Undisciplined

Money wants to be one, and assets want to be mortgaged, and "loans want to be securitized"

They will say this in part because it’s true — a newly invented form of lending should have high returns (no one else does it) and low correlations (it’s not like everything else) — and in part because there is limited data: A newly invented form of lending hasn’t been around for long enough for all of its risks to be realized.

once it has been around for long enough to have some track record of good results, outside investors will be interested in getting in. So the company that makes the loans will be able to sell them to outside investors, who will not meet the borrowers and make the lending decisions themselves, but will trust some combination of (1) the pitch and documents and handshake that they get from the company that makes the loans and (2) the track record of the asset class

ultimately there will be a division of labor between people who 

who meet the customers and do the underwriting

). And this has various well-known problems, because the people making the loans have less skin in the game than they used to, though you can arrange the incentives to manage those problems.

The company making the decision is the company taking the risk. It has skin in the game.

? Oh absolutely. Lots of people want Bitcoin margin loans, and “Bitcoin margin loan” is a relatively straightforward concept for outside investors to understand and underwrite

But Ledn had to liquidate a bunch of loans supposedly involved in that securitization... oops...

Asset-backed bonds—often associated with the 2008 financial crisis—are enjoying a renaissance as investors including big insurers and fund managers seek higher returns than conventional bonds offer.

Ledn does margin calls at 70% loan-to-value ratios and liquidates at 80%; “so far, the mechanism has worked,” and “Ledn has liquidated 7,493 loans in its seven-year history at a maximum loan-to-value of 85% and has never experienced a loss.” It’s nice when a new asset class has a track record of earning high returns with low risk.

Ah, man, I often wonder if Bitcoiners are just reinventing the financial system all over again. (That 

 sort of Levine's schpiel, and I'm reading him all the time so, you know, rubs off...)

https://newsletterhunt.com/emails/220282

econ

**Money wants to be one, and assets want to be mortgaged, and "loans want to be securitized"**


![](https://m.stacker.news/129994)



OLDSCHOOL banking, browskii. 

> They will say this in part because it’s true — a newly invented form of lending should have high returns (no one else does it) and low correlations (it’s not like everything else) — and in part because there is limited data: A newly invented form of lending hasn’t been around for long enough for all of its risks to be realized.
> once it has been around for long enough to have some track record of good results, outside investors will be interested in getting in. So the company that makes the loans will be able to sell them to outside investors, who will not meet the borrowers and make the lending decisions themselves, but will trust some combination of (1) the pitch and documents and handshake that they get from the company that makes the loans and (2) the track record of the asset class


> ultimately there will be a division of labor between people who *make* the loans (**who meet the customers and do the underwriting**) and the people who *own* the loans (**who put up the money**). And this has various well-known problems, because the people making the loans have less skin in the game than they used to, though you can arrange the incentives to manage those problems.

>  The company making the decision is the company taking the risk. It has skin in the game.

> Can **Bitcoin margin loans be securitized**? Oh absolutely. Lots of people want Bitcoin margin loans, and “Bitcoin margin loan” is a relatively straightforward concept for outside investors to understand and underwrite

![](https://m.stacker.news/129995)

But Ledn had to liquidate a bunch of loans supposedly involved in that securitization... oops... 

> Asset-backed bonds—often associated with the 2008 financial crisis—are enjoying a renaissance as investors including big insurers and fund managers seek higher returns than conventional bonds offer.

> Ledn does margin calls at 70% loan-to-value ratios and liquidates at 80%; “so far, the mechanism has worked,” and “Ledn has liquidated 7,493 loans in its seven-year history at a maximum loan-to-value of 85% and has never experienced a loss.” It’s nice when a new asset class has a track record of earning high returns with low risk.

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Ah, man, I often wonder if Bitcoiners are just reinventing the financial system all over again. (That _is_ sort of Levine's schpiel, and I'm reading him all the time so, you know, rubs off...)

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archive:  https://newsletterhunt.com/emails/220282