Quote:
Originally Posted by rowan
I would say it seems unlikely that a "bank" would use their customer's funds to speculate in high risk investments, but hey......didn't something like that already happen?
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It's not unlikely. Banks make money by investing the majority of their customers' deposits. Only a portion of it is kept liquid to service their customers' accounts.
Yes, it did happen. You may recall the global banking crisis from 10 years ago, when many banks were investing in high risk mortgages, lending money to anyone who wanted to buy property, regardless of their creditworthiness. Borrowers were getting 100% mortgage financing, with no money down, to buy overpriced homes.