If your borrow money and give it to someone else and that someone else loses it how is it the borrower's fault or even problem?
If your borrow money and give it to someone else and that someone else loses it how is it the borrower's fault or even problem?
It's not the borrowers fault, and in case of banks, it's not even their problem thanks to credit score and extensive guarantees built into the system.
However when I'm paying for some work to be done in the future, I'm essentially lending the contractor money predicate on the work being done by a certain deadline, quality or even at all.
So I'm the lender until the job is done, and if the borrower defaults on this it's not my fault, but certainly my problem.
Sorry I meant lender.
Anyway my point is that if you become a lender for a nontrivial sum of money it might sense to hedge that risk (insurance, credit risk entrustment, ...)