1) smoothly operating securitization market 2) wildly expanding credit 3) housing bubble equity extractions 4) highly leveraged capital ratios 5) derivative market that gave them false confidence that their position was "insured", even in wildly reckless risk-taking environment.
Today's environment:
Big Wave of ALT-A and Option ARM resets coming, Commercial loans coming due (at huge losses that banks will have to recognize), contracting consumer credit, contracting loan demand, no securitization market, regulation-happy legislation to punish the bad behavior.
Sorry, but the "steep yield curve" argument for bank profits doesn't override these structural changes.
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