Posted on 05/01/2009 4:36:59 AM PDT by TigerLikesRooster
MBIA sues Merrill over CDO losses
Thu Apr 30, 5:16 pm ET
NEW YORK (Reuters) – MBIA Inc (MBI.N), the world's largest bond insurer, sued Merrill Lynch & Co on Thursday seeking damages for losses from complex debt securities it insured for the bank.
The lawsuit, filed in New York State Supreme Court in Manhattan, seeks to void certain credit default swaps and related insurance contracts that MBIA, through a special purpose vehicle, wrote on the securities held by Merrill.
The insurer wrote $5.7 billion in guarantees on these securities, which were packages of mortgages known as collateralized debt obligations (CDOs), it said in a statement.
MBIA faces several hundred million dollars of losses on these contracts because Merrill misrepresented the credit quality of the CDOs, the insurer said.
(Excerpt) Read more at news.yahoo.com ...
Ping!
They put themselves in the position of insuring bonds that were misrepresented. And why the heck were they relying on Merrill to do their due diligence?
This was done knowing what legislation would be changed in what order as a select few on the front end could skim the real money. Freddie and Fannie are prime examples.
Realizing that crap like the CRA and subsequent extortion of US lending institutions forcing them to make no-doc loans etc, allowed a temporary illusion of profitability.
You can bet the big boys on Wall Street were in on it too, just like the pimping for the dot com bust. This time however, the Fed has been a major player as well as Congress and the SEC.
I cannot fathom how any big shot investor would purchase CDS's and CDO's without any details as to the liabilities w/ potential profits as to just what those 'assets', the borrower, the property, and the values of those assets and combined liabilities.
No one can ever convince me otherwise that this hasn't been and isn't still a huge Ponzi scheme.
Having read how many US government employee retirement funds have had significant amounts of cash tied up in discrete hedge funds, with a good number of those being ran offshore, now reporting losses, bought up these CDS's, CDO's etc an use those toxic assets as collateral to back 30:1 to 80:l leveraging schemes.
This has occurred on global level, yet, we receive no news as to who actually made all the money up front. The money seems to have been funneled into bogus housing and commercial construction all over the world not to mention hefty fraudulent bonuses and commissions.
Isn’t it interesting how the mess virtually always comes back in some way to those darned mortgages?
Don't they have a legal obligation to accurately represent what they are selling?
“...we shall starve terrorists of funding, turn them one against the other...”
Take a hedge fund (off shore) that sets up a US LLC 'investment group' that scoops these up for cash on the barrel.
They'll sit on them for a while to rent as the property starts to appreciate then sell them once the return minus taxes, upkeep and insurance hits the 15-20% profit margin.
That's a lot of collateral for a guaranteed margin averaging 3-5% / year. They'll use that to leverage in on the commodities futures markets and pick up dirt cheap bank stock.......it's all been planned.
See #9...... pretty slick as the economy is all about money changing hands.....the lucky younger folk who land goobermint jobs will be the ones able to qualify for the loans to pay the ‘investors’ back. Thus that’s another one of the big reasons that goobermint at all levels will not shed useless spending programs.
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