THE RISE OF POLITICAL CONSERVATISM 1980 1992
PRESIDENT GEORGE HW BUSH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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They had bank customers loaning their own money to people that weren’t really financially qualified to pay back the loans.
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They ‘bundled’ good and bad loans together and told investors that it was a sure money maker because everyone pays back home loans.
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They ‘bundled’ the good loans together and told investors that it was a sure money maker because everyone pays back home loans.
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They had bank customers pool their money together to lend to the bank for home loans.
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Detailed explanation-1: -An increase in demand deposits or other liabilities of a bank increases the bank’s reserves. Bank can make loans equal to its excess reserves. Loans made by increasing demand deposits. The loan check is spent, deposited in a different bank, and CLEARS.
Detailed explanation-2: -Liquidity is an important principle of bank lending. Bank lend for short periods only because they lend public money which can be withdrawn at any time by depositors. They, therefore, advance loans on the security of such assets which are easily marketable and convertible into cash at a short notice.
Detailed explanation-3: -The banks might not be willing to lend certain borrowers due to the following reasons: (a) Banks require proper documents and collateral as security against loans. Some persons fail to meet these requirements. (b) The borrowers who have not repaid previous loans, the banks might not be willing to lend them further.
Detailed explanation-4: -Banks create new money whenever they make loans. The money that banks create isn’t the paper money that bears the seal of the Federal Reserve. It’s the electronic money that flashes up on the screen when you check your balance at an ATM. Banks can create money through the accounting they use when they make loans.