Operate in such a way as to minimize the impact on

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Unformatted text preview: on the sale or other disposition of institutions, 3. Operate in such a way as to minimize the impact on local real estate and financial markets and 4) minimize the loss to the U.S. government from failed institutions. In addition, it was required to maximize the preservation of the availability and affordability of housing for low and moderate income individuals. It was given a seven year life to accomplish its goals. The RTC had a number of tools at its disposal - it was authorized, for example to use seller financing, which means the RTC provided the purchase money loans to purchasers of real estate owned by the thrifts as a result of foreclosures. In the case of performing loan portfolios, the RTC would issue asset-backed securities. They also had the right to auction properties and loans to private investors. The RTC created a precedent for the sale of non-performing loan assets by banks and thrifts, as well as for the securitization of commercial real estate loans. The non-performing loans were sold on a discounted basis to Wall Street Investors who would hold the assets until they could be sold at profit, or to other companies who specialized in cleaning up the loans and then re-selling or securitizing them at a profit. The primary benefits for the banks were to reduce their ratio of non-performing assets, convert non-earning assets to cash, and eliminate cost for work out the problem loans. This allowed relatively sound thrifts to recover and rebuild. BIBLIOGRAPHY Reference: John P Bonin, Dealing with the Bad Loans of the Chinese Banks, Department of Economics, Wesleyan University Gregory C. Chow, China's Economy: Reform and Perspectives, 02/1999, University of Pennsylvania Deutsche Bank Asia Equity Research, Asset Management Companies, A Tough Job Ahead, 02/2001 He Qinglian, China'sLatent Economic Crisis and PotentialRisks, 11/1999, University of Chicago Nicholas R. Lardy, China's Unfinished Economic Revolution, 1998, Brooking Institution Press, Washington D.C. Liu Mingkang, InternationalFinancialReport, 2001-2002, 02/2002, Bank of China International Finance Research office Liu Zhongli, Report on the Implementation of the Centraland Local Budgets for 1996 and on the Draft Centraland local Budgets for 1997, 04/1997, Beijing Review, Moodys Investors Service, Effects of Recent Reforms on Credit Quality of China's Specialized Banks, 05/2000 David Pierce and Lawrence Yee, China's Bank Asset Management Companies, O'Melveneny & Myers LLP Shalendra D. Sharma, Stability amidst Turmoil: China and the Asian FinancialCrisis, 03/01, Harvard Asia Quarterly Edward Steinfeld, Market visions, Market illusions: Debt-equity Conversion and the Future of Chinese State Sector Reform, 10/2000, Massachusetts Institute of Technology Takeshi Jingu, Moving Forwardin Reforming China's CapitalMarket,01/2002, Nomura Research Institute Yi-feng Tao, The Impact of WTO Accession on China's FinancialSystem, 11/2001, National Chengchi University Zhou Yi, Theory and PracticeofAMC Operation,01/2002, China Price Publishing House. Website: Huarong AMC: http://www.chamc.com.cn/ Great Wall AMC: http://www.gwamcc.coim/ Cinda AMC: http://www.cinda.com.cn/ Orient AMC: http://www.coamc.com.cn/ Interview: Dai, Liping China Construction Bank Fan, Qiaoling China State Administration of Taxation Guo, Jingchun China Cinda Asset Management Company Hu, Shuiwen China State Administration of Foreign Exchanges Li, Vivian Ding KTH Capital Management Ltd. Li, Yameng Agriculture Bank of China Liang, Liyang Xiamen International Bank Ren, Li International Financial Corporation Sheng, Liurong China Construction Bank Southergill, Bryan Morgan Stanley Dean Witter Asia Limited Wang, Hong, School of Economics & Management, Tsinghua University Wang, Wenjie China Huarong Asset Management Company Zhang, Chunlin World Bank, Beijing Office Zhang, Lu People's Bank of China ABBREVIATION ABC: Agricultural Bank of China AMC: Asset Management Company BOC: Bank of China CCB: China Construction Bank CSRC: China Securities Regulatory Commission GDP: Gross Domestic Product ICBC: Industrial and Commercial Bank of China IFC: International Financial Corporation NPL: Non-performing Loan POBC: People's Bank of China SETC: State Economic and Trade Commission SOB: State Owned Bank SOE: State Owned Enterprise SPV: Special Purpose Vehicle WTO: World Trade Organization...
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This document was uploaded on 03/12/2014.

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