Re: Financial innovation | <– Date –> <– Thread –> |
From: Brian Bartholomew (bbstat.ufl.edu) | |
Date: Fri, 16 May 2008 13:03:17 -0700 (PDT) |
> Were there runs on the bank? Fractional reserve banking is inherently bankrupt. A bank run forces that bankruptcy into the light: http://www.mises.org/mysteryofbanking/mysteryofbanking.pdf A lender to build cohos might be better arranged as a mutual fund, which makes no promise that shares can be redeemed in cash. It has a set of promised investment goals and methods, but the fund is only obligated to follow the prospectus, not to attain specific results. There is no magic; the assets a coho mutual fund would hold are a bunch of mortgages. If there is a run of redemptions of fund shares, investors would receive whatever the mortgages could be sold for. Brian
- Re: Sympathetic lenders, (continued)
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