BUSN370 Regent University Importance of Commercial Paper Discussion I will need 2 responses to the following 2 discussion board posts. (see attached) Orig

BUSN370 Regent University Importance of Commercial Paper Discussion I will need 2 responses to the following 2 discussion board posts. (see attached)

Original prompt from the discussion board – Utilizing the concepts regarding Commercial Paper (Chapters 22 and 23) and the Bible (more than the scriptures assigned), write a post explaining what commercial paper means, as well as a biblical discussion regarding lending from both a lender’s perspective and a lendee’s perspective.

Liuzzo, A. L., & Hughes, R. C. (2019). Essentials of Business Law (10th ed.). New York, NY: McGraw Hill Education:
Chapter 17, Sales;
Chapter 18, Warranties;
Chapter 22, Introduction to Commercial Paper;
Chapter 23, Transfer and Discharge of Commercial Paper; and
Deuteronomy 24:10-13 (Biblical Lending)

For the 2 responses – In addition, learners post a minimum of two responses to peer initial responses. The peer response should include additional research that expands upon one of key points noted in your peers initial response. The peer reply should be composed in a professional manner with a word count range of 150-350 words each. Post #1: William Gott
In the United States, corporate paper has become one of the most popular ways for
corporations to raise money. So what is commercial paper? Our texts labels it as the
following, “Commercial paper is a term used to describe several legally binding documents
such as notes, checks and drafts to facilitate the transfer of money from one person to
another” (Liuzzo, 2019, p.350).
For many large, creditworthy issuers, commercial paper is a low-cost alternative to
bank loans. “Issuers are able to efficiently raise large amounts of funds quickly and without
expensive Securities and Exchange Commission (SEC) registration by selling paper, either
directly or through independent dealers, to a large and varied pool of institutional buyers”
(Crabbe 1992). Investors in commercial paper earn competitive, market-determined yields
in notes whose maturity and amounts can be tailored to their specific needs. Financial firms
are the biggest issuer of commercial paper, with an average outstanding paper balance of 36
billion dollars. Finance companies provide consumers with home loans, retail automobile
loans, and unsecured personal loans. They provide businesses with a variety of short- and
medium-term loans including secured loans to finance purchases of equipment for resale.
When it comes to lending money and being the borrower of money, one particular
bible verse sticks out to me and it is from the book of Psalms. “The wicked borrows but does
not pay back, but the righteous is generous and gives” (Psalms 37:21)
References
Crabbe, Leland, and Mitchell A. Post. “The Effect of SEC Amendments to Rule 2A-7 on the
Commercial Paper Market.” Washington: Board of Governors of the Federal Reserve
System, May 1992.
Liuzzo, A. L. (2019). Essentials of Business Law (10th ed.). New York, NY: McGraw Hill.
Post #2: Daniel Sumulong
Commercial paper is a term used to describe several legally binding documents such as notes,
checks and drafts to facilitate the transfer of money from one person to another (Liuzzo, 2019,
p.350). It is also referred to as a negotiable instrument, “an unconditional written promise to pay a
certain sum of money on demand or at a definite time (p. 350).” This concept is similar to that of
a contract. When a commercial paper is issued, the drawer is giving his/her word to the payee (the
receiver) of the funds that a successful monetary transfer will occur (p.352). Since these
instruments are not as liquid or tangible (in a transactional sense) as cash, it does leave room for
the parties to cheat one another. Once again, we have to stay true to our word and be upright in our
dealings with others.
For years, there have several unethical activities involving the banks, corporations and
individuals. Ballen (1992) cited a case in Ohio (Master Chem Corp v. Inkrott, 1990) where a bank
was honoring the deposits of a corporate bookkeeper who was depositing company funds into
his/her own bank account. The court later ruled that the bank did not act in good faith and ordered
that the corporate accounts be recredited for whatever amount was embezzled by the bookkeeper
(p. 1563). Polles v. FDIC (1990) showed an example of a bank forcing the drawer to take the loss
since it was able to prove that the drawer ratified a forgery of commercial paper (p. 1564). These
are only two of the many examples of deceitful, illegal and unethical acts. While the development
of Electronic Funds Transfer (EFT) has greatly reduced the use of checks and other commercial
paper, I believe there will still be other means for clever people to cheat their neighbors.
“A payor bank that fails to exercise ordinary case in providing timely and accurate
notification to the depositor bank is liable for losses up to the amount of the item (Miller, 1986, p.
1401).” From the perspective of the banks, this rule is very important in the way they conduct
business. Previous examples have shown how banks can be complicit in aiding unethical activity.
Even when bank officials have their suspicions, they still allow a deposit to go through. Whenever
this happens, it may not hurt for the payor bank to halt the transaction and conduct further
investigation to prevent damages to themselves, the depositor bank and the payee.
Scriptures says in Proverbs 37:21, “The wicked borrow and never repay, but the godly are
generous givers (New Living Translation).” When dealing in commercial paper, we must keep our
word and act ethically. Just as money is a tool with no positive or negative essence, commercial
paper is very much the same. Instead of using it to take advantage of our neighbors, we ought to
use it to bless them and honor the Lord.
References:
Ballen, R. G., Savage, J. P., & Veltri, S. C. (1992). Commercial paper, bank deposits and
collections, and other payment systems. Business Lawyer, 47(4), 1551.
Liuzzo, A. L. (2019). Essentials of Business Law (10th ed.). New York, NY: McGraw Hill.
Miller, F. H., & Ballen, R. G. (1986). Commercial paper, bank deposits and collections, and
commercial electronic fund transfers. The Business Lawyer, 41(4), 1399-1434.

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