Mr Cooper Group Inc (COOP)

[SamuraiProgrammer]

You are so right!

Banking 101...

(The numbers may not be exact but are in the ballpark)

For a bank, assets are (by and large) the principal balance on loans that were made.

When the bank creates the loan, they have to have 10% of the loan in deposits. The other 90% is 'created from thin air'. This is how fractional reserve banking works.

As payments are being made, the bank collects the interest and gets to keep it. As for the principal portion of the payments, the money that was 'created from thin air' goes POOF! back into thin air.

So the 300B in assets represents 300B in loans which represent 30B in real money. I know it is not what we wish, but it is the real situation.

https://positivemoney.org/how-money-works/banking-101-video-course/how-money-gets-destroyed-banking-101-part-6/

BUT there is light at the end of the tunnel...

We have seen evidence that suggests that WMI/WMB did something like this.

1) WMB makes a loan (creating 90% out of thin air)
2) WMI buys the loan from WMB
3) WMI securitizes the loan and involves other investors.
4) Theoretically, these securities still exist and WMI's portion is behind the bankruptcy remote curtain.

In this case, I suspect that the point where the created money goes POOF happens at step 2. (I DO NOT KNOW THIS FOR CERTAIN. If anyone else has information, I am eager to hear it.) If that is correct, then whatever is in these securities will not erode. Remember, however, that there are other investors involved and WMI probably only held a small portion of the security.

To reiterate, I am quite certain about the first part (up to the link) and only fairly certain about the rest of it.