Negotiations

I was wrapping up discussion with my customer, a large bank:

“It sounds to me like you want us to pass along lower prices, but you also want us to eat all cost increases.”

“Precisely.”

“That sounds like the ‘have your cake and eat it too’ clause.” I thought.

“Can we assume that you agree?” The procurement executive smiled.

“We live in troubled times.” I replied. “For example, I have challenges with my mortgage. I’d like The Bank to provide an adjustable rate mortgage that adjusts downward when interest rates decrease, but never moves upwards.”

“But..”

“And, with falling prices, I need to keep my equity intact. So – I require that the principal of my mortgage to be adjusted (annually) so that the total I owe is never more than 80% of the market value of my house. Naturally, I want this “principle adjustment clause” to apply only when prices fall.”

“We’d lose money under that arrangement.”

“But losing money on mortgages is your core (in)competency.” “I thought.

“You can’t expect us to underwrite such risky mortgages.”

I looked at them. (sub-primely)