With the continued easing of lending standards and terms for C&I loans - according to a recent Senior Loan Officer Opinion Survey on Bank Lending Practices released by the Federal Reserve - the issue of MBS bank demand arises again.

In recent research, MBS analysts have noted that even with the bank C&I growth over the past year - with the increase actually showing up on bank balance sheets beginning in August 2004 - the large banks are still adding to their mortgage portfolios. However, analysts said that the numbers are concealing the real story - Bank of America has the lion's share of this increase across all banks in 2004 to 2005.

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