With the recent release of a new loss-severity analysis model, Credit Suisse First Boston finds that within the subprime home-equity sector the Darwinian theory of "survival of the fittest" has clearly been demonstrated among lenders, separating the proverbial wheat from the chaff. Researchers Rod Dubitsky and Kumar Neelakantan also find current, rather than initial loan-to-value ratios, a much more significant indicator of loss severity.

What makes this analysis so groundbreaking is the fact that CSFB looks not only at active lenders in the sector but those who have tried - and failed - to survive within the sector. This shows, according to Dubitsky, that "those still operating are doing things right."

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