Silly me! Here I thought the main reason for funneling so much money into higher education via what has become lax student loan screening was patronage. Academics and administrators have a strong tendency to vote Democratic. So a debt-fueled expansion of colleges and universities could only help Team Dem.
But in finance, bad accounting regularly drives bad outcomes and that looks to the far more immediate cause for the expansion in student loans, and the resulting escalation in higher education costs.
Another example of this type of dynamic is the global financial crisis. As we explained long-form in ECONNED, many banks adopted accounting practices that allowed them to use credit default swaps to remove CDOs from their balance sheets for accounting purposes. Traders had the entire theoretical future profits from this so-called negative basis trade booked in the current year. This resulted in Eurobanks as well as some US securities firms to (at best) be indifferent to CDO risk and
Banks face new reporting requirements; lenders still holding back on Helocs
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Amalgam Rx Announces Addition of Digital All-Stars to Leadership Team
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