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Why would bankers agree to loan the money then? They get their year end bonus for originating the fee and don't care about the losses? Or do they think they can
by makestuff 4y ago
Why would bankers agree to loan the money then? They get their year end bonus for originating the fee and don't care about the losses? Or do they think they can eventually get their money back by selling it to someone else?
- mywittyname 4y agoWell, for starters, they collect those massive interest payments each year. They also saddle the companies with expensive, long-term consulting contracts which extract even more money. And if/when the company goes bankrupt, the courts often give financiers an equity slice of the new post-bankruptcy company. The idea is usually to slash close enough to the bone that the company survives, but 100% of profits go to debt servicing. But this doesn't make for a company that's resilient to economic turmoil (or one that can invest money into growth). So the contingency plan is to ensure that they are first in line in court.