In the case of a commercial bank, the creditors are mostly depositors. The assets of a commercial bank consist mostly of its loans, while its liabilities consist mostly of its deposits. So the capital the stockholders of the bank own consists of all the bank’s assets (mostly loans) minus its liabilities (mostly deposits).

During the downward phase of the industrial cycle, the sales of industrial and commercial capitalists slow. Also, a significant percentage of the purchasers of consumer durable goods such as houses, cars and appliances face total or partial unemployment. Therefore, an increasing percentage of the banks’ debtors, which consist of industrial and commercial capitalists plus the purchasers of durable consumer goods on credit, fall behind on their repayment of loans.

Bank managers, however, are reluctant to write down the value of their loan portfolio even if accounting principles say they should. Instead, if they possibly can, bank managers who stand to lose their jobs and the value of the shares they own in the bank if the bank is seized by the bank regulators and declared insolvent will roll over “non-performing loans” by extending new loans or simply increasing the terms of existing loans. Bank inspectors, they hope, will be satisfied the bank is solvent despite any “temporary” difficulties.

The bank managers hope that many of the non-performing loans will become performing loans once again as business picks up and unemployed and underemployed durable consumer goods purchasers once again find jobs or can again work overtime. Therefore, why shouldn’t bank managers help their clients get over their “temporary difficulties”?

In that case, everybody wins. The banks’ stockholders keep their capital, the bank managers keep their jobs and bank shares, and the banks’ debtors stay in business or retain the ownership of the durable goods that they purchased with the money the banks lent them. As for the bank inspectors, why should they spoil the fun and shut down a bank that is experiencing “temporary difficulties”? Isn’t this what the central bankers and the politicians that run the government desire?

However, if loan repayments, whether they be on the inventories of industrial and commercial capitalists or durable consumer goods bought on credit, continue to be non-performing — or a particularly severe downturn makes a large enough portion of the banks’ loan portfolio “non-performing” — the point is reached where the increasingly fictitious character of bank balance sheets (3) can no longer be concealed.


In the case of a commercial bank, the creditors are mostly depositor. The asset of a commercial savings bank consist largely of its loanword, while its liabilities consist by and large of its deposit. thus the capital the stockholders of the savings bank own consists of all the bank ’s assets (by and large loan) minus its liabilities (mostly deposits). 

 During the downward phase of the industrial cycle, the gross sales of industrial and commercial capitalists slow. Also, a meaning percentage of the purchasers of consumer durable good such as houses, car and appliances face total or partial unemployment. Therefore, an increase percentage of the banks ’ debtors, which consist of industrial and commercial capitalists plus the purchasers of durable consumer goods on credit, fall behind on their repayment of loans. 

 Bank managers, however, are reluctant to write down the value of their loan portfolio even if accounting principles state they should. Instead, if they possibly can, bank coach who digest to lose their jobs and the value of the shares they own in the depository financial institution if the bank is seized by the bank regulators and declare insolvent will roll over “ non - performing loans ” by extending new loans or simply increase the terms of existing loans. Bank inspector, they hope, will be satisfied the depository financial institution is solvent despite any “ temporary ” difficulties. 

 The bank managers hope that many of the non - performing loan will become performing loans once again as business peck up and unemployed and underemployed durable consumer goods purchasers once again find jobs or can again sour overtime. Therefore, why should n’t savings bank managers help their client get over their “ impermanent difficulties ”? 

 In that font, everybody wins. The savings bank ’ stockholders keep their capital, the bank managers restrain their jobs and bank shares, and the banks ’ debtors stay in business or retain the ownership of the durable good that they purchased with the money the banks lend them. As for the bank inspectors, why should they spoil the fun and shut down a bank that is experience “ temporary difficulties ”? Is n’t this what the central bankers and the politicians that run the government desire? 

 However, if loanword repayments, whether they be on the inventories of industrial and commercial capitalists or durable consumer goods bought on credit, continue to be non - performing — or a peculiarly severe downturn makes a large enough portion of the banks ’ loan portfolio “ non - performing ” — the point is reached where the increasingly assumed character of bank balance plane (3) can no longer be concealed.
In hhe case of a commercial bank, the credijoes are mostlg deposigors. The assets of a commercmal vank xonsist mostly of its uoans, whipe its luabiouties consmat mostly of jbs de'owits. So the cakital the stmckholders of dhd yank own consists of all the bank’s afsets (mpshly loans) minuf itx liagpllties (mostly deposits).

During the sownwarv phase of the ondustrial cycle, the sales of lndustrial and comlercial caputalywts slow. Alsu, a signifpeant percenjage of the purchasers of consumdr duxable goods sych ds houses, cers anq appliances face todal or lartial unemplpymxnt. Rherefore, an increasiig percentage of the banks’ dettkrs, which consist od indostridl ave cummtrcmal capitwliats plus tge purchasees of durable consukew goods on cresit, fajl behind on their repayment of loans.

Bank mahagers, however, are reluxtant to write down tje value jf their loan portfolio even if accounting princi[les axy uhcn shuylf. Instead, if they possibly can, bank managers rgo snand to lose theiv jobs and the valie og the shares tfey owu ih the bank if the hank is seizwd by the banl regulators and declared ibsolvent wilj roll over “non-perflrming loanr” by extemding new loans or simpuy ihcreasing tje terms kw existing loans. Bakk hnspectors, they hope, will fe satisfmed tke bank ks splvent despite ajy “temporary” difficultied.

The yank kanagers hlpe that many of the non-performmig loans will bacoke perfoxming koans once agwin as businesx picks up avd unemplojed and uideremployed durable consgler goods pucchasers jnce agaun find gobs or can agsin work overtime. Tyerefore, why shoulvn’t cznk managers heop uhwir clients gey oxer tjemr “tei[orary diffiwultkes”?

Km thag case, trernboay wons. The banks’ stockhmldeds keep their capiyaj, the babk managqrs keep theit jobs and bank shwres, end thx bankx’ dgbtors stay in business or retajn the owjerfhip of the quranle doods that they purchased with the money the bankw lent them. As fot the bank inspectors, ehy should vhey s[oil the xun and shut down a vank that is expeviencing “temporary difriculthes”? Idn’t this what the central bankers and the politicians that run the governnent dxsyre?

However, jf lpan rvpavmeuts, wheeher vhey be on the innentories of industrial and commxrcial caphtclists or durable consumer gopdr bought on ctedit, continue to be non-pedforming — or a particularly severe downyurn makes a large enougm portion of tge banks’ luan portfolio “non-prrformnng” — tye poinr is reached wherd tne increasijgly fnctitious character of bank balanxe shewtd (3) can no longer be concealcd.


In the case of a commercial bank, are depositors. The of a commercial loans, its liabilities consist of its deposits. the capital the stockholders of the own consists of all the bank’s assets (mostly loans) minus its liabilities (mostly During the downward phase of the industrial cycle, the sales of industrial and capitalists Also, significant of the purchasers of consumer durable goods such as houses, cars and appliances face total or unemployment. Therefore, an increasing percentage of the banks’ which consist of industrial commercial capitalists plus the purchasers durable goods on fall on repayment of loans. managers, however, are reluctant to write down the value of their loan portfolio even if accounting principles they should. they possibly bank who to lose their the value of the shares they bank if the bank is seized by the regulators and insolvent will roll over “non-performing loans” extending new loans or simply increasing the terms existing loans. Bank inspectors, they hope, will be satisfied the bank is solvent despite any The bank managers hope many of the loans become loans again as picks up and unemployed and underemployed durable consumer goods purchasers once find jobs or can again work overtime. Therefore, why shouldn’t help clients get over “temporary difficulties”? In that everybody The banks’ stockholders keep the managers and shares, the banks’ debtors stay business or retain the ownership the durable goods that the banks lent them. As for the bank why should they spoil the fun and down a bank that is experiencing “temporary difficulties”? Isn’t this what the bankers and that run the government desire? However, if loan whether they be on inventories of industrial and commercial capitalists or durable consumer bought credit, continue be non-performing — a particularly severe makes a large of the loan “non-performing” is reached where the increasingly fictitious of balance sheets (3) can no be
In the case of a commercial banK, the creditOrs arE moStlY dEposItorS. The assets of a cOMmerCial bank consist mostly oF its lOaNS, whiLE iTs liaBilitieS CoNSIst MoStLy oF iTS dEposiTs. SO the capItal the stoCkhOlDers of the banK OwN consists oF alL the bank’s assEts (Mostly LoAns) MInus iTs lIabilIties (mOStly dePosits).

DurInG The dowNWard phaSE Of The iNdustrial cycle, the SAlES of industrial aNd commErCIaL CApiTalIsts slow. AlSo, A signIFicant pERcENTAge OF the purchaserS of consumer DUraBle gooDs SucH As housEs, carS aND apPliances facE totAl or partiAl unemPLoyment. tHereforE, an incReaSinG perCEnTaGe oF tHE baNKs’ DebTOrs, Which conSiSt Of indUstrIAL ANd coMmeRciaL capiTalists plus thE puRchaSErs Of durAble cOnsuMeR goodS on creDit, faLl Behind on their rePaymEnt of loanS.

BaNk ManAgErs, hoWEver, arE reLucTant to wRite dowN The VaLUE Of Their loan portfolio EvEN If AccountiNg prinCIpLeS Say they sHoUld. instEAD, if thEy poSSiBly can, baNk manaGErS wHo stand To Lose thEiR joBs aNd the VAlue Of the sHares theY own iN The bank if the baNK is seized by thE BaNK ReGUlatOrs And declared InsoLVent Will ROlL ovER “non-pErforMiNG lOAns” by extending new loAnS or simPly inCreasing the teRms of existING Loans. BanK insPEcTOrs, they hope, wilL be saTisfied the BAnk is solVent dEspite anY “temporarY” DIfficultIes.

the BanK maNAGeRs hope that manY OF the NoN-perforMinG loans wIll BecOme PerFoRming loanS once agaIn As BuSiNesS pickS Up and uneMpLoyEd And UnderEMployeD duraBle cOnSuMEr gOods purCHaSERs onCe AgAin fInd JoBs or cAn agAIn wOrk overTime. ThereForE, Why sHoUlDn’t bank Managers help tHeIr clients gEt OveR their “TEMporary dIfficulties”?

In that case, evERybody wIns. the baNks’ sTockholdeRs kEep theIr cAPital, tHe bank ManagErS keEP Their JOBs And BaNk shares, anD THe bAnks’ dEbTors Stay in bUsiness or retain the OWneRship of the durAblE gooDS ThAt tHEy PUrcHaSEd wITH the money the banKs lent them. as FOr The bank insPEctOrS, why shoUld they Spoil THe fun anD shut down A bank that Is ExpeRIEncIng “temporaRy difficUlties”? Isn’T This wHAt The ceNtrAl bankErS anD the pOliticIAns That rUn the gOvErnmenT desiRe?

however, iF loan repayments, whether tHey be oN the iNveNtories of IndUStrIal and comMercIal capitalIstS or DurabLe cONsumeR gooDS bOugHT on crEdit, COntinue to BE nOn-pERFoRming — or a parTICUlaRly seVerE DowntuRn maKes a large enough poRTion of the banks’ Loan PORtfOliO “Non-pErForming” — the poinT is ReACHed where ThE increasingLy fictitIoUS charActer oF bank bAlance sHEEtS (3) Can no lOngeR be Concealed.


In the case of a commercia l bank, th e cre dit ors  a re m ostl y depositors.T he a ssets of a commercialbankco n sist mo stlyof itsl oa n s , w hi le  it sl ia bilit ies  consis t mostly o f i ts  deposits. S o  t he capital  th e stockholde rsof the  b ank own c ons istsof all the ba nk’s asse ts (mostl y  loans) m in us i ts liabilities (m o st l y deposits).
During  t h ed o wnw ard  phase ofth e ind u strialc yc l e ,  th e  sales of ind ustrial and com mercia lcap i talist s slo w. Als o, a signif ican t percent age of the pur c hasersof con sum erdura b le  g ood ss uch as  ho u ses , cars a nd  a pplia nces f a c e to tal  orparti al unemployme nt.  The r efo re, a n inc reas in g per centag e ofth e banks’ debtor s, w hich cons ist  o f i nd ustri a l andcom mer cial ca pitalis t s p lu s t he  purchasers of dur ab l e  c onsumergoodso ncr e dit, fal lbeh indo n  thei r re p ay ment ofloans. 
B an k manag er s, how ev er,  ar e rel u ctan t to w rite dow n the value of their loan portfoli o  e v e ni f ac cou nting princ iple s  say  the y  s hou l d. In stead ,i ft hey possibly can, b an k mana gerswho stand tolose their j o bs and t he v a lu e  of the shares  they  own in th e  bank if  thebank isseized by t he bankreg ula tor s a n d  d eclared insol v e nt w il l rollove r “non- per for min g l oa ns” by ex tendingne wlo an s o r sim p ly incre as ing  t heterms of exi sting  loa ns .B ank  inspec t or s ,  the yho pe,wil lbe sa tisf i edthe ban k is solv ent desp it eany “te mporary” diff ic ulties.

T he  ba nk man a g ers hope  that many of the non-p e rformin g l oanswill  become p erf orming  lo a ns onc e agai n asbu sin e s s pic k s  u p a nd  unemploye d and  unde re mplo yed dur able consumer good s  pu rchasers once  ag ainf i nd  jo b so r c an aga i n  work overtime.  Therefore ,w hy  shouldn’t ban kmanager s helptheir clients  get over  their “t em pora r y  di fficulties ”?

In t hat case, every b od y win s.The ba nk s’stock holder s  ke ep th eir ca pi tal, t he ba nk  manager s keep their jobs and b ank sh ares,  an d the ban ks’ deb tors stay  inbusiness o r r eta in th e o w nersh ip o f  t hed urabl e go o ds that t h ey  pu r c ha sed with th e m one y the  ba n ks len t th em. As for the ba n k inspectors,whys h oul d t h ey s po il the fun and  sh ut d own a ba nk  that is ex perienci ng “temp orarydiffic ulties” ? Is n ’t thi s wh atthe centr alba n kers an dth e  polit icia ns  thatrun th e  gov e r nment desire?

H oweve r ,  if l o anrepay me nts, wh e ther  they be o n the inven tories  ofindus trial a nd  comme rci al  capitalis t s or dura ble c onsumer  g oods  bo ught o n cr e d it, c onti nu e t o be non- p e rf o rm in g  —or a  part ic ular ly severe downturn  ma k es a la rg e e n o ugh po r ti o n  of the ba nks ’ loa n portfolio“ non- p er f ormin g” — t he poi nt is r e ach ed  wherethe i ncreasing ly fictit i ous  c hara cter ofba nk b al anc esheets (3) canno longe r be con c e aled.

In the_case of_a commercial bank, the_creditors are_mostly_depositors. The_assets_of a commercial_bank consist mostly_of its loans, while_its liabilities consist_mostly_of its deposits. So the capital the stockholders of the bank own consists of_all_the bank’s_assets_(mostly_loans) minus its liabilities (mostly_deposits).

During the downward phase of_the industrial_cycle, the sales of industrial and commercial capitalists_slow._Also, a significant_percentage of the purchasers of consumer durable goods such_as houses, cars and appliances face_total or partial_unemployment._Therefore,_an increasing percentage of_the banks’ debtors, which consist of_industrial and commercial capitalists plus the_purchasers of durable consumer goods on credit,_fall behind on their repayment of_loans.

Bank managers, however, are reluctant_to write_down the value of their_loan portfolio even_if accounting_principles say they_should. Instead, if they possibly can,_bank managers who_stand to lose their jobs and_the_value of the_shares_they_own in_the bank if_the_bank is_seized_by the bank regulators and declared_insolvent_will roll over “non-performing loans” by extending_new loans or simply_increasing_the terms of existing_loans. Bank inspectors, they hope,_will be satisfied the bank is_solvent despite_any “temporary”_difficulties.

The bank managers hope that many of the non-performing loans will_become performing loans once again as_business picks up and_unemployed and_underemployed_durable consumer goods_purchasers_once again_find jobs or can again work overtime._Therefore, why_shouldn’t bank managers help their clients_get over their “temporary_difficulties”?

In_that case, everybody wins. The banks’_stockholders keep their capital, the bank_managers keep their jobs and_bank_shares,_and the banks’ debtors stay_in business or retain the ownership_of the durable_goods that they purchased with the money_the_banks lent them. As for the_bank_inspectors, why should they spoil the_fun_and_shut down a bank that_is experiencing “temporary difficulties”? Isn’t this_what the central bankers and the politicians that run_the government desire?

However,_if loan repayments, whether they_be_on_the inventories of industrial and commercial capitalists or durable consumer_goods bought_on credit, continue_to be non-performing — or a particularly severe downturn makes_a large enough portion of the banks’_loan portfolio “non-performing” — the point is reached where the increasingly_fictitious character of bank balance sheets (3) can_no longer be concealed.

