Economy
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Title: Subprime 1-2-3
Source:
Mother Jones
URL Source: http://motherjones.com/politics/2008/05/foreclosure-phil
Published: Jul 12, 2008
Author: Casey Miner
Post Date: 2011-06-12 11:11:51 by lucysmom
Keywords: Deregulation, Credit Default Swaps
Views: 2162
Comments: 3
Subprime borrower: Has a few overdue credit card bills; goes to a storefront lender owned by major bank; takes out a $100,000 home-equity loan at 11 percent interest Lending bank: Assuming housing prices will only go up, and that investors will want to buy mortgage loan packages, makes as many subprime loans as it can Investment bank: Packages subprime mortgages into bundles called collateralized debt obligations, or cdos, then sells those cdos to eager investors. Goes to insurer to get protection for those investors, thus passing the default risk to the insurer through a "credit default swap." Insurer: Thinking that default risk is low, agrees to cover more money than it can pay out, in exchange for a premium Rating agency: On basis of original quality of loans and insurance policy they are "wrapped" in, issues a rating signaling certain slices of the cdo are low risk (aaa), medium risk (bbb), or high risk (ccc) Investor: Borrows more money from investment bank to load up on cdo slices; makes money from interest payments made to the "pool" of loans. No one loses—as long as no one tries to cash in on the insurance.
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#1. To: Badeye, A K A Stone, hondo68, Fred Mertz, Godwinson, go65, war, no gnu taxes, Skip Intro, ferret mike, jwpegler, brian s, mcgowanjm, Capitalist Eric, Mininggold (#0)
It is our responsibility to protect that child once that child’s born too. When we start debating a budget, let’s make sure we don’t cut 100,000 vaccines. Let’s make sure we’ve got health insurance. We seem to worship what we cannot see, but as soon as that baby’s born, oh no, we don’t want to be intrusive. Texas is going to shrink government until it fits inside a women’s uterus. Senator Leticia Van de Putte
A ponzi scheme, endorsed by the D&R party.
Obama's watch stopped on 24 May 2008, but he's been too busy smoking crack to notice.
And you thought I would be interested in this...because....?
Proxy IP's are amusing.....lmao
No one loses—as long as no one tries to cash in on the insurance.
#2. To: lucysmom, *The Two Parties ARE the Same* (#0)
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
#3. To: lucysmom (#1)
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