When Zombie Banks Walked the Earth 0
There is a certain delightful irony in this. There’s a line forming at the returns desk (emphasis added):
The banks are setting aside more reserves to cover the potential costs of such repurchases, cutting into earnings.
The trend is also pitting big lenders, insurers and mortgage-finance institutions against each other. That’s a big change from the previous decade, when they worked together to fuel the housing boom by originating, insuring and securitizing mortgages in record amounts.
Christopher Whalen, managing director of research firm Institutional Risk Analytics, offered up a colorful metaphor for the unfolding situation.
“The wave of loan repurchase demands on securitization sponsors is the next area of fun in the zombie dance party, namely the part where different zombies start to eat each other,” Whalen wrote in a note to clients Tuesday.
