Legal Lending Limit
Categories: Credit
Risk management. For a bank, it matters. Lots.
In the modern era, the legal lending limit for most banks is 15%. That is, any bank can't have as a borrower one entity who borrows more than 15% of the bank's total capital.
Why? Well, if that one borrower went bust, the livelihood of the bank itself would be in jeopardy, likely putting at risk the deposits and other credits the bank held from other "innocent" potential victims.
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Finance a la shmoop. What is repo or repossession? Well this is possession yes [Crazy looking woman in bed]
the devil spirit inhabits your body you need an exorcism.. Yeah right just bring [Priest waving a cross at the woman]
the PC, well this is a repossession like when you take your body, you know back
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like a car you could have and should have bought that very old but in good
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ice cream truck you know that cost five grand. You could have paid for all of it
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the smartphone integration night vision and squirrel detection feature... That Audi [Squirrel detected in night vision]
cost 30 grand even though it was used and after you put the five grand down [Stacks of money]
you swore with your hand on your chest after signing promising documents 18
times that you'd pay 500 bucks a month for about five years until that car was [Woman signging the contract]
fully paid for but lo and behold you got fired from your job yeah, didn't plan [Woman looking angry walking out of her office]
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another and then another without paying and the nasty gram letters come from
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can't find a job in a tough economy yeah you really shouldn't have majored in [Woman watching the news with ice cream and crisps]
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tools and at 2:00 a.m. you hear your car is starting in the
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extent they'll be a scar a blotch on your record like that d- you've got in
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