Dana El-Kurd

They shouldn't do that.

And they say, hey, if this person actually pays a loan back, I will pay you money.

Yeah.

So the other bank that's giving out the loan, right, gets money if the loan goes under.

So in theory, they're sort of like insured against the risk.

They call it like hedging.

So theoretically, it's less bad for them because now even if the loan goes under, they still get money back from that other bank.

Yeah.

And the other bank is betting that they are going to get it.

So then if the loan does get paid, then that bank makes money.

And this is legal for everyone to do.

Yep.

This is real banking or shadow bank?

This is real bank.

No, this is technical.

Actually, no, this is actually both.

Both of you do this.

Technically speaking, the instrument, like the actual credit default swap or whatever is made by the shadow banks, but then they're brought by the regular banks.

I'm starting to think that the banks are the shadow banks and that all of this is just fake and bad.

Like, so here's the thing.