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The difference is that everybody knows that leveraged loans are risky. The mortgage crisis wasn't triggered by the fact that complex mortgage backed securities
by travisoneill1 8y ago
The difference is that everybody knows that leveraged loans are risky. The mortgage crisis wasn't triggered by the fact that complex mortgage backed securities were risky, but by the fact that people thought they were pretty much risk free and were blindsided.
- interlocutor 8y agoWhoever is determining credit worthiness needs to have skin in the game. This is what Dodd-Frank did. It required security bankers retain 5% of the overall risk of the security. Known as the Volcker Rule, it is now being rolled back: https://www.washingtonpost.com/business/economy/trump-signs-law-rolling-back-post-financial-crisis-banking-rules/2018/05/24/077e3aa8-5f6c-11e8-a4a4-c070ef53f315_story.html https://www.washingtonpost.com/business/economy/trump-signs-...