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Unemployment Rate Increase Should Lead Banks To Adjust Models
No doubt banks are recalibrating their financial models today, and higher credit reserves should result.
Last November I wrote about how most banks had expected the unemployment rate to top out at 7.5%. Now, while in the meantime some banks reassessed the economic situation and projected higher 2009 unemployment, I am certain there are banks still clinging to the 7.5% mark.
Well, the January unemployment rate hit 7.6% today. Better change the model inputs.
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