Short Memories at Goldman
- Thread starter ByLoSellHi
- Start date
so you think GS generated the profit by borrowing at zero and buying some treasuries (you dont account for the fact that treasuries will trade down as soon as the Fed will indicate they will raise rates again, getting this trade to breakeven in a split of a second) and earning the "3.5%" for couple months...yeah great gift, moron.
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Not a buddy, not male.
Asiaprop, this is how possible for (JUNK) to be sold like (INVESTMENT GRADE) all over the world.
"Expansion of nonconforming mortgage lending has been facilitated by an increasingly diverse set of origination and funding channels. Origination channels include both FDIC-insured institutions and their finance company affiliates, as well as mortgage brokers and stand-alone finance companies that fall outside direct federal supervision. Funding channels include banks and thrift institutions, the housing-related Government Sponsored Enterprises (GSEs), GSE-sponsored mortgage pools, and, increasingly, private issuers of asset-backed securities (ABS). But an unmistakable trend that stands out as a driver of the changes we have seen in the mortgage industry has been the rise in the share of mortgages funded by ABS issuers, which rose from 8.5 percent in 2003 to 18.7 percent by 2006.3 The availability of funding through private ABS facilitated growth in the "originate and sell" business model, under which a broad range of brokers and correspondents participate in originating mortgage loans without the need to provide permanent financing themselves. This model was pioneered by lenders selling conforming mortgages to the GSEs, but in recent years private ABS issuance has become a primary channel for the funding of subprime and Alt-A mortgage loans. Subprime and Alt-A loans together stood behind 77 percent of all private ABS outstanding as of May of this year.4
In the absence of GSE sponsorship, private ABS issuers were able to enhance the marketability of their obligations by structuring them into senior and subordinate tranches. The end result of this process was the creation of trillions of dollars in investment grade mortgage-backed securities (MBS) that were purchased by a range of domestic and international investors, along with a smaller volume of higher-risk securities that were better suited to hedge funds and other investors with an appetite for yield and a greater tolerance for risk."
6 simple ways to reform Wall Street :
from Yahoo Tech Ticker:
⢠Reinstate Glass-Steagall Separating banks from brokerage firms guarantees that âwhen Wall Street hits the wall⦠it doesnât cause the banks to do the same,â says Ritholtz, who claims the Act was a major reason why the economy didnât come crashing down along with stocks in October 1987 ( supported by Volcker )
⢠Repeal the Commodity Futures Modernization Act This rule âallowed derivatives to be exempt from all the rules that affect every other traded financial instrument,â and was a root cause of AIGâs problems, he says.
⢠Overturning the so-called Bear Stearns rule allowing leverage beyond 12 to 1 The SECâs 2004 rule change, which eliminated some leverage restrictions on investment banks in favor of capital requirements by type of asset was a mistake, says Ritholtz. âWithout overturning that, give us 5-10 years, weâll be right back where we started.â
⢠Continuing to allow high-risk trades to be compensated regardless of profitability This issue is one already being addressed by the so-called Pay Czar Kenneth Feinberg.
⢠Regulating the non bank sub-prime lenders and mandating (and enforcing) lending standards This one is pretty self-explanatory and one few argue as a key reason for the subprime debacle.
http://www.ritholtz.com/blog/2009/09/6-simple-ways-to-reform-wall-street/
from Yahoo Tech Ticker:
⢠Reinstate Glass-Steagall Separating banks from brokerage firms guarantees that âwhen Wall Street hits the wall⦠it doesnât cause the banks to do the same,â says Ritholtz, who claims the Act was a major reason why the economy didnât come crashing down along with stocks in October 1987 ( supported by Volcker )
⢠Repeal the Commodity Futures Modernization Act This rule âallowed derivatives to be exempt from all the rules that affect every other traded financial instrument,â and was a root cause of AIGâs problems, he says.
⢠Overturning the so-called Bear Stearns rule allowing leverage beyond 12 to 1 The SECâs 2004 rule change, which eliminated some leverage restrictions on investment banks in favor of capital requirements by type of asset was a mistake, says Ritholtz. âWithout overturning that, give us 5-10 years, weâll be right back where we started.â
⢠Continuing to allow high-risk trades to be compensated regardless of profitability This issue is one already being addressed by the so-called Pay Czar Kenneth Feinberg.
⢠Regulating the non bank sub-prime lenders and mandating (and enforcing) lending standards This one is pretty self-explanatory and one few argue as a key reason for the subprime debacle.
http://www.ritholtz.com/blog/2009/09/6-simple-ways-to-reform-wall-street/
Yes!
For people to blame poor people to bring down the (WORLD) finance is excuse.
Yes, some poor people want something they can not pay for, true.
But after (2002?) when the PRIME people all refinance because of offer of VERY LOW INTEREST RATE, these morgages packaged and sold are no so risky. They are good credit mostly.
Now the investment bank want MORE. How do they get more?
They buy from (originators/non-bank/dealer/broker) who is legal to be( outside of regulation)
So no one of the big investment bank understand the origination? Hmm? Or they say, "Who care, I just buy,package and sell, and I buy a swap to protect myself."
No one will admit they know originator is bad because that will proof they are AWARE.