July 15 (Bloomberg) -- Originally top-ranked securities created in repackagings of home-loan bonds last year by JPMorgan Chase & Co. and Goldman Sachs Group Inc. had their ratings cut to below investment grade by Moody’s Investors Service.
The securities were among the 15 classes of five so-called Re-REMICs from 2006 or 2008 whose grades were lowered by Moody’s because of the “deterioration in performance and ratings” of the underlying bonds, the New York-based ratings firm said in a statement today. One class rated Aaa in the JPMorgan deal from December was cut to B2, or five steps below investment grade.
Re-packaged loans?
This so-called "resecuritizations" are just another turn at the same old scam - trying to convince people that a package of loans has more value than the original underwriting (or lack thereof.)
When these went bad the first time, the banks, desperate to find another way to skim off yet another set of fees, "restructured" the loans and then sold them again, shuffling the deck one more time and of course skimming off yet another set of fees from the inherent cashflow that originally existed.
This depleted the fundamental cash-flow and as a consequence the underlying credit quality compared to the reference benchmarks (remember, the true risk-adjusted return compared to the original benchmark can never go up once the original mortgage is made - it can only be subtracted from in the form of fees and costs), but voila - through the magic of arm-waving and paper, these were again rated "Aaa" just as recently as this last December!
JP Morgan and Goldman, of course, booked the profit from handling these things (again) and took that money from the investors (again), in that the underlying cash flow from these deals was (again) impaired. And again, they have failed to perform anywhere near what their alleged "Aaa" rating would suggest, being cut to junk less than seven months later - a ratings move that is supposed, according to the definition of "Aaa", about as likely as getting hit by lightning.
Someone needs to go have a discussion with God about the odds here, because this is twice that the same deal has been struck by the very same bolt of fire from the sky!
If this isn't evidence that the entire scheme of "securitization" is fatally flawed and that "ratings" on securitized "products" are worthless I don't know what is.
How is it that a bank can pull this sort of thing not once but twice with the same bucket of loans and the same ratings agencies and not only will they not get sued or shut down by regulators but in addition they actually manage to find suckers who will buy this crap from them the second time around - after having already been proved to be garbage the first time!
Now you know how companies like Goldman and JP Morgan are producing their "earnings" - once again, they're producing securities they claim are "Aaa", yet just months later turn out to be garbage, yet they skim off their money and pocket it, screwing the investor (again.)
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Scam Me Once, Scam Me Twice! in forum [Market-Ticker]
Wearedoomed
Posts: 3584
Incept: 2009-01-14
slightly red state
Online
Uh, won't get scammed again?
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And you, my father, there on the sad height, Curse, bless me now with your fierce tears, I pray. Do not go gentle into that good night. Rage, rage against the dying of the light.
"We'll be fighting in the streets With our children at our feet And the morals that they worship will be gone And the men who spurred us on Sit in judgement of all wrong They decide and the shotgun sings the song"
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“The problem with socialism is that, sooner or later, you run out of other people’s money.” Thatcher
Mangothebird
Posts: 383
Incept: 2009-04-01
Smith & Wesson Country
Genesis wrote:
Quote:
Someone needs to go have a discussion with God about the odds here, because this is twice that the same deal has been struck by the very same bolt of fire from the sky!
Perhaps these securities are like lightning rods. I suppose we'll find out soon how well grounded the entities that bought them and the institutions that created them are.
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"Light a fire for a man, and he shall be warm for a few hours. Light the man on fire, and he shall be warm for the rest of his life." - Chinese Proverb
How is it that a bank can pull this sort of thing not once but twice with the same bucket of loans and the same ratings agencies and not only will they not get sued or shut down by regulators but in addition they actually manage to find suckers who will buy this crap from them the second time around - after having already been proved to be garbage the first time!
So Gen, what your saying is this, In *layman's* or so NASCAR joe 6 pack would understand..
JPMorgan Chase & Co. and Goldman Sachs Group Inc. had these Securities that were worth *JUNK*, in effect, part of the problem that brought this crash in the economy about.. Let's say these Securities are a basket of Fruit,Stores, (Investors) bought it and went bankrupt because the Maters went bad real quick... ALOT goes bad, (rotten),JPMorgan Chase & Co. and Goldman Sachs Group Inc.then purchased baskets of Rotten Tomatoes from the Store(s) that went Bankrupt from Tomatoes they had sold Earlier to BK stores, then bought back for pennies on the dollar.. Aforementioned Crooks picked out the Fruit that still "looked good", piled them into another basket, repackaging & re-pricing it, (high grading) as #1 basket of Mater's.. Effectively Making Money/Profits TWICE from the same baskets of rotten, (or soon to be) Mater's. (While the USDA bought the rotten junk and Made Mater Paste with that fruit, giving it away too needy foodbanks). ONLY the Mater's goes rotten themselves in a SHORTER amount of time..Store buys Mater's, only when they put them on the Shelf, they are bad with-in days before they(the store/investors)have time to Make their money back+ profit.. Semi-correct? I ask this, so I can explain this to some *dense* people.. (NASCARJ6P)
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“Cognitive Co-Dependency” is when a normal rational person, internalizes irrational illogical presentations, and somehow reconciles them to fit their scripted indoctrination of logical analysis.
Quote:
Samuel L. Clemens:There is NO Native Criminal Class; EXCEPT for CONgress
It all boils down to the buyers an fiduciary responsibility...
Who are/were the purchasers of these products? Was it private individuals purchasing them for themselves?
Or was it funds managers, pension managers, and other folks, who, by structural design, are continually receiving fresh money through 401K deposits, pension deposits, etc. and the money HAS to be spent.
Since the money, by definition, has to be invested, the managers have to buy **** sandwiches over and over again, as long as they meet the "criteria".
You will not believe the legal pressure I had, as my companies 401K trustee, to "invest" in ****, because I chose NOT to put it into stocks, but into a CD.
It was all about protecting the Principal. Yet, the plan lawyers said that by not putting the money "in play", I was liable for lawsuits. When I explained about my market theories, they said I was not liable for principal loses, only for "missed opportunity" costs.
The same holds true here.
Until the law is changed, and fund managers are allowed to "change" their required investment paradigms, and worry about principal protection, they MUST be net purchasers of these pieces of ****.
It was **** the first time you bit into it, and it still is - even if you dip it in chocolate first.
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I don't care if it makes sense -- only if it makes money. -- Me Bank (n): See scam, fraud and theft.Eat a bankster -- they're low-carb. What part of "shall not be infringed" was unclear?
Jstanley01
Posts: 8176
Incept: 2008-07-30
San Antonio, Texas
Pabloescobar wrote..
You will not believe the legal pressure I had, as my companies 401K trustee, to "invest" in ****, because I chose NOT to put it into stocks, but into a CD.
It was all about protecting the Principal. Yet, the plan lawyers said that by not putting the money "in play", I was liable for lawsuits. When I explained about my market theories, they said I was not liable for principal loses, only for "missed opportunity" costs.
This is un-be-f**kin'-lievable.
FORCING financial professionals de facto to violate their fiduciary responsibilities under the de jure color of the very law that is supposed to require them to uphold those responsibilities, it worse than criminal. It is EVIL. It makes THE LAW a LIE.
Pabloescobar wrote..
Until the law is changed, and fund managers are allowed to "change" their required investment paradigms, and worry about principal protection, they MUST be net purchasers of these pieces of ****.
Oh how I wish I could try that at my business. The profit margins would be sky-high (for a little while). Let's suppose a customer only eats half of his food and cries about how bad it is. Then let's suppose I take the remaining half, throw a little good on top, and re-package it for another customer. Man, I wish I were a banker now. It must be nice...
Oh no Jc, they did better. They repackaged the used food.
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I don't care if it makes sense -- only if it makes money. -- Me Bank (n): See scam, fraud and theft.Eat a bankster -- they're low-carb. What part of "shall not be infringed" was unclear?
The "suckers" are no doubt pension fund and fixed income mutual fund managers of OPM who have nowhere to go for yield - so in order to justify their weekly paycheck, have to buy something. And so they take their slice as well out of the final sucker, J6P, who is at least enjoying some well earned time on the beach at the moment.
Another good dose of reality Karl.
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"Pay no attention to Caeser, Caeser doesn't have the slightest idea what's really going on." - Kurt Vonnegut RIP
