Of course,, but what happens when the responsible borrower of $400K gets into trouble or the $500K item that you loaned $400K on becomes worth $250K ?
Thirst for above market returns creates a crazy risk/reward structure.
Institutions offer comepetitive rates, that are FDIC insured to get deposits, and then can lend out multiples of the incoming deposits to what could become risky loans.
Leverage is everyone’s friend on the way up…
Watch out below on the way down. The original deposits are backed by taxpayers.
