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That’s not financial engineering though. That’s predatory lending.

• direwolf20 9mo ago
  What separates predatory lending from being a form of financial engineering?
  • seanhunter 9mo ago
    They simply are completely different things. Financial engineering refers to the creation of complex financial products (usually derivatives) using techniques from financial mathematics[1]. Predatory lending is just lending to people who can’t afford to borrow. No engineering of any kind involved. [1] https://corporatefinanceinstitute.com/resources/financial-modeling/financial-engineering/ https://corporatefinanceinstitute.com/resources/financial-mo...
• graemep 9mo ago
  Financial engineering can enable predatory lending by repacking low quality debt into complex securities that are easier to sell. It happened with sub-prime lending that ended with the 1008 crash. I do not know whether it is a significant factor with private credit now.