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#33145 - 01/10/12 10:09 PM How do banks lose money when a mortgagor defaults?
Uni Offline
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Registered: 01/10/12
Posts: 2
Loc: USA
Since banks loan created money, as in fractonal reserve banking, how do they lose money when a mortgagor defaults?

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#33149 - 01/13/12 01:04 PM Re: How do banks lose money when a mortgagor defaults? [Re: Uni]
The editor Administrator Offline
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Registered: 07/25/08
Posts: 4422
Money the bank loans is represented by the dollars on deposit. Imagine the days before FDIC insurance, the loans don't pay, the bank can't pay someone who wants a withdrawal.

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