25-25 Selling loans without recourse is a way for FIs to remove loans from their balance sheet for the purpose of reducing the cost associated with reserve requirements.

Question

Quizplus · Accepted Answer

Selling loans without recourse means that the lender (FI) is transferring the risk associated with the loans to another party, so they do not need to hold reserves against them. This can help reduce the cost of having these loans on the balance sheet.

25-25 Selling Loans Without Recourse Is a Way for FIs