3 ms·
It is a bad business generally, because it requires an unfailing entity to exist as a stopgap ("lender of last resort") who will take the hit to prop you up as
by SilasX 7y ago
It is a bad business generally, because it requires an unfailing entity to exist as a stopgap ("lender of last resort") who will take the hit to prop you up as the short term payment becomes due, for the inevitable times when the payments don't line up. WeWork doesn't (yet) have that.
- goatinaboat 7y agoTrue, but that is a general property of fractional reserve banking, not specifically of maturity transformation. There is a lot of ideology around homeownership both for and against, I am on the for side, so when asked about the social value of banking, that’s my go-to answer.
- SilasX 7y ago>True, but that is a general property of fractional reserve banking, not specifically of maturity transformation. But maturity transformation requires FRB.
- goatinaboat 7y agoNot if you start with enough capital. But it is drastically more efficient with FRB.