S&P emails slammed mortgage debt products: report ("house of cards")

[UpInArms]

Source: Reuters

CHICAGO (Reuters) - Analysts at Standard & Poor's Rating Services warned against mortgage-related debt products in internal e-mails that, in one case, called the complex financial deals "ridiculous," the Wall Street Journal reported in its weekend edition.

The Journal cited a draft revision of a U.S. Securities and Exchange Commission report on bond-rating firms that was first released on July 8.

In one email message, an S&P analyst called a mortgage or structured finance deal "ridiculous" and wrote "we should not be rating it."

In another email, an S&P manager said ratings agencies were helping to create an "even bigger monster -- the CDO (collateralized debt obligation) market. Let's hope we are all wealthy and retired by the time this house of card falters."

Read more: http://www.reuters.com/article/bondsNews/idUSN0240365320080802

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looks like the "house of cards" has faltered before they planned on it

[scarface2004]

1. you mean them 'fancy investments' prez chimp...

referred to??!

[TomInTib]

2. Did he really call them that ("fancy investments")?

Please tell me "No".

Please.

[cliffordu]

3. That's what he said. I remember it because I had to clean up the vomit

immediately afterword...

[TomInTib]

4. Ohhh, God.... Just when I think it couldn't possibly get any worse.

Well, hell, he has that fancy-pants MBA from that there school up East, so he must know what he's talking about.

[scarface2004]

10. my bad...

he said 'fancy financial instruments' some kind of harvard mba concept i suppose

http://www.youtube.com/watch?v=hrzFyeHSRJI

[Deny and Shred]

5. When do they go the way of Arthur Anderson?

Watchdogs knowing the truth, but sitting on their hands. This one is a lot worse, much more far reaching. Trusted names singning off on these non-transparent structures WILL be the doom of the U.S. economy. It runs on credit and credibility - which is sorely lacking.

[NashVegas]

6. The Complicity Was Astounding

I'm sure if you did an advanced search, you'd find no few instances where someone wrote about the housing bubble and what was going to happen when it burst, and someone else going, "stop saying that!" with no sarcasm at all.

Meanwhile, all the money the real estate industry was spending in media buys kept most reporters and broadcasters silent, except to pump it up.

[UpInArms]

9. Greenspan says ARMs might be better deal

http://www.usatoday.com/money/economy/fed/2004-02-23-greenspan-debt_x.htm

Posted 2/23/2004 11:39 AM Updated 2/24/2004 2:13 AM

WASHINGTON — Federal Reserve Chairman Alan Greenspan said Monday that Americans' preference for long-term, fixed-rate mortgages means many are paying more than necessary for their homes and suggested consumers would benefit if lenders offered more alternatives.

In a standing-room-only speech to the Credit Union National Association meeting here, Greenspan also said U.S. household finances appeared generally sound, despite rising debt levels and bankruptcy filings. Low interest rates and surging home prices have given consumers flexibility to manage debt, he said.

"Overall, the household sector seems to be in good shape," Greenspan said.

Americans have been buying homes and refinancing mortgages at a record pace in the past several years, lured by low interest rates. Most mortgages are fixed rate, so consumers can prepay when rates go down but do not face higher costs if rates rise. Under adjustable-rate mortgages (ARMs), which made up about 28% of mortgages in January, borrowers usually have lower initial rates but face the risk of higher payments if rates in the broader economy rise.

While borrowers can refinance fixed-rate mortgages, Greenspan said homeowners were paying as much as 0.5 to 1.2 percentage points for that right and the protection against a potential rate rise, which could increase annual after-tax payments by several thousand dollars.

He said a Fed study suggested many homeowners could have saved tens of thousands of dollars in the last decade if they had ARMs. Those savings would not have been realized, however, had interest rates shot up.

"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage," Greenspan said.

...more...

why do an advanced search - just go to the source of those "exotic loans"

[JNelson6563]

7. Ok, I am fluent in ancient bullshit linquitics

My translation is: We're all screwed.

Am I reading this right?

Julie

[ozymandius]

11. That's pretty much it.

There's just not enough money, anywhere, to cover the derivatives market associated with these things. And the principle values are dropping. Anyone who transacted business associated with real estate during these heady years will get hit.

[Tansy_Gold]

12. I'm gonna go out and buy a new ink pad for my rubber stamp

When my kids were, well, kids, we had a running family joke. Whenever they'd get hurt doing something I'd told them not to, or when something broke because they were doing something I'd told them not to, or when anything happened that I'd warned them about ahead of time, I'd tap them on the top of the hand with my fist, simulating a rubber stamp that said "I told you so!"

Several years ago I happened across a little pushcart vendor at the Arizona Center selling rubber stamps. For something like $8, you could order a "custom" rubber stamp, so I got one that just said "I.T.Y.S." For a long time I actually carried it in my purse along with a small ink pad.

Lately, though, it just sits here on my desk, within easy reach any time I need to remind BF I do occasionally know what I'm talking about, and he doesn't.



Tansy Gold, thinking maybe this would be a good avatar???????

[MetaTrope]

8. "Let's hope we are all wealthy and retired by the time this house of card falters"

Lovely. Just lovely.