Without the illusion from institutions like the Lazard Investment backed (Just research all their lobyists and connections with F&F, Franklin Raines, lol) Fannie and Freddie, the "derivatives" would not have existed in the first place.
ROTFLMAO at the first paragraph
This is what Lazard tries to ignore back in 2002 and before.
To understand the importance of Fannie Mae and Freddie Mac, one must understand the rudiments of the housing financing market. To buy a home, a prospective purchaser must have the financial means: Either the purchaser is wealthy enough to buy the home in cash, or—in most cases—the purchaser takes out a mortgage loan. Commercial banks, and savings and loan associations are the financial institutions most likely to originate a mortgage loan. The primary mortgage-lending institution can hold that loan until maturity—30 years, for example—collecting, during this time, interest and principal payments.
However, the primary mortgage-lending institution can exercise a second option: After originating the mortgage loan, it can sell it off. Two of the leading corporations that could buy the mortgage from the primary institution—known as secondary market corporations—are Fannie Mae and Freddie Mac. As a result of Fannie Mae and/or Freddie Mac buying the mortgage from the primary lending institution, that primary institution now has cash, which it can use to originate a new mortgage.
This process can be, and is, repeated several times during the course of the year, for each primary-mortgage lending institution in America. Thus, Fannie Mae and Freddie Mac act as a spigot pouring liquidity into the U.S. mortgage market.
There is another step to this process. When a primary mortgage lending institution offers to sell a mortgage loan it has originated, Fannie Mae or Freddie Mac can do one of two things. They can, as described, buy the mortgage loan outright and hold onto it (Fannie and Freddie issue bonds in their own names, and use the proceeds from the bond sale to buy mortgage loans). Or, they can pool several mortgage loans together, into a derivatives-like instrument, called a Mortgage-Backed Security (MBS); put a guarantee on it; and sell it to a third party—such as a mutual fund, a pension fund, or an insurance company. In the latter case, the pension fund or mutual fund end up owning the MBS, which gives them a claim to the underlying principal and interest stream of the mortgage. Thus, it is the cash from the pension fund, or mutual fund, etc., which is going into the housing market, having been drawn into that market by Fannie Mae and Freddie Mac as issuers of securities.
Even the LeRouche cult has a moment of clarity
The deregulation bogeymen were not the only ones at fault. Lazard backed F&F drove the car carrying the clowns off the cliff.
“Without the illusion from institutions like the Lazard Investment backed (Just research all their lobyists and connections with F&F, Franklin Raines, lol) Fannie and Freddie, the “derivatives” would not have existed in the first place”
Well that’s pure, unadulterated nonsense.
Derivatives developed in London, England, during the 1990s.
They are assumed to be a byproduct of the American mortgage market by those, like you, who don’t know that they are talking about.
Anyone interested in discovering how and why derivatives were developed by the financial industry can read Gillian Tett’s ‘Fool’s Gold’.
Regarding Lazard, you should try reading the applicable research paper before ‘informing’ us that they have been bought off by Fannie and Freddie. Sometimes it helps to actually do some research:
http://www.lazardnet.com/lam/us/tpd/pdfs/Inv_Research_Mortgage_Crisis.pdf