Shaky home equity lines of credit (HELOC) loans are overwhelming major banks’ Tier 1 capital which means they need more capital to meet Basel III requirements. B of A, Wells Fargo, Citigroup, and JPMorgan Chase together have about 40% of all home equity loans.
B of A estimates that only about $5 billion, or [...]
You may wipe your brow and say to yourself, “Well, we avoided the Big One this time, let’s get back to normal.” After all, we were threatened with the specter of the Great Depression early into the crisis, at least according to Ben Bernanke, and you might think that we dodged that bullet. You would be wrong.
I wish to thank Keith Weiner and Mike Shedlock for their discussion on fractional reserve banking (FRB). For what it’s worth, Mish, I don’t think that Keith got it wrong or that he had intended to write a definitive article on the topic. I appreciate the fact that you have written about duration mismatch over [...]