alt Hacker NewsThis is just what banks do O_o underwrite loans, then collateralize (i.e. bundle) to people who want the risk.
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I reacted the same. What could be a bad sign though is if they try to sell it and they dont get what they want.
yeah, either they discount it enough to look worthwhile to someone, or they keep it and take the risk. Risk assessments are inherently subjective, so both parties can think they're making a deal.
>We lent £1,000 to John Sozzleby at 10%. We quantify the risk level as “iffy”, which is 42.6 qualm points above "dodgy". and are willing to sell you the debt for £700. its a great deal!
This is what a lot of, if not all, IPOs are for too.
Lots of names to obfuscate the same financial yada yada.
|This is just what banks do O_o underwrite loans, then collateralize (i.e. bundle) to people who want the risk.
... and from the linked piece ...
| Banks do not sell down debt they are confident in
... I have no claim to expertise but both of these can't be true.
I wouldn't worry about it anyway, you can be sure when the day comes "they'll be to big to fail".
yes just like mortgage backed securities in 2007
Next thing you know, they're going to take the money in your savings account lend it out to anyone who asks for a loan!
/s
> This is just what banks do…
Sure. Sometimes they cause global financial crises as part of that process.
https://en.wikipedia.org/wiki/2008_financial_crisis