Saturday, December 8, 2007

Call Out the Cops-4

"Incredibly risky in retrospect, the refund policies were critical in the banks' push to keep a steady stream of money coming in during the peak years of the housing market from 2004 to 2006. ... In an effort to attract money-market funds--a new group of buyers for subprime-related securities--banks started putting guarantees on some products a few years ago. ... The refund policies, technically known as 'liquidity puts,' were crucial. For instance, they allowed the credit rating agencies to bestow on the investments the same grade they gave the banks that backed them", Matthew Goldstein, in BusinessWeek, 10 December.

What "in retrospect" kimosabe? If the products had the same credit rating as their sponsoring banks why weren't they bank liabilites? This gets worse every minute. If the rating agencies knew of the guarantees and apparently required them, why haven't they been indicted for aiding and abetting securites fraud? The rating agencies had to have known the guarantees made the investments bank loans! Where is the US Attorney for the Southern District of New York? What is he doing? Chasing down nickel and dime (ugh-double entendre) retail crack dealers? Where were the CPA firms when all this was going on?

4 comments:

Tom Stone said...

I hate to be the one to break the news to you,but this IS the Bush Administration.I am sorry about that,and so is the rest of the world,but hey there it is.

Independent Accountant said...

Why are you apologizing for the George Bush presidency?

Tom Stone said...

Gosh,I didn't mean to imply I was apologizing for George and his buddies,I just sorta miss being a Citizen,and living in a first world country and stuff like that.

Independent Accountant said...

Now I understand you. I no longer "miss being a Citizen and living in a first world country". We are subjects of King George, just like we were before 1776. It seems the US legal system is approaching that of Pakistan or Nigeria for corruption. Your's and my thinking may be closer either of us thought. See my posts with the title "Anatole of France".
As to living in a "first world country", I moved from Los Angeles to Houston. LA is part of "Alta California". Joe Klein had an article in "Time" recently in whihc he noted immigration is the "hot button" issue in 2008's presidential election. I agree. If interested, go to Vdare and George Borjas which write about immigration.