alt Hacker News|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".
The next sentence in that article is:
> They sell down debt when they are worried about concentration, which is exactly what "approaching internal limits" means in plain English: too much of this bank's balance sheet is now one bet on one sector holding up.
Which is correct, but kind of weird because being confident in a credit and being worried about concentration are not really mutually exclusive things. You can be pretty confident in an investment but not want it to constitute a majority of your portfolio. (Bankers know that even very strong credits are never 100% guaranteed to pay out.)
Let's say I offered you the chance to pay $100 to get $120 back if at least one coin toss in five came up heads. That's a pretty good bet, right? But would you bet your house on it?