Quote:
Originally Posted by Libertine
You are missing one of the driving forces behind this whole situation, though: the credit rating agencies.
Investors often didn't invest in sub-prime mortgages, but in investment grade-rated securities.
|
True.
Investors unfortunately didnt knew that rating agencies are crooked.
Does this looks like current AAA rated company?
It is...
Why it is AAA rated? Cause otherwise as one indepedent rating agency (edgar jones) suggest, with BBB status this company deserve (ABK and its competitor MBI, both biggest mortgage bond insurers), half of wall street would be BK or would need to raise a capital significantly.
Thats one of the reall reason for credit crunch, noone believe those rating agencies anymore....
""America's biggest mortgage bond insurers collectively need a $200 billion (Ł101 billion) capital injection if they are to maintain their key AAA credit ratings, a figure that dwarfs a plan by New York regulators to put together a capital infusion of up to $15 billion, a leading ratings expert said yesterday."
and
""Banks worldwide may need to raise as much as $143 billion of additional reserves to satisfy regulators if bond insurer rating cuts trigger downgrades for the securities they guarantee, Barclays Capital analysts said.""
and:
"Everyone thinks they're looking at the cliff over Armageddon," said Ed Rombach, senior derivatives analyst at Thomson Financial. "If you think the write-downs have been bad so far, the next write-downs could be twice as big."
That was big whole game in JAN/FEB with too much bullshit games and I am sure rating agencies were pushed to not to downgrade mortgage bond insurers.
Suddendly, all that problem with ABK and MBI was forgotten.
I made a lot of money with put options on both of those pigs, but when they hitted 5 -8 bucks, all that wallstreet/goverment bullshit game has begun.