Word: loans
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Dates: during 1980-1989
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...trust, he says about one-half is his. Where are the cars, the fur coats, the alleged secret funds from PTL? He refuses to answer. "I have about $50,000 cash to my name, and my daughter has $50,000 saved from her music work, which she'll probably loan me if I need it." The thought makes him erupt into laughter. Then the sad face again. "Together our family has about $100,000," he says. He reddens at this sudden turn in the conversation and reaches for his Bible. The flash of anger across his cheeks is palpable...
Baker appeared to undergo another setback with last month's decision of major U.S. banks, led by Citicorp, to write off sizable portions of their < Third World loan portfolios. As a result of that move, many economics experts now think the so-called Baker Plan for developing economies is essentially dead. The Treasury Secretary, however, remains sanguine. He lauded Citicorp's debt write-off, for example, as a "positive" step. One reason: the approach reduces the likelihood of wholesale default by debtor nations...
...billion) had made an almost heretical break with the U.S. financial community's long-standing practices in handling its crushing burden of $62 billion in Third World debt. Reed declared that Citicorp intends to set aside, effective immediately, no less than $3 billion in additional reserves to cover loan losses on its $133 billion portfolio, bringing its total reserves to $5 billion. The drastic move will give Citicorp a net loss of $2.5 billion in revenues in the second quarter of the year, its first red ink since 1934 and the second largest quarterly deficit in U.S. corporate history...
What Reed was doing could perhaps best be described as preventive medicine. The youthful chairman could see that Citicorp's hefty Third World commitment, which forms more than 10% of the bank's total loan portfolio, posed a severe threat to the bank's future prosperity. The income from those loans was dwindling because of all the concessionary terms -- lengthened repayment schedules, lowered interest rates -- that creditors worldwide have been granting to Third World debtors in order to keep them from defaulting. Then the entire international credit edifice was badly shaken last February when Brazil announced an indefinite moratorium...
...profitable quarters, to bring the year-end loss back to $1 billion. The company aims to return to profitability next year. And within three years, Citicorp plans to reduce its Third World debt portfolio by about one third, or $5 billion. The bank intends to sell some of the loans at a discount and transform others through so-called debt-for-equity swaps, in which the loan becomes an investment in the borrower country...