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| Good explanation of Mortgage Crisis (312255) | |||
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Good explanation of Mortgage Crisis |
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Posted by AlM on Sat Apr 26 16:52:27 2008 http://www.nytimes.com/2008/04/27/magazine/27Credit-t.html?pagewanted=2Exactly what CharlesG said a week or two ago. In the article, Moody's takes the author through their decision process on a package of $430 million worth of mortgages. 43% of borrowers did not have to reveal their income!!! And yet somehow Moody's managed to call the top slice of the package AAA. Obviously a lot of the original buyers were a bunch of liars and the loan originator was a sleaze, but those are expected in the business. It's Moody's job (along with S&P and Fitch) to tell investors what they're getting, and they just fell asleep on the job. If Moody's hadn't overrated this and many other packages, loan originators would have needed to be more careful whom they loaned to. |
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