It is truly amazing what you can prove with the right people under oath.

[jaylon]

It is truly amazing what you can prove with the right people under oath. This is what you are trying to get to. The bank is sunk if they don't stop you from getting these people on the stand. This is just one excerpt of what you would ask.

CPA in charge of internal auditing/ controller over accounting of the assets and liabilities of the bank. Please state your name and what position you hold with the bank? And what are your qualifications to hold that position?

The word Asset is an accounting term isn’t it? What does it mean? It’s a broad term that can include many things isn’t that correct? I show you now a definition of “Asset” from Accounting Principles, Phillip Fess Page 19, published by Southwestern Publishing, exhibit “P”, Are you familiar with Mr Fess?

He is a PHD. And professor emeritus of Accountancy at the University of Illinois, Champaign-Urbana. He defines an asset as follows: “Any physical thing(tangible) or right (intangible) that has a monetary value is an asset.”
He devides assets into 2 catagories, one is Current Assets: He defines these as “Cash and other assets that may reasonably be expected to be realized in cash or sold……” In defining “Other Assets” that may be counted as current assets, He says , “Cash is any medium of exchange that a bank will accept at face value….. And he includes among these “Notes receivable are claims against debtors evidenced by a written promise to pay a sum of money at a definite time”. As a professional accountant do you take exception to this definition of a current asset? You don’t disagree with it in any way? This is what we call Commercial paper isn’t that correct? And in the world of banking and finance enforcable notes are daily negotiated, exchanged and traded in the financial markets for cash or other securities or obligations as commercial paper assets of face value substantive money equivalence are they not? sometimes even discounted to face value because their value in interest to be realized is often many times the face value? Isn’t that correct? But it doesn’t matter whether you do this with it or not, does it M_____? In the form of an enforcible note, The bank still holds commercial paper on its books that is that value of money if that ‘s what it is worth to sell it, isn’t that right? So when Mr. Fess says Assets are “Cash and other assets that may reasonably be expected to be realized in cash ……”

[jaylon]

Notes are part of what he is talking about. Isn’t that right?

From this authoritative definition then, a promissory note held by a bank is received or deposited and held and used on its books for what ever purposes, as an asset of cash equivalent value, isn’t that what Mr. Fess is saying here and isn’t that what you are saying as well?

And from the experience of your position would you say that for the most part the general public is not aware of this fact, is it? Now for every asset received or held by the bank, there is an offsetting commensurate increase in payable deposit money credit on its books as a liability due and owing to somebody isn’t that right?

Whether it’s a note, cash or some other cash equivalent asset received by the bank it increases the payable deposit money on its books by that amount, doesn’t it? In fact if one can only see the liability side of the ledger you can’t tell whether the increased payable deposit money credit has come from a deposit of actual cash, a note, or some other cash equivalent security can you Mr._____? They all have the same affect on the deposit money credits and liabilities of the bank when received, don’t they?
Because when you receive value of money or money equivalent to hold as an asset, this originates or creates and brings onto the bank’s books new increased payable deposit money credits of that same amount that wasn’t there before doesn’t it Mr_____?

This is new payable deposit money credit created on the bank’s books that had not existed before the bank received the note as an asset, isn’t that right? Yet the borrower is not aware of this use of his note from the bank loan contract is he Mr.____? [Well here is a copy of the borrower’s note and trust deed, would you show us here where this fact is disclosed?]
The bank has not wanted to call this a “deposit” but by definition of the United States banking code:

12 USC Sect. 1813, defines the term “deposit” read it with me Mr. Blank:
(1)the unpaid balance of money or its equivalent received or held by a bank or savings association in the usual course of business and for which it has given or is obligated to give credit, "Our note was received by the bank as a money or money equivalent, isn't that correct Mr. Blank?
And by the definition here, until the loan obligations were paid and settled, it was an unpaid balance of money or money equivalent on its books waiting to be paid, isn't that correct? By definition here a deposit isn't that correct? now read with me again Mr. Blank, any such account or instrument must be regarded as evidencing the receipt of the equivalent of money when credited or issued in exchange for checks or drafts or for a promissory note upon which the person obtaining any such credit or instrument is primarily or secondarily liable, or for a charge against a deposit account, or in settlement of checks, drafts, or other instruments forwarded to such bank or savings association for collection. Now Mr. Blank, what ever the bank did with it, the bank's accounts have been "credited ……in exchange for a promissory note" because that's what I gave them wasn't it Mr. Blank? And by law according to this definition here cited, "any such account must be regarded as evidencing the receipt of the equivalent of money", isn't that what it says Mr. Blank?

So In the world of banking a note received is indeed “money or money equivalent " on its books for most all of their purposes. And if they receive or hold a promissory note, by definition, it is a deposit. Isn't that correct?

Now for every asset received or held by the bank, there is an offsetting commensurate increase in payable deposit money credit on its books as a liability due and owing to somebody isn’t that right? The receiving of an asset of substantive money value immediately produces a corresponding increase of the bank’s demand deposit liabilities of the same amount in increased payable money credits on its books waiting to be paid to somebody in behalf of the party who added the asset to its base, isn't that correct?

Whether it’s a note, cash or some other cash equivalent asset received by the bank it increases the payable deposit money on its books by that amount, doesn’t it? In fact if one can only see the liability side of the ledger you can’t tell whether the increased payable deposit money credit has come from a deposit of actual cash, a note, or some other cash equivalent security can you Mr._____? They all have the same affect on the deposit money liabilities and credits of the bank when received, don’t they?

Because when you receive value of money or money equivalent to hold as an asset, this originates or creates and brings onto the bank’s books new increased payable deposit money credits of that same amount that wasn’t there before doesn’t it Mr_____?

This is new payable deposit money credit created on the bank’s books that had not existed before the bank received the note as an asset, isn’t that right? Yet the borrower is not aware of this use of his note from the bank loan contract is he Mr.____? [Well here is a copy of the borrower’s note and trust deed, would show us here where this fact is disclosed?]

From these authoritative sources, and your own testimony here, when the bank receives my note, this is a tangible commercial paper money equivalent asset in the world of finance on its books that expands the bank’s payable deposit money credits by the same amount as the loan, offsetting the book entry transfers in settling of the loan checks unless checks were cashed out of the bank, isn't that correct Mr. Blank?

Now the bank always has more deposit money liabilities than actual cash reserves to cover them doesn’t it? So when book entry deposit money credits and liabilities are electronically transferred between banks in payment of loan checks that doesn’t increase the cash reserves of the bank having the increased liabilities, and it doesn’t decrease the actual cash on hand of the bank paying the liabilities does it? But this is considered real money in commerce isn’t it? People write checks and pay bills off of it out of their accounts. And the bank writes loan proceeds off of it, and its considered real money isn’t it? In fact most bank financial transactions of deposits, withdrawals, or payments are made by electronic book entry deposit money transfers aren’t they? In fact its highly possible or even likely a bank could receive a deposit , and honor checks on it and neither the bank nor the account holder ever see any of that in cash, nor in any way affect the demand payable cash reserves of the bank. And yet as far as commerce between parties is concerned, money has been received and has been paid, hasn’t it? In fact, only if the check is cashed out of the bank, are the bank’ cash reserves affected, isn’t that correct Mr.____?

So the bank can conceivably write loan checks and settle these loan obligations on the bank’s books [by deposit money transfers] without in any way affecting the demand cash reserves of the bank, isn’t that correct? And From these authoritative sources, and your own testimony here, when the bank receives my note, this is a tangible commercial paper money equivalent asset in the world of finance on its books that expands the bank’s payable deposit money credits by the same amount as the loan, that offsets the book entry transfers in settling of the loan checks unless, in fact, checks were cashed out of the bank, isn't that correct Mr. Blank?

The accounting would show whether this is what happened in this loan or not, would it?

If this is what the book entry accounting shows The bank could conceivably have been charging interest on a risk it does not have, for a principle of its own consideration already there before the transaction it did not have to give for a borrower to receive money as a loan, if this is what the book entry accounting shows, this could be true couldn’t it? So if the book entry accounting shows this is what happened, The equitable cost and risk to the bank to make the loan may have been misrepresented, isn't that correct? And yet it is the representation of a genuine equitable risk of money to lose to make the loan that has been the foundation for the terms of the agreement, has it not Mr. Blank?

Now wouldn't it be true Mr. Blank when all loan proceeds checks and obligations are settled, if the bank has no continuing equitable risk to its other assets or cash reserves to recover any loss of principle extended from them to have made the loan, then the bank has been charging me principle and interest on a loan in equity it did not make as a cash loan, book entry loan, or otherwise, for a risk in equity, as we said, it turned out not to have but again, has been charging me as if it did, this entire time!

Originally Posted by jaylon

If this is what the book entry accounting shows The bank could conceivably have been charging interest on a risk it does not have, for a principle of its own consideration already there before the transaction it did not have to give for a borrower to receive money as a loan, if this is what the book entry accounting shows, this could be true couldn’t it? So if the book entry accounting shows this is what happened, The equitable cost and risk to the bank to make the loan may have been misrepresented, isn't that correct? And yet it is the representation of a genuine equitable risk of money to lose to make the loan that has been the foundation for the terms of the agreement, has it not Mr. Blank?

Now wouldn't it be true Mr. Blank when all loan proceeds checks and obligations are settled, if the bank has no continuing equitable risk to its other assets or cash reserves to recover any loss of principle extended from them to have made the loan, then the bank has been charging me principle and interest on a loan in equity it did not make as a cash loan, book entry loan, or otherwise, for a risk in equity, as we said, it turned out not to have but again, has been charging me as if it did, this entire time!

WE ALL KNOW BY NOW THAT THE BANKS WON'T OPEN THE BOOKS DURING DISCOVERY. THE MONEY FOR THE LOAN WAS NOT IN A PRE-EXISTING ACCOUNT BUT IT IS SOMEWHERE IN THE FUTURE WAITING FOR COLLECTION.
THE QUESTION IS: IN CASE OF DEFAULT, SHOULD SOMEONE HAVE THE RIGHT TO COLLECT ON THIS FUTURE DEBT MONEY PLUS THE INTEREST?