nobody@huge.cajones.com (Huge Cajones Remailer) writes:

At 9:04 AM 12/10/1996, Black Unicorn wrote:

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On Tue, 10 Dec 1996, Huge Cajones Remailer wrote:

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I believe that ten, or a hundred, or a thousand people should be able to pool their money and lend it to whomever they please for whatever reason they like.

That, essentially, is what a bank is. I do not believe the government should dictate which people you, or your bank, are allowed to lend to.

Create a bank where the identity of the customers are unknown and you solve the redlining problem.

I can imagine a bank whose depositors are not known. I can also imagine a bank which itself operates anonymously.

How would people borrow money against real estate and remain anonymous? It seems to me that the borrower cannot do so if the real estate will act as collateral.

Also, how would an anonymous bank foreclose on a mortgage?

Actually, this is not as wild as it first sounds, even though the location forms a major part of the price of real estate. (We seem to be talking about mortgages for primary residences now. Actually, the bigger problem with redlining is the banks' refusal to extend loans to business venture (such as retail stores) in neighborhoods they consider too risky.) Suppose the bank deals with a middleman (perhaps even a government agency - something in the spirit of Sally Maie, Freddie Mac, and Fannie May) that guarantees that the collateral is worth a certain amount and the bank can set the interest rate based on the borrower's crddit history etc. If the bank forecloses, they get the value of the collateral from the middleman. A bank would charge lower rates because they wouldn't have to deal with the potential foreclosures. Alternatively, the information about the location can be held in a kind of escrow while the mortage is being negotiated and disclosed to the bank immediately after they agree on terms. The bank can pull out if they, e.g., disagree with the appraisal. Anonymous transactions are surprisingly common in financial markets (I again refer you to Solnik's book for some examples). I used to work with a very curious kind of transaction called "principal bid". Let's suppose that you own 10,000 shares of IBM and you want to sell them and buy 150,000 shares of Novell with the proceeds. If you do it through a regular broker, it'll cost you a great deal in both commission cost and market impact. For large transactions ($20M+) asset managers use the following technique: Compose a description of the package you're trying to buy/sell. You might list things like the number of shares you're trying to buy and sell, the average closing price from the day before, some indication of market capitalization, liquidity, bid/ask spread, etc. Fax it over to your brokers who *can't* determine from this information which stocks you're trying to trade. (If they could, they would manupulate the market against you.) Based on the description you supply, the brokers send in bids in the form "closing price plus n cents", where n is usually between 5 and 20 cents. This is done in the afternoon and the closing price for that day is not known to either party. The lowest bidder buys/sells the package at the close minus/plus the n cents and finds out afterwards what he got (a cat in the bag indeed). The other bidders don't even know what got traded. --- Dr.Dimitri Vulis KOTM Brighton Beach Boardwalk BBS, Forest Hills, N.Y.: +1-718-261-2013, 14.4Kbps