An Immediate, Implementable Solution to Toxic Assets

By October of 2007, I was truly puzzled. Any businessman worth his salt, given a serious inventory deficiency problem, would institute an audit, physical inventory, whatever it took to identify the magnitude of the problem. He would hope in that process to determine the cause but, first and foremost, how big was the problem? The only thing I heard or read was someone saying the CDOs et al, couldn't be valued (inventoried?) as the means by which they historically were valued had failed (mark-to-market). To me that sounded like someone saying they lost directions to the warehouse or they needed a new adding machine.

Time has gone by, accompanied by hand-wringing, tons of taxpayer money down the drain, repetition of all those issues readers of Seeking Alpha are steeped in daily, and nothing got done. Government threw money at a problem whose size or value they hadn't determined, the last thing a businessman would do. No one seemed to know what to do. Some said, "Change the rules, eliminate this failed valuation method."; no businessman would do this as he would know the method may have flaws, but isn't the problem - after all, without the so-called defective method, we might still not know the depth of the problem.

In any case, that threat was a form of the last straw to me, so I thought a while and developed a solution, one I applied 20+ years ago to a shortage where the numbers were gone and the values were suspect. As modified, it absolutely should take care of this problem. I am thinking of it as a solution to the issues at what we now call banks; it may have other solutions, but this is solely for the bank/financial institution issue.

1. Whether one speaks of an individual mortgage or a CDO, it must have a face value, otherwise some couldn't benefit from taking write-downs for credibility while others pumped up their balance sheets by "holding to maturity".

2. Speaking from this point forward about CDOs or whatever investment instruments are similar, it is reasonably evident that many believe these instruments don't contain what they are supposed to, some allegedly are a full barrel of rotten apples, others containing only one or a few, some even containing no bad apples. Two points must now be made:

a. Only Wall Street types think these one or two bad apples spoil the barrel; thus, probably eventually to their trading benefit, they allege all barrels are spoiled or nearly so - however, as I see it, in this case Wall Street only represents one day, today's, market.

b.The businessman knows there are some very bad barrels, some with bad apples that miraculously don't affect their neighboring apples, and some with pristine apples that may actually be coated in honest AAA (Wall Street's equivalent of ALAR.)

3. Wall Street is busy putting everyone it can out of business, or at least driving the value of anyone suspected of holding these instruments as low as possible. Everyone is going along like sheep; however, this businessman knows that Wall Street doesn't know what is in the barrels either. Thus, the first step of the answer.

4. A trio should be formed Monday. I would suggest Paul Volcker, Lawrence Fine and Mohamed El-Arian only because their candor/experience/plain sense stood out, for this writer, far above the din since August 2007. They should be asked to set a value - one price expressed as a percentage discount from face value - on all of these instruments! It may be necessary to group very broadly some different types of these vilified instruments to do so. Hereafter I will call them all CDOs.

5. These august and, to me, brilliant gentlemen know three things, I am sure. They are all positive that each barrel is worth face value, zero, or something in between; being super intelligent business men knowledgeable about these arcane barrels baffling the world, they also are reasonably sure the average value is probably between 40% of face value and 65% of face value. (I will not steal their thunder by attempting to be more accurate.)

6. Like doctors, these gentlemen would like to heal those inflicted with barrelitis, but also want to "do no harm"; this is where the government comes in. We must not forget that, in addition to the three values above, some barrel owners - in an attempt to be more honest or, in some cases attract more government money, have absorbed financial write-downs on the face value of some or all of their barrels. It must be noted, that these actions, applauded by shareholders and others, DID NOT CHANGE THE VALUE IN ANY GIVEN BARREL. Rather, it put the barrel holder at less risk of dying if his barrels were saturated with rotten apples while giving it a future profit if they were wrong. In some ways, this was the first thing the businessman could applaud - tax deduction today, profit deferral to help future years.

7. Thus, we tell the Titanium Trio to value ALL barrels that exist at that ONE number (a % of the face value) at which no barrel holder, hopefully, or only a tiny number would be forever insolvent. Why? We'll ask our wise men to value them - obviously - on the lowest side possible without having to instantly wrestle with insolvency. They, in their wisdom, may select a slightly higher value, which I would also understand. However, I would totally trust them to make this decision.

8. Now we get the government involved. All the barrel holders will be told that they are to use the ONE Titanium Trio number to value all CDOs REGARDLESS OF THEIR QUALITY (which no one knows,right?). They cannot book any profit should their prior actions have placed them below the TT# until they clear this CDO by selling it, trading it, or in some way removing it from the guarantee - even then, if they have other CD's under guarantee, they cannot take any differential into profit until all CD's are cleared from the guarantee. Should the TT# (face value minus the TT# percentage) be below their current carrying cost, they will have no worries. The US Government will guarantee the difference between face value and the face value minus the TT percentage. However, there will be a choice that these financial institutions (barrel holders) will have to make!

9. The government is going to begin removing, at the end of the first and subsequent 12 month periods, either 20% tranches over 5 years, meaning the bank must do something to replace or augment their capital to replace the 20% of the guarantee annually, OR the government will guarantee the difference for 10 years, meaning the bank must do something to replace or augment their capital to replace 10% of the guarantee that will be removed annually.

10. Why isn't everyone going to take the 10 year deal? Because the 10 year deal comes with all kinds of government meddling - no/low dividends, no/low bonuses, restricted salaries, goodness knows what Nancy and Barack will dream up with the eager assistance of Dodd, Rangel, Reid, Barney and goodness knows who else.

11. Those who take the 5 year deal have free hands to market, swap, make other money to cover their write-offs and take responsibility for and act to get rid of their so-called toxic assets now that such assets (many of which were never toxic) are allowed in sight long enough to determine their real value over time.

Why doesn't everybody fake it until they don't make it? Because those opting for the 5 year program will sign a document that says they do so knowing that at the end of the 5 years, if they haven't been successful, they acknowledge they cannot get either any taxpayer money or further government guarantees. If this means they end up insolvent, they can explain to the shareholders why they were so aggressive. For the first two years, banks will have the right to leave the 5 year program, accept the handcuffs of Washington, and have the balance of their CDO's guaranteed over either 9 or 8 years, shackles included.

I'm assuming that the Fed can put a number on the face value of the gross amount of CDO's each bank carries as it must be reported in some broken aggregates; if not, the bank has 30 days to get the number. I'm further assuming that, since taxpayer cash money is not required, this can be done by the Fed without waiting three months for Congress to fill it with earmarks. If these assumptions are close to correct, we could kick off the program on May 1 - though I know that most of the people responsible for getting this on the road are not businessmen or they wouldn't be in this mess. So let's assume that, in the absence of Teddy Roosevelt, we'll get going June 1, 2009.

Let's see what we have:

1. A program that rewards those institutions who didn't sell as many, buy as many or tried to write down and stay solvent at the same time instead of perpetuating the fiction that they''ll carry perfect apple barrels to maturity.

2. A program that rewards those institutions that are good marketers, good salesmen, good cost managers, and good bank business people so they are regularly replacing their shrinking guarantee with cash flow. Not only is it from selling their CDOs at what should now be somewhat higher prices that probably increase as this moves along, swapping CDOs for other forms of equity augmenting value, but it is also from running their businesses without Wall Street's destructive threat, from having stock that now begins to rise as their performance warrants, and for those who are the best operators and business-like bankers, from the extra profits and successes they will have without the cost and burdens of government meddling and interference. They may even get strong enough to acquire someone else who is foundering in this process.

3. But wait, there's more! Because one day, they'll have a balance sheet with all toxic assets guaranteed at face value - one might say 80% for a year - they can lend more, they can be more transparent in their accounting, they can be more aggressive in their efforts to deal with the foreclosures that can be avoided, they can lend small businesses and big businesses more money because they have a balance sheet and a definable way to the future - one that they must report on quarterly.

4. Wait, there's more! The government can quit wasting money on fixing a problem they can't fix, as these banks will have to work out the servicing, collection, re-financing of some of these or they won't make funds to balance the guarantee reduction. It will take a full court press, service to customers, competition on fees all sorts of things consumers will reward with more business to the winners.

There are more benefits but you'll figure them out. There are some caveats; this isn't an accounting exercise, where you produce the aggregate number and have the bank auditor sign off and get going. No politicians on the titanium three; no fiddling. If a bank can't solve this problem in the 10 group period, they deserve to go bankrupt, period.

One of the many things I've learned in life is the more complex the problem, the simpler the solution must and will be or the problem goes on and on. Keep Geithner's hands off this. Insist Bernanke lookw but doesn't touch. Get a manager who can manage, who can say no, who can fire if necessary but who will get this going and keep it on track. Frankly, if I had to hire him, I'd call Larry Bossidy and if he wouldn't do it, I'd hire the man Mr. Bossidy thought would get the job done.

Comments

[random walking]

Or you could do something that showed you had faith in free markets, innovation, and technology. The only reasons markets are not working right now to adjust to a massive fraud and corruption that came about by the failure of proper regulation and the acceptance of political contributions (bribes), is that Wall Street (and the banksters, AIG etc.) and Washington DC are negotiating to transfer failure from one set of baskets to other sets of baskets behind closed doors. The free market doesn't function in this environment and the economy does a time out. The only way to get ugly assets moving again is to innovate improved markets for packaged and de-packaged instruments that are sinking the economy. If you can sell individual houses, you can sell individual mortgages. Loan servicing outfits can compete for the business of the new owners.

2009 Mar 08 10:04 AM

[retiredengineer]

The problem is the government buerocrats have invented the word "too big to fail". Definition, appointed buerocrats to lazy and/or inept to take the time to correct the problem. Don't play the stock market and lose 10's of billions of dollars of taxpayer money. Force each bank asking for a bail out to sell all divisions except the toxic assets. Suspend all bonuses, dividends, bond payments until you know if you have any money to pay them. The people causing the problem then have the money from the sold divisions to see if they have enough to pay of equity holders. Allow one to three years and if in the end you are negative the government has insured this so picks up the bill, but all other divisions are doing business and you are not rewarding the crooks and causing a long line of beggers asking for our tax dollars.

2009 Mar 08 12:07 PM

[Prudent Man CFA]

The FDIC has been in place for seventy years and has dealt well with toxic assets. What the FDIC does is not show favoritism to standing managements and Boards as they are immediately fired. The remaining staff. where qualified, take over the tasks under the acquiring bank.

Paulson, Bernanke, as well as Geithner of the NY Fed, want to keep the friends on Wall Street, especially Goldman Sachs, from losses. When the FDIC closed the Continental Illinois Bank, one of the largest in the country at that time, it didn't bring down the economy. Closing Citi, et al won't either. Too big to fail is too big to succeed!

2009 Mar 08 12:20 PM

[waveheatin]

(1) Unfortunately, CDO or toxic asset is the concern of last year. Today, the fear over banking system is loan loss. If you check USB's book you will find there is almost no CDO percentage wise. But the fear that it may be nationalized has driven down it stock, making it impossible to actually to raise private capital and nationalization become self-fullfilled by fear alone.

WFC may have the same problem, little CDO, but a lot of loans.

(2) Mark to market represents the price of a moment in market. In case of lack of a market, wouldn't it better to simply use its interest paymaent on the CDO to determine the value of CDO? For example if a CDO now earns 50% of original interest payment, its value therefore is also 50% of face value.

2009 Mar 08 01:07 PM

[Responsibility]

Although I do not understand exactly all the elements proposed, there is apparently no suggestion to include certain commitment from the debtors. When we have such a big problem, the cause is due to many factors and all of us must bear some responsibilities, more or less.

Let's include the requirement of a life long liability for the debtors to pay up, with 10% of their future incomes to be withheld as tax penality, until they shall pay up their responsible share of 0.5*(100-TT)%*DEBT; that is debtors are required to pay back 50% of the bail-out. I'll leave the exact equation for tax people to figure out the details, such as including some incentive for early pay back. The idea is for the DEBTORS to pay half of the Government's costs (or the tax payer's costs), a fair share for all, to encourage all parties to work together. The DEBTORS may be mortgage or loan bearers (individuals) or corporations.

We need accountability to be included as an important element, since lack of accountability is a major cause of this big problem on hand.

2009 Mar 08 01:18 PM

[nmelendez]

Everyone forgets, US Govt. owns the banks. Now take out mark to market and put in mark to model. How much are these banks now worth? If AIG no longer has to discount it's MBS guess what, it's now solvent. Why did Obama drive down the market? Buy financials on the cheap. Now when they double in price they sell the stocks and erase the debt. Watch Citi go to 12 in the next 6 months, the Govt sell their shares and when the buyers see whats going on it will be to late. jejeje one smart cookie

2009 Mar 08 02:41 PM

[Stewart Gordon]

Continued response from Author - tried to identify the writer whose suggest I found not to be a plan at all - rather it wasw destroy everything, soak the taxpayer and in three years make it go away. Without pretending I could imagine what this did to the financial markets, as a businessman, I must seek value first, a solution first and let someone else worry about vengeance. This suggestion approached anarchy.

4. I might agree with one writer's comment on bigness, but I don't have time to philosophize. I do think there is great irony, if not justice, in forcing those who bought this paper and loans - in ignorance, due to poor due diligence, I don't care, forcing them to work them out on an "or else" basis - and all they get is a shrinking guarantee.

I'm very loathe to have that super competent Sheila Bain stuck with the huge banks - who could have been tasked to solve their own problems or go broke - at the expense of her efforts to do the optimum for and with the Regional and smaller banks.

5. My research and questioning says there are still significant CDO problems out there. However, I used CDO as stalking horse for all those batches of lousy assets whether they be commercial loans, or other assets in an alphabet soup I soon found irrelevent. Perhaps the next paragraph is more important.,

It is important to realize that the second peak of mortgage problems (people coming off low/no interest mortages packaged into these CDO or such instruments)is about the same size as the first one, occurs THIS YEAR, about June/July. (see Economist,Oct. 10,2007).Further reading and discussion strongly suggests a high number of ALT-A and equally super-toxic mortgage disasters litter this peak.

If we adopt the plan I am suggesting, we will find that markets will develop for CDOs, commercial mortgage packages, even Jumbos and Helocs where appropriate; the banks will get experience, we will get slowly developing markets, all will get experience doing/trading instead of hand-wringing,and the banks will be staffed up for the next on-slaught. I will leave all comments about how to value to the titanium three - remember, that doesn't mean anything without the declining guarantees!

For those who may not realize it, these are debt instruments containing 500, 1000, I've forgotten how many mortgages/individual debtors. Some of them need and deserve help, some of them don't need any help, and some shouldn't get help at all.By using guarantees for this program of dealing with the INSTRUMENTS, we may well be freeing up what some think could be over a trillion dollars, some of which could be used for those individuals above,.
However, banks are doing something today, contrary to some of the self-serving comments I read in blogs and hear from politicians. With this program, it is realistic to assume banks will now work harder on these assets valuation and disposal (or holds)now that it is safe to do so - and in the process many of them will expand the breadth and shorten the time of implementation of current programs. Instead of cursing the banks, give them means to solve the debt instrument problem, without tax payer money,and let government get involved as need classes appear. Frankly, I believe the federal government is not capable of doing more than funding state efforts to solve helping on a more local level.

Finally, in the last comment, the seventh I believe, I find absolutely no solution. Mark to model only worked when the assets were what they said they were; some of the results of this effort I outlined could re-create assets that could use mark-to-model. The last commentor may have a brilliant investment tactic (I reserve my opinion), but I'd suggest he or she use their own money instead of taxpayer money to buy the time to achieve their coup.

Thank you all for your responses. My future responses will not address the vengeance issues, the blame issues. They are counter-productive until the problem is solved.

Stewart Gordon (sorry for the break in the middle of this,.)

2009 Mar 08 09:43 PM

[john s. gordon]

an interesting suggestion.

in 2008 it was friends of hank getting bailouts w/o any business plan,

in 2009 it is ?
> jack

2009 Mar 09 08:10 AM

[Tallguy511]

I agree with the approach, however to get your highly thought out and detailed points clearly understood a closing summary of main points is needed addressing why this directly impacts root cause. Your underlying theory, I think, is:
1. Defaulting mortgages are undermining value of much larger population of mortgages.
2. Many or maybe all mortgage bundling instruments are being undervalued due to uncertainty.
3. Even defaulting mortgages have significant value depending on asset involved. For instance a defaulting house mortgage is not worth $0, it at least have the value of the house involved.
4. The swing in current value in a low housing sales market is an overcorrection on the downward side.
5. Resetting the value of these vs Mark to Market is essential to stabalize the financial markets.
6. All the other effort is noise if this basis is not reestablished.

Is this correct?

2009 Mar 09 09:20 AM

[john s. gordon]

tallguy - point #3 - when you insure a house, the covered value of the structure and the value of the land are declared separately. when you mark-to-market, how can the value of the package be less than the value of the land?
> jack

2009 Mar 09 12:14 PM

[Tallguy511]

You are correct, I was not precise enough with the point. The mortgage would be for building and land in most cases of residential mortgages.

2009 Mar 09 01:05 PM

[Stewart Gordon]

jACK - I believe that the pressure of having to have adequate assets to lose 10% or 20% of their guarantee each year will mean they write their own business plans or die.
This plan gives them no money - it says here's some guarantees that are adequate for you to heal yourselves so you can start lending again. They are lending today, they will need to lend more, but that won't occur until this bottleneck in our financial system is eliminated.
When the apple barrels are investigated so they can sell them - to whomever - then the new owners will have the responsibility of handling the mortgages. The banks, once incentivized (gun to head), should find lots of mortgages they don't want to sell, they do want to finance and at least part of what I sense is your objective will be met. Governments and politicians think laws run businesses; I can assure you that businesses that are going to run and survive will do so despite and not because of government laws and meddling. If they don't, they won't have customers and if they don't use this opportunity to get customers, they will go broke on their own.


On Mar 09 08:10 AM john s. gordon wrote:

> an interesting suggestion.
>
> in 2008 it was friends of hank getting bailouts w/o any business
> plan,
>
> in 2009 it is ?

2009 Mar 09 09:20 PM

[Stewart Gordon]

Tallguy 511:



Superb summary, my response for clarification of your points:

1. We know some CDO packages were "salted" accidentally or otherwise, with
mortgages not of the value the package claimed to be.
2. We know some mortgages in the general group within a CDO are in default or have potential to default under today's circumstances at a rate probably higher than usual for that quality of instrument.

3. Within the huge inventory of these "so-called toxic assets" are conceivably even packages with normal default percentages.

Because no one knows what is in each specific package of umpteen mortgages (the undone inventory issue), Wall Street is pricing ALL such packages as if they were defective, and AS IF THEY WERE ALL BROUGHT TO MARKET NEAR SIMULTANEOUSLY.

The above considers in more detail your correct points #1 and #2.,

#3. Correct, but some of these aren't defaulting, they are slow, may need re-financing that many are capable of doing, but I absolutely believe a majority have some value. One must consider that, by the time a full default and auction occurs, there are some terribly low values to set against some dramatic legal costs, not to comment on usual property deterioration. A large number of the unfinanceable homes here will sit on the market until people aren't afraid to buy homes again. People won't buy homes until they can borrow; when they want to buy, there will not be adequate free capital in our banks if this is not fixed, now!! (Unless your dream is a government mortgage business run with taxpayer money.)

#4. Without dealing with specific markets, I don't agree with #4. I believe we have another 10% to go downward in housing prices (some think 15% but I think that has to be regional); in addition, when a market becomes commoditized as this one has, it will nearly always have a month where prices plunge beyond anything expected - and that is the month that sellers have capitulated in Wall Street terms and buyers are starting the process of buying us out of this hole,said purchases always being at unbelievable bargain prices.(that shocking fall,maybe of only a month, signals the market is on its way back.
HOWEVER, as I point out, doing this program, should prepare us for the torrent of bad mortgages coming out in the mix of packages in late June/July and should mean we are more experienced, have a market for the CDO or equivalent instruments starting if not fully active and banks are better prepared to handle these people and their homes.

5. Establishing a proxy value is essential; Wall Street will persist to eternity pricing for the disaster described in #3 above so their one-day tsunami price is useless; by spreading out the entry of these packages into settlement, sale or whatever,( without rendering a huge number of banks insolvent while requiring them to deal with their individual caches of these "mixed barrel of apples") is essential.
IMPORTANT DISTINCTION: What you call resetting the value vs Mark to Market is not quite what I suggested. What I am suggesting is the Titanium Team resetting the values uniformly to a percentage of the FACE VALUE of the individual packages and removing those resets 10-20% a year. Remember, that value could be above what some banks have written these down to, thus giving them a reserve against which to write down other bad assets that are cluttering their required capital holdings.

6. YOU NAILED THE ESSENCE OF WHAT MAKES THIS FIX A PROBLEM THAT SEEMS TO REMAIN INTRACTABLE. YOU SAID - "WITHOUT A PROXY PRICE, ALL OTHER EFFORT IS NOISE!!" AMEN!!

In interest of full disclosure, there is one exception to all: the government could spend 1 - 2 Trillion dollars of taxpayer money buying us out of these and thereby giving us the privilege of lots of taxes in the future and lots of inflation to eat away the lower take-home experienced in all economic levels.
Thank you for reading and understanding. Growin$$



On Mar 09 09:20 AM Tallguy511 wrote:

> I agree with the approach, however to get your highly thought out
> and detailed points clearly understood a closing summary of main
> points is needed addressing why this directly impacts root cause.
> Your underlying theory, I think, is:
> 1. Defaulting mortgages are undermining value of much larger population
> of mortgages.
> 2. Many or maybe all mortgage bundling instruments are being undervalued
> due to uncertainty.
> 3. Even defaulting mortgages have significant value depending on
> asset involved. For instance a defaulting house mortgage is not worth
> $0, it at least have the value of the house involved.
> 4. The swing in current value in a low housing sales market is an
> overcorrection on the downward side.
> 5. Resetting the value of these vs Mark to Market is essential to
> stabalize the financial markets.
> 6. All the other effort is noise if this basis is not reestablished.
>
>
> Is this correct?

2009 Mar 09 09:46 PM

[Stewart Gordon]

I guess I feel there is too much vengeance in the comments below. Let's let them hang by their necks for three years,and since by then they are dead, use taxpayer $$$ - one to two trillion - to put the core of the financial system back together.

As a businessman, it is my instinct, faced with very, very troubled assets and businesses to seek value first and having done that, allow failure second. I also loath having government (our money) in such an inevitably destructive course of action.



On Mar 08 12:07 PM retiredengineer wrote:

> The problem is the government buerocrats have invented the word "too
> big to fail". Definition, appointed buerocrats to lazy and/or inept
> to take the time to correct the problem. Don't play the stock market
> and lose 10's of billions of dollars of taxpayer money. Force each
> bank asking for a bail out to sell all divisions except the toxic
> assets. Suspend all bonuses, dividends, bond payments until you know
> if you have any money to pay them. The people causing the problem
> then have the money from the sold divisions to see if they have enough
> to pay of equity holders. Allow one to three years and if in the
> end you are negative the government has insured this so picks up
> the bill, but all other divisions are doing business and you are
> not rewarding the crooks and causing a long line of beggers asking
> for our tax dollars.

2009 Mar 09 10:07 PM

[Stewart Gordon]

After reading the my responses to "retired engineer" if you would be patient and kind enough to scroll back up this column to the response that begins, "continued response from Author"
In that extended section, I tried to respond to the relevant comments from Prudent Man CFA,
waveheatin, Responsiblity, and nmelendez.

I then responded individually to john s gordon and tall guy 511, both of value with the tall guy 511 adding value to my initial article.

I am trying to get this idea into hands of someone who can do something with it. I will continue to respond as long as there are comments, questions, alternate ideas.
By now, you must know I believe blame and vengeance have no place in healing this ghastly mess, so I will not re-state that.

Again, thank you all who responded.
Growin$$

2009 Mar 09 10:21 PM

[Tallguy511]

Someone I consider exceptionally brilliant on this item has used a simple analogy to explain the problem with the "toxic" mortgage based assets that have undermined the financial system. Some portion of mortgages are defaulting. The transparency of which mortgages and who owns them is no longer clear. As a result many or all of the instruments bundling mortgages and their risk are being deeply discounted undermining banks balance sheets. Those banks holding large quantities of these assets no longer have confidence in the financial instruments.

It is as if there arelarge warehouses full of apples. But the apples are in barrels. Some of the apples are rotton. Nobody know for sure which barrels have rotton apples, how many rotten apples exist, and who owns which barrels. Bundling, insuring, or moving around the barrels has no impact on the root concern affecting confidence. The only way to solve the problem is to start opening barrels and sort them out. Some will have no rotten apples and be marketable again. Some will have a percentage of rotten apples and be discounted. Some may have all rotten apples and need to be written off.
We need a large effort to begin evaluating the barrels in detail to know how big the problem is and how to eventually restore confidence in the value of the assets.
Not my analogy, hope I did it justice though.
If the government is going to do something useful it needs to begin a process of auditing and revaluing the assets behind the mortgage back securities and financial instruments. A future set of rules or regulations are likely necessary now to prevent this type of manipulation of risk in the future that undermines transparency and accountability.

2009 Mar 10 03:18 PM