The chase for yield has banks buying CMOs - those dreaded securities backed by mortgage loans...

|By:, SA News Editor

The chase for yield has banks buying CMOs - those dreaded securities backed by mortgage loans sliced and diced into many tranches - by the billions, increasing holdings by 20% in the first 3 quarters of 2011. CMOs now take up 3.47% of bank balance sheets vs. U.S. Treasurys which have declined to just 1.25%.