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When banks warehouse loans, that is, hold them temporarily before selling them through securitizations, how do they protect themselves against credit risk?


Hedges in the Warehouse: The Banks Get Trimmed
Last Updated: 08/28/08

When banks warehouse loans, that is, hold them temporarily before selling them through securitizations, how do they protect themselves against credit risk? This article examines the effectiveness of hedging strategies in the context of the recent heavy losses in financial markets.