Wokay!

It all started because the UPA government was embarassed by Sainath blasting them for privatising Neyveli Lignite Corporation while farmers were dying in Vidarbha. They decided to show that they were doing something, so they passed a law making moneylending illegal and imposed stiff penalties on anybody who was collecting debts without a banking or chit fund license.

Unfortunately they didn’t count on Sweety Singh. Sweety Singh was rich, unemployed, always ready to stir up trouble, and enjoyed filing frivolous PILs. Once the bill had passed into law, he appeared before the Hyderabad High Court. In his affidavit to the court, Sweety claimed that he was appearing on behalf of a young man called Balaji Venkateswara who had a few millenia ago taken a loan from a moneylender called Kubera, and that Kubera was harassing Balaji for interest repayments to this day. Sweety claimed that Kubera had used most of the dirty tricks in the subprime lenders’ books – resetting interest rates, taking interest only payments and not letting the principal balance be paid down, and allowing negative equity – the loan had been taken for wedding expenses, and not the purchase of an asset.

To Sweety’s own great surprise, the High Court admitted the case and issued a show cause notice to the Tirumala Tirupati Devasthanam Trust, asking why it should not be charged with illegal moneylending and harassment of borrowers. Things got complicated because the TTD trustees were actually appointed by the Andhra Pradesh government. YS Reddy immediately announced that the trustees would be sacked and that the hundi collections at Tirupati would be diverted to the Chief Minister’s Relief Fund instead of going to pay interest to Kubera.

Naturally, there was a huge uproar. Hindus were aghast at this attack on tradition. Hindutvawadis alleged that YSR was doing this because he was a Christian and that the whole thing was a plot by Sonia Gandhi and the Catholic Church. In his Rediff column, Rajeev Srinivasan announced that the Indian cricket team’s latest series defeat was because of the attempt to seize the hundi collections. Because it was a rediff column, the commenters further suggested that it was a Chinese and Pakistani conspiracy – that is, the ones who weren’t bitching about how smelly Gults were. Murli Manohar Joshi was thrilled and mounted a simultaneous rath yatra and campaign for the BJP leadership. The whole nation was so preoccupied by the crisis that the news channels even stopped running stories about boys who fell down wells.

Finally the crisis was resolved by a young summer intern at Citi called Savitha Sundaram. By this time, the situation at Citi was so bad that senior managers actually had time to read their interns’ reports. When Savitha’s line manager read her report, he realised that it was a work of genius and worked madly to get her plan approved and implemented.

Two weeks later, Citi announced that it would be buying the original debt from Kubera. As a bank, it was entirely legal for it to lend money and collect debts from Balaji Venkateswara. Moreover, since Venkateswara was clearly a subprime borrower who hadn’t repaid the principal for centuries, the debt could be acquired for paise on the rupee. Vikram Pandit presented a cheque for 1 rupee to the Srilakshmi Kuberar temple in Ratnamangalam and so acquired the loan. Citi then created yet another CDO, this one with the hundi collections at Tirupati as the underlying, and sold it back to TTD.

The Tirupati temple kept getting the money from the hundi collections without actually being responsible for collecting on the debt, and the Andhra Pradesh government was no longer in the embarassing position of breaking the moneylending law. Citi also charged the temple a very minute fee on all the cash that poured through. It was less than 0.1%, but Tirupati got so much money that Citi flourished. Moreover, the value of the cash flows was enough to bring its balance sheet back to health, and it started repaying TARP money.

In this way Savitha Sundaram and Sanatan Dharam saved global capitalism.