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> Should banks care? If you put up $300k on a $1m property (meaning a $700k loan), and it gets foreclosed, then the bank will recover all of their money. They s
by icelancer 8y ago
> Should banks care? If you put up $300k on a $1m property (meaning a $700k loan), and it gets foreclosed, then the bank will recover all of their money. They shouldn't care, as they're in the clear risk wise.
From a micro perspective, yes. But a giant book of business relying on this model can easily expose unintended overleveraging in a sector that can hurt valuations regionally, such as China-US relations, more attractive offers elsewhere, etc. It isn't that simple.