Archived In case you didn't know how banks; local, regional or federal, operate (imgoat.com)
submitted ago by ARsandOutdoors
Posted by: ARsandOutdoors
Posting time: 1.8 years ago on
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Archived on: 5/15/2019 10:00:00 AM
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79 upvotes, 2 downvotes (98% upvoted it)
Archived In case you didn't know how banks; local, regional or federal, operate (imgoat.com)
submitted ago by ARsandOutdoors
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[–] BloatedVoatGoat ago
People don't borrow money to put back into a bank. Doesn't make sense
[–] ARsandOutdoors [S] ago
The money eventually makes it back into the bank, where it becomes an asset on their balance sheet from which they can loan out against. They can do that over and over again until they hit their reserve ratio and can't do it any more.
[–] BloatedVoatGoat ago
They still have the liability ratio to maintain against the loans of 9:1. So they cannot make new loans using depreciating items like cars or non colletral loans but can against things that do appreciate like a home. So if you have paid down 10% on your home and have 20% equity they can write out 100% of the value in another loan. And with that we can see how housing broke the market.