52. PJ Pierre & Zed Francis - Are any banks solvent?
Mutiny Investing Podcast
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The Advantages of Trading a Credit Spread
Operating a bank is you're just trading a spread, right? So it's like, okay, we're going to issue a loan with some sort of credit spread over what's determined to be risk fee rate. And ultimately, what's in like the credit spread portion, I would probably call like the piece of the loan where the banks actually not really making a ton of money. The market's actually pretty darn efficient from the, you know, pricing the credit spread reasonably correctly.
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