Poole: Investors burnt in subprime mess got what they deserved

Discussion in 'Wall St. News' started by makloda, Aug 5, 2007.

  1. Funny, isn't this the same guy that proclaimed subprime wasn't a big deal and there won't be any issues arising from it? LMAO

    July 20 (Bloomberg) -- Federal Reserve Bank of St. Louis President William Poole said investors who lost money buying subprime mortgage-linked securities got what they deserved.

    Poole criticized the underwriting standards and interest- rate assessments of Wall Street and endorsed the Fed's steps to strengthen consumer safeguards. His remarks come after Chairman Ben S. Bernanke committed to tougher rules to protect consumers during his semiannual monetary policy testimony this week.

    ``The punishment has been meted out to those who have done misdeeds and made bad judgments,'' Poole told reporters in St. Louis after a speech on the market for mortgages to borrowers with sketchy or weak credit histories. ``We are getting good evidence that the companies and hedge funds that are being hit are the ones who deserve it.''

    Poole said that the meltdown isn't spreading to the broader financial services industry. His confidence didn't prevent Treasury notes extending their rally, pushing the yield on the benchmark 10-year note to a six-week low.

    Investors have also dumped stocks because of spreading defaults on mortgages. Some 89 of 92 financial companies in the Standard & Poor's 500 Index were lower today, helping push the S&P down 1.22 percent to 1,534.08.

    A so-called ABX index based on derivatives linked to subprime mortgage securities has fallen by more than 50 percent since January, suggesting a similar decline in the prices of such bonds. Another ABX index suggests declines of percent in the value of AAA rated subprime securities.

  2. Only thing I can think of this news is that Invest bankers of wallstreet had sold its worthless CDO to others; foreign banks; labor funds; and public.