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That squeezes margins and puts pressure on the banks to lend money to anyone who will take it, including weaker borrowers.
Dealers say the frenzied competition has made it possible for weaker borrowers — those denied credit even six months earlier — to finally obtain loans.
Lenders are betting they can cover some of the difference by luring rewards programs users to pay more for perks once subsidized by weaker borrowers.
Increasingly last year, said Martin S. Fridson, chief high-yield strategist at Merrill Lynch, bank lenders tightened standards, squeezing the weaker borrowers.
Although the amount of government financing was relatively small, it accomplished its goal: to revive the market for packaged consumer loans and get credit flowing again, especially to weaker borrowers.
Inflation did, however, help a lot of weaker borrowers pay their debts.
Similar(48)
Tighter lending standards are making it harder for subprime and other weak borrowers to get mortgages.
The real answer is that Japan's banks kept rolling over bad loans to weak borrowers.
Many believe that most of Resona's weakest borrowers will also be propped up.
"The Chaori default goes to show the government will begin to let the market decide the fate of weak borrowers.
Mr Gomi describes its attempt, and those of other banks, to raise capital by turning to its own, equally weak borrowers, as "not the best method".
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Justyna Jupowicz-Kozak
CEO of Professional Science Editing for Scientists @ prosciediting.com