4 ms·

I think the most interesting thing from this is that Apple, despite having $145 Billion in the bank, wasn't worthy of a triple-A credit rating. It feels like w

I think the most interesting thing from this is that Apple, despite having $145 Billion in the bank, wasn't worthy of a triple-A credit rating. It feels like when I'm trying to get a loan for a car and they won't give it to me because I haven't had a "steady job" for long enough, despite the fact I could buy it in cash with money for my side gigs, or put the whole thing on credit cards if I wanted to. It's two institutions whose values just don't jive.

tempaccount9473 14y ago
The ratings agencies were pricing in the risk that Apple lobbyists would not be able to bribe the US Congress to allow overseas profits to be returned tax-free.
- Samuel_Michon 14y ago
  To be fair, not only Apple has been lobbying for a tax holiday, also parties like Google and Cisco. Both those companies are sitting on cash in tax havens, but I haven’t seen the market act bearish over it. http://www.bloomberg.com/news/2011-09-29/google-joins-apple-mobilizing-lobbyists-to-push-for-tax-holiday-on-profits.html http://www.bloomberg.com/news/2011-09-29/google-joins-apple-...
ajross 14y ago
If your credit cards are really willing to give you an unsecured loan that another bank won't accept a car as collateral on, then someone's risk analysis is wrong. Regardless, there's a lot of work in analyzing "risk" that has nothing to do with assets. Pull up a list of the most successful tech companies in the world 30 years ago. How many of them look like "AAA" bets today? Do HP or IBM look like solid borrowers in hindsight? At least (I don't think) they never defaulted on a bond. How about DEC or SGI? Even Apple Computer itself went through some pretty lean years where it looked like a pretty bad loan risk during that period. The point is that companies aren't like economies that can sustain themselves on scale alone. You just can't tell what market conditions (or just plain mismanagement) lie in Apple's future.
- SatvikBeri 14y ago
  If your credit cards are really willing to give you an unsecured loan that another bank won't accept a car as collateral on, then someone's risk analysis is wrong. In practice this doesn't happen because large single-item purchases should be denied, especially if they're unusual. If you generally spend $500 of your $10,000 limit on an average of 20 different items, and suddenly try to put one $5,000 item on your credit card without calling your bank ahead of time, it probably won't go through. Source: I worked at a credit card risk department at a major bank.
- toomuchtodo 14y ago
  I walked away from my townhouse that lost $150K in value (and I would've had to earn $200-300K before tax to pay that off). Bank of America, 2.5 years later, still hasn't foreclosed on it; they just marked me as delinquent payment each month. PNC Bank wouldn't give me a $10,000 loan to refinance my 6% car loan down to 2%. American Express continues to keep my Platinum Card open with over $75K in available credit. I make well into the $200K/year range. Risk analysis? Hah. EDIT: I have the $10K sitting in a PNC savings vehicle, and was still denied.
  - encoderer 14y ago
    What do you mean $75k in avail credit? I'm just curious. Do you mean you used the online/phone based "spending check" to see if they would approve a $75k charge? Except in cases of borderline credit Amex doesn't publish spending guidelines on charge cards. Unless you meant a revolving product, but usually when somebody says Platinum they mean the Amex Platinum charge card. Also, there's some serious caveats and differences here. If it IS a charge card, you'll have to pay it off within 60 days. If you don't, you'll definitely see some adverse action from Amex not to mention a HIGH apr. Even if it is a revolving card like the Amex Skymiles Plat or the MB Plat, if you start revolving a 5-figure balance Amex will most likely investigate and you could get investigated (a request for your 1040's) and/or see some adverse action. Finally, Amex has a lot more sophisticated risk models than other lenders, because they have to. I can charge as much on my Amex PR Gold card as all of my other credit limits combined -- just about $100k. They aren't as Fico reliant. Have you seen your Fico scores recently? (There are about a dozen different true Fico scores, and endless knockoffs that are useless). If you've seen your Fico from something like MyFico.com and it's over 700 you could still have a problem with the Auto Enhanced Fico product that many lenders use for auto loans. That scoring model emphasizes installment loan history which it seems is your sore spot. If I were you I'd head over to CreditBoards.com and learn how to clean up the negative info on your reports and get your auto loan problem fixed up.
fpgeek 14y ago
In a world where US government debt isn't triple-A either, it's hard to take the distinctions at the high end of the rating scale seriously.
- aaronbrethorst 14y ago
  US Government debt isn't AAA-rated because the House decided to play chicken with the US economy in 2011.
  - toomuchtodo 14y ago
    Has the US missed a debt payment yet?
    - aaronbrethorst 14y ago
      no: http://en.wikipedia.org/wiki/United_States_debt-ceiling_crisis_of_2011#Timeline http://en.wikipedia.org/wiki/United_States_debt-ceiling_cris...
      - toomuchtodo 14y ago
        My question was more rhetorical, but thanks for the reference. Until the US misses a debt payment, it should still have maintained its credit rating.
mynameishere 14y ago
I remember some article about a guy in India who ran a business. His employees could get mortgages (or some kind of loan anyway) but he couldn't because he wasn't employed. If you think about it though, it sort-of makes sense. A business is a gigantic liability, and if things get bad, you'll default on a loan before shutting down a company.
SatvikBeri 14y ago
It feels like when I'm trying to get a loan for a car and they won't give it to me because I haven't had a "steady job" for long enough, despite the fact I could buy it in cash with money for my side gigs, or put the whole thing on credit cards if I wanted to. It's two institutions whose values just don't jive. Part of the problem is that banks often have to build their models off of data that isn't sufficiently granular. For example, most banks don't have the ability to distinguish between someone who misses a utility payment because they're absent-minded vs. someone who misses a payment because they're short on cash. Regulations compound the difficulty to some extent, but it's really primarily a data/technology problem at this point.

tempaccount9473 14y ago

The ratings agencies were pricing in the risk that Apple lobbyists would not be able to bribe the US Congress to allow overseas profits to be returned tax-free.

Samuel_Michon 14y ago
To be fair, not only Apple has been lobbying for a tax holiday, also parties like Google and Cisco. Both those companies are sitting on cash in tax havens, but I haven’t seen the market act bearish over it. http://www.bloomberg.com/news/2011-09-29/google-joins-apple-mobilizing-lobbyists-to-push-for-tax-holiday-on-profits.html http://www.bloomberg.com/news/2011-09-29/google-joins-apple-...

ajross 14y ago

If your credit cards are really willing to give you an unsecured loan that another bank won't accept a car as collateral on, then someone's risk analysis is wrong. Regardless, there's a lot of work in analyzing "risk" that has nothing to do with assets. Pull up a list of the most successful tech companies in the world 30 years ago. How many of them look like "AAA" bets today? Do HP or IBM look like solid borrowers in hindsight? At least (I don't think) they never defaulted on a bond. How about DEC or SGI? Even Apple Computer itself went through some pretty lean years where it looked like a pretty bad loan risk during that period. The point is that companies aren't like economies that can sustain themselves on scale alone. You just can't tell what market conditions (or just plain mismanagement) lie in Apple's future.

SatvikBeri 14y ago
If your credit cards are really willing to give you an unsecured loan that another bank won't accept a car as collateral on, then someone's risk analysis is wrong. In practice this doesn't happen because large single-item purchases should be denied, especially if they're unusual. If you generally spend $500 of your $10,000 limit on an average of 20 different items, and suddenly try to put one $5,000 item on your credit card without calling your bank ahead of time, it probably won't go through. Source: I worked at a credit card risk department at a major bank.
toomuchtodo 14y ago
I walked away from my townhouse that lost $150K in value (and I would've had to earn $200-300K before tax to pay that off). Bank of America, 2.5 years later, still hasn't foreclosed on it; they just marked me as delinquent payment each month. PNC Bank wouldn't give me a $10,000 loan to refinance my 6% car loan down to 2%. American Express continues to keep my Platinum Card open with over $75K in available credit. I make well into the $200K/year range. Risk analysis? Hah. EDIT: I have the $10K sitting in a PNC savings vehicle, and was still denied.
- encoderer 14y ago
  What do you mean $75k in avail credit? I'm just curious. Do you mean you used the online/phone based "spending check" to see if they would approve a $75k charge? Except in cases of borderline credit Amex doesn't publish spending guidelines on charge cards. Unless you meant a revolving product, but usually when somebody says Platinum they mean the Amex Platinum charge card. Also, there's some serious caveats and differences here. If it IS a charge card, you'll have to pay it off within 60 days. If you don't, you'll definitely see some adverse action from Amex not to mention a HIGH apr. Even if it is a revolving card like the Amex Skymiles Plat or the MB Plat, if you start revolving a 5-figure balance Amex will most likely investigate and you could get investigated (a request for your 1040's) and/or see some adverse action. Finally, Amex has a lot more sophisticated risk models than other lenders, because they have to. I can charge as much on my Amex PR Gold card as all of my other credit limits combined -- just about $100k. They aren't as Fico reliant. Have you seen your Fico scores recently? (There are about a dozen different true Fico scores, and endless knockoffs that are useless). If you've seen your Fico from something like MyFico.com and it's over 700 you could still have a problem with the Auto Enhanced Fico product that many lenders use for auto loans. That scoring model emphasizes installment loan history which it seems is your sore spot. If I were you I'd head over to CreditBoards.com and learn how to clean up the negative info on your reports and get your auto loan problem fixed up.

fpgeek 14y ago

In a world where US government debt isn't triple-A either, it's hard to take the distinctions at the high end of the rating scale seriously.

aaronbrethorst 14y ago
US Government debt isn't AAA-rated because the House decided to play chicken with the US economy in 2011.
- toomuchtodo 14y ago
  Has the US missed a debt payment yet?
  - aaronbrethorst 14y ago
    no: http://en.wikipedia.org/wiki/United_States_debt-ceiling_crisis_of_2011#Timeline http://en.wikipedia.org/wiki/United_States_debt-ceiling_cris...
    - toomuchtodo 14y ago
      My question was more rhetorical, but thanks for the reference. Until the US misses a debt payment, it should still have maintained its credit rating.

mynameishere 14y ago

I remember some article about a guy in India who ran a business. His employees could get mortgages (or some kind of loan anyway) but he couldn't because he wasn't employed. If you think about it though, it sort-of makes sense. A business is a gigantic liability, and if things get bad, you'll default on a loan before shutting down a company.

SatvikBeri 14y ago

It feels like when I'm trying to get a loan for a car and they won't give it to me because I haven't had a "steady job" for long enough, despite the fact I could buy it in cash with money for my side gigs, or put the whole thing on credit cards if I wanted to. It's two institutions whose values just don't jive. Part of the problem is that banks often have to build their models off of data that isn't sufficiently granular. For example, most banks don't have the ability to distinguish between someone who misses a utility payment because they're absent-minded vs. someone who misses a payment because they're short on cash. Regulations compound the difficulty to some extent, but it's really primarily a data/technology problem at this point.