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Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: Zincman who wrote (54671)	9/20/2013 5:31:41 PM
From: Lazarus	Read Replies (2) \| Respond to of 223348

Risk is mitigated by following prudent lending guidelines. I dont think that money given to a bank by you or me or uncle sam is an asset for the bank. I believe its a liability on their books until it is lent out in which case the loan becomes an asset to the bank and liability to the borrower. Before the crash the balance sheet of banks looked stupendous because all that money they lent out represented A HUGE ASSET BASE [millions of customers owing them TRILLIONS of dollars]. What they were not prepared for was so many of those ASSETS become NON-PERFORMING. REPEAT: The only way to mitigate the risk of non-performing loans is to lend money with prudence. You do NOT make loans to people who do not have; Character to repay ----> decent credit score Capacity to repay ----> job with income sufficient to service the debt. Collateral ----> DOWN PAYMENT [skin in the game]