Who is to blame - the borrower or the bank?

In a recent article that Yahoo republished from the Wall Street Journal, Stephanie Simon wrote about a failed Colorado bank - New Frontier. She tells the story of a woman named Tina Gasner and her $260,000 business loan to start a pizza shop.

In the article Ms. Gasner blames the bank for misleading her into thinking her business plan was sound. The problem I have with this is that at the beginning of her statement she declares that she is an accountant.

Come on Ms. Gasner - it's time to "woman up".. and take some blame for selling yourself and the bank on a bad plan.

As an accountant she should have been knowledgeable in determining costs,revenues and profit margins.

Either she is a very poor accountant or she tried to borrow on a business plan that she knew did not add up.

Granted the bank was making a lot of bad loans, their criteria for lending failed the ultimate test. The bank was closed by regulators.

But Ms. Gasner and borrowers like her have to step up and take some blame. If you know that you cannot make the payments you should not be asking for the loan. You should not blame everyone else for letting you do something that based on your experience and knowledge you must have known had little chance of succeeding.

To be fair - the bank management and the loan officer that approved the loan were as delusional as the borrower.

This reminds of the days of the NINA loan. borrowers would apply knowing that they did not have a chance in you know where to make the payments over the life of the loan. They were leveraging themselves against all odds to get in on the flipping bandwagon. If a loan officer did the right thing and refused to process the application the borrower moved down the street until they found someone who would take the application.

I for one am glad to see products like the NINA and loan officers who only care about an easy commission out of this industry.

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