> Is this not quite risky for banks? Not that banks taking a risk is bad, but it seems a very long bet for them. It is and it isn’t I think. They rebundle thos

> Is this not quite risky for banks? Not that banks taking a risk is bad, but it seems a very long bet for them. It is and it isn’t I think. They rebundle those into securities and sell them on so that other banks and investment firms convert capital into cash flow and it acts like an investment portfolio (then others leverage those securities with derivatives). So the bank isn’t holding the loan directly typically. Of course, as we found out in 2008, the amount of exposure to risk is generally poorly understood even by the players. That being said, I believe similar things happen abroad, so I’m not so sure why 30 year fixed exists in America as an anomaly that you don’t see in other countries and what specific regulation / law encourages it to be this way.