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When banks run out of money to loan to people where do they get more money?
Wiki User
∙ 10y ago
Either from other banks or their own particular government. In the worst case they can borrow from other banks outside the governance of their local control.
It's a great merry-go-round of displaced irresponsibility.
We all loose.
~JCF
Wiki User
∙ 10y ago
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What do banks do with the money not held in reserve?
Loan it out to people, because they'll make more money by lending than by saving.
What do banks do with money not held in the federeal reserve?
They loan it out to others. Banks make more money through lending money than through storing it.
How does the fed encourage banks to loan more money?
The Fed encourages banks to loan more money by:Reducing the Cash Reserve Ratio (Money that needs to be deposited with the fed by every bank) This way banks have more cash to lend and hence they loan it to customersReducing Interest Rates - By reducing interest rates, loans become cheaper thereby prompting customers to take new loans which encourages banks to lend more loans in order to gain new business
Where can you find out more information on home loans for people with bad credit?
A lot of private loan companies will loan people money who have bad credit. Most national banks will not though. The only problem is that these private loan companies will charge much more than a bank would.
How bank create money?
Money is CREATED by governments, not banks. They store money. Banks also EARN money by loaning money to people. People pay the banks back more money than they borrow (interest)
What do banks do with the money not held in reserve?
Loan it out to people, because they'll make more money by lending than by saving.
What do banks do with money not held in the federeal reserve?
They loan it out to others. Banks make more money through lending money than through storing it.
How does the fed encourage banks to loan more money?
The Fed encourages banks to loan more money by:Reducing the Cash Reserve Ratio (Money that needs to be deposited with the fed by every bank) This way banks have more cash to lend and hence they loan it to customersReducing Interest Rates - By reducing interest rates, loans become cheaper thereby prompting customers to take new loans which encourages banks to lend more loans in order to gain new business
Where can you find out more information on home loans for people with bad credit?
A lot of private loan companies will loan people money who have bad credit. Most national banks will not though. The only problem is that these private loan companies will charge much more than a bank would.
Why were banks often pressured to loan more money then what they should have?
Because that is just how things have to be sometimes.
How bank create money?
Money is CREATED by governments, not banks. They store money. Banks also EARN money by loaning money to people. People pay the banks back more money than they borrow (interest)
What describes how lowering the required reserve ratio reduces the money supply?
When the required reserve ratio is lowered, banks can loan out more money.
Difference in loan syndication and multiple banking?
multiple banking is use of more than one bank while loan syndication is where several banks lend the money for one loan.
Why do banks give interest on deposit?
Banks make money by lending money to people and charging people for borrowing. The amount banks charge is called interest. Banks borrow money from other people and pay them interest on the amount borrowed. Banks charge more interest on the money they lend than they pay one the money they borrow. That is how they make money. When people deposit money with a bank, the bank is literally borrowing money from some people so they can lend it to other people. That is why banks pay interest.
Is it possible that banks are not modifying your loan because they cant after selling your note and are lying to stall so they can foreclose instead of come clean?
The main reason why banks generally are not doing loan mods is because of money. Banks make more money by foreclosing on a property then by approving a loan mod . Also, banks have an obligation to their investors to get the most return on investments for their investors. A loan mod reduces the return on investment. Now if a bank sold the note and is offering a loan mod when they they are not the holder of the note in do course then they really have no authority to do so.
How does charging interest encourage banks to make loans?
Interest is the money banks get in exchange for lending money. The more "safe" loans they make, the more money they make. This helps keep bank investors happy. A loan at 0% offers the bank zero incentive for lending money.
What of the following best explains why the money supply is increased when the Fed buys T-bonds on the open market?
The purchase of bonds increases the amount of deposits in people's bank accounts, which enables banks to loan more money
