Question

What are the errors that Bassanio made in Merchant Of Venice from the perspective of good banking practices? And compare his actions to those of the financial institutions that were major players in the 2007-2009 meltdown in the U.S. economy that has resulted in so many changes.

Answer 1

Antonio is the merchant of Venice and Bassanio is his friend. Bassanio owes him money. but asks for more money in order to impress and marry beautiful and wealthy Portia. Antonio agrees to pay but he is unable to pay because his all money is invested in trade ships that are all in the sea. Antonio suggests that Bassanio secures the loan from one of the city's moneylenders and name Antonio as the loan guarantor but money lender has one condition if he didn't pay the money on time he receives one pound of Antonio's flesh and Antonio agrees. Bassanio receives the money He Won Portia all is set wonderfully until news comes from that Antonio is in financial trouble. Fearing the outcome of her fate Portia dresses as a man and follows Bassanio to Venice and serves as Antonios lawyer and take fate into her own hands.

It is not an example of good banking practice. Bassanio already owes money to Antonio but Bassanio tries to get more and more debt and Antonio tries to give more and more loan to Bassanio without caring the future. The same situation can also be found in the great financial crisis of the USA in 2008. The major financial players like Lehman brother became bankrupt due to subprime lending. Due to easy credit conditions, interest rates were lower and it encouraged borrowing. Between 1998 to 2006, the price of a typical American household increase by 124%. The housing bubble resulted in many homeowners refinancing their homes at lower interest rates by September 2008, average US prices have declined over 20% from their mid-2006 peak. As price declined, borrowers with adjustable rate mortgages could not refinance to avoid higher payments associated with rising interest prices and began to default.

Financial institutions in the USA started to give more loans and people started to buy more. Then the debtors started to default their payment it caused financial institutions in more debt burden. The lesson from both Merchant of Venice and the financial crisis are similar. If the debt burden is more there is more chance of happening default of payment. Giving more debt without caution is not good banking practice.