What went wrong?
Why do we prefer safer lending?
The reason why we think this predicament is most worthy is because banks will make smarter choices(which will benefit them) about not giving out to much money that people can’t payback.
The second reason why we like this idea is that people wont go bankrupt and will be able to afford more expensive items for example houses and cars
(financial crisis times)
Jeffy had to borrow money from the bank to buy a house. his mansion costs approximately £985,000 but he has only got £500,000 so he has to borrow quite a bit of money for the bank. As it is the financial crisis they offered him way to much money. So Jeffy takes the deal but later on he loses his job. Resulting in this because he owned his own business he could pay the bank or his workers so this mean banks have to take Jeffys stuff meaning he goes bankrupt and he goes homeless and his colleagues' don’t get a job.
What will prevent this from happening?
. If bankers give money without checking the person can pay back, this will cause another crisis
.resulting in this if bankers are less greedy and they don’t go over board with the amount of money they are giving the person it will make sure we don’t have another crisis.