and an active section of parliamentarians is no longer a secret. The cooperation between the two was evident in the “fact-finding” meetings that ended work on its “investigative” report on numbers last week. The most prominent thing that was reported on that day, and gives an accurate explanation of the phrase “the battle of distributing losses”, was mentioned by Representative Ibrahim Kanaan about non-performing loans in the banking sector. He said on that day that he had “found” a difference of “26 thousand billion pounds between what the government is proposing and the reality of non-performing loan numbers.” It is 14 thousand billion pounds. The main difference is that the Finance and Budget Committees and “fact-finding” have included in the accounts the existence of real estate collateral, on the basis of which banks give loans, and therefore can be used to mitigate losses, knowing that it is not clear how banks were able to calculate the value of these collateral, and knew How much you will benefit from, while many estimates indicate that the value of these guarantees declined with the collapse of the exchange rate of the lira, and the market is only driven by people who buy real estate to “smuggle” their money by paying checks.The guarantee is what the banks reserve, in exchange for agreeing to give the customer a loan. Announcements of an auction, placing a judicial sign on a real estate, closing a factory … were filling the media, every time the banks wanted to implement the contract signed between them and the borrower, which may be paid by various reasons until he fails to pay the debt dues. For years, Lebanese commercial banks have not exercised their role in stimulating the economy and supporting productive sectors. She turned to the practice of “moneylending”, after she discovered that it was an easy way to reap a lot of profits in a “evil” way, especially lending it to the “Lebanese state”. The latter is a bankrupt customer, steeped in debts and deficits, and reasoning forces him not to continue lending to him. If someone were to borrow from a farmer who needed to finance the fig planting project, the banks would not have risked and “supported” it. But with the state the matter is different. Banks, through the Banque du Liban, continued to take depositors’ money and use it to purchase public debt securities, in exchange for high interest rates that were recording profits for shareholders in banks. When the “state” decided to reduce its dependence on public debt, by proposing a restructuring of 40% of it, the banks responded by calling for the “expropriation” of the property of all the people, so that they could compensate the losses of the “dominant few”. This is what was stated in the plan presented by the Association of Banks, that “the state should put assets from its own lands, the two cellular companies, Middle East Airlines, Intra, the Casino du Liban, the Lebanese ports, Beirut airport, and others, into a fund.” The revenue from this fund will cover the losses. ”
By the same logic, banks want to deal with defaulting on private sector loans. Putting a hand on real estate guarantees means increasing people’s misery. He who mortgages a house will find himself expelled from him. Someone’s car will be taken away because he defaulted on the bond. Many properties will be sold by banks at auction, because their owners have not repaid their loans. Factories and institutions whose owners will be forced to close and fire workers, because the bank has seized its properties. All that is mortgaged in order to obtain a loan, the banks will put their hand on him to try to compensate the losses in their portfolio, thus saving themselves from paying their capital to extinguish the losses. Banks and the Parliamentary Committee dealt with this issue from a purely mathematical background, without establishing any consideration for social standards, just as it did since after October 2019 and the Corona crisis, as it resorted to seizing the property of those who failed to pay interest on the loans, challenging Temporary exemption decisions.

The government has fixed non-performing loans at 40,000 billion liras

But even the economic and financial interest requires that banks not act in a “notebook” manner. So, while ways are being sought to increase growth and reduce losses, is there an interest for banks in increasing poverty and unemployment rates and “slicing” people everything they own?
Representatives of the “fact-finding” committee argue that their report includes “the numbers of the Banking Supervision Committee, at a time when the government was not coordinating with the party concerned, because it wanted to satisfy the International Monetary Fund.” And they explain that private sector loans are divided between 29 billion US dollars, and the equivalent of 15 billion dollars in Lebanese pounds, based on the exchange rate of 1515 pounds. “The primary risk, according to the Oversight Committee, is that loans in US dollars have defaulted. The number was more than that, but it declined because some people paid off the debt. The oversight committee settled the controversy. And these deputies admit that “the matter will have consequences for the people, but the accounts were financial, not social.”
In their speech, MPs confuse loans that were not counted as “unproductive”, and therefore “hope” is still high that their owners can repay them, and the loans that were included in the bank accounts as “bad”, and that it is settled that the bank will not recover them.

Putting a hand on real estate guarantees means increasing people’s misery and getting them out of their homes

On April 27, the Banking Supervision Commission predicted (See «News», Capital Supplement) That the value of “nonperforming” bank loans and loans at the end of 2020 double to $ 15.22 billion, or 30.5% of the total portfolio of $ 49.9 billion at the end of February 2020. Workers on the government financial plan confirm that the numbers they set are also obtained … from the Banking Supervision Committee, the day it was headed by Samir Hammoud (her term ended last March). And they add that, “We agreed that the final number of bad loans is only counted after checking the books of each of the banks.” The latter declined to hand over its numbers to the government, and “gave it to the representatives of the International Monetary Fund, who found that the number of losses included in the government plan is the most accurate.”
But is it permissible to use guarantees? Workers respond to the government plan that “cases must be dealt with in an independent manner, and clear standards established for dealing with safeguards.” But for the government plan, these are also losses, for many reasons. First, “Isn’t taking a borrower a car or a car, too, a loss? Their use is considered poverty for the people, while liberalism requires that the losses be borne by the owner of the capital. Secondly, one of the main crises in the country is related to a lack of liquidity in foreign currencies. “Will banks be able to sell real estate in dollars coming from abroad, or will they inflate their real estate portfolio as happened in the 1990s?” Third, according to “what the IMF transferred to the banks, the guarantees lost a lot of their value, and their liquidation is not enough to compensate the losses.”





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