OT: “Bank of America sets cutoff for redeeming California IOUs”

[Coronita]

[quote=Allan from Fallbrook][quote=flu]I smell a business opportunity here….For folks that give a cash advance at a steep discount of the face value of the IOU….The longer CA drags this out, the more cash strapped folks with those IOU’s will be.

I wouldn’t be surprised if folks/company with cash start offering cash to holders of those IOUs in exchange for those IOUs being purchased at a significant discount.

For instance, suppose J6p has an IOU for $2000. Assuming it would be transferrable, why not offer cash-strapped J6P $1300 cash in exchange for the IOU? While it’s seems like a shitty thing to do, it’s really a win-win proposition for j6p….J6p gets to continue to live paycheck to paycheck, and the person offering the cash gets a premium for taking on the risk in case CA defaults and those IOUs aren’t redeemable

Hell, folks can even advertise this on craigslist and or on those websites that attempts to raise money for 3rd world countries (appropriate, since we’re definitely heading that direction !)

You can extrapolate this to businesses that have a nice big IOU too who need to meet payroll and bills.

I don’t see this doom and gloom…In fact, as shitty as it sounds, I think it creates opportunity.[/quote]

FLU: What you’re talking about is essentially factoring (cash for discounted Accounts Receivable) and it happens frequently in other industries.

Usual rule of thumb is about 1.5% interest per month charged on 100% of the face value of the paper, but for 80% of the face value in cash (the other 20% being reserved as security). It’s a risky business, but it can be exceptionally lucrative, too.

I think you’re right, especially for those businesses in the construction and contracting trades that rely on state work for the bulk of their revenue (the subs working for Edge Construction in Temecula come to mind, for instance). I would imagine there are subs out there that would play ball and probably at significant discounts.[/quote]

Unfortunately, I don’t think I have the smarts to pull this off at a large scale. So short of doing this for a few small potatoes, I can only live vicariously to folks with deeper pockets that do it at the commercial level. Back in 97, i attended a few classes about trading commercial paper…It seemed like it would be lucrative if you were plugged in right…Unfortunately, I was too chicken to invest into doing it.

[Allan from Fallbrook]

[quote=flu][quote=Allan from Fallbrook][quote=flu]
Unfortunately, I don’t think I have the smarts to pull this off at a large scale. So short of doing this for a few small potatoes, I can only live vicariously to folks with deeper pockets that do it at the commercial level. Back in 97, i attended a few classes about trading commercial paper…It seemed like it would be lucrative if you were plugged in right…Unfortunately, I was too chicken to invest into doing it.[/quote]

FLU: You can do it on a small scale. I know, because I have. During the last serious downturn in construction, an attorney buddy and I went into small-scale factoring (sub $100k in total invested dollars). He had a law school buddy who was working for a large commercial paper outfit in LA and drew up our contracts and taught us how to do UCC filings and encumbrances, as well as what our recourse was in case of a default.

We ran this on a part-time basis for about four years and made some decent money doing it. At the end, we were buying court judgments for less than a nickel on the dollar and making money there, too (nasty business in terms of collecting, though).

There is some really toxic paper out there right now that you can scoop up for pennies on the dollar from some fairly significant players (like Vedder Price), if you have the stones and the stomach to collect on it. Most of the big players in banking, law and finance are happy to get rid of the little stuff, since their overhead won’t allow them to make money collecting it.

[Allan from Fallbrook]

[quote=flu][quote=Allan from Fallbrook][quote=flu]
Unfortunately, I don’t think I have the smarts to pull this off at a large scale. So short of doing this for a few small potatoes, I can only live vicariously to folks with deeper pockets that do it at the commercial level. Back in 97, i attended a few classes about trading commercial paper…It seemed like it would be lucrative if you were plugged in right…Unfortunately, I was too chicken to invest into doing it.[/quote]

FLU: You can do it on a small scale. I know, because I have. During the last serious downturn in construction, an attorney buddy and I went into small-scale factoring (sub $100k in total invested dollars). He had a law school buddy who was working for a large commercial paper outfit in LA and drew up our contracts and taught us how to do UCC filings and encumbrances, as well as what our recourse was in case of a default.

We ran this on a part-time basis for about four years and made some decent money doing it. At the end, we were buying court judgments for less than a nickel on the dollar and making money there, too (nasty business in terms of collecting, though).

There is some really toxic paper out there right now that you can scoop up for pennies on the dollar from some fairly significant players (like Vedder Price), if you have the stones and the stomach to collect on it. Most of the big players in banking, law and finance are happy to get rid of the little stuff, since their overhead won’t allow them to make money collecting it.

[Allan from Fallbrook]

[quote=flu][quote=Allan from Fallbrook][quote=flu]
Unfortunately, I don’t think I have the smarts to pull this off at a large scale. So short of doing this for a few small potatoes, I can only live vicariously to folks with deeper pockets that do it at the commercial level. Back in 97, i attended a few classes about trading commercial paper…It seemed like it would be lucrative if you were plugged in right…Unfortunately, I was too chicken to invest into doing it.[/quote]

FLU: You can do it on a small scale. I know, because I have. During the last serious downturn in construction, an attorney buddy and I went into small-scale factoring (sub $100k in total invested dollars). He had a law school buddy who was working for a large commercial paper outfit in LA and drew up our contracts and taught us how to do UCC filings and encumbrances, as well as what our recourse was in case of a default.

We ran this on a part-time basis for about four years and made some decent money doing it. At the end, we were buying court judgments for less than a nickel on the dollar and making money there, too (nasty business in terms of collecting, though).

There is some really toxic paper out there right now that you can scoop up for pennies on the dollar from some fairly significant players (like Vedder Price), if you have the stones and the stomach to collect on it. Most of the big players in banking, law and finance are happy to get rid of the little stuff, since their overhead won’t allow them to make money collecting it.

[Allan from Fallbrook]

[quote=flu][quote=Allan from Fallbrook][quote=flu]
Unfortunately, I don’t think I have the smarts to pull this off at a large scale. So short of doing this for a few small potatoes, I can only live vicariously to folks with deeper pockets that do it at the commercial level. Back in 97, i attended a few classes about trading commercial paper…It seemed like it would be lucrative if you were plugged in right…Unfortunately, I was too chicken to invest into doing it.[/quote]

FLU: You can do it on a small scale. I know, because I have. During the last serious downturn in construction, an attorney buddy and I went into small-scale factoring (sub $100k in total invested dollars). He had a law school buddy who was working for a large commercial paper outfit in LA and drew up our contracts and taught us how to do UCC filings and encumbrances, as well as what our recourse was in case of a default.

We ran this on a part-time basis for about four years and made some decent money doing it. At the end, we were buying court judgments for less than a nickel on the dollar and making money there, too (nasty business in terms of collecting, though).

There is some really toxic paper out there right now that you can scoop up for pennies on the dollar from some fairly significant players (like Vedder Price), if you have the stones and the stomach to collect on it. Most of the big players in banking, law and finance are happy to get rid of the little stuff, since their overhead won’t allow them to make money collecting it.

[Allan from Fallbrook]

[quote=flu][quote=Allan from Fallbrook][quote=flu]
Unfortunately, I don’t think I have the smarts to pull this off at a large scale. So short of doing this for a few small potatoes, I can only live vicariously to folks with deeper pockets that do it at the commercial level. Back in 97, i attended a few classes about trading commercial paper…It seemed like it would be lucrative if you were plugged in right…Unfortunately, I was too chicken to invest into doing it.[/quote]

FLU: You can do it on a small scale. I know, because I have. During the last serious downturn in construction, an attorney buddy and I went into small-scale factoring (sub $100k in total invested dollars). He had a law school buddy who was working for a large commercial paper outfit in LA and drew up our contracts and taught us how to do UCC filings and encumbrances, as well as what our recourse was in case of a default.

We ran this on a part-time basis for about four years and made some decent money doing it. At the end, we were buying court judgments for less than a nickel on the dollar and making money there, too (nasty business in terms of collecting, though).

There is some really toxic paper out there right now that you can scoop up for pennies on the dollar from some fairly significant players (like Vedder Price), if you have the stones and the stomach to collect on it. Most of the big players in banking, law and finance are happy to get rid of the little stuff, since their overhead won’t allow them to make money collecting it.

[CA renter]

Why not start up a Pigg fund and let Allan head it up? 🙂

[CA renter]

Why not start up a Pigg fund and let Allan head it up? 🙂

[CA renter]

Why not start up a Pigg fund and let Allan head it up? 🙂

[CA renter]

Why not start up a Pigg fund and let Allan head it up? 🙂

[CA renter]

Why not start up a Pigg fund and let Allan head it up? 🙂

[patientrenter]

[quote=CA renter]Why not start up a Pigg fund and let Allan head it up? :)[/quote]

That’s funny, that’s exactly what I was thinking when I read this. With Allan picking up loans for us at pennies on the dollar, and SDR buying rental properties, Piggs would be all set. We need to bring a contract and serve ’em lots of beer at the next gathering before they sign on!

[patientrenter]

[quote=CA renter]Why not start up a Pigg fund and let Allan head it up? :)[/quote]

That’s funny, that’s exactly what I was thinking when I read this. With Allan picking up loans for us at pennies on the dollar, and SDR buying rental properties, Piggs would be all set. We need to bring a contract and serve ’em lots of beer at the next gathering before they sign on!

[patientrenter]

[quote=CA renter]Why not start up a Pigg fund and let Allan head it up? :)[/quote]

That’s funny, that’s exactly what I was thinking when I read this. With Allan picking up loans for us at pennies on the dollar, and SDR buying rental properties, Piggs would be all set. We need to bring a contract and serve ’em lots of beer at the next gathering before they sign on!

[patientrenter]

[quote=CA renter]Why not start up a Pigg fund and let Allan head it up? :)[/quote]

That’s funny, that’s exactly what I was thinking when I read this. With Allan picking up loans for us at pennies on the dollar, and SDR buying rental properties, Piggs would be all set. We need to bring a contract and serve ’em lots of beer at the next gathering before they sign on!

[Author]

Posts