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Originally Posted by Mavdog
the loans aren't all worthless, these lenders are not all failing, and they likely won't all fail either. what these lenders will do is not have liquidity to make new loans, which is why we are facing a contraction. no loans, little economic expansion. they will just sity on these portfolios until the portfolios either mature or prove to not be as low quality as the current owners feel they are.
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Banks are NOT without liquidity options. The discount window is still wide open and the terms there have never been better.