Post #4094911
2026-07-25 10:45 UTC
Lenders are always seeking the highest possible return on their loan-books, which makes that "risk premium" awfully tempting. Why loan $1m to Elon Musk at 0.5% interest when you can make 10,000 $100 payday loans to non-union Tesla workers on food stamps at 1,000% interest?
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Replies (1)
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@pluralistic@mamot.fr 2026-07-25 10:45
Obviously, the fly in the ointment here is the *risK* in "risk premium." The reason the risk premium exists is that poor borrowers have a harder time paying their loans. That can be good, up to a point: if you're Klarna and you're originating loans to people Chipotle lunches on the installment plan, you *want* your borrowers to miss several payments. 4/