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Banks have enough cash to cover 20% of their obligations. I think that is not that bad.
by jkot 10y ago
Banks have enough cash to cover 20% of their obligations. I think that is not that bad.
- SFJulie 10y agoThey have 20% of the deposit, but they are warranting the money of the financial assets they created. With lever effect, this account to 50 x more money. In France, banks systematically do all their possible to block customers to access the money from their life insurance contracts. There is as much fraud in bank industry in Europa as there is in food industry in USA.
- djschnei 10y agoGood ol' fractional-reserve banking. Wouldn't it be nice if we could all do that?
- selectodude 10y agoEver taken out a loan with nothing more than a down payment?
- djschnei 10y agoYes, in fact about $100k worth in order to learn about the very subject you're incorrectly making a snarky comment about! A down payment on a loan? That makes zero sense. I think you're talking about unsecured loans (i.e when there isn't an asset that can be repossessed if the debtor defaults). The fact that the loan is "unsecured" is precisely why the resulting interest rate will be higher. I am paying to borrow that money, and it's more expensive to borrow because of the increased risk assumed by the bank. However, fractional reserve banking is entirely functionally different.