To quantify the credit response today to the concerns with large future financial obligations for the banks in dealing with foreclosure and mortgage buybacks, 5 yr CDS in BAC (they own Countrywide) is up 10bps to 191 and higher by 35 bps over the past 4 days. The cost of credit insurance is now at the highest level since July ’09. Wells Fargo, who bought Wachovia (who before bought Golden West Financial at the peak of the housing market in May ’06 and GW was big in option ARMs) 5 yr CDS is up by 10 bps to 130 and up 35 bps this week to the highest since June. Citi CDS is higher by 8 bps to 173 up almost 20 bps on the week and JPM is up by 8 bps to 96 and is also up about 20 bps on the week.
