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

To: Ramsey Su who wrote (26632)	2/17/2005 9:26:01 AM
From: russwinter	Read Replies (2) \| Respond to of 110194

Look like the problem here will be their cost of funds, which is creeping up, and bringing down their primary spreads from 2.62% in Nov. to 2.46% in Jan. Costs of funds are going up faster than yield. It would interesting see how these guys handle their costs. Do they have a bunch of money markets that are constantly increasing? And on CDs they will have to offer 3.0% even on six months, as the 6 month T-Bill is 2.85% now. My folks have a bunch of cash in an S&L, and I've opened up a Treasury Direct account, and am cleaning their bank deposits out. Pretty easy to do, if anybody here is so inclined? No reason to give banks low cost money (GDW's was only 2.19% cost of deposits in Jan.) anymore, plus they may be in trouble in short order. publicdebt.treas.gov They will have to match costs and rates charged, and still stay competitive on their new offerings. May be a tough trick, especially if the have a bunch of 5 year adjustables out there that don't readjust for another 3-5 years. I think the 5 and 7 year and maybe even the 3's will kill these lenders, as cost of funds creeps up.