When did I say everyone is paying their mortgage? I’m saying this is a bigger problem on Wall St. than on Main St.
Of course there will be foreclosures, but the bigger hit will be if companies like CFC go BK and lay off 20,000 people. Then if effects Main St. That’s why the Fed needs (and will) keep the spigot open. This wouldn’t have taken place if not for the creation of CDO’s that were not what they appear to be and the nudge-nudge, wink-wink relationship between the bond raters and their clients
If the underwriters of those loans had to hang onto them rather than sell them we’d see a much different market for those loans and credit in general. And those who bought them (Wall St) only did so because they had the ratings agencies in their back pockets and they knew they could resell them as AAA paper even though they were junk grade at best.
The guys who started New Century made millions upon million and the firms who bought and resold their junk made millions more in fees. New Century files BK and fires everyone, but all their top execs made out like bandits. Now investors that invested based on AAA and AA ratings are left holdng the bag of junk. I guarantee you will see congressional hearings where Moddy’s and S&P are grilled on this. I question why it hasn’t happened already.
I’m wondering what Warren Buffet thinks of Moody’s since BRK owns about 18% of them? BRK issues credit default insurance. How come I have a feeling they aren’t exposed to this very much. I sure hope not because I’m a shareholder.
