tag:blogger.com,1999:blog-33399132.post6489939245594346763..comments2024-03-04T08:09:21.453-08:00Comments on Richard's Real Estate and Urban Economics Blog: The Hidden Leverage of Mortgage SecuritizationRichard Greenhttp://www.blogger.com/profile/02161226214739034402noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-33399132.post-18942069754653727982010-07-29T06:37:34.624-07:002010-07-29T06:37:34.624-07:00Banks say they cannot make money holding mortgages...Banks say they cannot make money holding mortgages so they securitize the loan.<br />Right?<br />But the banks are free to issue the credit for the mortgage without having the reserves. It must simply have sufficient capital backing the loan. (8%, right?)<br /><br />So securitization must be a way to avoid holding sufficient capital to support the mortgages. <br /><br />So, the real point of securitization must be to balance more debt atop smaller bits of capital--in other words, to maximize leverage.<br /><br />Is my analysis flawed???Mike Whitneyhttps://www.blogger.com/profile/08822460885055606579noreply@blogger.com