Question by Steve: What are “hung loans”? How do they relate to investment banks and buy-outs/take-overs?
how do they relate to investment banks/PE firms in a take-over,

Also, when a ibank/PE firm wants to takeover or buyout another company, does it first do so from debt or a bank loan or from sale of it’s own bonds?

thanks, any info would be greatly appreciated

Best answer:

Answer by Jade C
“Hung loans” is debt that is stuck on the books of the investment banks because no one will buy the loans from them. A leveraged buyout is typically funded by the sale of bonds.

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Question by bluenote12482: was it the government who made the banks give these “bad loans”?
who made the banks give these bad loans seriously? I think the banks were at fault just as much because they knew they could make mucho $ $ $ $ $ off these “bad loans” and they kept doing it and really did not mind it.

Best answer:

Answer by Huntsman
Banks did not keep the loans. They sold them off to investors.
Banks perhaps would keep 1 to 3% of the loan amount.

Investors were HUNGRY to buy loans. The banks could not produce enough. Demand was so high that banks were barely checking the paperwork.
So… you also have to blame “greedy” wall street for all this mess

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