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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Oblomov who wrote (134922)11/16/2001 6:59:24 PM
From: Haim R. Branisteanu  Read Replies (2) of 436258
 
Oblomov, banks, mortgage lenders, and GSEs have equity requirements as such they are limited to the amount of loans they can write. I am not sure how the MBS for example qualify for that.

After a second thought it can be that as soon as the securitization is out of the door only the residual liability goes on the bank books and then you are right.

Still it is the FED responsibility to regulate the amount of liquidity by loan classification through general and specific reserves imposed on the banks.

My point is that to much liquidity will generate sooner of later inflation no matter who generate it.

Imbalances get settled in this case to much money will increase the cost of goods.

Haim
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