Saturday, August 11, 2007

The Standard Rule always applies

by Ken Houghton

Warren Buffet is fond of noting that when a good manager joins a bad company, it's likely that the manager's reputation, not the company's, will change. (A simplified version is here.)

Apparently, good credits put into bad houses find the same effect. Or, as Tanta put it:
Insofar as FICOs are accurate measures of past performance, high scores indicate borrowers who have managed credit wisely in the past. Put those borrowers in unwise credit terms, and they perform just like people who have managed credit unwisely in the past. Glad we got some real-time empirical data to prove that. Sorry about your global financial crisis.

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