4 ms·
The idea that anyone is getting a 0.5% interest rate for anything—let alone with collateral of a risky asset—when treasuries are at 4%+ is fanciful, and makes m
by twoodfin 2y ago
The idea that anyone is getting a 0.5% interest rate for anything—let alone with collateral of a risky asset—when treasuries are at 4%+ is fanciful, and makes me lean strongly in the direction of the LARPer theory.
- mrkeen 2y agoPeople didn't believe negative interest rates were possible either. Anyway, I bet at that level of loan the customer has a lot more power; no lender is going to want a billionaire to do their business elsewhere. The human lender who signs the loan gets a promotion for increasing the bank's future-money. And if it goes sour, that human won't lose money. Even the bank doesn't need to worry about its existence if it will be bailed out by the tax payer anyway.
- alasdair_ 2y agoIt’s 0.5% plus a portion of the asset appreciation, not just 0.5%
- anonfordays 2y agoBanks and investment firms are not allowed to loan money out privately for less than the AFS, which is 3.72% right now: https://www.investopedia.com/terms/a/applicablefederalrate.asp https://www.investopedia.com/terms/a/applicablefederalrate.a...
- alasdair_ 2y agoIt's not a loan, it's considered a security.
- anonfordays 2y agoIt's a loan on securities, like a home equity loan. They are considered loans and such must follow the minimum interest rules.