Comments on: How securitization works http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: The Real Deal http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-8014 Sat, 17 Oct 2009 02:28:38 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-8014 Structured Products Guy:

Of course we cannot call those NINJ subprime loans innocent. They are perpetrated by a different gang of bastards in the field.

If you ask me to agree that there are things worse than securitization in the whole mess, yes I agree. The subprime stuff is the original sin. Securitization aggregates and multiplies that. There is nothing fundamentally wrong with securitization. It is how it was done by WSM gang – using CDO slice and dice, using fraudulent ratings, using CDS trading to cover up the risks and leverage up the profits. I maintain that the combined practice is criminal, prospectus fine prints notwithstanding. Yet no one has been charged. Could this be the perfect crime of the past 4 centuries?

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By: Stan Brody http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-8007 Fri, 16 Oct 2009 17:27:46 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-8007 ‘splain me Lucy why Andrew “I’m running to be Guv and going after everyone” Cuomo hasn’t gone after even one person at A.I.G… what would a fire insurance policy written without the ability to pay off for a covered event be called… fraud… why then, isn’t anyone being prosecuted for the fraud committed by A.I.G in writing the CDS’s??? Without which, none of this could have happened… people DID read the prospectus’… did see the pitfalls… but were sold a bill of goods by the brokerages and underwriters, providing a “wonderful” guaranty against any loses…

Must be the size of the campaign contribution check written against “our” TARP funds…

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By: Structured Products Guy http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7999 Fri, 16 Oct 2009 15:36:54 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7999 @ The Real Deal
Are you calling 300k loans to people with 620 credit scores and NINA documentation innocent? I look at the docs for the nastiest most Wall Streetish subprime securitizations. The collateral is crappier than the structure. If you read the structure carefully, a first year analyst fresh out of school can point out that if home prices fall, borrowers won’t be able to refi, won’t be able to afford the mortgages, and defaults will be rampant. The structure is not that opaque. Sure it could be simplified, and in the future it probably will, but don’t blame the structure when underneath it was greed from EVERYONE. Borrowers, originators, brokers, and investors.

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By: PM http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7998 Fri, 16 Oct 2009 15:11:20 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7998 Why is it that the necessary “incentive” these days always means a payoff?

I think we should start mining the vast array of negative incentives available to us (sticks, vs carrots), such as “if you don’t do X we’ll break up your oligopoly” or “if you don’t do X we’ll throw you in jail”.

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By: Ken http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7992 Fri, 16 Oct 2009 14:19:00 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7992 Structured Products Guy wrote: “No bank wants to keep super long term assets sitting on their balance sheet that have low interest rates.”

Silly me, I thought that was the definition of a bank – you know, borrow short and lend long. Because someone has to do that, and if not the banks, who? Possibly more pertinently, if not the banks, then why have banks?

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By: Stan Brody http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7991 Fri, 16 Oct 2009 13:59:51 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7991 And what was even better were the non-existent CDS’s written by A.I.G…. Goldman Sachs, Bear Stearns, Lehman, etc., bundle a product, that they knew to be a risky, bogus? investment?? then lured Fitch’s S&P, Moody’s etc., with massive fees into providing an investment??? grade rating assuring them that they had “insurance” policies to cover any “possible” loses…

Let’s see now, Bernie stole a mere $65 billion, and will be in the cross bars hotel for eternity… yet not one of these, how large a campaign contribution check do we need to write crooks, has even had a finger pointed at him/her/it by congress… it would appear that money really can buy happiness… in the scheme of crookery, compared to these geniuses, Bernie is a picker…

Seems to me that congress and the administration are creating czars as fast they can to compensate these bastards…

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By: The Real Deal http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7975 Fri, 16 Oct 2009 00:57:11 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7975 Structured Products Guy:

There are securitizations, and then there is Wall Street securitization.

Look around much of the developed world and you see securitized stuffs here and there, but all highly regulated, which includes a healthy dose of ‘self-regulation’, all traded only by pros. Most by done by hedge funds. (Hell, I used to manage a number of Canadian accounts and even they, 1 hr flight from Manhattan, BAN US-style securitization of residential mortgages!)

Look at Wall Street securitization and you find the most notorious con game conjured up by bastards, carefully designed to reap huge profits by turning innocent loans into opium, and selling them as cancer cure. These bastards screw everybody from old pros all the way to little old ladies but escape responsibilities like cowards by using pages of fine prints to game the law.

I hope you can see there is a slight difference between the two.

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By: Pete Cann http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7965 Thu, 15 Oct 2009 20:59:23 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7965 Potato chips. Think potato chips. Step 1 is to legislate that you don’t have to fight tooth and nail to know what’s in what you’re buying; it’s on the label. I would also suggest that only individuals, by dint of being beneficial owners, be allowed to vote at the annual meeting of any corporation.

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By: Mike http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7961 Thu, 15 Oct 2009 20:12:54 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7961 Just perform due diligence like Michael Osinski did with his PA bonds. If your brain can’t handle that, then don’t buy MBS’s.

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By: Structured Products Guy http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/comment-page-1/#comment-7958 Thu, 15 Oct 2009 19:21:19 +0000 http://blogs.reuters.com/felix-salmon/2009/10/15/how-securitization-works/#comment-7958 Fine. Shut down securitization markets. Have fun getting a low interest rate loan of any kind. No bank wants to keep super long term assets sitting on their balance sheet that have low interest rates. What nonsense. Securitization lets capital get around more freely, and can transfer long term assets to investors who want them. It worked for a long time before the meltdown, and it will work for al ong time after.

Investors need to READ THE PROSPECTUSES of securitizations they buy. The risks are right there to be seen. All of the Subprime MBS had detailed stratifications available to ALL who invested in them. It’s not very hard to see from reading them that if housing prices go down that these borrowers won’t be able to refi and will subsequently default. In the end, almost everyone made the assumption that housing prices would go up. This includes Liberal and conservative legislators, financial journalist, Nobel Prize winning economists, Ivy League B-School teachers. This was not a notion that Wall Street could have invented by itself. If you take this out on securitizations, you’ll end up punishing consumers in the end, as much of proposed financial regulation ends up doing.

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