> Because the punitive response to default makes even less sense.
I always thought that banks don't care for punishing people per-se, as morality it not their business. It seems they just have an excuse to create some bogus losses to offset their gains on paper? Does that makes sense? In other words, they know that some of these debtors will never pay back so they start charging a high (say 35%) interest. All that accumulated "loss" can be written off against their gains for tax purposes.
Does that make any sense or am I completely wrong?
I always thought that banks don't care for punishing people per-se, as morality it not their business. It seems they just have an excuse to create some bogus losses to offset their gains on paper? Does that makes sense? In other words, they know that some of these debtors will never pay back so they start charging a high (say 35%) interest. All that accumulated "loss" can be written off against their gains for tax purposes.
Does that make any sense or am I completely wrong?