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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: Ramsey Su who wrote (46814)12/8/2005 1:42:03 PM
From: ild  Read Replies (1) of 110194
 
<<<moving so strongly into the higher risk areas>>>
Do they have any choice if many of their competitors have moved into the higher risk areas? IMO they don't. Servicing revenue is not something the market will assign a high P/E for.

All banks have margin pressure because of overcapacity and flat curve. Apparently Option ARM has higher margins, so this is what they try to sell. Very similar to the move the big banks when they aggressively moved into subprime squeezing LEND/NEW margins.
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