Comments on: The Death of Securitized Mortgages http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html Mon, 23 Nov 2009 11:57:17 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: Anonymous http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html#comment-10324 Anonymous Mon, 30 Jun 2008 14:49:00 +0000 http://www.nakedcapitalism.com/2008/06/the-death-of-securitized-mortgages/#comment-10324 You should do a second chart because this chart is misleading. You switched from years to quarters. A more dramatic chart would emerge if you added all 2007 together. You should do a second chart because this chart is misleading. You switched from years to quarters. A more dramatic chart would emerge if you added all 2007 together.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html#comment-10322 Anonymous Mon, 30 Jun 2008 13:42:00 +0000 http://www.nakedcapitalism.com/2008/06/the-death-of-securitized-mortgages/#comment-10322 "Expect more efforts to socialize the housing market to prevent this outcome"<br/><br/>Watch closely for GNMA quarterly volumes and you'll see that a socialized housing market crept up last quarter and is at the foot of your bed waiting for you to wake up... Should be up 73% quarter over quarter. “Expect more efforts to socialize the housing market to prevent this outcome”

Watch closely for GNMA quarterly volumes and you’ll see that a socialized housing market crept up last quarter and is at the foot of your bed waiting for you to wake up… Should be up 73% quarter over quarter.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html#comment-10321 Anonymous Mon, 30 Jun 2008 13:41:00 +0000 http://www.nakedcapitalism.com/2008/06/the-death-of-securitized-mortgages/#comment-10321 The truth is those securities are impossible to value. By the time the dust settles, your pension fund won't be able to own them. There weren't buyers for these things in the first place, which is why the issuers had to house them in SIVs.Finally, how does Joun Dugan still have his job? I want to know why he approved a special request to create SIVs and then didn't track them. The truth is those securities are impossible to value. By the time the dust settles, your pension fund won’t be able to own them. There weren’t buyers for these things in the first place, which is why the issuers had to house them in SIVs.Finally, how does Joun Dugan still have his job? I want to know why he approved a special request to create SIVs and then didn’t track them.

]]> By: Anonymous http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html#comment-10285 Anonymous Sun, 29 Jun 2008 20:56:00 +0000 http://www.nakedcapitalism.com/2008/06/the-death-of-securitized-mortgages/#comment-10285 The proof against your arguement is in the chart you yourself posted. Take a look and you will see that the past few years were bubble years in terms of non-agency mortgage securitization. The housing market worked fine before the non-agency market got so big and it can work fine after it is gone. The proof against your arguement is in the chart you yourself posted. Take a look and you will see that the past few years were bubble years in terms of non-agency mortgage securitization. The housing market worked fine before the non-agency market got so big and it can work fine after it is gone.

]]> By: Zippy in Annapolis http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html#comment-10280 Zippy in Annapolis Sun, 29 Jun 2008 17:42:00 +0000 http://www.nakedcapitalism.com/2008/06/the-death-of-securitized-mortgages/#comment-10280 "Been there" has it exactly right. The average voter hasn't a clue. <br/><br/>Taking illiquid assets and making them liquid via securitization is one of the essential drivers in our modern economy. Until we restart that process the entire economy will suffer as commercial banks have shrinking capital reserves and the credit crunch is just beginning throughout the real economy. “Been there” has it exactly right. The average voter hasn’t a clue.

Taking illiquid assets and making them liquid via securitization is one of the essential drivers in our modern economy. Until we restart that process the entire economy will suffer as commercial banks have shrinking capital reserves and the credit crunch is just beginning throughout the real economy.

]]> By: Been there http://www.nakedcapitalism.com/2008/06/death-of-securitized-mortgages.html#comment-10273 Been there Sun, 29 Jun 2008 13:44:00 +0000 http://www.nakedcapitalism.com/2008/06/the-death-of-securitized-mortgages/#comment-10273 "The impairment of lending capacity suggests that housing prices could overshoot their "fair" value in relationship to incomes. Expect more efforts to socialize the housing market to prevent this outcome."<br/><br/>It seems you mean that it will overshoot the relationship in a downward direction as house prices continue to fall.<br/><br/>"In fact, regulators do not expect securitization to return to anything like its former level. They expect far more bank originated assets to stay within the banking system, on their balance sheets"<br/><br/>Yes and no. Agreed the securitization business probably won't be able to return to it previous level. But when in comes back, it will probably be due a entirely new group of large securitization players. <br/><br/>The securitization business was able to achieve those levels of the past 3 to 4 years only through subtrifuge- muzzeling of the due diligence firms, failure on the part of the ratings agencies, etc. Because of the misrepresentations of risk that were imbedded in the securitization process industry-wide, the over-rated instruments that were created, were able to generate a level of investor interest way beyond what was reasonable. <br/><br/>Moving forward, if the securitaztion process picks back up, it will be a simpler more transparent(i.e. commoditized) process. The gross profit margins will be smaller, so the most effective players will those that are most efficient. A low margin/high volume business model isn't where the IB's want to be in 5 years. Many smaller banks won't have the scale to compete. Look for new large regional and national players to emerge. “The impairment of lending capacity suggests that housing prices could overshoot their “fair” value in relationship to incomes. Expect more efforts to socialize the housing market to prevent this outcome.”

It seems you mean that it will overshoot the relationship in a downward direction as house prices continue to fall.

“In fact, regulators do not expect securitization to return to anything like its former level. They expect far more bank originated assets to stay within the banking system, on their balance sheets”

Yes and no. Agreed the securitization business probably won’t be able to return to it previous level. But when in comes back, it will probably be due a entirely new group of large securitization players.

The securitization business was able to achieve those levels of the past 3 to 4 years only through subtrifuge- muzzeling of the due diligence firms, failure on the part of the ratings agencies, etc. Because of the misrepresentations of risk that were imbedded in the securitization process industry-wide, the over-rated instruments that were created, were able to generate a level of investor interest way beyond what was reasonable.

Moving forward, if the securitaztion process picks back up, it will be a simpler more transparent(i.e. commoditized) process. The gross profit margins will be smaller, so the most effective players will those that are most efficient. A low margin/high volume business model isn’t where the IB’s want to be in 5 years. Many smaller banks won’t have the scale to compete. Look for new large regional and national players to emerge.

]]>