WSJ Article Notes

WSJ Article Notes - Chinese govt to invest in foreign...

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1/19 WSJ article -banks required to hold 5% of risky mortgages in their portfolios when they securitize them -forcing them to hold the mortgages prevents them from selling them all off which leads to less risky loans given since they have ties to the loans, and in turn reduces moral hazard -30% required down payment is above the industry standard at 20% 1/24 Headline: Chinese Bank Makes a Bold US Bid -Largest Chinese bank (gov’t owned—there are 4 total banks) takes over US bank for the first time ever (Bank of East Asia) -motives: desire to better support Chinese companies overseas (“follow your customer”), desire by the
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Unformatted text preview: Chinese govt to invest in foreign exchange overseas (recycle all of the US dollars they are sitting on)-deal must be approved by US regulatorswant to make sure they arent drawing too many assets from US-If deal is approved, will start to happen way more often 1/26-small banks WERE bailed out, by TARP money, discount rate was also changed-low level of small business lending is due to low DEMAND-main lending by small banks is real estate, NOT C&I lending -if small banks continue to hurt, they will probably get eaten up by big banks or fail...
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