Do banks loan money

[Patriotdiscussions]

Seems like a simple question, any of the pros on here know? I will give you a hint, the fed bank publications modern money mechanics and I bet you thought can provide the answers.


Also does anyone know if it is illegal to photocopy security instruments and know the correct code for violation?

[fortinbras]

How I wish you'd proofread your comments!

Banks lend money. When they make a mortgage possible they put an entry in the borrower's account reporting the addition of several thousand dollars with the intention of using it to buy the house. The borrower writes a check based on the new bank balance, and gives that check to the vendor. The vendor takes that check to his own bank and, surprise, it turns into money - if he wants cash, it turns into legal tender that is put right into his hot little hand. So even though all the bank activity didn't look like it involved money, in the end, for the vendor, it resulted in money.

In any case, you could not have bought the house without the bank doing whatever it did, so you have to pay it back for making your house purchase possible.

[Judge Roy Bean]

Seems like a simple question, any of the pros on here know? I will give you a hint, the fed bank publications modern money mechanics and I bet you thought can provide the answers.

Asked and answered ad nauseam.

Also does anyone know if it is illegal to photocopy security instruments and know the correct code for violation?

You can photocopy anything.
What you do with the copy is another set of issues.

[Famspear]

Seems like a simple question, any of the pros on here know? I will give you a hint, the fed bank publications modern money mechanics and I bet you thought can provide the answers.

I'll give you a hint. If you just discovered the publication Modern Money Mechanics and you just discovered what money is and you just figured out how banking works, you're a bit late to the game. By the way, that publication has been around along time -- maybe since before you were born. You haven't discovered anything.

And all this has already been covered over and over and over again.

Also does anyone know if it is illegal to photocopy security instruments and know the correct code for violation?

The vagueness of your question indicates that you don't fully understand the subject. The answer depends on what you mean by "security instrument." And the "correct code for violation" depends on the kind of "security instrument" -- and the kind of violation. Go back and try to figure out what it is you're trying to ask.

Dear "Patriotdiscussions": I'm seeing a pattern here. Just as is the case with the vast majority of people like you, you come to the game with a host of misconceptions.

One of the misconceptions you have is that you yourself can "know" things better than the Quatloos regulars -- who have been studying this stuff for years. You cannot know these things better than we do.

Another misconception you have is that you believe you can "teach" others here. You can't.

The following are example of some of the materials that I use when people like you come here putting on "airs". First, from a text published by the American Bankers Association:

Typically, bank loans are made to existing customers, or the proceeds of a loan are used to open an account; thus, most bank loans increase total deposits. In the typical credit situation, two balance sheet items --loans and deposits -- are simultaneously increased.

--Eric N. Compton, Principles of Banking, p. 150, American Bankers Ass'n (1979) (Eric N. Compton was a Vice President at The Chase Manhattan Bank, N.A.)

From Paul Horvitz:

Since demand deposits are money, this means that commercial banks can create money. The process of deposit creation is deceptively simple -- so much so that even the bankers themselves have frequently been deceived. There are several reasons for this confusion and we shall try to clarify them.

One cause of confusion centers around the meaning of "deposit." Deposits are, of course, a liability of the bank. If we have a $300 deposit in a commercial bank, the bank owes us $300. The deposit itself, however, can arise in various ways. We may have brought $300 in paper money to the bank to deposit in our account. On the balance sheet of the bank this transaction will simply be reflected as a $300 increase in the bank's holdings of cash, and a $300 increase in the bank's deposit liabilities. This transaction is what may be called a ''primary deposit''. It should be noted that this transaction does not result in any change in the money supply. The depositor has $300 less in currency and $300 more in the form of a demand deposit; his total holdings of money are unchanged.

Deposits may arise in a different way, however. Let us suppose a businessman comes into the bank and wants to borrow $1000 to cover the cost of some additional inventory he wants to purchase. The bank may approve the loan, and the businessman will tell the bank to credit the $1000 to his deposit account.

Bank Assets
debit Loans $1000

Bank Liabilities
credit Deposits $1000

The businessman now has an additional $1000 demand deposit. No one else's demand deposits have been reduced. This is clearly an increase in the money supply, and it is apparent that the bank created the $1000.

These ''derivative'' deposits are very important both quantitatively and theoretically -- it is in terms of derivative deposits that banks can be thought of as creators of money. If all deposits arose from primary deposits, banks could not be said to create money.

-- Paul M. Horvitz, Monetary Policy and the Financial System, pp. 56-57, Prentice-Hall, 3rd ed. (1974). (Horvitz received his Ph.D. from Massachusetts Institute of Technology, and was Director of Research at the Federal Deposit Insurance Corporation. He was an assistant professor of finance at Boston University. He also served as Associate Director of Research for the Office of Comptroller of the Currency, U.S. Department of the Treasury, and as Financial Economist at the Federal Reserve Bank of Boston.)

From the Federal Reserve Bank of Chicago:

Of course, they [commercial banks] do not really make loans out of the money they receive as deposits. If they did this, they would be acting just like financial intermediaries and no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities) both rise....

--Federal Reserve Bank of Chicago, Modern Money Mechanics, pp. 3-13 (May 1961), reprinted in Money and Banking: Theory, Analysis, and Policy, p. 59, ed. by S. Mittra (Random House, New York 1970).

Here's what I suggest you do. Go to college. Major in accounting. While you're in college, take a standard college economics course called "Money and Banking." Get the bachelor's degree in accounting. Then, go to work for a CPA firm. Study for the Uniform Certified Public Accountant Examination, take the exam, and pass it. Become licensed as a CPA in your state.

Then, while you're at the CPA firm, become a bank auditor and audit banks for about five years.

Then, you might know as much as I do about how banks loan money.

[rogfulton]

Maybe we should just save ourselves some time and reply to Troll de la Semaine using links to previous Q posts which address his casuistry.

[JamesVincent]

Maybe we should just save ourselves some time and reply to Troll de la Semaine using links to previous Q posts which address his casuistry.

Might not be a bad idea, make him work for his answers. On the other hand it is Quatloos' mission to expose scams and make people understand why they are scams. And burying it in old threads might not accomplish that. Since I'm not here to actually answer anything I'll skip that part for now.

Patriotdiscussions why are you actually here? So far you have started 4(?) threads, asking questions that have been answered and proven incorrect many, many times over. Not just on Quatloos but on many other boards and, funnily enough, on the IRS' website dealing with frivolous positions. If you are genuinely looking for answers, they are out there, in a multitude of places. If you are here to beard the lion in his den, as it were, you will fail. The bulk of the people that post here are professionals, including many that are attorneys, CPAs, accountants, etc. that actually do this for a living. Those of us who aren't are still businessmen/ women, educated, and are knowledgeable about the way things work in real life, not in a fantasy land where semantics seem to rule. "Is" actually does mean "is", "includes" actually does "include" and "shall" means what it means in context since it is an auxiliary verb and it's whole purpose is to move the verb into a future tense, IIRC, and can be interchanged with other auxiliary verbs if you wish. It is used because it is the best word for the job. A bank makes a loan, in which they lend money. Income means moneys you make, either in currency, barter, shepherd pies, whatever it is that you get paid in and/ or accrue wealth in. All of these things have been answered many times before. So what is it exactly you are looking for?

[Patriotdiscussions]

What better place to test these theories I have seen online, I tried looking but could not find what I wanted answered. If everyone here is sure of the self, then state the facts. Chill with personal attacks and educate me.


Now

Is a promissory note a security instrument that can not be copied in order to claim payment?
Is a note not taken for value I.e. you are the issuer of the first funds transfer for any loan?

[LPC]

Seems like a simple question, any of the pros on here know?

Not to you, I hope.

[LPC]

Chill with personal attacks and educate me.

It would be more useful and productive to teach a pig to sing.

[AndyK]

Is a promissory note a security instrument that can not be copied in order to claim payment?
Is a note not taken for value I.e. you are the issuer of the first funds transfer for any loan?

1 - A promissory note is just a piece of paper. It can be copied as many times as the holder wishes. HOWEVER, it can only be collected upon one time. At that time, the holder normally marks the note "PAID" and returns it to the promisor.

2 - The second question is somewhat unclear, but I have a fieling that you're runnung down the rabbit hole of "the borrower's signature creates the funds." If that's the question, then the answer is NO The borrowere is simply signing a legal contract obliging him to repay the money the lender is providing. Usually, the borrower is also pledging some form of asset (house, automobile) which will be forfeit if the loan is not repaid.

[fortinbras]

This is the "vapor money" argument - the notion that the bank didn't lend "real money" because it simply created a ledger entry in the borrower's account, and then the borrower trots out this argument to excuse his non-repayment. This has NEVER WORKED in a court case.

Although the borrower may not see the cash, the seller of the house sees the cash, as the lending bank has to make good on the check written and given to the seller. So, yes, the lending bank did lend cash ... which it used, bank to bank, to pay the seller.

The borrower probably wrote a promissory note to the lending bank, promising to repay the amount lent and probably making his new home the collateral. The promissory note was, I am sure, a form worked up by the lending bank.

A promissory note is not to be confused with money. It is an IOU, a promise to pay money in the future. A promissory note does not pay a debt, it is proof of the existence of a debt. Nobody is obliged to accept a promissory note. SovCits have churned out documents they label "Registered Promissory Notes" or "Certified Promissory Notes" or even "Bonded Promissory Notes" -- but they're really not registered nor certified and certainly not bonded, and the promissory note is undoubtedly as fake as its adjective. The SovCits never talk about paying their promissory notes; they mistakenly think that churning such a document out of their word processors somehow creates a form of money.

Unlike Federal Reserve Notes, since the promissory note is mere evidence of a debt, if somehow a promissory note is destroyed or lost while the debt remains unpaid, the two parties are supposed to gin up a replacement promissory note reproducing as best they can the terms of the lost copy simply to serve as documentation of the persisting debt. So a promissory note can be replaced if destroyed - unlike US paper currency.

[davids]

These are some really good replies. There are many a scam being run, especially in the mortgage defense field, that rely on these myths and misinterpretations and these are some very good basic explanations. There are even supposedly reputable attorneys who promulgate this "you don't owe your mortgage because there was no loan" stuff to the public.

[Famspear]

What better place to test these theories I have seen online, I tried looking but could not find what I wanted answered. If everyone here is sure of the self, then state the facts. Chill with personal attacks and educate me.

If you can't stand the heat, get out of the kitchen. To be more precise, if you don't want to be humiliated, then stop pretending that you know something about what you're talking about. You don't.

The rest of us are not here to indulge you or to coddle you or to make you happy. We're here to teach, and specifically to expose scams. You have been reading scam literature, and we've seen all this before, a thousand times.

You've asked one question after another in various threads, and you've implied certain things that we have shown were false. We've shot you down every time. Your questions and your statements and responses do not indicate that you intend to learn anything.

And, making assertions without backing them up does not entitle you to an explanation from others as to why you are wrong. So, no, in that situation we are under no obligation to -- as you put It -- "state the facts." If you don't back up what you say, you may sometimes find that we simply say "you're wrong" without explaining why. To the extent that we do provide you with a detailed explanation, you can consider yourself fortunate.

You have a bad attitude. Chill with the attitude. You don't know anything about this stuff. We do.

[JamesVincent]

What better place to test these theories I have seen online, I tried looking but could not find what I wanted answered. If everyone here is sure of the self, then state the facts. Chill with personal attacks and educate me.

Every single time I have seen something brought up on Quatloos I did not know about or did not immediately understand I looked it up. And, usually within 5 minutes, I found it. I, for one, am not a teacher and the world is much better off for that fact as I have lousy patience for someone who claims to want to learn yet ignores every resource available. Maybe the problem is not that you haven't found the answers, the problem is, in your own words, you could not find what you wanted answered.

Take, for instance, the title of this thread; "Do banks loan money". Not only is it grammatically incorrect, typing that exact same phrase into Google yields 133,000,000 results in under 0.5 seconds, many of them major articles on the principles of lending by financial institutions, not just banks. You may also find whatever type of articles you have been reading that gave you the incorrect suppositions you are currently listing. Whichever you choose to read is up to you but I fear your education would be remiss if you only read one type of article and then draw conclusions from it.

As far as personal attacks, stuff it. Your forum name is a personal attack to several of his, as has been mentioned, and I don't see anything in my post even close to resembling what you said to AndyK in another thread. So, if you can't take it, don't step it.

[Patriotdiscussions]

This is the "vapor money" argument - the notion that the bank didn't lend "real money" because it simply created a ledger entry in the borrower's account, and then the borrower trots out this argument to excuse his non-repayment. This has NEVER WORKED in a court case.

Although the borrower may not see the cash, the seller of the house sees the cash, as the lending bank has to make good on the check written and given to the seller. So, yes, the lending bank did lend cash ... which it used, bank to bank, to pay the seller.

The borrower probably wrote a promissory note to the lending bank, promising to repay the amount lent and probably making his new home the collateral. The promissory note was, I am sure, a form worked up by the lending bank.

A promissory note is not to be confused with money. It is an IOU, a promise to pay money in the future. A promissory note does not pay a debt, it is proof of the existence of a debt. Nobody is obliged to accept a promissory note. SovCits have churned out documents they label "Registered Promissory Notes" or "Certified Promissory Notes" or even "Bonded Promissory Notes" -- but they're really not registered nor certified and certainly not bonded, and the promissory note is undoubtedly as fake as its adjective. The SovCits never talk about paying their promissory notes; they mistakenly think that churning such a document out of their word processors somehow creates a form of money.

Unlike Federal Reserve Notes, since the promissory note is mere evidence of a debt, if somehow a promissory note is destroyed or lost while the debt remains unpaid, the two parties are supposed to gin up a replacement promissory note reproducing as best they can the terms of the lost copy simply to serve as documentation of the persisting debt. So a promissory note can be replaced if destroyed - unlike US paper currency.

Ah I see so the promissory NOTE is an I.o.u. where as the federal reserve NOTE is not. We all know the legal definition of note is debt correct? Fed law even states frn's are OBLIGATIONS of the us government 12 USC 411. So what is an obligation if not a debt?

If a bank loses my note we don't jimmy up a new one, the bank has to put up an indemnity bond for twice the note value.

We do know that a note is a negotiable instrument right? We do know that a note with a maturity of over 9 months is a security right? 15 USC 78c 10.

On some levels losing the note is worse than blowing the mortgage (due to MERS Madness, for example). Because promissory notes are negotiable instruments generally only the original (and not any copy) is enforceable against the borrower. Under the UCC (a uniform commercial code in place in most all jurisdictions in one form or another), section 3-309, a lost note may not be fatal to recovery by the owner of the note. But the requirements of proof under this section are quite demanding; most notably, the section requires that possession and ownership of the promissory note be vested in the plaintiff at the time of loss. It appears that many MBS notes disappeared before transfer to the trust that now holds the note, which would defeat recovery under this section. Moreover, in order to enforce a lost note under the UCC, the court must assure that "the person required to pay the instrument is adequately protected against loss that might occur by reason of a claim by another person to enforce the instrument." That sounds like an indemnity bond to me (particularly given the transitory nature of the banks holding these notes, as I will show in my next post). And, that could prove costly. These are serious impediments to enforcement of lost promissory notes in this context.

Moreover, analysis of the ability to enforce lost notes is made more difficult by the fact that each state may have quirks in their version of the UCC. Some states have amended their UCC statutes like this version in Florida which is less demanding than most states. It could take years for the courts across the country to work out these issues.

Again, these issues are not technicalities. Instead, they are integral parts of a statutory scheme designed to balance commercial certainty and enforcement of contracts against protecting the borrower from multiple claims. The ultimate protection of the borrower is an original canceled note. Once a borrower pays a note obligation he is entitled to a canceled note. If the lender loses the note he has in a real sense deprived the borrower of this basic right. So courts are rightly suspect of efforts to enforce lost notes, and courts should take appropriate steps to give borrowers that same level of protection--i.e., an indemnity bond or better. Thus, courts have not hesitated to refuse to enforce lost notes despite efforts by claimants to avail themselves of 3-309, as illustrated in this case, and those cited therein.

http://corporatejusticeblog.blogspot.co ... e.html?m=1

[Patriotdiscussions]

Seems like a simple question, any of the pros on here know? I will give you a hint, the fed bank publications modern money mechanics and I bet you thought can provide the answers.

I'll give you a hint. If you just discovered the publication Modern Money Mechanics and you just discovered what money is and you just figured out how banking works, you're a bit late to the game. By the way, that publication has been around along time -- maybe since before you were born. You haven't discovered anything.

And all this has already been covered over and over and over again.

Also does anyone know if it is illegal to photocopy security instruments and know the correct code for violation?

The vagueness of your question indicates that you don't fully understand the subject. The answer depends on what you mean by "security instrument." And the "correct code for violation" depends on the kind of "security instrument" -- and the kind of violation. Go back and try to figure out what it is you're trying to ask.

Dear "Patriotdiscussions": I'm seeing a pattern here. Just as is the case with the vast majority of people like you, you come to the game with a host of misconceptions.

One of the misconceptions you have is that you yourself can "know" things better than the Quatloos regulars -- who have been studying this stuff for years. You cannot know these things better than we do.

Another misconception you have is that you believe you can "teach" others here. You can't.

The following are example of some of the materials that I use when people like you come here putting on "airs". First, from a text published by the American Bankers Association:

Typically, bank loans are made to existing customers, or the proceeds of a loan are used to open an account; thus, most bank loans increase total deposits. In the typical credit situation, two balance sheet items --loans and deposits -- are simultaneously increased.

--Eric N. Compton, Principles of Banking, p. 150, American Bankers Ass'n (1979) (Eric N. Compton was a Vice President at The Chase Manhattan Bank, N.A.)

From Paul Horvitz:

Since demand deposits are money, this means that commercial banks can create money. The process of deposit creation is deceptively simple -- so much so that even the bankers themselves have frequently been deceived. There are several reasons for this confusion and we shall try to clarify them.

One cause of confusion centers around the meaning of "deposit." Deposits are, of course, a liability of the bank. If we have a $300 deposit in a commercial bank, the bank owes us $300. The deposit itself, however, can arise in various ways. We may have brought $300 in paper money to the bank to deposit in our account. On the balance sheet of the bank this transaction will simply be reflected as a $300 increase in the bank's holdings of cash, and a $300 increase in the bank's deposit liabilities. This transaction is what may be called a ''primary deposit''. It should be noted that this transaction does not result in any change in the money supply. The depositor has $300 less in currency and $300 more in the form of a demand deposit; his total holdings of money are unchanged.

Deposits may arise in a different way, however. Let us suppose a businessman comes into the bank and wants to borrow $1000 to cover the cost of some additional inventory he wants to purchase. The bank may approve the loan, and the businessman will tell the bank to credit the $1000 to his deposit account.

Bank Assets
debit Loans $1000

Bank Liabilities
credit Deposits $1000

The businessman now has an additional $1000 demand deposit. No one else's demand deposits have been reduced. This is clearly an increase in the money supply, and it is apparent that the bank created the $1000.

These ''derivative'' deposits are very important both quantitatively and theoretically -- it is in terms of derivative deposits that banks can be thought of as creators of money. If all deposits arose from primary deposits, banks could not be said to create money.

-- Paul M. Horvitz, Monetary Policy and the Financial System, pp. 56-57, Prentice-Hall, 3rd ed. (1974). (Horvitz received his Ph.D. from Massachusetts Institute of Technology, and was Director of Research at the Federal Deposit Insurance Corporation. He was an assistant professor of finance at Boston University. He also served as Associate Director of Research for the Office of Comptroller of the Currency, U.S. Department of the Treasury, and as Financial Economist at the Federal Reserve Bank of Boston.)

From the Federal Reserve Bank of Chicago:

Of course, they [commercial banks] do not really make loans out of the money they receive as deposits. If they did this, they would be acting just like financial intermediaries and no additional money would be created. What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities) both rise....

--Federal Reserve Bank of Chicago, Modern Money Mechanics, pp. 3-13 (May 1961), reprinted in Money and Banking: Theory, Analysis, and Policy, p. 59, ed. by S. Mittra (Random House, New York 1970).

Here's what I suggest you do. Go to college. Major in accounting. While you're in college, take a standard college economics course called "Money and Banking." Get the bachelor's degree in accounting. Then, go to work for a CPA firm. Study for the Uniform Certified Public Accountant Examination, take the exam, and pass it. Become licensed as a CPA in your state.

Then, while you're at the CPA firm, become a bank auditor and audit banks for about five years.

Then, you might know as much as I do about how banks loan money.

Wow, you sure know a lot. Simple question for you.....

What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities)
both rise....


What does IN EXCHANGE mean? Does it mean to loan? Not sure on the meaning of exchange.

And while we are at it, a holder in due course has to accept the instrument for value, what does that mean?


(2) the holder took the instrument (i) for value,
http://www.law.cornell.edu/ucc/3/3-302

[JamesVincent]

Wow, you sure know a lot. Simple question for you.....

What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities)
both rise....


What does IN EXCHANGE mean? Does it mean to loan? Not sure on the meaning of exchange.

And while we are at it, a holder in due course has to accept the instrument for value, what does that mean?


(2) the holder took the instrument (i) for value,
http://www.law.cornell.edu/ucc/3/3-302

If you take out a loan, say a $200,000 mortgage the financial institution is given a note by you stating that you borrowed $200,000 and promise to pay that money back at whatever agreement you reach. At the same time the financial institution transfers $200,000 to wherever it has been agreed upon in your agreement. The exchange is you providing a promissory note, an IOU, for that $200,000 and that financial institution providing $200,000 for that note. That is in the most basic, simple terms I can think of. As was said at the same time this happens the institution receives an asset in your note to repay and some where else a liability is created by the deposit of said monies. To simplify things we'll assume that the same institution is used at both ends and they receive the liability for $200,000 deposited. The reason the institution would do this is to receive the interest paid on the note, which is how a bank makes money in it's lowest form.

[grixit]

What better place to test these theories I have seen online, I tried looking but could not find what I wanted answered. If everyone here is sure of the self, then state the facts. Chill with personal attacks and educate me.

No. We have tried reason, we have tried facts, but people like you are not here to be educated, you are here desperately determined *not* to be educated. We have to break through that attitude by speaking plainly. You are an ignorant, deluded troll. Hopefully, the truth will make you angry enough to start thinking for yourself, instead of surrendering your mind to a bunch of scammers. Maybe you'll get angry enough to contact them and ask why they sent you out with a bag of marshmallows that they told you were thunderbolts. Maybe you'll get angry enough to start reading the law for what it actually says without trying to change the plain meaning of words. And maybe you'll get angry enough to ask yourself why you decided to reject reality to trust a bunch of random, out of context quotes.

[Patriotdiscussions]

Wow, you sure know a lot. Simple question for you.....

What they do when they make loans is to accept promissory notes in exchange for credits they make to the borrowers' deposit accounts. Loans (assets) and deposits (liabilities)
both rise....


What does IN EXCHANGE mean? Does it mean to loan? Not sure on the meaning of exchange.

And while we are at it, a holder in due course has to accept the instrument for value, what does that mean?


(2) the holder took the instrument (i) for value,
http://www.law.cornell.edu/ucc/3/3-302

If you take out a loan, say a $200,000 mortgage the financial institution is given a note by you stating that you borrowed $200,000 and promise to pay that money back at whatever agreement you reach. At the same time the financial institution transfers $200,000 to wherever it has been agreed upon in your agreement. The exchange is you providing a promissory note, an IOU, for that $200,000 and that financial institution providing $200,000 for that note. That is in the most basic, simple terms I can think of. As was said at the same time this happens the institution receives an asset in your note to repay and some where else a liability is created by the deposit of said monies. To simplify things we'll assume that the same institution is used at both ends and they receive the liability for $200,000 deposited. The reason the institution would do this is to receive the interest paid on the note, which is how a bank makes money in it's lowest form.

Ah so exchange means to borrow eh? See I learn something new. Now is the promissory note worth anything? I have heard that they sell the note, which seems impossible since it is an IOU, and if the banks can sell it, how much did they pay for it? Did we sell it to the bank? Or did we exchange it for the money(checkbook money) they provided? How did the funds come into being? Banks need reserves in order to create money, is my note the backing for the creation of the money.

What does accept for value mean?

[fortinbras]

NO, they really don't accept promissory notes "in exchange" for money. They accept promissory notes as promises to pay back money at some future date. The promissory notes themselves are expressions of existing debt, not a substitute for money. And, this is significant, "they" (the bank, the lender, the vendor, the tax collector, whoever) don't have to accept any promissory note -- they can pick and choose which to accept and which to reject, and they can reject any and all promissory notes if they wish.