These sorts of sales should have long term baggage clauses built into them to prevent government “suckers”. If they fail within x number of years, the original owners and their investors are held liable for them.
How can we mathematically prevent these sorts of deals? Is regulation the only way forward? #openquestion
Under the radar, a new class of dangerous debt — climate-distressed mortgage loans — might already be threatening the financial system. Lending data analyzed by Keenan and his co-author, Jacob Bradt, for a study published in the journal Climatic Change in June shows that small banks are liberally making loans on environmentally threatened homes, but then quickly passing them along to federal mortgage backers. At the same time, they have all but stopped lending money for the higher-end properties worth too much for the government to accept, suggesting that the banks are knowingly passing climate liabilities along to taxpayers as stranded assets. 1