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Strategies & Market Trends : Value Investing

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To: TimbaBear who wrote (12532)	5/28/2001 7:18:12 PM
From: Bob Rudd	Read Replies (2) of 78688

<<Easy to build up huge sales and originations and apparent profits when no one gets turned down>>I spent some time recently boning up on analyzing banks and finance entities. According to one analyst, while accounting convention and appearances indicate that originations sold to institutions thru packagers are no longer a risk exposure for the originator, in reality, if there's a default, the originator better step in and make it good if he wants to continue to sell paper. If so, there could be a large unspoken off-balance-sheet liability for future loan losses. Fast growth in subprime paper, that way exceeds industry growth [car sales], is almost always a tipoff of relaxed credit standards. If you finance it, they will come...but may not repay. This may be message in the share price.

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