Option ARMs Enter the Eye of the Hurricane

we have largely moved through the subprime debacle which is wave 1 on the chart above. This impacted most states since every state had some volume of subprime loans. Yet the option ARM is largely a bubble state phenomenon. And there is nothing on the current table that is helping this out. This is largely a silent ticking time bomb that will go off in starting in 2010... $109 billion is not a tiny number given the loss severity of these loans and this is only on securitized loans – the number is even bigger if we look at loans that are on the bank balance sheets.