Felt this piece of news would be pretty relevant to understanding the increase of CLO. I think from a Bank perspective the truth is that its sees profitability from lowering its requirements and offering housing loans to people slightly below the eligibility requirements. AND this profitability outweighs the firm stance it should be taking since the Recession of 2008 with bad loans. Moreover the banks can simply earn their margins by offloading its debt liabilities through CLO to the public keeping their downsides minimal. The fact that few Banks are doing this just makes the profitability all the more attractive.
Felt this piece of news would be pretty relevant to understanding the increase of CLO. I think from a Bank perspective the truth is that its sees profitability from lowering its requirements and offering housing loans to people slightly below the eligibility requirements. AND this profitability outweighs the firm stance it should be taking since the Recession of 2008 with bad loans. Moreover the banks can simply earn their margins by offloading its debt liabilities through CLO to the public keeping their downsides minimal. The fact that few Banks are doing this just makes the profitability all the more attractive.