Sunday, August 04, 2013

Banks Find S.&P. More Favorable in Bond Ratings -

Banks Find S.& P. More Favorable in Bond Ratings -

Actually, it's a bit more dramatic than that. The rating agencies gave AAA ratings to mortgage backed bonds (Residential Mortgage Backed Securities, or RMBS) that were in fact about as far from AAA as any investment could get. They were worse than junk bonds and turned out in many cases to have been completely worthless because the mortgages that the bonds represented were issued to people with  no money, no job, no assets, no down payment, and no chance that they would make mortgage payments. And now, here we go again:

"S.& P. has been giving higher grades than its big rivals to certain mortgage-backed securities just as Wall Street is eagerly trying to revive the market for these investments, according to an analysis conducted for The New York Times by Commercial Mortgage Alert, which collects data on the industry. S.& P.’s chase for business is notable because it is fighting a government lawsuit accusing it of similar action before the financial crisis."

1 comment:

IC_deLight said...

not to mention the form "opinion" letters provided by high priced law firms were completely worthless

not to mention that the banks did not follow or otherwise fulfill the assumptions made in the "opinion" letters

not to mention that for the standard securitizations, the banks and finance companies for the most part did not perform the transfers of the promissory notes as represented in the materials made available to investors. MERS served the multiply-obfuscating purposes of i) concealing the fact that the transfers WEREN'T made, ii) avoiding transfer fees with local government, iii) concealing the identity of the owner of the loan, iv) concealing the identity of the party that actually had standing (along with concealing the fact that the foreclosing entities did not have the authority they claimed).