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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Louis V. Lambrecht who wrote (7406)	2/9/2004 2:00:18 AM
From: Haim R. Branisteanu	Respond to of 110194

Louis there is a huge difference between what is called "money center bank" e.g. Citi, JP Morgan et-al and real banks that have assets of around 5 to 50 billion involved in old fashion banking business. Think why the mergers between the big banks like Bank One and J.P Morgan or the present result of CitiBank or Bank America they are all hungry for cheap money that a bank can get it's hands on via the FED window or from the pool of money sitting in insurance companies. The reason is very simple not economies of "scale" in personnel but the ability to manipulate markets and profit from that. You will not see those profits as "speculative" profits but as fees in a bank balance sheet. I am not sure how many are familiar with swaps and caps which are mostly "off balance sheet" transaction. Those instruments should be profit neutral (as they are build based on computer models) but they are not! When a bank builds such instruments it tries to move the market to it's own benefit grabbing more premium and booking a profit, which is later classified as fees - under the excuse that they charged a fee for building the swap or cap. For those action you need the cheap money and lots of it