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Chicago Fed Letter, No. 249, April 2008
Hedges in the Warehouse: The Banks Get Trimmed
To Wall Street bankers, market conditions in the spring of 2007 looked close to perfect. The world savings glut meant that liquidity was pouring into the U.S. fixed income markets; interest rates were relatively low compared with historical averages; the U.S. economy was growing strongly; and increasingly complex asset-backed securities (ABSs) that banks had developed as a way to trade loans to other investors were being sold as fast as they could be created.


Federal Reserve Bank of Chicago, 230 South LaSalle Street, Chicago, Illinois 60604-1413, USA. Tel. (312) 322-5322

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