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A comment on Italy’s teetering banks will be Europe’s next crisis. Parent comment

Re:Italy’s teetering banks will be Europe’s next crisis by visarga on Monday July 11, 2016 @05:08AM (#12069801)
> Banks make loans, that's kind of what they do,

How naive. Banks have to take collateral and give loans only to people/companies that have good track record. What they did is to give loans to people who could not pay back, which is a fatal mistake for a bank.

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Re:Italy’s teetering banks will be Europe’s next crisis by pjc50 on Monday July 11, 2016 @06:55AM (#12070183)
give loans to people who could not pay back

The people they lent to seemed like reasonable credit risks at the time - this isn't the same situation as US "subprime". Fundamentally there's no way to know whether a lender will be able to pay back, you can only make statistical guesses at the time based on limited information.

There's an additional problem in that NPL levels depend on the state of the economy as a whole, which can become a self-fulfilling prophecy.

(See e.g. http://english.mps.it/media-and-news/press-releases/2016/Pag...

Edit: MPS isn't even loss-making, at the moment. The cliff is not so close. http://markets.ft.com/research/Markets/Tearsheets/Financials...

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Re:Italy’s teetering banks will be Europe’s next crisis by calibraxis on Monday July 11, 2016 @09:18AM (#12070816)
If you can get a country to likely bail you out, then "risky" loans are no-brainers. Because you externalize risks onto taxpayers.

Example: why does Obama get heavy support from the finance industry?

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