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If you owe the bank a million dollars, you have a problem. If a million people owe the bank a million dollars, the bank has a problem.

• twomoretime 7y ago
  Particularly with fractional reserve banking.
• LeoTinnitus 7y ago
  In terms of commercial renting in the "better" states, this is why the government requires reserves, lending only at a percentage of their income, and take consider economic downturn in underwriting decisions. I say this in regards to commercial lending though. Residential is no holds barred, anything goes cause banks and mortgage companies house people without any consideration if it's reasonable.
  • ichirotakahashi 7y ago
    The biggest problem with financial bubbles is that people get super-risk averse. As soon as there is talk of over-indebtedness, everyone throws the book at them. Then the bubble pops.
  • flashyfaffe2 7y ago
    Agree with you, however bank rules rely that normality law (small loss at the tail will be covered by the entire population). Here we have a typically extreme case event and generalized Pareto law is more illustrative to deacribe what we witness right now. Banks reserve are clearly not enough to cover all the all loss. So unless a global agreement with every parties ( renters, landlords and Banks) can't see a fair solution popping up.
• hkmurakami 7y ago
  One step down stream was Simon properties buying forever 21 because the latter occupied so much space in their malls in a way that would be difficult to replace (also apparently there are some clauses in the leases near F21 locations that would be triggered if F21 leaves)