Countrywide Financial Corp (CFC) set the proverbial cat among the pigeons last week by announcing that default rates among prime loans were higher than expected. This did not come as a surprise to many hedge funds who have been decreasing their exposure to the US banks sector for at least three months. The heatmap on the left shows the % change in market cap on loan over the last quarter: the more red the square, the larger the increase in short interest. The chart tells the same story on a monthly basis and in the real estate sector. With trading halted in AHM shares, investors are not betting on a recovery in this sector in the near future. Utilisation figures for CFC are 29.4% and the market cap on loan is 12.91%. Once dividend related lending is stripped out, the rise in trend market cap on loan has roughly doubled, from 5% to 10%.