Interesting powerpoint presentation with some innacuracies and omissions (and lousy drawings). But an enjoyable read.
In terms of omissions. Firt there was no mention of the fact that the SEC was informed of the dubious ratings given on at least one major bond insurer. And no action was taken.
..Ackman took an interest in MBIA after asking a credit- market trader which companies didn't deserve AAA ratings, he says. In a report entitled, ``Is MBIA Triple-A?'' he argued that the company had insufficient reserves to cover potential losses and was guaranteeing increasingly risky debts...Ackman published his MBIA findings on Gotham's Web site. Ron MacDonald, the head of reinsurance at MBIA until 1999, read the report early in 2003 and e-mailed Ackman praising it, MacDonald says...Ackman made a series of presentations to Moody's Investors Service Inc., the New York-based credit rating company, challenging the bond insurer's top credit grade. In 2005, he wrote to Moody's warning that it was risking its own credibility by keeping MBIA at AAA.
Ackman Devoured 140,000 Pages Challenging MBIA Rating (Update2) By Christine Richard and Katherine Burton http://www.bloomberg.com/apps/news?pid=20601109&sid=a5tQL4.YXs8I&refer=home
Secondly, there's only one reason given as to WHY the mortgage brokers were free (and encouraged) to hand out mortgages to anyone who would take them. That is, that they didn't have to cop the flack of the mortgages failing. The historical background of the great flood of global investment funds is missing and the multiple reasons why these 'monies' existed in the first instance. (the massive expansion of compulsory pension savings, the derivative instruments that allowed a massive expansion of credit on the basis of very little collateral, the build up of reserves by nations associated with global imbalances of trade and ballooning commodity prices etc, etc.)
Perhaps the most pertinent factor is the rise of the political and economic power of giant transnational corporations. Their arms extend deeply into the US Presidencies and other key positions of global power. They have played one nation off against another using assassinations, blackmail, bribery, wage and interest-rate arbitrage, media concentration.
They discovered they could do what they wanted to whenever they felt like it. The global financial and ecological crisis is merely the end-game of it all.
The innacuracies seem to be concentrated in the portrayal of the subprime borrower. “more than 50% of subprime lending went to home buyers who should have been accorded prime rates and these were especially African American and Latino home buyers.” There were financial penalties imposed on the early repayment of subprime debt. Home builders had their own agencies to lend subprime mortgages (not just banks), potential borrowers were inundated with advertising and letterbox drops to lure them into avoidable and unnecessary debt of all types.
Lousy drawings was part of its charm. But then I was a sucker for how El Mariachi looked and the fact that it was a group of amateurs who starred in it.
4 comments:
Too funny. Love the part about the good, the not-so-good, and the ugly. Time to rent a Clint Eastwood movie.
Make my day!
Interesting powerpoint presentation with some innacuracies and omissions (and lousy drawings). But an enjoyable read.
In terms of omissions. Firt there was no mention of the fact that the SEC was informed of the dubious ratings given on at least one major bond insurer. And no action was taken.
..Ackman took an interest in MBIA after asking a credit- market trader which companies didn't deserve AAA ratings, he says. In a report entitled, ``Is MBIA Triple-A?'' he argued that the company had insufficient reserves to cover potential losses and was guaranteeing increasingly risky debts...Ackman published his MBIA findings on Gotham's Web site. Ron MacDonald, the head of reinsurance at MBIA until 1999, read the report early in 2003 and e-mailed Ackman praising it, MacDonald says...Ackman made a series of presentations to Moody's Investors Service Inc., the New York-based credit rating company, challenging the bond insurer's top credit grade. In 2005, he wrote to Moody's warning that it was risking its own credibility by keeping MBIA at AAA.
Ackman Devoured 140,000 Pages Challenging MBIA Rating (Update2)
By Christine Richard and Katherine Burton
http://www.bloomberg.com/apps/news?pid=20601109&sid=a5tQL4.YXs8I&refer=home
Secondly, there's only one reason given as to WHY the mortgage brokers were free (and encouraged) to hand out mortgages to anyone who would take them. That is, that they didn't have to cop the flack of the mortgages failing. The historical background of the great flood of global investment funds is missing and the multiple reasons why these 'monies' existed in the first instance. (the massive expansion of compulsory pension savings, the derivative instruments that allowed a massive expansion of credit on the basis of very little collateral, the build up of reserves by nations associated with global imbalances of trade and ballooning commodity prices etc, etc.)
Perhaps the most pertinent factor is the rise of the political and economic power of giant transnational corporations. Their arms extend deeply into the US Presidencies and other key positions of global power. They have played one nation off against another using assassinations, blackmail, bribery, wage and interest-rate arbitrage, media concentration.
They discovered they could do what they wanted to whenever they felt like it. The global financial and ecological crisis is merely the end-game of it all.
The innacuracies seem to be concentrated in the portrayal of the subprime borrower. “more than 50% of subprime lending went to home buyers who should have been accorded prime rates and these were especially African American and Latino home buyers.” There were financial penalties imposed on the early repayment of subprime debt. Home builders had their own agencies to lend subprime mortgages (not just banks), potential borrowers were inundated with advertising and letterbox drops to lure them into avoidable and unnecessary debt of all types.
Lousy drawings was part of its charm. But then I was a sucker for how El Mariachi looked and the fact that it was a group of amateurs who starred in it.
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