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That precedent could perversely incentivize people to seek out unstable lenders.
by ortusdux 4y ago
That precedent could perversely incentivize people to seek out unstable lenders.
- DwnVoteHoneyPot 4y agowhich may help them become less unstable.
- marricks 4y agoI wonder why survival of the fittest has to always hurt the little guy. Buyers seeking out unstable lenders seems like a good way to encourage more stable lenders.
- deleted 4y ago[deleted]
- ALittleLight 4y agoWouldn't buyers seeking out unstable lenders discourage stable lenders? Because buyers would prefer their competitors?
- marricks 4y agoIf the unstable lenders folded and the mortgage holders could buy out their loans on the cheap, no? Then the shareholders of the lending company wouldn't be rich-people-broke-where-someone-buys-them-out-and-somehow-they're-all-still-rich they'd be actual-broke-where-they-lost-all-their-money-on-a-stupid-venture.
- kipchak 4y agoMatthew effect perhaps?
- _jal 4y agoWhen businesses abuse incentives and tip systemic risk into systemic crash, well, that's just the way the world works. When individual borrowers may have a transient opportunity to play games, suddenly folks are hot and bothered about moral hazard. I'd also note you could flip that argument on its head - more people seeking out unstable lenders would help capitalize them.
- mhluongo 4y agoThat sounds awesome.
- jacquesm 4y agoWhat's wrong with that?
- dymk 4y agoWhy's that a perverse incentive? As long as they're not getting bailed out on the taxpayer's dime, let them go broke and let the debt be sold at a discount (and thus more likely to be forgiven).