Why are the banks and financial institutions still selling their toxic accounts to debt collectors?
Firstly, not all banks and financial institutions have been ‘bailed out’ by the government. Only a small proportion of the financial services industry has received any government funding or subscribed to the governments insurance/asset-backing scheme. Having said that, the ones that have are huge financial institutions. Where the government intervened, they did so to ensure that they could continue to operate as it was felt that failure to step in, and the resultant collapse of the UK banking system would have a far more detrimental affect. However, when the government ‘bought’ shares in these banks, they didn’t simply hand over billlions in cash. It is more complicated than that. The ‘toxic debt’ (I hate that term!) that you refer to doesn’t refer specifically to individual borrowers like your friend being unable to service their debts. It refers to wholesale, commercial debt that is traded between financial institutions (some of which does originate from sub-prime lending). This debt
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