Comments on: When is Running a Bank Like Cancer Surgery? http://connellyoncommerce.com/2007/11/05/when-is-running-a-bank-like-cancer-surgery/ Ageno School of Business dean Terry Connelly on business, the economy, and more. . . Thu, 09 Feb 2012 12:33:44 +0000 hourly 1 http://wordpress.com/ By: connellyoncommerce http://connellyoncommerce.com/2007/11/05/when-is-running-a-bank-like-cancer-surgery/#comment-41 Tue, 13 Nov 2007 00:24:24 +0000 http://connellyoncommerce.wordpress.com/2007/11/05/when-is-running-a-bank-like-cancer-surgery/#comment-41 Thanks. Not only the ‘back-room” gets a piece, but the rating agencies gfet one too — indeed, they do not get paid at all unless they issue a rating, and if the indication is less than desired, the issuer/aggregator will simply pull the request, and all the work is unpaid: a substantial inducement to a favorable outcome. TRC

]]> By: FRANCES HOLLAND http://connellyoncommerce.com/2007/11/05/when-is-running-a-bank-like-cancer-surgery/#comment-38 Mon, 05 Nov 2007 14:10:13 +0000 http://connellyoncommerce.wordpress.com/2007/11/05/when-is-running-a-bank-like-cancer-surgery/#comment-38 Great analogy!

To answer your question in regards to how to herd in the risk profiles, the financial institutions need to stop paying the “back room”/operational people a piece of every loan that is closed.

I worked in the mortgage industry and the riskiest type of lending, residential construction loans to individuals. Everytime I would bring up a credit issue or question an approval, I would be steam rolled.

No wonder the company’s Florida construction portfolio has 75% of it in default.

When did real estate lending every make sense strictly on a credit score?

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