“I sure do hope that I’m wrong about this.”

Of course you are not wrong. If you want to know how cosmetic and shallow this Administration is about pretty much everything that has to do with what is essential for the good functionning of the American Society, check this:

http://whistleblower.typepad.com/all_things_whistleblower_/2008/02/drug-import-mes.html

Anything that foster a “free-market” (Bushie’s code word for crony capitalism) has been done since 2000.

And it keeps getting uglier and uglier. From our finances to our health, this government does not give a damn about the people.

And no, I do not expect the Dems to do much better. perhaps a bit better, but not much. They need money to win elections and we know who provides it.

Yves was right: we’re going the way of Argentina.

“To little to late”, “Closing the barn door…?” How about “Pissing in the wind” and/or suggesting to a patient in Intensive Care, on Life Support, that they make sure that they use hand lotion twice a day. And who, and what, do they think will be left in near term other than the Fed to apply these new regs?
I sure do hope that I’m wrong about this.
Earl

Even with the balance sheet costs, covered bonds are far, far cheaper than (non-agency) securitisation. You can fund in single digits over Libor, compared with 100s of basis points for RMBS at the moment. The problem is (was) that the investor base for covered bonds was nowhere near as deep as that for RMBS. You could sell a $10bn RMBS quite easily, but covered bonds don’t usually go above $2bn. Of course, the situation is reversed now.

Also, Basel II removes most of the capital benefits of securitisation anyway, and FASB is planning to eliminate QSPE status, which would make off balance sheet treatment near impossible. So the balance sheet argument is going to be irrelevant fairly soon. In Europe, RMBS has been on balance sheet for years and people still did it for funding reasons.

Depending on how you define shopping, it certainly goes on. For instance, in European CMBS, Moody’s requires more credit enhancement at lower rating levels, so you often see deals with triple-As from the big three, but only Fitch and S&P ratings for subordinated notes. Then there’s bigger picture stuff like the fact that Fitch refused to give triple-A ratings to CPDOs, so obviously nobody bothered to get a rating from them.

It’s not so much about shopping a deal to agencies and seeing who gives you the best rating, so much as only going to the agencies you know are going to give you the rating you wantb because of their methodologies. For common asset classes and structures you don’t really need to do the iterative approach, because you can just plug your numbers into the agencies’ models. It’s only really for new/unique asset classes and structural features that iteration happens.

To illustrate:

Some of the States have been putting in place moderate requirements for mortgage brokers.

State Farm has a bank. They have their independent insurance agents making loans. When Ohio wanted these agents to register as mortgage brokers, State Farm ran to the OCC and got a letter from their counsel that State Farm’s independent agents were exempt because State Farm’s bank is a “National Bank” regulated by the OCC and exempt from state law.
The Judge slapped that attempt down for procedural issues, but also noted that the OCC had never previously shown any interest in regulating the independent mortgage brokers associated with National Banks.

It’s not really the laws, it’s the people doing the regulating.

russell120

THURSDAY, MARCH 13, 2008

The Fed’s Bank Bailout

http://www.theonion.com/content/amvo/the_feds_bank_bailout

Econolicious

Mistakes? Wow, he’s all the way up to “mistakes” but no problem because everyone did it and therefore there will be no punishment only forgiveness.