All this comes too late for many investors. They find themselves stuck in an asset with declining value that is no longer liquid. Merrill Lynch and Bear Sterns already tried running for the door only to find that they were stuck in "Hotel California" where you can check out any time you like, but you can never leave.

It still staggers me that a bunch of penny-ante frauds (i.e., liar/borrowers) were able to fool all the smart people who supply the money.

Come on: income verification is a pain-in-the-___. Did anyone really believe that the previous generations of lenders were unnecessarily verifying income? Did they really think that the previous lenders were fools?

It still staggers me that a bunch of penny-ante frauds (i.e., liar/borrowers) were able to fool all the smart people who supply the money.

But did they really fool anybody? In other words, the true big boy pigmen making $360M/yr. on average at the large hedge funds probably knew that this stuff was total garbage. But they didn't really care because, well, because they were making $360M/yr! So the pensions, FCB's, and mom and pop 401k's are the ones holding the bag - JSP in other words. And when the excrement crosses paths with the oscillating air mover, the hedgies won't give back the bonus money and will just beg the Fed for more in the form of bailouts. LOL.

IMHO, the opaque nature of the CDO's prevented the investors from knowing what was really going on, and the salesmen for this junk (pigmen hedgies and the complicit rating agencies) were the ones that got over on them, which isn't really that surprising after all.

Another fine example of partially closing the barn door after the horse has run away and jumped off a cliff.

S&P-So let's do a detailed review of your underwriting guidelines and credit process.
Lender-There are none.
S&P-Anything you'd like to add?
Lender-Uhm, and there never have been either?
S&P-Excellent, thank you. Now, moving onto quality control and internal audits. As above we presume?
Lender-yes, as above.
S&P-Thank you. Now that's out of the way, let's discuss our rating fees.

itsallgreektome,
I have some put positions that might pay me enough to quit work for a year if the deal blows and Lend hits the bk button. But I was buying those positions when everyone was harping on how done the deal was and how great the business would be with nobody left in the subprime space.

I now believe that subprime will only exist through fannie, freddie, and some very large banks through their own subprime divisions that will provide credit only upon enough equity being left to cover their costs of foreclosure. In other words back to the old days. I also believe that anybody who levered up to buy the toxic waste is currently dead in the water and will no longer be solvent by the end of the month, if not today by mark to market. Now how much in the way of equities they have to sell to meet their margin calls is yet another question that no one is even asking yet.

Everything down except treasuries is what seems to be the next month's future- oh yeah, gold up too and the yen due to shorts being repurchased.

Someday this war's gonna end...

Bad day for ABK, CFC and MBI all are off more than 3%.

It looks like the market might be waking up to reality here.

I still beleive that we have not seen the worst in the mortgage backs yet because FNMA and Freddie have not seen the bad losses yet on their portfolios because the volume of foreclsures are still low on A paper.

As housing prices fall over the next year or two they too will suffer the losses on their securitizations. I have to believe that the securities they issued underestimate the losses that they would incure just like the subprime folks did.

When this realization occurs look out.

"I now believe that subprime will only exist through fannie, freddie, and some very large banks through their own subprime divisions that will provide credit only upon enough equity being left to cover their costs of foreclosure"

I agree with Allen M.

Many small to mid size mortgage companies have already been squeezed out of the market. Mortgage brokers are also failing and are being regulated out of the market by new legislation being enacted.

This whole thing is a huge disaster for the consumer as they will be left with a home that is not worth as much ,higher mortgage payments and less competetion as there will be fewer companies offering mortgages.

how can u listen to that conf call and have any confidence in these people???????