MISSEDLINK

 

 

• "this report describes the events and the system - that propelled the USA toward crisis !!!!!!!!!!!!!!!!!!!!!!!!"

 

 

 

 

_________________________________________

• "collapsing mortgage-lending standards - and the mortgage securitization pipeline !!!!!!!!!!!!!!!!!!"

 

 

 

 

 

_________________________________________

• "lit and spread the flame - of contagion and crisis !!!!!!!!!!!!!!!!!!"

 

 

 

 

 

_________________________________________

• "when mortgage borrowers - defaulted !!!!!!!!!!!!!!!!!!"

 

 

 

 

_________________________________________

• "the financial markets - were in crisis !!!!!!!!!!!!!!!!!!!!!!!!"

 

 

 

 

 

 

_________________________________________

• "over-the-counter derivatives - contributed significantly to this crisis !!!!!!!!!!!!"

 

 

 

 

_________________________________________

• "the enactment of legislation in 2000 - was a key turning point !!!!!!!!!!!!"

 

 

 

 

 

_________________________________________

• "in the march toward - the financial crisis !!!!!!!!!!!!!!!!!!"

 

 

 

 

 

_________________________________________

• "the failures of credit rating agencies were essential cogs - in the wheel of financial destruction !!!!!!!!!!!!"

 

 

 

 

_________________________________________

• "the credit rating agencies were key enablers - of the financial meltdown !!!!!!!!!!!!"

 

 

 

 

 

_________________________________________

• "from 2000 to 2007, Moody’s rated 45,000 mortgage-related securities - as triple-A !"

 

 

 

 

 

_________________________________________

• "the financial system is - in many respects !!!!!!!!!!!!"

 

 

 

 

_________________________________________

• "still unchanged from what existed - on the eve of the crisis !!!!!!!!!!!!!!!!!!"

 

 

 

 

 

 

_________________________________________

• "when the FED cut interest rates early in the new century - and mortgage rates fell !"

 

 

 

 

_________________________________________

• "there were mortgage-lending instruments - and the financing techniques !"

 

 

 

 

 

_________________________________________

• "that turned mortgages into investments - called securities !"

 

 

 

 

 

_________________________________________

"bond salesmen earned bonuses - packaging and selling new kinds of loans !"

 

 

 

 

_________________________________________

"offered by new kinds of lenders - into new kinds of investment products !"

 

 

 

 

 

_________________________________________

"that possessed complex - and hidden risks !!!!!!!!!!!!!!!!!!"

 

 

 

 

 

 

_________________________________________

"when subprime and other risky mortgages - began to default !!!!!!!!!!!!!!!!!!"

 

 

 

 

_________________________________________

"the market for complex investment securities - abruptly failed !!!!!!!!!!!!!!!!!!!!!!!!"

 

 

 

 

 

_________________________________________

"when the contagion spread - investors panicked !!!!!!!!!!!!!!!!!!"

 

 

 

 

• Paul Volcker:  "it was kind of - a free ride !"

 

 

 

 

 

_________________________________________

• "an investment bank - bundled loans from a bank !"

 

 

 

 

_________________________________________

• "or other lender - into securities !"

 

 

 

 

 

_________________________________________

• "and sold them - to investors !"

 

 

 

 

_________________________________________

• "by moving loans off their books, the banks reduced the amount of capital - they were required to hold as protection against losses !"

 

 

 

 

 

_________________________________________

• "this complexity transformed the credit rating agencies - into key players in the process !"

 

 

 

 

_________________________________________

• "positioned between the issuers - and the investors of securities !"

 

 

 

 

 

• "they paid fees - to obtain the desired ratings !"

 

 

 

 

 

 

_________________________________________

• "derivatives were financial contracts - whose prices are determined by, or "derived"  !"

 

 

 

 

_________________________________________

• "from the value of some underlying asset - rate, index, or event !"

 

 

 

 

 

_________________________________________

• "they were instruments for speculating on changes in prices - interest rates, and the like !"

 

 

 

 

 

_________________________________________

• "the derivatives markets were organized as exchanges - or as over-the-counter markets, OTC !"

 

 

 

 

_________________________________________

• "the OTC market was neither centralized - nor regulated !"

 

 

 

_________________________________________

• Warren Buffett:  "they accentuated enormously - the leverage in the system !"

 

 

 

 

_________________________________________

• "derivatives are - very dangerous stuff !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"

 

 

 

 

 

_________________________________________

• "difficult for market participants - regulators - auditors - and investors to understand !!!!!!!!!!!!!!!!!!!!!!!!"

 

 

 

 

_________________________________________

• "I don’t think I could manage - a complex derivatives book !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!"

 

 

 

 

 

 

_________________________________________

• "synthetic CDOs were complex paper transactions - involving credit default swaps !"

 

 

 

 

_________________________________________

• "synthetic CDOs contained no actual tranches of mortgage-backed securities - or even tranches of other CDOs !"

 

 

 

 

 

_________________________________________

• "instead, they simply referenced - these mortgage securities !"

 

 

 

 

 

_________________________________________

• "and thus were bets - on whether borrowers would pay their mortgages !"

 

 

 

 

 

 

_________________________________________

• "the CDO machine would not have worked - without rating agencies !"