Word: defaulters
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Dates: during 1980-1989
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...bank. Half of the $1.2 billion to $1.4 billion has been guaranteed by seven Italian banks, and will apparently be repaid. The other half, though, is owed to creditors by Ambrosiano's subsidiaries in Nassau and Luxembourg. But the Luxembourg affiliate has been declared in default, and operations by the Bahamian subsidiary have been suspended by banking authorities in that country. Italian government officials and foreign creditors are arguing that the Vatican bank has at least a moral responsibility to honor the entire debt, since its two top officials signed the letters of patronage...
...just to make the interest payments on the debt. illions of dollars have been lent to troublesome credit risks in Latin America like Mexico, Brazil and Argentina. All together, this debt to U.S. banks now totals $62 billion. Warns one top Chase Manhattan banker: "If Latin America goes into default, it will bring down all the major banks in this country...
Another pressing East-West financial issue concerns the $25 billion that Poland owes Western creditors. Some officials have been urging the banks to declare Poland in default in order to increase pressure on Warsaw. The European economists were split on that issue. Although the board disapproved of using economic measures for political purposes, Brittan questioned the wisdom of continual rescheduling of the debt. He called the process "default by a slightly sweeter name." Carli replied that the banks had little choice. Said he: "If banks requested all their clients, developed or developing, to pay at once, they would cause...
...their houses as real estate prices rose, and are now saddled with crushing debt. Says Don Martin of Security Pacific National Bank: "When we get into the foreclosure process, we find that many of these buyers have taken out second, third and even fourth mortgages." Martin says the current default rate on residential loans for his bank is twice that of a year...
Many experts expect foreclosures to continue climbing in the U.S. because of the recession and towering interest costs. A rising default rate can also make hard times worse. Consumers feel poorer and tend to spend less when they fear for their homes, or when values are dropping, since housing is the largest investment that most people make. In California, where home prices have more than quadrupled since 1970, the impact of foreclosures may be especially damaging. Says Shulman: "People here have been counting on their homes to build their fortunes." Those fortunes increasingly look as if they may be built...