In most cases, credit spreads and share
prices of US financial institutions have
bounced back meaningfully from
March’s distressed depths, but we are
keeping our euphoria in check
 The originate-to-sell model is still
grounded, for the most part, which is
causing lenders to ration capital,
especially to consumers
 In the context of a weakening economy,
this means that the financial system in
the US has become part of the problem,
not part of the solution
 And the root causes of the problem,
falling US home values and a loss of
confidence in debt ratings, are proving
to be slow to cure
 Over the balance of this year, we favor
the up-in-quality trade, with large
diversified depositories good places to
find value, and we are comfortable
going down in capital structure; we are
highly selective elsewhere, but we do
like some of the oversold investment
banks