Private Lenders: The Bailout

In recent years there has been talking about the bailout that is being produced by the state of the banks with financial problems. We recall that the Bank of England nationalized (temporarily) to the mortgage bank Northern Rock in February 2008. Only a month later there was a case is more striking, with the collapse of investment bank fifth of the U.S., Bear Stearns. This was the first time the Federal Reserve intervened in the private sector to prevent system collapse. For many this was a clear sign of the end of capitalism as such.

In these two cases, and in many others, central banks act as lenders of last resort or UPI for commercial or private banks and other financial institutions. It thus allows the bank's activity does not cease thereby avoiding layoffs and unpaid debts. It helps them in times of crisis.

The same way but on a smaller scale applies to individuals. Millions of people come to an impasse and they need help. In this case it has been found as public administrations have come to the rescue of individuals. Claimed that the bank support be enough.

In this case the lender of last resort are themselves. If you encounter problems and need capital funding can only be found through private equity urgent. Private equity is for people willing to lend money and do not form part of any bank. They are individuals who become banks. In this case bailouts. Thus, a person with financial problems, and favorable economic prospects for the future, you can get the push that banks have been turning to worldwide investors.

Working with private lenders to lower requirements of banks in lending. Many of them use real estate as the only guarantee, something that banks do. Interest is 20% similar to a credit card, but in many cases mean the difference between the end of the work activity or not.