HeavyD
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First response is correct: the borrower makes out. As an example, if I borrow $1000 from Bank of America and default after paying back only $500, well, BofA suddenly has a $500 hole in its balance sheet (which will flow through the income statement as a writedown). Meanwhile, I already had use of the $1000 -- I might have used it to live in a home I bought, or I might have used it to buy a car, or a vacation -- whatever. Bottom line in this case is that the borrower ends up $500 ahead, the bank $500 in the hole. D |
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Elliott J
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If you are trying to solicit a conspiracy theory response - you won't get it here.
Truth is in reality - nobody does. Unless you consider temporary cash-flow to the debtor as a benefit. It still henders their credit.
Of course this has created the industry of Debt Collectors, so If anyone benefits it would be the employment of Debt Collectors. |
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lezgettiton
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The people who borrowed the money. |
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jockman432004
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They do thru increased interest rates |
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fabled.life
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The bank is simply out the money - depending on if it's a secured debt or not they may have the chance to recoup some of their losses by repossessing the house/vehicle. If it's a credit card however their only option is to sell the bad debt to a collection agency which will attempt to recover the money from the borrower.
The person who failed to pay is then subject to the repercussions of having bad credit. Any credit cards will have high APRs, as well as possibly up front fees just for having the card.
FDIC Insured just means if the bank goes bankrupt the Federal Deposit Insurance Corporation will take action to repay those who had deposits with the bank. |
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papabear098
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The bank does it is called writing it off your taxes as a loss. So when the bank pays it taxes it can claim the loss on this amount of money. at their Quarterly or yearly returns. Hope this helps |
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lordshelbysf
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Banks dont lose money, only lost the prospect of gaining a lot of money through interest. |
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theshebster
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Banks are Federally Insured (FDIC) so they don't actually lose any money. They always profit. |
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006
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Presumably the loans were made to people who could not repay them. If they used them to start up businesses, for example, the creditors and suppliers of the failed businesses would be the profiteers (the recipients of the startup capital). |
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educated guess
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The people who get stuff and do not pay for it are the only ones who profit from "Bad debt" |
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Owning Dogs .com
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No one really profits except the people who didn't pay back the money they borrowed - ask the IRS - they charge income tax on the $$ you EARNED by someone writing off your debt. |
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Not To Serious
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Banks never lose money. |
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Hall + Oates
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no one. everyone just gets paid, and then the bank loses money. |
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Dude
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Potentially another bank who may buy out the first bank.
The bank has to write off the debts as a loss. When you get enough losses, the banks can go 'out of business' as they would lose enough market share value to where they can be bought out by another company as almost the case with E-Trade last week.
Anytime you put money in the bank, it is not put in a drawer with your name on it. That money is handed out or invested elsewhere to raise the banks profits. Most accounts are federally insured up to 100k. On a bank failure, only so much is left to give. Perfect example, The Great Depression.
If it happens massively across the board, then no one profits and we are all losers in it if people were to start running on the bank and taking all they have out because of it. |
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DIXIE
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The bankers |
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