[JerryLove]

Originally Posted by Hopeful

I might actually agree with your assumption that the government can regulate better, IF you can guarantee the politicians will not mess it up or interfere with the intent of the law. Just for clarification, the banks did not lend to the quasi-government agencies. They put gasoline on the fire by buying the loans that the banks would not normally make because of the looser underwriting guidelines.

Which would mean that a collapse in the housing market would trigger the death of these quasi-government agencies... not the banks or stock market, neither of which would hold these debt-backed securities.

Of course, that's not what happened. These mortgages got packaged and sold in the private market (the stock exchange), and these debt backed securities were bought heavily by banks (AIG, Chase, Citi, etc).

So the appraisers did not self-regulate and put bogus appraisals. The mortgage companies did not self-regulate, and wrote horrible mortgages. The banks did not self-regulate and packaged these, and almost no-one self regulated and everyone bought the securities.

Finally: No one has told me how Frosted Flakes is a "healthy choice".

[Hopeful]

Originally Posted by JerryLove

Which would mean that a collapse in the housing market would trigger the death of these quasi-government agencies... not the banks or stock market, neither of which would hold these debt-backed securities.

Of course, that's not what happened. These mortgages got packaged and sold in the private market (the stock exchange), and these debt backed securities were bought heavily by banks (AIG, Chase, Citi, etc).

So the appraisers did not self-regulate and put bogus appraisals. The mortgage companies did not self-regulate, and wrote horrible mortgages. The banks did not self-regulate and packaged these, and almost no-one self regulated and everyone bought the securities.

Finally: No one has told me how Frosted Flakes is a "healthy choice".

Well, the jury is still out on whether or not we've seen the last of the residential mortgage problems. Even the "A" rated traunches are experiencing delinquencies and even downgrades. This means that there are further developments in the future. The impact on Fannie and Freddie has not fully been discovered (or maybe not disclosed).

I already answered you on your "Sugar Smacks" question, but I would say the same for Frosted Flakes.

[Bryan]

Originally Posted by JerryLove

Of course, that's not what happened. These mortgages got packaged and sold in the private market (the stock exchange), and these debt backed securities were bought heavily by banks (AIG, Chase, Citi, etc).

While I understand the point you are making, I have to correct you here. CDOs are not traded on the stock exchange. You have to be a qualified institutional buyer or an accredited investor to buy them. It is extremely rare for John Q Public to be able to buy these (he has to be rich...).

[Hopeful]

Originally Posted by Bryan

While I understand the point you are making, I have to correct you here. CDOs are not traded on the stock exchange. You have to be a qualified institutional buyer or an accredited investor to buy them. It is extremely rare for John Q Public to be able to buy these (he has to be rich...).

And in addition to CDOs, MBS for residential mortgages...

[JerryLove]

Originally Posted by Bryan

While I understand the point you are making, I have to correct you here. CDOs are not traded on the stock exchange. You have to be a qualified institutional buyer or an accredited investor to buy them. It is extremely rare for John Q Public to be able to buy these (he has to be rich...).

And then that institutional buyer sells its stock.

One part of the issue is that loans were sold, then securities were sold against the value of those loans, then securities were sold against the values of those securities. Meanwhile there was insurance on the mortgages, and that insurance was sold, and resold as well.

There's certainly no rational way to argue that the failure with MBSs didn't effect Joe Citizen.

[JerryLove]

Originally Posted by Hopeful

I already answered you on your "Sugar Smacks" question, but I would say the same for Frosted Flakes.

Did you? apologies. I'll have to go find it.

[Bryan]

Originally Posted by JerryLove

There's certainly no rational way to argue that the failure with MBSs didn't effect Joe Citizen.

I never made such an argument.