Residual comments

[quk@isham-research.demon.co.uk (Phil Payne)]

In message <62fa9fc8.3522b5d3@aol.com> QSHIPQ writes:

> Well here in the states it's not quite that simple calculation.  There is a
> residual value, and that value is guaranteed by an insurance policy for
> residual value (price to a dealer is around 150USD or so).

That's now illegal over here.  The crux was the demise of the Itel
Corporation.  In effect, the banks (creditors) were prevented from
squeezing Itel as they would normally have done by a clause in "J"
that eliminated liability to an insureee that was technically
bankrupt.  Thus the banks had a choice:  squeeze like hell and push
Itel over into Chapter 7 (and get no payout) - or squeeze very gently
and just wait for Lloyds to be forced to pay out on the "J".  Many of
Lloyds' ultimate financers, of course, were the very same banks.

The authorities (various) held that this Catch 22 situation was a
distortion of the insurance market, and "J" was banned.

I'm surprised to hear that the same concept (albeit at a somewhat
lower level) is still available in the USA.

--
 Phil Payne
 Phone: 0385 302803   Fax: 01536 723021
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