I don't get this. Banks must always do this, they exist because everyone else wants to lend short term or borrow long term. Anyone who acts as the counterparty to that is automatically a bank or bank-like.
I guess what you mean is that when the banks borrowed short term (as they must), they did it using home loans as collateral, and that more of those loans defaulted than was expected.
I don't get this. Banks must always do this, they exist because everyone else wants to lend short term or borrow long term. Anyone who acts as the counterparty to that is automatically a bank or bank-like.
I guess what you mean is that when the banks borrowed short term (as they must), they did it using home loans as collateral, and that more of those loans defaulted than was expected.
How does that justify defaulting?