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re: "Alan Greenspan Blasts Trump's Tariffs as "Insane"" Bloomberg

Posted on 11/15/18 at 11:04 am to
Posted by GumboPot
Member since Mar 2009
124254 posts
Posted on 11/15/18 at 11:04 am to
quote:

That is true.

Those banks were buying and creating derivatives on loan packages in such large volumes that no entity could have the capital to stand behind them.

It was really crazy nobody every questioned them. They would sell default derivatives on the same packages of loans hundreds of times and no one every said "can you financially cover these commitments if the package declines in value 5%?"


The bottom line is if the credit agencies would have rated the MBS's accurately those derivatives would have been fine. The failure happen because risks was not properly evaluated.
Posted by I B Freeman
Member since Oct 2009
27843 posts
Posted on 11/15/18 at 11:10 am to
quote:

The failure happen because risks was not properly evaluated.



First logical thing you have actually posted in weeks.

Moodys and S&P should have sued out of business.

Banks should have had too to report their potential liabilities too. At least that would have made them stop and think.

They had so much liability that even small changes in the default rates on those huge packages cost them billions.
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