Word: loaned
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Dates: during 1980-1989
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...last November's revelation that Kennedy School Dean Graham T. Allison '62 had attempted to swap a $500,000 gift in exchange for University Officer status. The K-School, with only a small pool of alumni but ever-expanding programs, badly needed the money to bolster the school's loan forgiveness program. Administrators let the demands of fundraising overshadow Harvard's ethical guidlines...
Though not as sick as the S and L business, the commercial-banking industry has major difficulties all its own. Chief among them is the seemingly never ending saga of Third World debt. The ten largest banks have more than $50 billion on loan to developing countries. This sum amounts to roughly 100% of their shareholders' equity; if all the loans went into default, the banks' capital would be wiped...
...Prospects for the largest debtors, concentrated in Latin America, are at best mixed. Brazil, which owes $120 billion, seems to be on the upswing: in December the country resumed paying all its interest -- more than ten months after it stunned the financial community by stopping payments on its loans from private banks. But in Argentina, which is some $55 billion in debt, President Raul Alfonsin has imposed a wage-price freeze to curb inflation, which was running at an annual rate of more than 300% in July. Earlier this month, the U.S. announced that it would give Argentina an emergency...
...waiting for disaster to hit, U.S. banks are making substantial progress in reducing their vulnerability to Third World debt. The banks have raised new capital, set aside billions of dollars in reserves to cover possible losses, and sold off some of their shakier loans to investors at deep discounts. Chase Manhattan, for example, has trimmed its Third World loan portfolio in the past year from $6.7 billion to $6.5 billion. Since the bank's capital has been rising, its loans to developing countries have been reduced from 185% of shareholders' equity in 1987 to 150% today...
DESCRIPTION: Four charts: Bank failures; costs to FDIC from bank failures; costs to FSLIC from savings and loan failures; savings and loan association liquidations, mergers and acquisitions; all 1981-1987 figures; color illustration: crying piggy bank...