Wallace and Gromit said:
This depends on the actual level of bad debts and recoveries relative to those assumed in pricing. The consumer credit companies expect(*) a certain level of bad debts, so they won't be unhappy about them occurring if their overall pricing contains sufficient margin.
(*) Obviously, poorly run lenders may assume they won't get any bad debts, but they deserve to be wiped out for incompetence.
Let's pretend you ran a credit card company.
Would you ever be happy, or not be unhappy, with bad receivables?
Imagine the big promotion that someone could get if they simply reduced defaults by 0.01%.
And, if you want an extreme example of how unhappy people might be with defaults, just think of stereotypic loan sharks and their collection agencies. By your argument, and thehog's, they should be pretty happy with the huge interest rates that they collect and not be so concerned if a few folks don't pay them back. Thus, please explain the need to break people's knee caps.
thehog said:
Thankyou and yes. I read the post, could see it was way too personal thus choose to ignore. I know those type of posts just end up in mindless exchanges of nitpicking that go on forever.
It was clear what I meant and I wasn't trying to win a war or a post battle. Just stating up front that settlements are not always win/lose.
I'll step away.
If that is what you meant, then you can clarify it yourself.
The post was incorrect, on something that is pretty straightforward, and appeared to represent lazy thinking and loose arguments. Particularly so where this is directly related to your besmirching of LeMond given that it follows the convoluted accounting arguments on how Trek might be better off.
You can always report me if you think my comments are out of line.
And, we are still due an explanation of how legal costs and settlement costs can be accounted for as an asset on a balance sheet.
Dave.