Remember those ooo so dusty minor points of how financial institutions were over leveraged and this was one of the causes of the financial crisis? Like Poltergeist....they're back!
Credit Suisse Group AG and Scotia Capital, a unit of Canada’s third-largest bank, said they’re offering credit to investors who want to purchase loans. SunTrust Banks Inc., which left the business last year, is “reaching out to clients” to provide financing, said Michael McCoy, a spokesman for the Atlanta-based bank. JPMorgan Chase & Co. and Citigroup Inc. are doing the same for loans and mortgage-backed securities, said people familiar with the situation.
Federal Reserve data show the 18 primary dealers required to bid at Treasury auctions held $27.6 billion of securities as collateral for financings lasting more than one day as of Aug. 12, up 75 percent from May 6.
The increase suggests money is being used for riskier home- loan, corporate and asset-backed securities because it excludes Treasuries, agency debt and mortgage bonds guaranteed by Washington-based Fannie Mae and Freddie Mac of McLean, Virginia or Ginnie Mae in Washington. Broader data on loans for investments isn’t available.
The article goes into some detail including the Federal Reserve's using $1.25 trillion dollars to buy mortgage bonds.
I'm sure some will argue that all of those mortgage backed securities are cheap now. I'll bet they are when one cannot evaluate junk and foreclosures are rising.
Casino banking once again.