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Optimistbott t1_jeb2fba wrote

Reply to comment by dwinps in Subprime is back on the menu boys! by megaultraman

sure, but in terms of accounting for safe assets, it feels like they need to make riskier loans or buy riskier assets to stay ahead of their rate theyre paying on their deposits.

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dwinps t1_jecab69 wrote

They were making money before, they will make less money going forward and potentially even lose money. Loan rates are already much higher, even for good customers. Their customer base really isn't subprime and I don't think regulators would be pleased if they started taking on more risky loans heading into a potential recession

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Optimistbott t1_jecu4cv wrote

You never know. They could be making safe loans to balance it out. But raising rates is supposed to slow borrowing, and the possibility of demand reduction to reduce inflation is supposed to make borrowing more risky. Maybe they already made the risky loans. A lot of long term assets depreciated due to rates tho. So maybe that’s where their heads are at. It’ll all be fine,

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