The risk on the CDO is overstated.The default will either write off or modified. The market misbelief the whole basket of loans will go default. It is totally not true.BAC making trunks of money from the refinance.The fee income is huge from the countrywide loans.No doubt the economy is weak. Provision will be high But the net interest income will be higher due to decline in interest rate.
The economy will improve over the next 12-16 months. good post.