Okay, you've got a customer who needs a loan BIG TIME!
I mean that they're on their last leg.
They've made some really, really bad financial decisions, so they won't qualify for a loan through conventional/traditional sources.
They're defaulting or soon will be defaulting on their financial responsibilities.
It's questionable as to if they have the capacity to repay the loan.
So they accept a loan which is priced 8 points above the 3 month Libor.
Doesn't that look like a subprime rate?
Actually doesn't the borrower look like a subprime borrower?
Meet their lender, The Fed, or maybe it's the taxpayers.
Meet the borrower, AIG.
Anyone see 85 bil around here.
Welcome to the newest subprime lender;
The Fed!
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