Posted on 10/07/2010 4:20:55 AM PDT by Daisyjane69
Norcini continues:
“That collateralized debt obligation is now effectively worthless because the collateral behind the debt can no longer be collected. The banks cannot go and get it.
Let’s say you have 10 mortgages at $1 million a piece, the sum total of those mortgages are $10 million. So, the banks took the 10 mortgages and bundled them together into a collateralized debt obligation or CDO with a face value of $10 million.
They then sold that new entity that they created to an investment group of some sort, a pension fund, hedge fund, etc. promising them a yield of let’s say 7%. The sales pitch would emphasize the fact that this CDO was backed by real collateral. In the event of loan defaults by the borrowers, the banks would tell the buyer of the CDO that the collateral behind the loan could be sold to recapture any potential losses on the part of the purchaser.
Everything seemed to work fine until the defaults began and the foreclosure process kicked into high gear. The foreclosure process has exposed fatal flaws in the system and the flaw is that the banks cannot prove clear ownership of the mortgage.
(Excerpt) Read more at kingworldnews.com ...
Nah.
Was America better off, or worse off, after the failure of the First Bank of the United States?
Was America better off, or worse off, after the failure and liquidation of the Second Bank of the United States?
Why should the Third Bank of the United States be any different?
The "financial system" is not our servant, it is our master. It has to die, to restore Liberty.
Stop worrying and plan for a free future.
As Shakespeare would say: “Hoist on your own petard”.
“The “financial system” is not our servant, it is our master. It has to die, to restore Liberty.”
Amen. I still want a little revenge for all the suffering the financial manipulators and their cronies have caused. Well, maybe more than a little.
Yea, and it has Barney Frank’s fingerprints all over it.
As discussed at: http://www.freerepublic.com/focus/f-news/2086551/posts
As a non financial type, but interested in history and the follies of man (and woman), I think the Federal Reserve System has to be totally abolished. We are not free with it in place.
I put a big down payment on my home, and my paper was sold to Countrywide the next day. I can imagine my AAA-rated paper being bundled together with paper rated AAA that really wasn't. Bundle hundreds or thousands of mortagages together like that, and the buyer didn't know what he had. And why should he care? He could sell his mega-CDO to Fannie and Freddie, backed by the hapless taxpayer.
And who has gone to jail over this mess?
Anyone who willingly bought or sold liar loans should be looking at jail time.
We're talking paper valued at six figures plus. Ain't that grand theft, a felony many times over? Who's going to jail? *crickets*
Our so-called gubmint is turning into 3rd world fast.
It won't be pretty.
But the longer we keep pretending, and putting it off, the worse the eventual consequences.
It should have happened in 2008.
I was glad to see that statement in the article.
Years ago I theorized that the reason for all this risky finance was the belief insurance companies would pick up the tab. I said that since Insurance Companies can't print money they might default on their obligations.
Now if only they could find someone who can print money to help them out. - Tom
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