Where do houses that the court can’t even auction off in the end go❓
The bank doesn’t want them, and the court won’t take them. Today I’ll use plain language to sort out this underground chain that devours tens of billions of funds.
First, after a bank’s property fails to sell at auction three times, it becomes a completely bad debt. The bank can’t keep it as a landlord, so it goes through internal procedures to write off the account. Note: a write-off only balances the books; the right to recover the debt still remains.
So, the bank bundles these bad debts and dumps them to an asset management company at a very low price, what we usually call an AMC. A claim worth 1 million may be sold by the bank for only 100,000. The main buyers are state-owned giants like Cinda and Huarong, whose job is to help the bank strip off bad assets.
However, this is only the beginning.
After the state-owned AMC gets the package, it will repackage the more complicated and time-consuming assets and sell them at a markup to local AMCs or private institutions. A debt bought for 100,000 is sold to the next buyer for 150,000.
The most exciting part comes at the last mile.
These private institutions will directly find the debtor: Brother, you owe the bank 1 million. Now the claim is in my hands. You don’t need to pay 1 million; give me 250,000 and we’ll call it settled.
When the debtor thinks it over, 1 million can’t be paid back, but 250,000 can be scraped together. So they reach a settlement and the asset returns to its original owner. The middleman just has to move their lips and makes a net profit of 100,000 on the price difference.
Do you get it?
Every layer is solving trouble, and every layer is also sharing the money. In the end, who pays the bill?
It’s the bank that first absorbed the loss, and the bank’s deficit is ultimately shared by society as a whole.
Seeing this, isn’t it terrifying when you think about it❓
The bank doesn’t want them, and the court won’t take them. Today I’ll use plain language to sort out this underground chain that devours tens of billions of funds.
First, after a bank’s property fails to sell at auction three times, it becomes a completely bad debt. The bank can’t keep it as a landlord, so it goes through internal procedures to write off the account. Note: a write-off only balances the books; the right to recover the debt still remains.
So, the bank bundles these bad debts and dumps them to an asset management company at a very low price, what we usually call an AMC. A claim worth 1 million may be sold by the bank for only 100,000. The main buyers are state-owned giants like Cinda and Huarong, whose job is to help the bank strip off bad assets.
However, this is only the beginning.
After the state-owned AMC gets the package, it will repackage the more complicated and time-consuming assets and sell them at a markup to local AMCs or private institutions. A debt bought for 100,000 is sold to the next buyer for 150,000.
The most exciting part comes at the last mile.
These private institutions will directly find the debtor: Brother, you owe the bank 1 million. Now the claim is in my hands. You don’t need to pay 1 million; give me 250,000 and we’ll call it settled.
When the debtor thinks it over, 1 million can’t be paid back, but 250,000 can be scraped together. So they reach a settlement and the asset returns to its original owner. The middleman just has to move their lips and makes a net profit of 100,000 on the price difference.
Do you get it?
Every layer is solving trouble, and every layer is also sharing the money. In the end, who pays the bill?
It’s the bank that first absorbed the loss, and the bank’s deficit is ultimately shared by society as a whole.
Seeing this, isn’t it terrifying when you think about it❓