Future Financial Winners and Losers

Editor's note: This is the second of Scott Rothbort's two-part look at the future of the financial services sector.

Mortages: The Return of the S&Ls

The era of mortgages gone wild is over. The days of Countrywide (now owned by Bank of America (BAC Quote)) and Thornburg Mortgage (now traded over-the-counter) are behind us. When the real estate market returns to "normal," gone will be the standalone mortgage companies, which rely on credit default swaps or unsecured borrowing to fund their origination businesses.

When the dust settles from the current financial shakeout, mortgages will probably be sourced in a much more traditional way -- from deposits. This is going to benefit the smaller and localized savings and loan industry, which was destroyed by the S&L crisis of the late 1980s and crushed by the once mighty Wall Street asset-backed security machine. ...