Loan Modification

Stop the presses--Greenspan suggests 15% reserves for banks!

By Implode-Explode Heavy Industries

It?s notable that Alan Greenspan says 15% tangible equity would have been a good cushion for Lehman and Bear. Extrapolated across other major banks, the 15% figure implies they?d have to raise nearly $900 billion, a truly stupendous figure.

The bankers themselves used to consider anything less than approximately 15% reserves (6-to-1 leverage) insane. Now they've found something better: a regime of virtually no reserves, with the general public to underwrite them to eliminate all of the consequences, while they capture the outsized short-term profits.

Full post as published by Mortgage Lender Implode-o-Meter on April 09, 2010 (boomark / email).