American car manufacturers are seeing 30-40% volume loss and even though jetsetting auto execs might be getting their just desserts (or, looking at some of their salaries, are just getting dessert), the millions of mechanics, parts dealers, salesmen, and factory workers -- not to mention the job loss of collateral industries -- are just getting screwed.
WHAT OTHERS SAY Marc S. Sovelove, senior vice president for lending at Financial Resources Federal Credit Union in Bridgewater, N.J.: "The $1 million loan request appears to be risky for any lender to do: the company's cash flow, collateral, industry trends, leverage, liquidity and profitability are all suspect.
That in turn slows production in factories, with collateral effects on related industries and on jobs.
Use of eminent domain to seize mortgages could change this, just as other developments that weakened the value of collateral in the auto industry or the understanding of loan provisions in municipal finance have had unintended negative consequences for other potential borrowers.
Collateral Damage The financial industry's reckless ways have led to a meltdown of historic proportions.
Campello et al. (2011) argue that corporate credit lines decrease during an industry crisis, leading to corporate distress, but Benmelech and Bergman (2011) find that a firm's default reduces other industry rivals' collateral value, leading to a bankruptcy chain reaction.
Unfortunately, progress in other industries has become collateral damage to the tech sector's race for AI talent, and this issue has received little attention.
But think about another victim of collateral damage, the fund management industry.
The judge suggested that there will be little in the way of monetary damages in the trial over who is to blame for the demise of Rosie magazine, but there is plenty of collateral damage to the publishing industry.
Late in the day on Sunday, Mr. Fuld learned that the Fed would expand its lending by allowing banks to post a wider variety of collateral, and that the banking industry had cobbled together a $70 billion lending pool.
Even so, Brussels staffers say that the lighter touch of their regulation would avoid the risk of decimating Africa's mineral industry through the collateral damage caused by an investment flight.
