Don’t banks sell most of the mortgages that they underwrite? So shouldn’t their losses be contained to mortgages on their balance sheet versus the large leverage that you see with hedge funds/ibanks?
bummer that banks also invest to try to make money in more ways than just issuing mortgages
I just think of National City. They’re stuck with the baggage that came along with the FL bank that they bought at the brink of this mess. They’re blaming most of their losses on the loans picked up from the Florida residential market. But shouldn’t the loans have had been sold after writing them?
Well obviously they didn’t sell all of them.
tvPM Wrote: ------------------------------------------------------- > bummer that banks also invest to try to make money > in more ways than just issuing mortgages what do you mean by this?
you are a bank, sure you issue mortgages and sell some of them off or whatever, maybe you keep a bunch. Maybe you have a part of your bank that also trades, maybe they buy a bunch of this stuff as investments.
thought that most of the banks that originated the loans and held them to maturity (like wells fargo) were faring much better in the marketplace. banks whose business models include holding mortgages obviously had more skin in the game and probably exercised better due diligence. or, did they recklessly abandon due diligence too?
WFC didnt have AS MUCH exposure to issuing bad loans, and USBank fared even better. You are a midwesterner I recall. But if you are a bank who has a silo of people that are buying/selling the securitized loans trying to make money for the bank, and they start to sour on you and you can’t unload them to anyone, then you are up a creek.