We Can Rebuild It
Dec 17th, 2007 | By Dan Amoss | Category: Macro Economics
BANKS AND OTHER FINANCIAL COMPANIES OPERATE with lots of leverage. This is good for bank shareholders when times are good, but very bad when loan losses start impairing assets.
If a bank were to invest its capital 6% in mortgages on an “unlevered” basis, its return on equity would be 6% ...read more
