Replies to post #121795 on Mr Cooper Group Inc (COOP)

[Desperado90]

Its call LEVERAGE.

You can create mortgages, small business loans, commercial real estate loans and so much more.

When you give out this loans and create this liquidity, if the assets are good and tangible not (Derivative or Nasty Paper) when this assets or loans are performing then the company make 4%* return on $40B instead of 4%* on $4B.

Now its a double edged sword because if these loans or assets are not performing the debt to equity ratio would be too high and unsustainable.

Thats the simplest way I can explain it for now. Thats why when we talk about the $29B windfall to JPM its because accounting standard changes.

The assets were written down to 0 and now after market to market changes they wrote the assets back to $29B.

GLTY.