What does it mean, derivative?

To do that, we would actually have to take and you might want to watch the video on this if you were to let that just compound, and you can imagine if you're the payday

And just to be clear, so the asset within this entity are the loans.

lender, that has maybe similar terms.

And in the meantime, all of these people let's say all of them took 500,000 home equity loans, right?

So I want to borrow 500.

You take a bunch of mortgages, so you know, these are house mortgages.

And Bear Stearns is doing this for millions of mortgages at a time.

And all the bank has to do is kind of set this whole legal structure up and service the loans.

So let's say, this person goes to a bank.

Well, I could keep making loans until I have 3,000 gold pieces of demand deposits.

Remember, it was 6 not too long ago.

Now, this is the endgame.

You know, we take out these loans to buy houses.

They're not due yet.

I know that I owe you 150 thousand

Or I want to have money back on my balance sheet.

And then they'll sell the loans.

You're talking about 0.5 per month.

But for the most part they're interest only loans.

I took a loan against the equity that

They'll give home loans to a million people, put them all together.

Let's say we had a constant y.

Take a seat.

Taking a dump.

Take him.

But the investment bank, they're not in the business of servicing loans or keeping loans on their balance sheets.

We create financial markets that are super complex.

And similarly, the government does auctions for all of the different durations.

They also tend to be able to think more abstractly.

Let's say I'm some type of the Investment Bank.

So what just happened?

Let's say I make another loan for 300.

I'm going to bundle them all together and sell them to this investment bank.

I'll take an impression of your teeth.

That's good Herby, that's lovely no change.

Take this.

I think most of us have a sense that payday loans are probably not the best source for a loan, that they probably charge a lot of money to those people who need that cash really badly.

(Laughter)

And on the liabilities side, what was left?

Well I have the original mortgage on my house.

Can I go out there and I buy a whole bunch of mortgages.

So I need to borrow 750,000.

I'll take attendance first.

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