Jan

11

Could there be a better industry to be in than the banks at present? With the yield curve its steepest in years, a bank can borrow from one branch of the government at close to zero via the discount window and lend to another branch of the government at 3.5% buying Treasuries, for a risk free 3% profit margin. Leverage that at a very conservative 10x (meaning 10% reserves, versus required 3%), and a risk fee 30% ROR. Plus a big chunk of the competition is out of business and your biggest client, the government again is churning out fees and commissions at a record pace via Treasury auctions and the like. Sounds like the best business model going.


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