it’s actually really easy,In the subprime financial crisis“Subprime”,Refers to subprime loans in housing mortgage loans。

simply put,People who apply for a mortgage loan because of family conditions、income、Different factors such as historical credit history,The credit scores of lenders are also different。
Some lenders have high credit scores,Strong repayment ability,Low risk of default,Then their mortgage belongs to“Premium loan”,That is“Preferential loan”。
And some lenders have low credit scores,Weak repayment ability,High risk of default,Then their mortgage belongs to“Subprime loan”,That is“Subprime”。
In fact, in a popular sense,Mortgage loans and stocks、Bond、futures、Options and similar,All belong to the category of basic financial products,Lending bank lends to lenders,The lender repays the loan on time within the repayment period。
So the mortgage belongs to the loan relationship between the lender and the lending bank,No third party involved。
Which means,Even if the lender’s credit score is low,“Subprime”The risk is greater,The lender is very likely to default and fail to repay the loan。
But for the lending bank, it’s just a house default,They just took back the house,Irrelevant,It’s even less likely to cause a financial storm sweeping the world。
So from this we can see,Basic financial products including housing mortgage loans are relatively independent,Even if there is a problem with a certain product,The threat to the entire financial system is not great。
But financial derivatives are completely different。
Still go back2008The subprime financial crisis of 2015 came up。
For lending banks,Even though they can enjoy the benefits after they release the mortgage,Fixed date rent collection,This is a very happy thing,But the lending bank is slowly not satisfied with this。
Because of a very simple truth,The more mortgages the lending banks give out,Then the more people make money for lending banks,The higher the income of the lending bank。
But a cruel reality is,No matter how much money the lending bank has,,Also have an upper limit,And things like houses are very expensive,For lending banks,The mortgages they give out require a lot of their funds。
For example, the value of a house in the United States100Ten thousand U.S. dollars,The lending bank issued a mortgage for 10,000 houses,Will occupy them100Billion dollars in funding。
But the mortgage is dead,If all the money of the lending bank is occupied by the mortgage,Then the mortgage bank doesn’t have the funds to lend more mortgages,Earn more interest,This also fails to satisfy their dream of releasing more mortgages to make more money。
What to do then?
Is there a way,Can the lending bank use the limited funds in hand to issue unlimited mortgages??
This is a fantasy to ordinary people,However, it was solved by smart Wall Street investment bankers.。