"The business model for big US banks is broken. Let us count the ways.
One: Banks no longer scrutinize a would-be borrower to decide whether he is good for the money. Instead they "originate and distribute" loans. "
Cheers. This is only the second WSJ writer to understand the sub prime mortgage scam. John Snow was the first a couple of months ago. The rest of the gallons of ink spilled on the subject have been bafflegab. The maker (originator) of the loan must lending his own money, and know that if the borrower defaults, he get hurt (or at least his bank gets hurt). If the originator can sell the loan and dump all the risk on the buyer, he will loan money like a drunken sailor. If the bank needs more money to do mortgages, let it attract more deposits.
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