Comments on: Floyd Norris: Candidate for Worst Mortgage Securitization, Ever http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html Sun, 22 Nov 2009 21:35:21 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8147 Anonymous Sat, 17 May 2008 01:41:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8147 Re: "Why have we heard so little about the devastanting effect this toxic waste must have had to the people who bought it?"<br/><br/>BECAUSE IT IS IN PENSION FUNDS!!!!!!!! Re: “Why have we heard so little about the devastanting effect this toxic waste must have had to the people who bought it?”

BECAUSE IT IS IN PENSION FUNDS!!!!!!!!

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8140 Anonymous Fri, 16 May 2008 21:19:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8140 There was a great "This American Life" piece that adds a bit more colour to this theme:<br/><br/><br/>http://podcast.thisamericanlife.org/podcast/355.mp3 There was a great “This American Life” piece that adds a bit more colour to this theme:

http://podcast.thisamericanlife.org/podcast/355.mp3

]]> By: Tom http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8132 Tom Fri, 16 May 2008 16:29:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8132 gbasin has the right end of the stick, this is one of the fundamental points of securitisation - if you have credit support, you should be able to achieve a specific level of probability of loss (e.g. AAA etc). The main problem is that the people making the investments were not doing to the proper work on the bonds they were buying, so the analysis had been outsourced to the agencies. "Unfortunately", they were asleep at the wheel, so people have ended up owning a pile of crap. And in answer to someone's question, I would bet that a lot of this deal ended up in ABS CDOs. gbasin has the right end of the stick, this is one of the fundamental points of securitisation – if you have credit support, you should be able to achieve a specific level of probability of loss (e.g. AAA etc). The main problem is that the people making the investments were not doing to the proper work on the bonds they were buying, so the analysis had been outsourced to the agencies. “Unfortunately”, they were asleep at the wheel, so people have ended up owning a pile of crap. And in answer to someone’s question, I would bet that a lot of this deal ended up in ABS CDOs.

]]> By: gbasin http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8128 gbasin Fri, 16 May 2008 15:29:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8128 It's not really relevant what made up the pool because it was heavily overcollateralized, this kind of analysis is meaningless (although it sounds SHOCKING) without knowing the structure of the pool. Heck, at a certain level of overcollateralization I'm sure I'd buy it for +30 It’s not really relevant what made up the pool because it was heavily overcollateralized, this kind of analysis is meaningless (although it sounds SHOCKING) without knowing the structure of the pool. Heck, at a certain level of overcollateralization I’m sure I’d buy it for +30

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8125 Anonymous Fri, 16 May 2008 14:25:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8125 ☺☺"And this paper was sold institutionally....or at least some of it was." <br/><br/>This begs a host of questions.<br/><br/>Who bought this stuff?<br/><br/>On whose balance sheet is this toxic waste sitting now?<br/><br/>The people who bought this stuff, were they spending their own money or other people's money?<br/><br/>Of all this toxic waste that was generated, how much did the banks sell and how much did they retain?<br/><br/>If this stuff is sitting on the balance sheets of, let's say pension funds, has it been written down yet?<br/><br/>While I have seen reems and reems of articles about the portion of this stuff that is still sitting on banks' balance sheets, I have seen nothing about who bought this stuff and the potential consequences to those purchasers.<br/><br/>Why have we heard so little about the devastanting effect this toxic waste must have had to the people who bought it? ☺☺”And this paper was sold institutionally….or at least some of it was.”

This begs a host of questions.

Who bought this stuff?

On whose balance sheet is this toxic waste sitting now?

The people who bought this stuff, were they spending their own money or other people’s money?

Of all this toxic waste that was generated, how much did the banks sell and how much did they retain?

If this stuff is sitting on the balance sheets of, let’s say pension funds, has it been written down yet?

While I have seen reems and reems of articles about the portion of this stuff that is still sitting on banks’ balance sheets, I have seen nothing about who bought this stuff and the potential consequences to those purchasers.

Why have we heard so little about the devastanting effect this toxic waste must have had to the people who bought it?

]]> By: guy n. cognito http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8120 guy n. cognito Fri, 16 May 2008 13:18:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8120 so this is the garbage being swapped for treasuries at the FRB that we the people are now guaranteeing? sweet. so this is the garbage being swapped for treasuries at the FRB that we the people are now guaranteeing? sweet.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8118 Anonymous Fri, 16 May 2008 11:57:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8118 It would seem that Michael Corleone's strategy to move the racket money into legitimate businesses has succeeded. Apparently all the wise guy kids got ivy league MBA's, too. Stay tuned for Godfather XIV. It would seem that Michael Corleone’s strategy to move the racket money into legitimate businesses has succeeded. Apparently all the wise guy kids got ivy league MBA’s, too. Stay tuned for Godfather XIV.

]]> By: a http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8109 a Fri, 16 May 2008 08:03:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8109 I'm not sure I understand. It seems more likely that you have an instance of normal-structured-product practice. You create a structure and then you see how much money can be extracted from it by selling it onto clients. I imagine initially the "30" was the x which was set up or down based on client demand. *Then* after having several successful rounds of selling it onto clients at 30 and reaping the profits, the departments needed to keep going at this level to reach their profit targets. But unfortunately (and this is where it deviates from the normal storty) there were no more clients to stuff, so they had to stuff their own banks. Their team still made the profits (and they pulled down the bonuses), while the bank itself suffered. I’m not sure I understand. It seems more likely that you have an instance of normal-structured-product practice. You create a structure and then you see how much money can be extracted from it by selling it onto clients. I imagine initially the “30″ was the x which was set up or down based on client demand. *Then* after having several successful rounds of selling it onto clients at 30 and reaping the profits, the departments needed to keep going at this level to reach their profit targets. But unfortunately (and this is where it deviates from the normal storty) there were no more clients to stuff, so they had to stuff their own banks. Their team still made the profits (and they pulled down the bonuses), while the bank itself suffered.

]]> By: Richard Kline http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8108 Richard Kline Fri, 16 May 2008 08:02:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8108 . . . Collective delusion. Per Norris, 40% of the loans were from California, with large quantities also from Nevada (read Las Vegas), and Florida: regional concentration of risk, an issue airily waved off by the Securitizers, too. There was a smaller outfit in WA State, can't recall their name, of the same ilk; they, too, stroked out on repurchase obligations while the industry still pushed their plague-bad paper downchannel. . . . Collective delusion. Per Norris, 40% of the loans were from California, with large quantities also from Nevada (read Las Vegas), and Florida: regional concentration of risk, an issue airily waved off by the Securitizers, too. There was a smaller outfit in WA State, can’t recall their name, of the same ilk; they, too, stroked out on repurchase obligations while the industry still pushed their plague-bad paper downchannel.

]]> By: tom a taxpayer http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst.html#comment-8102 tom a taxpayer Fri, 16 May 2008 05:46:00 +0000 http://www.nakedcapitalism.com/2008/05/floyd-norris-candidate-for-worst-mortgage-securitization-ever/#comment-8102 ...or committed fraud. …or committed fraud.

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