Who's afraid of the IRB?

Mortgages

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The benefits of Basel II are a little cloudy for most institutions. If banks are prepared to jump through all the hoops necessary to use the internal ratings-based (IRB) approaches, they are rewarded with more risk-sensitive capital requirements, stronger ties between risk and the business lines, and the respect of their peers. For mortgage lenders, the immediate benefits are more tangible. They get huge capital savings - running into the hundreds of millions for big lenders - to use however

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