The Old-Fashioned Way

I used to know a banker who said "I won't lend on anything I can't see from my front window." He's looking mighty good this morning. Here's a snippet from the Citibank conference call, announcing its $9.83 billion loss:

Within our bank cards portfolio, approximately two-thirds of the losses occurred in five states -- California , Florida , Illinois , Arizona and Michigan . And the loss rates on customers with mortgages in those states increased by fourfold versus the loss rates in the rest of the country .... Loss rates in the branch-originated mortgage business remained relatively stable, where face-to-face interaction with customers and long-standing relationships have historically resulted in lower losses. The CitiFinancial real estate mortgage portfolio, for example, is comprised primarily of full documentation, fixed-rate loans with low loan to values.

Via Calculated Risk.

The Lyndon Johnson Corollary: the best fertilizer for a farm is the owner's footsteps walking over it.