Are banks taking dangerous mortgage risks?  Lloyds bank sign
After we learned in 2007 and 2008 that banks in general had far
too little capital as a protection against losses on their loans
and investments, you would probably think that by now it would
be difficult to find examples of banks continuing to lend
several hundred times the sums they hold in reserves to protect
depositors and taxpayers against the risk of picking up the bill
when borrowers default.  You might think that, but according to
the banking team at Morgan Stanley you would be wrong.  In
gripping and slightly alarming research published this morning,
Morgan Stanley cites £143bn of high quality mortgages on the
books of Lloyds - and it calculates that Lloyds holds just £314m
of capital against the specific risk of these mortgages going
bad.  In other words, Lloyds seems to have lent 455 times the
value of the capital earmarked in its balance sheet to absorb
losses, just in case these mortgages go bad. To put this in
another way, just 0.2% o