5 ms·

A little bit, yeah. The leaders of those businesses made promises to people, and they failed to uphold them.

• whatnotests 10y ago
  Define "promise" in this context though. VCs invest in opportunity, not promises.
  • ericd 10y ago
    The person I replied to specifically mentioned owing money, so I took it to mean that he wasn't talking about the investors. I do think that a business owner who is unable to pay people he owes should feel bad about it, and should make every effort to pay them back. Just because he's legally off the hook doesn't take him off the hook ethically, in my opinion. But regardless, you should try to make your investors whole, if at all possible. I view that as your ethical responsibility as someone who receives investment.
• goneri 10y ago
  Promises only bind those who believe. Those pepole are paid to evaluate the risk.
• ceejayoz 10y ago
  If I promise to meet you for coffee, it's understood that there's a silent "but not if my wife winds up in the ER". If I promise to pay you back a loan, it's understood that the interest rate you'll charge me is related to the risk of my defaulting and that the option exists.
  • ericd 10y ago
    That interest rate doesn't in any way relieve you of your moral responsibility to pay back that loan, in my opinion, just because you run into financial trouble. People defaulting just because it's legal causes interest rates to rise on others, and imposes costs on the rest of society. Of course, it's important for social reasons for there to be legal ways to get out of inescapable debt, but you're not off the hook morally, in my opinion, if you bit off more than you could chew. It's both your fault and that of the lender if you borrow more than you can handle. This isn't usually some freak unforeseeable accident. The 2007 crisis was caused as much by people overlevering themselves to take advantage of a situation as it was by predatory lending practices and greed/fraud at the I Bank level. But people love to put all the blame on the banks, and none on themselves for not being prudent.
    • tanderson92 10y ago
      > It's both your fault and that of the lender if you borrow more than you can handle. Then why does the borrower have moral culpability in addition to financial culpability, while the lender only takes a financial haircut.
      • ericd 10y ago
        I think lenders have an ethical responsibility to not put borrowers in a bad position as well.
    • foobarrio 10y ago
      If a bank is making loans at rates that do not cover defaults they should go out of business because they are crappy at their job. If I take my car to a mechanic am I expected to know as much about my car as the mechanic? Do I tear down and redo/inspect any work they do to my car? If I go to a mechanic and ask them if it's okay to do something dangerous to my car and they go ahead and do it, I'd say the mechanic is way more on the hook morally than the idiot driver. Similarly if I go and ask for a 1,000,000 USD mortgage when I'm only making $20,000 USD a year and have no savings or investments and the bank gives it me... You're saying both me and bank are on equal moral footing? You would then have to ask what incentive the bank had to give me the money. Either they are greedy and wanted to charge a super high rate or they intended to pass the buck and sell the loan which can be fraud if they lie about my credit worthiness to the next buyer of the loan.
      • ericd 10y ago
        I would say that your asking for a $1M USD mortgage with a $20k income would be reckless at best, and dishonest at worst. Yes, they're also at fault, but you're not blameless in that case. You have a personal and societal responsibility to spend within your means. To do otherwise causes damage to the rest of us.
        • jacobush 10y ago
          It could though cause damage to his social standing by not overspending...