A few years back, during the early part of bubble mania, I was shopping at a Food-4-Less and saw a new Wells Fargo being opened. A young lady was stopping all grocery shoppers and letting them know about the new “facility”. Instead of just walking, I stopped and asked why they have so many new grocery store based branches. She mentioned that most of the business was Home Equity Credit and re-financings (cash out). I think this business was a huge river of gravy for all the banks. Just package the loans and sell for profit. Banking doesn’t get any less risky than that. If you ask me, I think the economy of the entire nation was pretty much Home Equity Withdrawal driven the last 5 years or so. If you invert that cycle, we are bound to see a 5 year stagflation/recession period now.
