The Alt-A Reset Wave, What it Means
Who will be the Bagholders in the coming wave of Alt-A resets and defaults?
Well, those "richer" folks who lied about their income to get into big homes already holding empty bags as prices plunge. Their neighbors, who hoped that the bubble prices were real get to hold an edge too. But according to this good post at Calculated Risk, a lot more banks will be holding this bag than with subprime, since Alt-A was more likely to stay on the balance sheet than be shipped off to outside bagholders in the CDO markets.
Still think financials are cheap? You have no idea what's on those balance sheets, folks, and the only surprises in there are bad ones.