S&P finally says subprime is mostly junk

Discussion in 'Wall St. News' started by ASusilovic, Jul 10, 2007.

  1. History will record that in the space of nine months, we've gone from hedge funds being the darlings to the scourge of the media.

    Nine months ago, politicians hob nobbed, hedge funds sued to avoid regulation, and the newly minted stood in line to invest wi/ the "stars".

    My my. With Milberg Weiss' guy rolling over, the only way to converse with these idiots will be visitation rights day. And this scrutny will lead to class actions suits forever. I'll bet they even go after the rating agency for this cluster fuck just uncovered.

    But hey. That's just me.
  2. Digs


    The bullshit from S&P is that the value is 12 BN. We will have to wait for further updates to this number !!!!
  3. The United States Securities and Exchange Commission is investigating more
    than a dozen publicly traded mortgage companies who packaged up and
    fraudulently sold more than a trillion dollars worth of phony liar loans
    since the year 2000 to domestic and foreign institutional investors such as
    insurance companies, banks and the 22 major main Wall Street brokerage
    houses who are all accomplices in the greatest housing swindle in the
    history of real estate.

    By the time the majority of these corrupt bankers and lawyers are brought to
    justice, and all the defaults have wound their way through the various
    county foreclosure processes, the global economic depression which ensues
    from purging these phony pillars of power politics will be well underway.


    OK. I believe him.

    I would suggest you look at the post I put in OSTK CEO. That is a very significant piece of news that I can understand no one understands. That scum is going to bury a lot of powerful people and testify to save his own sorry ass, and if I told you the names, you'd know who I was talking about. This subprime opens the books. It's not pretty.
  4. BBB- chart aint looking too healthy
  5. How will the oppressed buy houses if we don't lend them 100k with only a handshake and a toothless smile?


    apologies to the weak of heart
  6. Impressive chart ;=)
  7. In context to this chart read this "negligible" story :

    The Paulson Credit Opportunities fund, set up last year to take advantage of potential mortgage turmoil, returned 39.95% last month, leaving it up 129.22% so far this year, said the person, who's seen a copy of the firm's June investor update.

    Source :


    Any comments ??:D :D :D
  8. There's no market in the way we think of it. If you can't determine value, are afraid to price discover through offer, about all you can do is pour in cash like BSC did.

    From an Italian bank meltdown (Italease) not reported in the US:

    "These derivatives were very complex and suddenly turned against us," said Pierantonio Arrighi, the bank's spokesman.
    "They started moving in a non-linear way, so the losses were rising exponentially. We were afraid that in the worst case some of our clients would not be able to pay the contracts, so we stepped in to protect them, which means we took over the risk."

    Note too: this is a step FURTHER BEYOND where we are in our meltdown the way I read it - this is a loss of confidence in IR hedging swap performance to protect the underlying portfolio of sht bonds. I may be wrong on this.

    From Bloomberg this AM:

    "Price transparency came to the corporate bond market in 2002, when the U.S. Securities and Exchange Commission instructed the NASD to require securities firms to report every trade over a computer network called Trace.

    If trades of asset-backed securities were reported on a similar system, more investors could have avoided losses, said Lawrence White, professor of economics at New York University's Stern School of Business.

    ``With transparency, changes in value, which will be reflected in changes in the price, will let people know sooner that their value has changed,'' White said. Holders will ``get taken by surprise less and less often and to a lesser extent.''

    Wall Street Benefits

    Wall Street has benefited from keeping the so-called structured finance market opaque. Securities firms collected $27.4 billion in revenue from underwriting and trading asset- backed securities last year alone, according to Kian Abouhossein, an analyst at JPMorgan Chase & Co. in London.

    Investors struggle when they need to set values for subprime and lower-rated debt because the bonds trade infrequently, said Dan Shiffman, vice president at American Century Investment Management in Mountain View, California.

    ``If it's a bond that requires a lot of credit work and if that bond hasn't traded for some time, it's very difficult to assess,'' Shiffman said. American Century manages $5 billion in mortgage-backed and asset-backed bonds.

    Increased Confidence

    Reporting trades of asset-backed securities on a system similar to Trace may attract more investors, said Joseph Fichera, chief executive officer of New York-based Saber Partners LLC, which has advised governments and utilities on $8 billion of securitizations over the past five years.

    ``It would increase confidence and help the market grow if it became more transparent because we would expand the number of buyers and sellers,'' Fichera said. ``There would also be less fear of a major repricing, a traumatizing event.''

    The SEC started tackling the lack of price transparency in the corporate bond market in 1992 because of concern that traders were using inside information to manipulate prices of high-yield, high-risk bonds. Former SEC Chairman Richard Breeden's probe into junk-bond trading led to the creation of the Fixed Income Pricing Service.

    Arthur Levitt, who succeeded Breeden, wanted a database to collect the prices of trades on all registered corporate bonds after a 1998 review of the debt markets. The SEC concluded that transparency wasn't an issue for asset-backed securities and didn't include them in the Trace system. Levitt is a director of Bloomberg LP, the parent of Bloomberg News.

    Trace Objections

    Investment banks objected to Trace. The Bond Market Association, the trade group representing fixed-income underwriters and dealers, said traders wouldn't be compensated for buying risky bonds because investors adjust their bids and offers after prices are disseminated.

    Bonds rated below Baa3 by Moody's and BBB- by S&P and Fitch are considered below investment grade.

    Securities firms missed an opportunity to make the asset- backed market more transparent in 2004, when the NASD proposed changing the definition of securities that would be listed on Trace. The BMA sent a letter to the NASD expressing concerns that the language could include asset-backed bonds and other structured finance products.

    The NASD said asset-backed bonds wouldn't be on Trace. The BMA merged last year to create the Securities Industry and Financial Markets Association, the leading lobbyist of Wall Street firms.

    Traders in subprime and low-rated asset-backed securities may resist any move to shine a light on the trades because they benefit from having their moves kept under wraps, said American Century's Shiffman. ``They might get better execution rather than having the bonds flagged all over the market,'' he said. "

  9. He can floss with a piece of rope. Nice.
    #10     Jul 11, 2007