Sat, 1 Dec 2012, 9:16am PST
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Do they see this as a short term wave that they can ride for a quarter or two, or are they banking *pun intended* on a long term trend upwards?
I think they see it as a no lose situation. Since they borrow at the Feds ZIRP, they can make sub prime loans all day at +4%......
Then they get to sell those notes back as MBS as part of the $40 Billion Fed program each month, off loading all these "marginal" loans.
It's a winning program for the squid!!!