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by xivzgrev
2881 days ago
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See points above. Banks, being an integral part of the financial system, are only allowed to take on so much risk.
Third party companies have no such restrictions. But they can’t issue loans because they are not a bank.
So what happens is a bank issues a loan according to criteria the bank and the third party agree to. Then the bank sells it the next day to the third party. That way the bank is more insulated from risk because they aren’t holding the loan. |
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I have to think there is some misunderstanding here - lots of nonbank companies issue loans. Ford Motor Credit is not a bank.
The thing that banks are uniquely allowed to do is to take deposits, and lend out that money.