Money Card

Banks specialize in tailoring commercial loans to businesses. Not only are the loan officers relevant, but also the bank examiners as well.

Unlike corporate bonds, commercial bank loans are chock-full of special features such as covenants, collateral requirements and guarantees that enable banks to extend credit to companies that are too small, or whose credit characteristics are too challenging, to have access to the public debt markets. The commercial loan officer is responsible for making this happen by working closely with the borrowing company’s management-and working within lending policies of the bank. The loan officer must have a solid understanding of financial accounting, strong interpersonal skills and a knack for negotiating.

At many banks, loan officers are also responsible for generating new business. Therefore, this job often has a big sales component. This requires that the loan officer cultivate strong ties with the local business community.

Banks are audited about once per year by the regulators to determine whether the bank is solvent and whether its policies and procedures are prudent. These auditors called Bank examiners and they work in teams. In the United States there are about 11,000 banks and thrift institutions to examine. There is no shortage of bank regulators in United States, nor elsewhere in the world. At the national level, the office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, and the Federal Reserve each have extensive bank examination staffs. At the state level, all 50 states have their own bank authorities who also regulate and examine banks. Bank examiners rate banks on a number of different dimensions, including the adequacy of the bank’s capital, its asset quality, its overall management skill, its risk management procedures and liquidity.

Although these 2 jobs of the financial sector each have their own responsibilities, they are inextricably tied to one another. A bank examiner will determine if the loan officer is doing their job to make the bank profitable and if not will take action.

If you liked this financial topic then you might be interested in finding out how to learn to trade forex and a forex trading education.

One of the fast becoming popular investments now are the cash flow notes. These are I.O.U.s or promissory notes wherein an investor would buy from a lender the rights to collect from a third party.

This is usually in the form of monthly instalments either for a piece of real estate, a vehicle or equipment, a business loan of some sort, or even for a structured settlement of a lawsuit. The notes would be secured by real property in cases of real estate mortgages, cars or equipment in cases of auto loan, annuity loans in cases of structured settlements, and business assets in cases of business cash flow notes.

An investor will make money because he will only pay a percent of what is to be collected by the cash flow notes. For example if the notes are to collect a thousand a month for three years amounting to thirty six thousand, the investor may opt to purchase the notes for only twenty five thousand which would net him a profit of eleven thousand in a three year period. In essence what an investor does in cash flow notes is buying in lump sum a collectable at a discounted rate.

One danger in buying cash flow notes is if the third party from where one is to collect payments is a known credit risk. In this case if the investor is certain that despite the credit risk he will be able to collect the money, he may opt to buy the notes at an even lower cost due to the risk involved. In other words the investor is willing to assume the risk of collecting from the third party in consideration of a higher net profit at the end of the payment term.

Cash flow notes can even be treated as a commodity wherein an investor would buy cash flow notes and sell them later on if he sees that the value of those notes have gone higher. An investor doesn’t have to wait to collect the termed payment themselves if he is able to sell them at a lump sum to another investor and already netting a profit from the sale thereof. This way an investor can re invest his money on other cash flow notes that can give him higher profit.