Why are financial institutions/companies struggling when they made extra profit off bad credit loans?
February 6th, 2010 | by admin |
Why do they need to be bailed out? A little more than 65% of the American population have a credit score of less than 630 who were approved for different types of loans from financial institutions with a higher interest rate. With all the extra money they’ve received from these people/loans, why are so many companies struggling since they received all the extra money/profit? Did all these people default?
Part of the problem is that loans that were not sub-prime are going into default. Due to the economy, with layoffs and other factors, people that had great credit scores and received loans are now unable to pay. It is this increase that is really hurting the institutions.
The bailouts are not all for loan losses. Institutions also invest some of their capital, some of this was in the stock market and other places, and these have also lost value. They are required to have a certain amount of capital, and with changes in the value of investments, many of them are coming up short.
3 Responses to “Why are financial institutions/companies struggling when they made extra profit off bad credit loans?”
By Mandi on Feb 6, 2010 | Reply
Part of the problem is that loans that were not sub-prime are going into default. Due to the economy, with layoffs and other factors, people that had great credit scores and received loans are now unable to pay. It is this increase that is really hurting the institutions.
The bailouts are not all for loan losses. Institutions also invest some of their capital, some of this was in the stock market and other places, and these have also lost value. They are required to have a certain amount of capital, and with changes in the value of investments, many of them are coming up short.
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By Judy on Feb 6, 2010 | Reply
Uh, a lot of these people defaulted.
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By Leticia on Feb 6, 2010 | Reply
One week before my friend was also searching for Bad credit loans he have worst credit i think below 500.
He told me that when i was searching on Internet for Bad credit loan he found a site which contain link for Geniune for Bad credit Loan. He checked all 8 links in that each link offer different interest rate and repayment time.
My Friend got loan of 25000$ for 15 years on 3% interest rate which should be payed annually.
Well you go to
http://easyloan.net.tf > Bad credit loan
Check all 8 links in that in search of lowest interest rates.
Take Care
Bye!
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