8
regarding its tolerance for risk, how and under what terms loans
are to be made, pricing and profit objectives, documentation
requirements, acceptable levels of credit losses, and collection
and chargeoff procedures. The risk management process requires
continuous adjustment and refinement to address the competing
interests of marketing loans to as many customers as possible
while at the same time insuring that the bank makes low risk
loans.
Consumer Loans6
Platform employees at the banks typically met with
prospective consumer borrowers to explain available loan products
and to assist the prospective borrowers in completing a loan
application where appropriate. The consumer loan applications
were generally taken by branch employees. The application
identified the prospective borrower and described the prospective
borrower's income and assets, existing debt, the purpose of the
loan, and other data necessary to evaluate the prospective
borrower's financial condition. Where loans were to be secured
by an interest in real property, the application would also
include a description of the collateral sufficient to permit the
ordering of a property report or appraisal.
The application process is the primary means by which banks
obtain information from consumer customers. The banks took a
6Both the FNPC cases and the UFB cases involve expenditures
relating to consumer loans.
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Last modified: May 25, 2011