Part 8/10:
Understanding who owns these various forms of debt offers a clearer picture of risk exposure within the financial system. Credit card debt is typically held by major banks, while mortgage loans are often sold to government-backed entities like Fannie Mae and Freddie Mac. Student loans are predominantly controlled by the Department of Education.
When individuals default, banks and lenders face initial losses, which can lead to increased borrowing costs and tighter credit availability for everyone else. Such repercussions can have complex implications for the broader economy.