3 ms·
"its almost like making bets with money you don't actually have yet is a bad idea" Banking is supposed to be a very boring business (at least under Glass-Steag
by UncleOxidant 4y ago
"its almost like making bets with money you don't actually have yet is a bad idea"
Banking is supposed to be a very boring business (at least under Glass-Steagal-like regulation). Making "bets" with money they don't have isn't something retail banks are supposed to be doing. Yes, we know that some banks were doing this prior to the '08 GFC, but wasn't that supposed to have been reigned in by the reinstatement of Glass-Steagal-like regulation since then? (of course, there is some distinction between retail banks and investment banks, is SVB the former or the latter?)
- borski 4y agoLoans are bets. You’re limiting bets to investments, but lending money is a bet that the person you lent it to will be able to pay it back; albeit a properly collateralized bet with solid underwriting, hopefully. But it’s certainly not a 100% guarantee. Retail banks absolutely underwrite loans.
- za3faran 4y agoMaybe running an economy on interest bearing loans was not a good idea after all, who would have known? We've had checks notes only a few thousand years to know that.